**SECURITIES
        AND EXCHANGE COMMISSION** ****
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB**
 
 
 [X]
        Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
        of
        1934.
 
 For
        the
        quarterly period ended: **June
        30, 2006**
 
 OR
 
 [_]
        Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
        of
        1934.
 
 For
        the
        transition period from: ___ to ___.
 
 **Commission
        File Number:** **000-49670**
 
 **ULURU
        INC.**
 (Name
        of
        Small Business Issuer in its Charter)
 
 **Nevada**
              **41-2118656**(State
                  or other jurisdiction of
              (I.R.S.
                  Employer Identification No.)incorporation
                  or organization)
 
 **4452
        Beltway Drive**
 **Addison,
        Texas 75001**
 (Address
        of principal executive offices)
 
 Registrant's
        telephone number, including area code: **(214)
        905-5145**
 
 Securities
        registered pursuant to Section 12(b) of the Act: None
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 Common
        Stock, $.001 par value
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
        for
        such shorter period that the registrant was required to file such reports),
        and
        (2) has been subject to such filing requirements for the past 90 days. Yes
        [X]
        No [ ]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act. Yes [ ] No [X]
 
 The
        number of outstanding shares of registrant's Common Stock on August 21, 2006
        was
        12,844,311.
 
 Transitional
        Small Business Disclosure Format. Yes [ ] No [X]
 
  *Table
            of Contents*
  
 **ULURU
        INC.**
 
 **FORM
        10-QSB**
 
 **For
        the Quarterly Period Ended JUNE 30, 2006**
 
 
 
 **TABLE
        OF CONTENTS**
 Page**PART
                  I**
              **FINANCIAL
                  INFORMATION**Item
                  1.
              Financial
                  Statements
              3Unaudited
                  Condensed Consolidated Balance Sheet, June
                  30, 2006
              3Unaudited
                  Condensed Consolidated Statements
                  of Operations for three and six months ended June 30, 2006 and
                  June 30,
                  2005
              4Unaudited
                  Condensed Consolidated Statements of Cash
                  Flows for six months ended June 30, 2006 and June 30,
                  2005
              5Notes
                  to Unaudited Condensed Consolidated Financial
                  Statements
              6Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              12Item
                  3.
              Controls
                  and Procedures
              23**PART
                  II**
              **OTHER
                  INFORMATION**Item
                  1.
              Legal
                  Proceedings
              23Item
                  2.
              Unregistered
                  Sales of Equity Securities
                  and Use of Proceeds
              23Item
                  3.
              Defaults
                  Upon Senior
                  Securities
              24Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              24Item
                  5.
              Other
                  Information
              24Item
                  6.
              Exhibits
              25Signatures
              25
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            2
            -
 *Table
            of Contents*
  **PART
        1 - FINANCIAL INFORMATION**
 
 **ITEM
        1. FINANCIAL
        STATEMENTS**
 
 
 **ULURU
        INC.**
 **UNAUDITED
        CONDENSED CONSOLIDATED BALANCE SHEET**
 **AS
        AT JUNE 30, 2006**
 
 
 ALL
        ASSETS
        ARE PLEDGED AS COLLATERAL UNDER NOTES PAYABLE
 
 **ASSETS****Current
                  Assets**Cash
              
              $
              40,997Cash
                  in escrow account
              
              
              19,281Accounts
                  receivable - trade
              
              
              95,859Accounts
                  receivable - other
              
              
              18,323Inventory
              
              
              33,697Prepaid
                  expenses and deferred charges
              
              
              143,214Total
                  Current Assets
              
              
              351,371**Property,
                  Plant & Equipment, net**
              
              
              481,350**Other
                  Assets**Patents,
                  net
              
              
              12,029,743Licensing
                  rights, net
              
              
              239,534Deferred
                  financing costs, net
              
              
              848,054Deposits
              
              
              46,579Total
                  Other Assets
              
              
              13,163,910**TOTAL
                  ASSETS**
              
              $
              13,996,631**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****Current
                  Liabilities**Accounts
                  payable
              
              $
              422,035Accrued
                  liabilities
              
              
              204,975Accrued
                  liabilities - related party
              
              
              106,077Royalty
                  advance
              
              
              257,378Accrued
                  interest
              
              
              735,135Capital
                  lease obligation
              
              
              35,736Asset
                  purchase obligation, net - current portion
              
              
              3,604,332Total
                  Current Liabilities
              
              
              5,365,668**Long
                  Term Debt**Asset
                  purchase obligation, net - less current portion
              
              
              885,662Notes
                  Payable
              
              
              13,000,025Total
                  Long Term Debt
              
              
              13,885,687**Total
                  Liabilities**
              
              
              19,251,355**STOCKHOLDERS'
                  EQUITY (DEFICIT)**Preferred
                  stock, $.001 par value, 20,000 sharesauthorized,
                  none issued
              
              
              ---Common
                  Stock: $ 0.001 par value, 200,000,000 shares authorized;Issued
                  and outstanding : 12,844,311at June 30, 2006
              
              
              12,844Paid-in
                  capital
              
              
              214,891Retained
                  earnings (deficit)
              
              
              (5,482,460
              )**Total
                  Stockholders' Equity (Deficit)**
              
              
              (5,254,725
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              13,996,631The
                  accompanying notes are an integral part of these consolidated financial
                  statements.
 
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            3
            -
 *Table
            of Contents*
  
 **ULURU
        INC.**
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
 
 
 **Uluru
                  Inc.**
              
              
              **Topical
                  Component**
              
              
              **Uluru
                  Inc.**
              
              
              **Topical
                  Component****Three
                  Months Ended**
              
              
              **Three
                  Months Ended**
              
              
              **Six
                  Months Ended**
              
              
              **Six
                  Months Ended****June
                  30, 2006**
              
              
              **June
                  30, 2005**
              
              
              **June
                  30, 2006**
              
              
              **June
                  30, 2005****REVENUES**License
                  fees
              
              $
              155,038
              
              $
              20,084
              
              $
              155,038
              
              $
              35,069Royalty
                  income
              
              
              69,943
              
              
              23,490
              
              
              252,115
              
              
              50,650Product
                  sales
              
              
              75,578
              
              
              201,139
              
              
              75,578
              
              
              317,858Other
              
              
              11,664
              
              
              ---
              
              
              96,656
              
              
              ---Total
                  Revenues
              
              
              312,222
              
              
              244,713
              
              
              579,386
              
              
              403,577**COSTS
                  AND EXPENSES**Cost
                  of goods sold
              
              
              96,520
              
              
              106,938
              
              
              96,520
              
              
              148,970Research
                  and development
              
              
              477,725
              
              
              548,543
              
              
              954,121
              
              
              1,101,531General
                  and administrative
              
              
              462,878
              
              
              323,591
              
              
              745,907
              
              
              599,817Commitment
                  fee - Standby equity agreement
              
              
              ---
              
              
              ---
              
              
              1,787,940
              
              
              ---Amortization
              
              
              262,550
              
              
              43,401
              
              
              519,724
              
              
              86,801Depreciation
              
              
              17,173
              
              
              8,054
              
              
              31,898
              
              
              20,892Total
                  Costs and Expenses
              
              
              1,316,846
              
              
              1,030,527
              
              
              4,136,110
              
              
              1,958,011**OPERATING
                  LOSS**
              
              
              (1,004,623
              )
              
              (785,814
              )
              
              (3,556,723
              )
              
              (1,554,434
              )**Other
                  Income (Expense)**Interest
                  income
              
              
              2,830
              
              
              54,002
              
              
              11,210
              
              
              89,280Interest
                  expense
              
              
              (610,461
              )
              
              (37,915
              )
              
              (984,464
              )
              
              (56,580
              )**NET
                  INCOME (LOSS)**
              
              $
              (1,612,255
              )
              $
              (769,727
              )
              $
              (4,529,978
              )
              $
              (1,521,734
              )Basic
                  and diluted net (loss) per common share
              
