UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-Q





[X]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.





For the
quarterly period ended: September
30, 2009





OR





[_]
Transition Report Pursuant to 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.


(Exact
Name of Registrant as Specified in its Charter)








Nevada
            
            41-2118656(State
      or Other Jurisdiction of
            
            (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)4452
      Beltway DriveAddison,
      Texas
            
            75001(Address
      of Principal Executive Offices)
            
            (Zip
      Code)


(214)
905-5145


Registrant's
Telephone Number, including Area Code






Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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  þ    No  o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes  o    No  o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerate filer”,
“accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer o
            Accelerated
      filer o
            Non-accelerated
      filer o
            Smaller
      reporting company þ





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes  o    No  þ





As of
November 10, 2009, there were 66,099,419 shares of the registrant’s Common
Stock, $0.001 par value per share, issued and outstanding.








ULURU Inc.





INDEX
TO FORM 10-Q





For
the Three Months Ended SEPTEMBER 30, 2009











PagePART I
            FINANCIAL INFORMATIONItem 1.
            Financial Statements
            3Condensed Consolidated Balance Sheets as of September 30,
      2009 (unaudited) and December 31, 2008
            3Condensed Consolidated Statements of Operations
      (unaudited) for the three and nine months ended September 30, 2009 and
      2008
            4Condensed Consolidated Statements of Cash Flows
      (unaudited) for the nine months ended September 30, 2009 and
      2008
            5Notes to Condensed Consolidated Financial Statements
      (unaudited)
            6Item 2.
            Management's Discussion and Analysis of Financial Condition
      and Results of Operations
            19Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            30Item 4.
            Controls and Procedures
            30PART II
            OTHER INFORMATIONItem 1.
            Legal Proceedings
            31Item 1A.
            Risk Factors
            31Item 2.
            Unregistered Sales of Equity Securities and Use
      of Proceeds
            31Item 3.
            Defaults Upon Senior Securities
            31Item 4.
            Submission of Matters to a Vote of Security
      Holders
            31Item 5.
            Other Information
            31Item 6.
            Exhibits
            32Signatures
            32


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PART 1 – FINANCIAL INFORMATION





ITEM
1.  FINANCIAL STATEMENTS








ULURU Inc.


CONDENSED
CONSOLIDATED BALANCE SHEETS





September
      30, 2009
            
            
            December
      31, 2008(Unaudited)
            
            
            (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            1,399,113
            
            
            $
            7,567,588Accounts
      receivable
            
            
            112,618
            
            
            
            195,562Inventory
            
            
            1,047,225
            
            
            
            1,080,266Prepaid
      expenses and deferred charges
            
            
            225,070
            
            
            
            468,625Total
      Current Assets
            
            
            2,784,026
            
            
            
            9,312,041Property
      and Equipment, net
            
            
            1,681,547
            
            
            
            1,828,040Other
      AssetsPatents,
      net
            
            
            9,168,315
            
            
            
            9,965,169Deposits
            
            
            20,819
            
            
            
            20,819Total
      Other Assets
            
            
            9,189,134
            
            
            
            9,985,988TOTAL
      ASSETS
            
            $
            13,654,707
            
            
            $
            21,126,069LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            $
            429,846
            
            
            $
            1,441,986Accrued
      liabilities
            
            
            395,774
            
            
            
            648,546Deferred
      revenue – current portion
            
            
            101,288
            
            
            
            122,164Royalty
      advance
            
            
            ---
            
            
            
            30,417Total
      Current Liabilities
            
            
            926,908
            
            
            
            2,243,113Long
      Term LiabilitiesDeferred
      revenue, net – less current portion
            
            
            1,280,437
            
            
            
            1,356,526TOTAL
      LIABILITIES
            
            
            2,207,345
            
            
            
            3,599,639COMMITMENTS
      AND CONTINGENCIES
            
            
            ---
            
            
            
            ---STOCKHOLDERS'
      EQUITYPreferred
      stock - $0.001 par value; 20,000 shares authorized;no
      shares issued and outstanding
            
            
            ---
            
            
            
            ---Common
      Stock - $0.001 par value; 200,000,000 shares authorized;66,099,419
      and 65,509,481 shares issued and outstanding at September 30, 2009 and
      December 31, 2008, respectively
            
            
            66,099
            
            
            
            65,510Additional
      paid-in capital
            
            
            45,508,518
            
            
            
            44,057,757Accumulated  (deficit)
            
            
            (34,127,255
            )
            
            
            (26,596,837
            )TOTAL
      STOCKHOLDERS’ EQUITY
            
            
            11,447,362
            
            
            
            17,526,430TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            13,654,707
            
            
            $
            21,126,069The
      accompanying notes are an integral part of these consolidated financial
      statements.





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ULURU
Inc.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)








Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,2009
            
            
            2008
            
            
            2009
            
            
            2008REVENUESLicense
      fees
            
            $
            22,979
            
            
            $
            26,556
            
            
            $
            72,555
            
            
            $
            65,849Royalty
      income
            
            
            61,727
            
            
            
            80,822
            
            
            