              $
              (.13
              )
              $
              (.07
              )
              $
              (.37
              )
              $
              (.14
              )WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
              
              
              12,844,311
              
              
              11,000,000
              
              
              12,229,541
              
              
              11,000,000The
                  accompanying notes are an integral part of these consolidated financial
                  statements.
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            of Contents*
  
 **ULURU
        INC.**
 **UNAUDITED
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**
 
 
 **Uluru
                  Inc.**
              
              **Topical
                  Component****Six
                  Months Ended**
              
              **Six
                  Months Ended****June
                  30, 2006**
              
              **June
                  30, 2005****OPERATING
                  ACTIVITIES :**Net
                  (loss) from operations
              
              $
              (4,529,978
              )
              $
              (1,521,734
              )**Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:**Amortization
              
              
              519,724
              
              
              86,801Depreciation
              
              
              31,898
              
              
              20,892Commitment
                  fee - Standby equity agreement
              
              
              1,787,940
              
              
              ----Interest
                  expense - Financing costs
              
              
              164,548
              
              
              ----Interest
                  expense - Imputed
              
              
              208,915
              
              
              ----**Change
                  in operating assets and liabilities**Accounts
                  receivable
              
              
              29,112
              
              
              (19,847
              )Inventory
              
              
              44,013
              
              
              64,637Prepaid
                  expenses and deferred charges
              
              
              143,849
              
              
              213,156Deposits
              
              
              (17,506
              )
              
              ----Accounts
                  payable
              
              
              97,069
              
              
              10,130Accrued
                  liabilities
              
              
              (174,411
              )
              
              (238,224
              )Royalty
                  advance
              
              
              (211,678
              )
              
              ----Deferred
                  revenue
              
              
              ----
              
              
              (124,349
              )Accrued
                  interest
              
              
              379,012
              
              
              ----Total
                  Adjustments
              
              
              3,002,486
              
              
              13,196Net
                  Cash (Used) by Operating Activities
              
              
              (1,527,496
              )
              
              (1,508,538
              )**INVESTING
                  ACTIVITIES :**Increase
                  in fixed assets
              
              
              (132,654
              )
              
              (17,974
              )Cash
                  received in recapitalization of the Company
              
              
              128,045
              
              
              ----Restricted
                  cash
              
              
              ----
              
              
              839,356Net
                  Cash Provided by Investing Activities
              
              
              (4,609
              )
              
              821,382**FINANCING
                  ACTIVITIES :**Repayment
                  of capital lease obligations
              
              
              (17,974
              )
              
              (37,324
              )Receipt
                  of deferred revenues
              
              
              ----
              
              
              740,000Financing
                  provided by Access Pharmaceuticals
              
              
              ----
              
              
              (15,520
              )Net
                  Cash (Used) by Financing Activities
              
              
              (17,974
              )
              
              687,156**Net
                  (Decrease) in Cash**
              
              
              (1,550,079
              )
              
              ----Cash,
                  beginning of period
              
              
              1,610,357
              
              
              ----Cash,
                  end of period
              
              $
              60,278
              
              $
              ----**Supplemental
                  Schedule of Noncash****Investing
                  and Financing Activities :**Non-monetary
                  net liabilities assumed in a recapitalization of the Company on
                  March 31,
                  2006.Liabilities
                  assumed
              
              $
              13,694,962Less
                  : Non-cash assets
              
              
              12,006,690Less
                  : Cash received in recapitalization
              
              
              128,045Total
                  non-monetary net liabilities assumed
              
              $
              1,560,227*OTHER
                  SUPPLEMENTAL INFORMATION*Cash
                  Paid for Interest
              
              $
              237,777The
                  accompanying notes are an integral part of these consolidated financial
                  statements.
 
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            of Contents*
  **ULURU
        INC.**
 **NOTES
        TO UNAUDITED CONDENSED CONSOLIDATED**
 **FINANCIAL
        STATEMENTS**
 **FOR
        THE SIX MONTHS ENDED JUNE 30, 2006**
 
 
 
 **NOTE
        1.** **CONDENSED
        CONSOLIDATED FINANCIAL STATEMENTS**
 
 In
        the
        opinion of management, the accompanying unaudited condensed consolidated
        financial statements have been prepared in accordance with generally accepted
        accounting principles for interim financial information and with the
        instructions to Form 10-QSB. Accordingly, they do not include all of the
        information and footnotes required by generally accepted accounting principles
        for complete financial statements. In the opinion of management, all adjustments
        (consisting of normal recurring accruals) considered necessary for a fair
        presentation of the Company's financial position as of June 30, 2006 and
        the
        results of its operations for the three and six months ended June 30, 2006
        and
        cash flows for the six months ended June 30, 2006 have been made. Operating
        results for the three and six months ended June 30, 2006 are not necessarily
        indicative of the results that may be expected for the year ended December
        31,
        2006.
 
 These
        condensed consolidated financial statements should be read in conjunction
        with
        the financial statements and notes thereto contained in the Company's Definitive
        Information Statement on Schedule 14C filed March 1, 2006, Form 10-KSB for
        the
        year ended December 31, 2005, and Form 8-K disclosing the audited two year
        history of the Topical Component as of December 31 2005, including its
        predecessor.
 
 The
        Company has also included comparative financial data for the three and six
        months ended June 30, 2005 associated with the Topical Component business
        ("Topical Component") of Access Pharmaceuticals, Inc., a Delaware corporation
        ("Access"). The Topical Component represents a component of the consolidated
        operations of Access and its subsidiary companies. The Topical Component
        consists of three patented drug delivery technologies from which three products
        have been approved for marketing in various global markets. In addition,
        numerous products are under development utilizing the mucoadhesive film and
        nanoparticle aggregate technologies. The Topical Component's customer base
        consists of numerous strategic alliances with partners throughout the world
        to
        manufacture and market our products. Continuing operations of the Topical
        Component include a third party distribution arrangement for the sale of
        a
        product in the United States and the network of strategic partners
        globally.
 
 The
        Company entered into an Asset Purchase Agreement (“Agreement”) with Access which
        provides for the sale of the topical product assets and the assumption of
        certain capital lease obligations associated with equipment used by the Topical
        Component. Under the terms of the Agreement, Access sold substantially all
        of
        its assets used in the Topical Component including inventory, capital equipment
        and intellectual property that could be specifically identified as associated
        with the topical products. The sale excluded all liabilities of the Access
        except the assumed capital and operating leases applicable to the assets
        sold,
        and all non-equipment related debt. The sale was consummated on October 12,
        2005.
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            6
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 *Table
            of Contents*
  
 **NOTE
        2. BASIS OF PRESENTATION**
 
 History
 
 ULURU
        Inc. ("ULURU" or the "Company"), formerly Oxford Ventures, Inc., Casinos
        of The
        World, Inc., Clean Way Corporation, Trader Secrets.Com, and VOIP Technology,
        Inc. was in the development stage as defined in Financial Accounting Standards
        Board Statement No. 7 as of December 31, 2005. The Company is a Nevada
        corporation, formed on September 17, 1987. From inception through March 31,
        2006, it has had no substantial earned revenues from any planned
        operations.
 
 In
        December 2003, the Company acquired technology in process of development
        in the
        entertainment industry from several persons in exchange for cash and a majority
        interest in the Company. During 2004 the Company obtained additional financing,
        entered into a standby equity distribution agreement, and completed a
        registration statement on Form SB-2 on December 14, 2004.
 
 On
        October 12, 2005, the Company entered into a merger agreement with ULURU
        Inc., a
        Delaware corporation ("ULURU Delaware") and Uluru Acquisition Corp., a
        wholly-owned Delaware subsidiary of the Company formed on September 29, 2005.
        Under the terms of the agreement, Uluru Acquisition Corp. merged into ULURU
        Delaware, after ULURU Delaware had acquired the net assets of the topical
        component of Access Pharmaceuticals, Inc., under Section 368 (a) (1) (A)
        of the
        Internal Revenue Code, " a statutory merger or consolidation".
 
 As
        a
        result of the merger, the Company acquired all of the issued and outstanding
        shares of ULURU Delaware under a stock exchange transaction, and ULURU Delaware
        became a wholly-owned subsidiary of the Company, its legal parent. However,
        for
        financial accounting and reporting purposes, ULURU Delaware is treated as
        the
        acquirer and is consolidated with its legal parent, similar to the accounting
        treatment given in a recapitalization. For accounting presentation purposes
        only, ULURU's net assets are treated as being acquired by ULURU Delaware
        at fair
        value as of the date of the stock exchange transaction, and the financial
        reporting thereafter will not be that of a development stage enterprise,
        since
        ULURU Delaware had substantial earned revenues from planned operations. Both
        companies have a December 31 year end.
 
 All
        intercompany transactions have been eliminated in the condensed consolidated
        financial presented herewith.
 
 On
        March
        29, 2006, the Company filed a Certificate of Amendment to the Articles of
        Incorporation in Nevada.  This Certificate of Amendment authorized a
        400:1 reverse stock split to occur so that in exchange for every 400 outstanding
        shares of common stock that each shareholder had at the close of business
        on
        March 29, 2006, the shareholder would receive one share of common stock. 
As a result of this reverse stock split, the Company’s issued and outstanding
        common stock was reduced from 340,396,081 pre-split shares of common stock
        to
        851,011 post-split shares which includes an additional 21 shares for fractional
        interests.  The Certificate of Amendment also authorized a decrease in
        authorized shares of common stock from 400,000,000 shares, par value $.001
        each,
        to 200,000,000, par value $.001 each, and authorized up to 20,000 shares
        of
        Preferred Stock, par value $.001.
 
 On
        March
        31, 2006, ULURU filed a Certificate of Amendment to the Articles of
        Incorporation in Nevada to change its name from "Oxford Ventures, Inc." to
        "ULURU INC.".
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            7
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 On
        March
        31, 2006, ULURU acquired, through its wholly-owned subsidiary (Uluru Acquisition
        Corporation) a 100% ownership interest in ULURU Delaware through a merger
        of
        ULURU Delaware into Uluru Acquisition Corporation. ULURU acquired ULURU Delaware
        in exchange for 11,000,000 shares of ULURU's common stock. All securities
        issued
        pursuant to the merger are "restricted" stock and are subject to a two year
        Lock-up Agreement as well as all applicable re-sale restrictions specified
        by
        federal and state securities laws. The shareholders of ULURU immediately
        prior
        to the merger retained 851,011 shares of common stock.
 
 The
        aggregate amount of shares of common stock issuable to the shareholders of
        ULURU
        Delaware pursuant to the merger represented 92.8% of the issued and outstanding
        shares of ULURU's common stock. Under the terms of the Agreement and Plan
        of
        Merger and Reorganization executed on October 12, 2005, the pre-merger
        stockholders of ULURU owned an aggregate of 7.2% of the issued and outstanding
        shares of ULURU's common stock immediately after the merger.
 
 At
        the
        effective time of the Merger, the members of the ULURU Delaware Board of
        Directors holding office immediately prior to the merger became ULURU's
        directors, and all persons holding offices of ULURU Delaware at the effective
        time, continue to hold the same offices of the surviving corporation.
        Simultaneously, ULURU's directors and officers immediately prior to the closing
        of the Merger resigned from all of their respective positions with
        ULURU.
 
 On
        May
        31, 2006, our wholly owned subsidiary, Uluru Inc., a Delaware corporation,
        filed
        a Certificate of Amendment to the Articles of Incorporation, in Delaware,
        to
        change its name from "Uluru Inc." to "ULURU Delaware Inc.".
 
 
 **NOTE
        3. GOING CONCERN**
 
 The
        Company's consolidated financial statements have been presented on the basis
        that it is a going concern, which contemplates the realization of assets
        and the
        satisfaction of liabilities in the normal course of business. It has sustained
        operating losses since inception and has a deficit in working capital and
        stockholders' equity. The Company's ability to continue in existence is
        dependent on its ability to develop additional sources of capital and/or
        achieve
        profitable operations.
 
 Management's
        plans in regard to achieving profitable operations will take time and involve
        commercializing products for advancing topical delivery, wound management,
        burn
        care and plastic surgery. The Company's efforts are in the development of
        novel
        topically applied therapeutics based primarily on the adaptation of existing
        therapeutic agents using its proprietary drug delivery platforms to improve
        clinical outcomes.
 
 We
        believe that our products that require extensive sales efforts directed both
        at
        the consumer and the general practitioner can only compete successfully if
        marketed by a company having expertise and a strong presence in the therapeutic
        area or in direct to consumer marketing. Consequently, our business model
        is to
        form strategic alliances with major or regional pharmaceutical companies
        for
        products to compete in these markets. Management believes that our development
        risks should be minimized and that the technology potentially could be more
        rapidly developed and successfully introduced into the marketplace by adopting
        this strategy.
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            of Contents*
  
 The
        Company plans to establish a sales and marketing organization to commercialize
        our wound management, burn care, and plastic surgery products. The Company
        believes that a small dedicated sales and marketing organization can effectively
        commercialize our products. To achieve this objective, the Company plans
        on
        acquiring additional complimentary wound management and plastic surgery
        products. We plan to add additional products to our existing portfolio through
        the addition of numerous wound management compounds to our nanoparticle
        aggregate dressing.
 
 The
        Company has made only one interest payment to certain holders of the Company’s
        secured convertible debentures. Although the non-payment of amounts due to
        the
        holders of the Company’s Debentures is an event of default under the Debentures,
        the Company has not received any default notifications as defined in the
        Debentures. Currently, the Company is in negotiation with Prenox and Highgate
        regarding the outstanding payments and the possibility of providing additional
        funds to the Company.
 
 The
        accompanying consolidated financial statements do not include any adjustments
        that might result from the outcome of this uncertainty.
 
 
 
 **NOTE
        4. COMMITMENTS AND CONTINGENCIES**
 
 Legal
        Proceedings
 
 On
        June
        29, 2004, a complaint was filed against the Company in the County Court,
        Denver
        County, Colorado. The complaint alleges that the Company used a telephone
        facsimile machine, computer or other device to send unsolicited advertisements
        to the facsimile machine of Cache Valley Electric without having obtained
        the
        prior express permission or invitation to do so. The plaintiff in the action
        seeks recovery of up to $15,000. The Company filed an answer to the complaint
        on
        July 29, 2004, and does not believe that the complaint has merit. No further
        action has been taken by either party as of June 30, 2006.
 
 On
        January 31, 2005, a Default Judgment for $57,144 was filed against the Company
        in the Superior Court of Maricopa County, Arizona. The judgment was for the
        benefit of TGR Properties, LLC, for damages that have been incurred as a
        result
        of the premature termination of the operating lease of the facilities in
        Mesa,
        Arizona. As of April 28, 2006, the balance due on this judgment is $122,406,
        which is included in accounts payable as of June 30 2006, includes post judgment
        legal fees, interest and collection costs.
 
 License
        Agreement with Amlexanox Manufacturer
 
 In
        connection with the asset sale agreement between ULURU and Access, consent
        was
        required to be granted to ULURU by the foreign manufacturer of the active
        ingredient, Amlexanox, for continued manufacture of the ingredient. If the
        consent is withheld, ULURU's purchase price of the net assets may be reduced
        up
        to a maximum of 1 million dollars based on damages to ULURU on a
        dollar-for-dollar basis and which ULURU is entitled to deduct the actual
        amount
        of damages from the amount due Access.
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 Milestone
        Payments
 
 The
        Company is subject to paying Access up to $7,250,000 in connection with 11
        enumerated milestones, including 5 for up to an aggregate of $4,625,000 if
        the
        Company achieves annual net sales volumes of 20 million dollars or 40 million
        dollars on any one product, and 20 million dollars on all products, and at
        levels of 50 million dollars and 100 million dollars for cumulative net
        sales.
 
 The
        balance of 6 milestone payments totaling $2,625,000 relate to ULURU commencing
        Phase II clinical testing of any drug products or pivotal testing of any
        device
        products other than a dental product, using the licensed technology; signing
        a
        license agreement for any non dental products utilizing the licensed technology,
        and signing a license agreement relating to the Mucoadhesive product applied
        to
        tooth whitening.
 
 Registration
        Rights Agreement
 
 On
        October 12, 2005, the Company entered in a Registration Rights Agreement
        with
        Prenox and Highgate requiring the Company to file a registration statement,
        to
        include 30,000,000 shares for escrow and 5,000,000 shares for the exercise
        of
        warrants, with the Securities and Exchange Commission (“SEC”) by no later than
        45 days after closing (November 26, 2005). The Company is also required to
        use
        best efforts to have the registration statement declared effective by the
        SEC by
        no later than 150 days after the date of filing. In the event that the
        registration statement is not filed or is not declared effective, the Company
        is
        obligated to pay, as liquidated damages, an amount equal to 2% per month
        of the
        outstanding principal amount of the outstanding debentures.
 
 To
        date,
        the Company has been unable to file the registration statement with the SEC
        due
        to unforeseen issues relating to the SEC’s requirement for audited 2005
        financial statement for the Company’s wholly owned subsidiary, Uluru Delaware
        Inc., and for the audited 2005 financial statements for the Topical Component.
        The Company is currently negotiating a waiver of the provisions for the initial
        filing requirement, registration effectiveness, and liquated damages with
        Prenox
        and Highgate.
 
 Past
        due status of Accounts Payable
 
 As
        of
        June 30, 2006, the Company was past due on the settlement of accounts payable
        from 2005 totaling approximately $191,000.
 
 
 **NOTE
        5. DEBT AND EQUITY FINANCING**
 
 On
        October 12, 2005, the Company entered in a Securities Purchase Agreement
        to
        issue secured convertible debentures to Highgate House Funds, Ltd. and Prenox,
        LLC in an amount of up to $15,000,000 and to issue Highgate and Prenox warrants
        for up to 5 million shares (post-split) of the Company's common stock for
        a
        period of five years with an exercise price of $.01(post-split).
 
 Also
        on
        October 12, 2005, the Company issued a $10,000,000 secured convertible debenture
        to Prenox and a $3,000,000 secured convertible debenture (together, the
        "Debentures") to Highgate as well as the Warrants. The shares underlying
        the
        Warrants shall be included on a registration statement to be filed by the
        Company with the Securities and Exchange Commission
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            10
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 The
        Debentures have a term of two years from the date of issuance and bear an
        interest rate of ten percent per annum, compounded monthly. The Company may
        redeem the Debentures at any time prior to their maturity at a price equal
        to
        120% of the face amount redeemed plus any accrued interest. Highgate and
        Prenox
        may at their option convert all or some of the Debentures plus any accrued
        and
        unpaid interest into shares of the Company's common stock at the price of
        $1.50
        per share which is not considered to be a beneficial conversion
        feature.
 
 As
        a
        condition of the Debentures, the Company is required to remit monthly interest
        only payments starting on November 12, 2005. Effective April 12, 2006 (180
        days
        after closing) the Company is required to remit principal and interest payments
        (“Scheduled Payments”). The principal amount of each Scheduled Payment shall be
        determined by dividing the outstanding principal amount of the Debentures
        by the
        number of payments remaining until the maturity date of the Debentures plus
        a
        repayment premium equal to five percent (5%) of the amount of the principal
        payment.
 
 To
        date,
        the Company has made one remittance of interest only in January 2006 in the
        amount of $230,556. Although the non-payment of interest and principal for
        Scheduled Payments is an event of default under the Debentures, the Company
        has
        not received any default notification as defined in the Debentures. Currently,
        the Company is in negotiation with Prenox and Highgate regarding the outstanding
        payments described herein.
 
 
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            11
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 **ITEM
        2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        PLAN OF OPERATION**
 
 *This
        Quarterly Report on Form 10-QSB contains certain statements that are
        forward-looking within the meaning of Section 27a of the Securities Act of
        1933,
        as amended, and Section 21E of the Securities and Exchange Act of 1934, as
        amended, and that involve risks and uncertainties, including, but not limited
        to
        the uncertainties associated with research and development activities, clinical
        trials, our ability to raise capital, our ability to continue as a going
        concern, our ability to negotiate waivers for our defaults on our convertible
        securities, our ability to repay our outstanding debt obligations, the timing
        of
        and our ability to achieve regulatory approvals, dependence on others to
        market
        our licensed products, collaborations, future cash flow, the timing and receipt
        of licensing and milestone revenues, our ability to achieve licensing and
        milestone revenues, the future success of our marketed products and products
        in
        development, and other risks described below as well as those discussed
        elsewhere in this Form 10-QSB, documents incorporated by reference and other
        documents and reports that we file periodically with the Securities and Exchange
        Commission including our Form 10-KSB for the period ended December 31, 2005.
        Forward-looking statements contained in this Form 10-QSB include, but are
        not
        limited to those relating to anticipated product approvals and timing thereof,
        the terms of future licensing arrangements, our ability to secure additional
        financing for our operations, our ability to repay our outstanding debt
        obligations, our ability to continue as a going concern, our ability to
        negotiate waivers for our defaults on our convertible securities, our ability
        to
        fund our operations through December 31, 2006 with our current cash reserves
        and
        without accessing our SEDA, and our expected capital
        expenditures.*
 
 Business
 
 ULURU
        Inc. (“ULURU”) is a Nevada corporation. We are an emerging pharmaceutical
        company focused on establishing a market leadership position in the development
        of wound management, plastic surgery and oral care products utilizing innovative
        drug delivery solutions to improve the clinical outcome of patients and provide
        a pharmacoeconomic benefit to healthcare providers. The first step in achieving
        this objective was the acquisition of the topical business component of Access
        Pharmaceuticals, Inc. which was completed on October 12, 2005. This acquisition
        resulted in the Company acquiring Aphthasol®, Zindaclin® and the Mucoadhesive
        Film technology and a fully paid exclusive worldwide license to the Nanoparticle
        Aggregate technology for all applications excluding injectable drug delivery
        devices. Utilizing this technology, three products have been approved for
        marketing in various global markets. In addition, numerous products are under
        development utilizing our Mucoadhesive Film and Nanoparticle Aggregate
        technologies.
 
 Recent
        Developments
 
 On
        May 3,
        2006 the Company entered a Research Collaboration and Option Agreement with
        Dexo
        Biopharm Limited, a subsidiary of BioProgress Plc. The objective of the
        collaboration is to develop a specified anti-emetic for the treatment of
        emesis
        utilizing our mucoadhesive film, OraDisc, and Dexo Biopharm Limited's Instant
        Release Film technology. Under the terms of the collaboration the companies
        will
        share the development expense and the future revenues.
 
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            12
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            of Contents*
  
 Other
        Key Developments
 
 On
        October 12, 2005, the Company entered in a Registration Rights Agreement
        with
        Prenox and Highgate requiring the Company to file a registration statement,
        to
        include 30,000,000 shares for conversion of convertible notes and 5,000,000
        shares for the exercise of warrant, with the Securities and Exchange Commission
        (“SEC”) by no later than 45 days after closing (November 26, 2005). The Company
        is also required to use best efforts to have the registration statement declared
        effective by the SEC by no later than 150 days after the date of filing.
        In the
        event that the registration statement is not filed or is not declared effective,
        the Company is obligated to pay, as liquidated damages, an amount equal to
        2%
        per month of the outstanding principal amount of the outstanding
        debentures.
 
 To
        date,
        the Company has been unable to file the registration statement with the SEC
        due
        to unforeseen issues relating to the SEC’s requirement for audited 2005
        financial statements for the Company’s wholly owned subsidiary, Uluru Delaware
        Inc., and for the audited 2005 financial statement for the Topical Component.
        The Company is currently negotiating a waiver of the provisions for the initial
        filing requirement, registration effectiveness, and liquated damages with
        Prenox
        and Highgate.
 
 Employees
 
 As
        of
        June 30, 2006, we have 10 full-time and 3 part-time employees. Of these
        employees, 8 are directly engaged in or directly support research and
        development activities of which 5 have advanced scientific degrees, two directly
        support commercial and business development activities and 2 are in
        administrative positions. Our employees are not represented by a labor union
        and
        are not covered by a collective bargaining agreement. Management believes
        that
        we maintain good relations with our personnel. We compliment our internal
        expertise with external scientific consultants, university research laboratories
        and contract manufacturing organizations that specialize in various aspects
        of
        drug development including clinical development, regulatory affairs, toxicology,
        preclinical testing and process scale-up.
 
 Web
        Availability
 
 We
        make
        available free of charge through our web site, www.uluruinc.com ,
        our
        annual reports on Form 10-KSB and other reports required under the Securities
        and Exchange Act of 1934, as amended, as soon as reasonably practicable after
        such reports are filed with, or furnished to, the Securities and Exchange
        Commission as well as certain of our corporate governance policies, including
        the charters for the Board of Director's corporate governance committees
        and our
        code of ethics, corporate governance guidelines and whistleblower policy.
        We
        will provide to any person without charge, upon request, a copy of any of
        the
        foregoing materials. Any such request must be made in writing to ULURU Inc.,
        4452 Beltway Drive, Addison, TX 75001 attn: Investor Relations.
  -
            13
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  LIQUIDITY
        AND CAPITAL RESOURCES
 
 We
        have
        funded our operations primarily through private sales of convertible debentures
        and our principal source of liquidity is cash and cash equivalents. Contract
        research, products sales, royalty payments, licensing fees and milestone
        payments from corporate alliances have, and are expected in the future to,
        also
        provide funding for operations. As of June 30, 2006 our cash and cash
        equivalents and short-term investments were $60,278 and our working capital
        (current assets less current liabilities) was ($5,014,297).
 
 As
        of
        June 30, 2006 the Company did not have enough capital to achieve it's near,
        medium or long-term goals. The Company is currently in the process of finalizing
        a modification to the Securities Purchase Agreement with the holders of the
        Company’s Debentures. The anticipated modification will provide the Company with
        additional financing in the near term without the requirement of having to
        have
        an effective registration statement. Our available cash together with the
        anticipated additional financing are expected to be sufficient to fund
        operations through December 31, 2006. The Company does plan to access the
        SEDA
        upon the filing of an effective registration statement in late 2006.
 
 On
        October 12, 2005 the Company entered into a Securities Purchase Agreement
        to
        issue Secured Convertible Debentures to Prenox, LLC and Highgate House Funds,
        Limited in an amount of up to $15,000,000. Under the Securities Purchase
        Agreement on October 12, 2005 the Company issued a $10,000,000 secured
        convertible debenture to Prenox, LLC ("Prenox") and a $3,000,000 secured
        convertible debenture to Highgate House Funds, Ltd. ("Highgate") as well
        as
        Warrants to purchase up to 5,000,000 shares of the Company for a period of
        5
        years with an exercise price of $0.01. The shares underlying the Debentures
        and
        Warrants shall be included on a registration statement to be filed by the
        Company with the Securities and Exchange Commission. In exchange for the
        purchase of the Debentures, the Company granted Prenox and Highgate a security
        interest in all of its assets, including any assets the Company acquires
        while
        the Debentures are outstanding. The sale of the Debentures and Warrants was
        made
        under Section 4(2) of the Securities Act of 1933.
 
 The
        Debentures have a term of two years from the date of issuance and bear an
        interest rate of ten percent per annum, compounded monthly. The Company may
        redeem the Debentures at any time prior to their maturity at a price equal
        to
        120% of the face amount redeemed plus any accrued interest. Prenox and Highgate
        may at their option convert all or some of the Debenture plus any accrued
        and
        unpaid interest into shares of the Company's common stock at the price of
        $1.50
        per share.
 
 As
        a
        condition of the Debentures, the Company is required to remit monthly interest
        only payments starting on November 12, 2005. Effective April 12, 2006 (180
        days
        after closing) the Company is required to remit principal and interest payments
        (“Scheduled Payments”). The principal amount of each Scheduled payment shall be
        determined by dividing the outstanding principal amount of the Debentures
        by the
        number of payments remaining until the maturity date of the Debentures plus
        a
        repayment premium equal to five percent (5%) of the amount of the principal
        payment.
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            14
            -
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  To
        date,
        the Company has made one remittance of interest only in January 2006 in the
        amount of $230,556. Although the non-payment of interest and principle for
        the
        Scheduled Payments is an event of default under the Debentures, the Company
        has
        not received any default notifications as defined in the Debentures. Currently,
        the Company is in negotiation with Prenox and Highgate regarding the outstanding
        payments and the possibility of providing additional funds to the
        Company.
 
 Also,
        on
        October 12, 2005 the Company entered into a Standby Equity Distribution
        Agreement ("SEDA") with Cornell Capital Partners, LP. Under the SEDA, Cornell
        committed to purchase over the course of two years from the date of the
        effectiveness of a registration statement up to $30,000,000 of the Company's
        common stock in increments up to $1,000,000.
 
 Since
        our
        inception we have incurred negative cash flow from operations and anticipate
        for
        the balance of 2006 to continue to expend funds to advance our product
        developments, license additional products and establish a sales and marketing
        operation to commercialize our wound care products. Our expenses have exceeded
        our revenue, resulting in an accumulated deficit as of June 30, 2006 of
        ($5,482,460). Our available cash together with the anticipated additional
        financing from the existing debenture holders are expected to be sufficient
        to
        fund operations through December 31, 2006. The Company plans to raise additional
        capital in order to fund its October 12, 2006 payment obligation to Access,
        as
        well as providing funding for operations in 2007 and beyond. The Company
        does
        plan to access the SEDA upon the effectiveness of a registration statement
        in
        late 2006. We cannot assure investors that we will be able to raise additional
        capital, access the SEDA or that we will be able to generate significant
        product
        revenue or achieve or sustain profitability.
 
 Our
        future capital requirements and adequacy of available funds will depend on
        many
        factors including:
 
 ·
              Our
                  ability to raise financing in order to continue our
                  operations·
              The
                  ability to successfully commercialize our wound management and
                  burn care
                  products and the market acceptance of these products·
              The
                  ability to establish and maintain collaborative arrangements with
                  corporate partners for the research, development and commercialization
                  of
                  certain product opportunities·
              Continued
                  scientific progress in our development programs·
              The
                  costs involved in filing, prosecuting and enforcing patent
                  claims·
              Competing
                  technological developments·
              The
                  cost of manufacturing and production scale-up·
              Successful
                  regulatory filings·
              The
                  ability to convert, repay or restructure our outstanding convertible
                  notes
 
 
 
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            15
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  RESULTS
        OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2006
 COMPARED
        TO THREE MONTHS ENDED JUNE 30, 2005
 
 Total
        Revenues
 
 Revenues
        were $312,222 for the three months ended June 30, 2006, as compared to the
        Topical Component's revenues of $244,713 for the three months ended June
        30,
        2005. Revenues for the second quarter 2006 were comprised of domestic royalties
        of $52,420 from the sale of Aphthasol, foreign royalties from the sale of
        Zindaclin of $17,523, license fees associated with Zindaclin in foreign markets
        of $155,038, sponsored wound care research of $11,664 and $75,578 for the
        sale
        of Aphthasol to our domestic distributor.
 
 The
        second quarter 2006 revenues represent an overall increase of $67,509 from
        the
        Topical Component comparative second quarter 2005 revenues, primarily due
        to
        higher Aphthasol royalties as a result of a shift to a new U.S. distributor,
        sponsored research fees, and the licensing fees for our Zindaclin product.
        The
        Company has been able to increase royalties for Aphthasol as we are now selling
        our product to our distributor on a breakeven basis but receiving increase
        royalty commissions. Last year, the Topical Component was selling the product
        on
        a retail markup basis but receiving limited royalties on the sale of Aphthasol.
 
 Costs
        and Expenses
 
 Cost
        of Goods Sold
 
 The
        Company incurred costs of $96,520 for the production of Aphthasol for our
        domestic distributor. The Company had committed to providing the finished
        product at a fixed price to our distributor, whereas the actual production
        cost
        herein was higher than anticipated due to a decrease in manufacturing yield
        of
        the Aphthasol paste. This problem is not expected to recur, and we expect
        to
        breakeven on near term product sales as we are more interested in providing
        sales to our distributor on a breakeven basis so that we are able to enjoy
        substantial product sales which produce royalties to the Company from such
        sales. The focus in the prior year was to have profitable product sales which
        affected our royalty yield.
 
 Research
        and Development
 
 Research
        and development expenses were $477,725 for the three months ended June 30,
        2006,
        as compared to the Topical Component's expenses of $548,543 for the three
        months
        ended June 30, 2005. The second quarter 2006 expenses were comprised primarily
        of salaries/taxes/benefit costs of $203,195, operating costs of $16,286,
        and
        $258,244 of costs associated with the continuing development of our technologies
        as follows:
 
 Technology
              
              
              Three
                  Months Ended
                June
                  30, 2006OraDisc
              
              $
              145,932Wound Care & Nanoparticle
              
              
              89,428Aphthasol & other technologies
              
              
              22,884$
              258,244
 
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            16
            -
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  The
        second quarter 2006 decrease in research and development expenses of $70,818
        versus the comparative second quarter 2005 research and development expenses
        of
        the Topical Component was due primarily to the following:
 
 ·
              Lower
                  salary and benefit expenses of approximately $94,300 as the Company
                  decreased levels of staffing to focus only on existing technologies
                  whereas the Topical Component's comparative second quarter 2005
                  included
                  partial and full allocations of the overall research and development
                  staff;·
              Lower
                  expenses for travel by scientific personnel of $1,500;·
              Elimination
                  of contract manufacturing costs of $17,600;·
              Lower
                  expenses for laboratory equipment rental of $3,800; and·
              Lower
                  Food & Drug Administration fees of
                  $65,720.
 
 The
        decrease in research and development expenses is partially offset
        by
 
 ·
              Increased
                  occupancy costs for laboratory of $15,000; and·
              Increased
                  laboratory development expenses of
                  $97,500.
 
 General
        and Administrative
 
 General
        and administrative expenses were $462,878 for the three months ended June
        30,
        2006, as compared to the Topical Component's general and administrative expenses
        of $323,591 for the three months ended June 30, 2005. The second quarter
        2006
        increase of $139,287 versus the comparative second quarter 2005 was due
        primarily to the following:
 
 ·
              Higher
                  salary and benefit expenses of approximately $119,300 as the President
                  and
                  Chief Financial Officer’s compensation in the Topical Component's
                  comparative second quarter 2005 was only partially allocated to
                  Topical
                  Component whereas his compensation is fully allocated for the three
                  months
                  ended June 30, 2006;·
              Higher
                  accounting professional fees of $44,500 as the Company incurred
                  costs
                  associated with the annual audit of their subsidiary, Uluru Delaware
                  Inc.,
                  and for a 2005 audit of the Topical Component;·
              Increased
                  expenses for consulting of $29,300;·
              Increased
                  corporate travel costs of $13,000;·
              Costs
                  associated with relocating to new office space in Addison, Texas
                  of
                  $7,300;·
              Higher
                  occupancy costs for new office space of $4,900;·
              Increased
                  costs for operating supplies of $7,300; and·
              Costs
                  associated with marketing due diligence for potential wound products
                  of
                  $3,950.
 
 The
        increase in general and administrative expenses is partially offset
        by
 
 ·
              Lower
                  costs of $12,000 for insurance as the Company experienced savings
                  in their
                  new insurance program initiated in October 2005;·
              Lower
                  director fee expense of $8,750 as the Company did not incur any
                  director
                  fees expense in the second quarter 2006 whereas the Topical Component
                  incurred $8,750 in the second quarter 2005;·
              Lower
                  shareholder expense of $16,700 as the Company incurred only minor
                  expenses
                  for shareholder costs in the second quarter 2006 whereas the Topical
                  Component incurred costs of approximately $8,500 for shareholder
                  public
                  relations, $4,200 for shareholder meetings, $12,300 for printed
                  materials,
                  and $2,400 for transfer costs; and·
              Lower
                  legal fees of $52,800 for costs associated with patent applications
                  and
                  filings by the Topical Component in the second quarter of
                  2005.
 
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            17
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 Amortization
 
 Amortization
        expense was $262,550 for the three months ended June 30, 2006, as compared
        to
        the Topical Component's amortization expense of $43,401 for the three months
        ended June 30, 2005. The second quarter 2006 increase of $219,149 versus
        the
        comparative second quarter 2005 was due to the Company’s purchase of three
        patents and one licensing agreement from Access Pharmaceuticals on October
        12,
        2005. These patent and licensing rights assets were capitalized at their
        fair
        market value on the date of acquisition, thereby causing an increase in
        subsequent amortization expense.
 
 Depreciation
 
 Depreciation
        expense was $17,173 for the three months ended June 30, 2006, as compared
        to the
        Topical Component's depreciation expense of $8,054 for the three months ended
        June 30, 2005. The second quarter 2006 increase of $9,119 versus the comparative
        second quarter 2005 was due to the Company’s acquisition of laboratory,
        computer, and office equipment from Access Pharmaceuticals on October 12,
        2005.
        These assets were capitalized at their fair market value on the date of
        acquisition, thereby causing an overall increase in subsequent depreciation
        expense. Many items acquired from Access were fully depreciated, whereas
        values
        assigned by the Company to them resulted in added depreciation expense during
        2006. Alternatively, many other items had historic costs which were reduced
        by
        the Company at the time of their acquisition due to age and relatively lower
        replacement costs.
 
 Interest
        Expense
 
 Interest
        expense was $610,461 for the three months ended June 30, 2006, as compared
        to
        the Topical Component's interest expenses of $37,915 for the three months
        ended
        June 30, 2005. Interest expense for the second quarter is comprised of interest
        on the $13,000,025 Secured Convertible Debentures of $342,068, interest expense
        of $717 associated with insurance premium financing, amortization of financing
        costs of $164,547 in connection with acquiring the $13,000,025 Secured
        Convertible Debentures, and $103,129 of imputed interest on the Asset Purchase
        Obligations, based on an interest rate of 10% per annum.
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  RESULTS
        OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2006
 COMPARED
        TO THE SIX MONTHS ENDED JUNE 30, 2005
 
 Total
        Revenues
 
 Revenues
        were $579,386 for the six months ended June 30, 2006, as compared to the
        Topical
        Component's revenues of $403,577 for the six months ended June 30, 2005.
        Revenues for the six months ended June 30, 2006 were comprised of domestic
        royalties of $211,678 from the sale of Aphthasol, foreign royalties from
        the
        sale of Zindaclin of $40,437, foreign market licensing fees from Zindaclin
        of
        $155,038, sponsored wound care research of $46,656, a non-recurring development
        fee of $50,000 associated with our OraDisc technology, and $75,577 for the
        sale
        of Aphthasol to our domestic distributor.
 
 The
        six
        months ended June 30, 2006 revenues represent an overall increase of $175,809
        from the Topical Component comparative six months ended June 30, 2005 revenues,
        primarily due to higher Aphthasol royalties as a result of a shift to a new
        U.S.
        distributor, the non-recurring development fee from Glaxo Smith Kline, the
        Zindaclin licensing fee received in the second quarter 2006, and the sale
        of the
        Aphthasol finished product in the second quarter.
 
 Costs
        and Expenses
 
 Cost
        of Goods Sold
 
 The
        cost
        of goods sold were $96,520 for the six months ended June 30, 2006, as compared
        to the Topical Component's cost of goods sold of $148,970 for the six months
        ended June 30, 2005. The decrease was due to less volume sales on the one
        hand,
        and a proportionate increase in the relative cost of the product due to
        providing the finished product at a fixed price to our distributor, whereas
        the
        actual production cost herein was higher than anticipated due to a decrease
        in
        manufacturing yield of the Aphthasol paste.
 
 Research
        and Development
 
 Research
        and development expenses were $954,121 for the six months ended June 30,
        2006,
        as compared to the Topical Component's research and development expenses
        of
        $1,101,531 for the six months ended June 30, 2005. The six months ended June
        30,
        2006 expenses are comprised of primarily salaries/taxes/benefit costs of
        $426,749, operating costs of $34,790, and $492,582 of costs associated with
        the
        continuing development of our technologies as follows:
 
 Technology
              
              
              Six
                  Months Ended
                June
                  30, 2006OraDisc
              
              $
              285,586Wound Care & Nanoparticle
              
              
              178,072Aphthasol & other technologies
              
              
              28,924$
              492,582
 
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 The
        six
        months ended June 30, 2006 decrease of $147,410 versus the comparative six
        months ended June 30, 2005 for research and development expenses were due
        primarily to the following:
 
 ·
              Lower
                  salary and benefit expenses of approximately $155,500 as the Company
                  decreased levels of staffing to focus only on existing technologies
                  whereas the Topical Component's comparative first six months of
                  2005
                  included partial and full allocations of the overall research and
                  development staff;·
              Lower
                  Food & Drug Administration fees of $131,440;·
              Elimination
                  of contract manufacturing costs of $33,900;·
              Lower
                  expenses for laboratory equipment rental of $3,800; and·
              Lower
                  expenses for travel by scientific personnel of
                  $1,500.
 
 The
        decrease in research and development expenses is partially offset
        by
 
 ·
              Increased
                  laboratory research and development expenses of
                  $152,500;·
              Increased
                  occupancy costs of $19,500 for laboratory space; and·
              Increased
                  costs associated with repairs to laboratory equipment of
                  $6,800.
 
 
 General
        and Administrative
 
 General
        and administrative expenses were $745,907 for the six months ended June 30,
        2006, as compared to the Topical Component's general and administrative expenses
        of $599,817 for the six months ended June 30, 2005. The six months ended
        June
        30, 2006 increase of $146,090 versus the comparative six months of 2005 was
        due
        primarily to the following:
 
 ·
              Increased
                  salary and benefit expenses of approximately $207,100 as the President
                  and
                  Chief Financial Officer's compensation in the Topical Component's
                  comparative first six months of 2005 was only partially allocated
                  to
                  Topical Component whereas his compensation is fully allocated for
                  the six
                  months ended June 30, 2006;·
              Increased
                  expenses for external consultants of $37,500;·
              Higher
                  corporate travel costs of $26,500;·
              Higher
                  accounting professional fees of $24,300 as the Company incurred
                  costs
                  associated with two annual audits (their subsidiary, Uluru Delaware
                  Inc.,
                  and 2005 Topical Component), whereas the comparative 2005 included
                  only
                  the costs of the 2004 Topical Component audit;·
              Costs
                  incurred for the relocation to new office space in Addison, Texas
                  of
                  $11,050; and·
              Costs
                  associated with marketing due diligence for potential wound product
                  of
                  $5,850.
 
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 The
        increase in general and administrative expenses is partially offset
        by
 
 ·
              Lower
                  occupancy costs of $5,100 associated with transitional office and
                  utility
                  costs until the Company relocated to their permanent facility in
                  April
                  2006;·
              Lower
                  costs of $25,000 for insurance as the Company experienced savings
                  in their
                  new insurance program initiated in October 2005;·
              Lower
                  legal professional fees of $37,400 as the Company was not involved
                  in any
                  litigation whereas the Topical Component incurred legal expense
                  of $97,600
                  in the first six months of 2005 for legal representation for general
                  corporate matters and for licensing agreements;·
              Lower
                  legal fees of $32,950 for costs associated with patent applications
                  and
                  filings;·
              Lower
                  director fee expense of $17,500 as the Company did not incur any
                  director
                  fees expense in the first six months of 2006 whereas the Topical
                  Component
                  incurred $17,500 in the comparative six months of 2005;·
              Lower
                  shareholder expense of $28,400 as the Company incurred only minor
                  expenses
                  for shareholder costs in the first six months of 2006 whereas the
                  Topical
                  Component incurred costs of approximately $39,400 for the comparative
                  six
                  months of 2005. The 2005 expense includes amounts for shareholder
                  public
                  relations, shareholder meetings, and transfer costs;
                  and·
              Lower
                  stock exchange fee expense of $20,000 as the Topical Component
                  incurred
                  costs for their annual membership with the American Stock Exchange
                  in
                  January 2005 and expenses associated with a new stock offering
                  in March
                  2005. The Company did not incur any of these expenses in the first
                  six
                  months of 2006.
 
 Commitment
        Fee
 
 The
        Company had agreed to issue, at the time of the completion of the
        recapitalization and merger, 993,300 shares of its common stock as a commitment
        fee in connection with the SEDA for $30 million dollars provided by Cornell
        Capital. Those shares had a market value of $1.80 per share on March 31,
        2006,
        for a total of $1,787,940. There was no commitment fee expense incurred in
        first
        six months of 2005 for the Topical Component.
 
 Amortization
 
 Amortization
        expense was $519,724 for the six months ended June 30, 2006, as compared
        to the
        Topical Component's amortization expense of $86,801 for the six months ended
        June 30, 2005. The $432,923 increase in amortization expense for the first
        six
        months of 2006 versus the comparative six months of 2005 was due to the
        Company’s purchase of three patents and one licensing agreement from Access
        Pharmaceuticals on October 12, 2005. These patent and licensing rights assets
        were capitalized at their fair market value on the date of acquisition, thereby
        causing an increase in subsequent amortization expense.
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 Depreciation
 
 Depreciation
        expense was $31,898 for the six months ended June 30, 2006, as compared to
        the
        Topical Component's depreciation expenses of $20,892 for the six months ended
        June 30, 2005. The $11,006 increase in depreciation expense for the first
        six
        months of 2006 versus the comparative six months of 2005 was due to the
        Company’s acquisition of laboratory, computer, and office equipment from Access
        Pharmaceuticals on October 12, 2005. These assets were capitalized at their
        fair
        market value on the date of acquisition, thereby causing an overall increase
        in
        subsequent depreciation expense. Many items acquired from Access were fully
        depreciated, whereas values assigned by the Company to them resulted in added
        depreciation expense during 2006. Alternatively, many other items had historic
        costs which were reduced by the Company at the time of their acquisition
        due to
        age and relatively lower replacement costs.
 
 Interest
        Expense
 
 Interest
        expense was $984,464 for the six months ended June 30, 2006, as compared
        to the
        Topical Component's interest expenses of $56,580 for the six months ended
        June
        30, 2005. Interest expense for the first six months of 2006 is comprised
        of
        interest on the $13,000,025 Secured Convertible Debentures of $342,068,
        amortization of financing costs in connection with acquiring the $13,000,025
        Secured Convertible Debentures of $164,547, interest expense of $1,434
        associated with insurance premium financing, $208,915 of imputed interest
        on the
        Asset Purchase Obligations, based on an interest rate of 10% per annum, and
        $267,500 of interest expense based on the existing $10.7 million Note payable
        to
        the Company by its wholly owned subsidiary, ULURU Delaware Inc., prior to
        consolidation on March 31, 2006, with interest accruing at 10% per
        annum.
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  **ITEM
        3: CONTROLS AND PROCEDURES**
 
 Evaluation
        of Disclosure Controls and Procedures.
 
 Our
        chief
        executive officer and our chief financial officer, after evaluating the
        effectiveness of our “disclosure controls and procedures” (as defined in Rules
        13a-14(c) of the Securities and Exchange Act of 1934, as amended (the “Exchange
        Act”)) as of the end of the period covered by this quarterly report, concluded
        that the Company’s disclosure controls and procedures were (1) designed to
        ensure that material information relating to the Company, including its
        consolidated subsidiaries, is made known to the Company’s chief executive
        officer and chief financial officer by others within those entities,
        particularly during the period in which this report was being prepared, and
        (2)
        effective, in that they provide reasonable assurance that information required
        to be disclosed by the Company in the reports that it files or submits under
        the
        Exchange Act is recorded, processed, summarized and reported within the time
        periods specified in the SEC’s rules and forms.
 
 Changes
        in internal controls.
 
 There
        were no changes in our internal controls over financial reporting during
        the
        quarter ended June 30, 2006 that have materially affected, or are reasonably
        likely to material affect, our internal controls over financial
        reporting.
 
 
 **PART
        II: OTHER INFORMATION**
 
 **ITEM
        1 - LEGAL PROCEEDINGS**
 
 On
        June
        29, 2004, a complaint was filed against the Company in the County Court,
        Denver
        County, Colorado. The complaint alleges that the Company used a telephone
        facsimile machine, computer or other device to send unsolicited advertisements
        to the facsimile machine of Cache Valley Electric without having obtained
        the
        prior express permission or invitation to do so. The plaintiff in the action
        seeks recovery of up to $15,000. The Company filed an answer to the complaint
        on
        July 29, 2004, and does not believe that the complaint has merit. No further
        action has been taken by either party as of June 30, 2006.
 
 On
        January 31, 2005, a Default Judgment for $57,144 was filed against the Company
        in the Superior Court of Maricopa County, Arizona. The judgment was for the
        benefit of TGR Properties, LLC, for damages that have been incurred as a
        result
        of the premature termination of the operating lease of the facilities in
        Mesa,
        Arizona. As of June 30, 2006, the balance due on this judgment is $122,406,
        which includes post judgment legal fees, interest and collection
        costs.
 
 
 **ITEM
        2 - UNREGISTERED SALE OF EQUITY
        SECURITIES**
 
 On
        April
        18, 2006, the Company issued a certificate for 993,300 shares of common stock
        in
        payment of the commitment fee for a value of $1,787,940. Such issuance was
        made
        pursuant to an exemption under Section 4(2) of the Securities Act of 1933,
        as
        amended.
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 **ITEM
        3 - DEFAULTS UPON SENIOR SECURITIES**
 
 On
        October 12, 2005, the Company issued a $10,000,000 secured convertible debenture
        to Prenox and a $3,000,000 secured convertible debenture (together, the
        "Debentures") to Highgate as well as the Warrants. The shares underlying
        the
        Warrants shall be included on a registration statement to be filed by the
        Company with the Securities and Exchange Commission
 
 The
        Debentures have a term of two years from the date of issuance and bear an
        interest rate of ten percent per annum, compounded monthly. The Company may
        redeem the Debentures at any time prior to their maturity at a price equal
        to
        120% of the face amount redeemed plus any accrued interest. Highgate and
        Prenox
        may at their option convert all or some of the Debentures plus any accrued
        and
        unpaid interest into shares of the Company's common stock at the price of
        $1.50
        per share which is not considered to be a beneficial conversion
        feature.
 
 As
        a
        condition of the Debentures, the Company is required to remit monthly interest
        only payments starting on November 12, 2005. Effective April 12, 2006 (180
        days
        after closing) the Company is required to remit principal and interest payments
        (“Scheduled Payments”). The principal amount of each Scheduled Payment shall be
        determined by dividing the outstanding principal amount of the Debentures
        by the
        number of payments remaining until the maturity date of the Debentures plus
        a
        repayment premium equal to five percent (5%) of the amount of the principal
        payment.
 
 To
        date,
        the Company has made one remittance of interest only in January 2006 in the
        amount of $230,556. Although the non-payment of interest and principal for
        Scheduled Payments is an event of default under the Debentures, the Company
        has
        not received any default notification as defined in the Debentures. Currently,
        the Company is in negotiation with Prenox and Highgate regarding the outstanding
        payments described herein.
 
 
 
 **ITEM
        4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
 
 None.
 
 
 **ITEM
        5: OTHER INFORMATION**
 
 On
        October 12, 2005, the Company issued a $10,000,000 secured convertible debenture
        to Prenox and a $3,000,000 secured convertible debenture (together, the
        "Debentures") to Highgate as well as the Warrants. The shares underlying
        the
        Warrants shall be included on a registration statement to be filed by the
        Company with the Securities and Exchange Commission
 
 The
        Debentures have a term of two years from the date of issuance and bear an
        interest rate of ten percent per annum, compounded monthly. The Company may
        redeem the Debentures at any time prior to their maturity at a price equal
        to
        120% of the face amount redeemed plus any accrued interest. Highgate and
        Prenox
        may at their option convert all or some of the Debentures plus any accrued
        and
        unpaid interest into shares of the Company's common stock at the price of
        $1.50
        per share which is not considered to be a beneficial conversion
        feature.
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 As
        a
        condition of the Debentures, the Company is required to remit monthly interest
        only payments starting on November 12, 2005. Effective April 12, 2006 (180
        days
        after closing) the Company is required to remit principal and interest payments
        (“Scheduled Payments”). The principal amount of each Scheduled Payment shall be
        determined by dividing the outstanding principal amount of the Debentures
        by the
        number of payments remaining until the maturity date of the Debentures plus
        a
        repayment premium equal to five percent (5%) of the amount of the principal
        payment.
 
 To
        date,
        the Company has made one remittance of interest only in January 2006 in the
        amount of $230,556. Although the non-payment of interest and principal for
        Scheduled Payments is an event of default under the Debentures, the Company
        has
        not received any default notification as defined in the Debentures. Currently,
        the Company is in negotiation with Prenox and Highgate regarding the outstanding
        payments described herein.
 
 
 **ITEM
        6: EXHIBITS**
 
 ExhibitNumber
              Description31.1
              Certification
                  of Principal Executive Officer of ULURU
                  Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities
                  Exchange Act of 1934, as Amended31.2
              Certification
                  of Principal Accounting Officer of ULURU
                  Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities
                  Exchange Act of 1934, as Amended32.1
              Certification
                  of Chief Executive Officer of ULURU Inc.
                  pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 200232.2
              Certification
                  of Chief Financial Officer of ULURU Inc.
                  pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002
 
 
 **SIGNATURES:**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned, thereunto
        duly authorized.
 
 **ULURU
                  INC.**Date:
                  August 21, 2006
              
              By:
              /s/
                  Kerry P. GrayKerry
                  P. Gray, Chief Executive OfficerPrincipal
                  Executive OfficerDate:
                  August 21, 2006
              
              By:
              /s/
                  Terrance K. WallbergTerrance
                  K. Wallberg, Chief Financial OfficerPrincipal
                  Accounting Officer
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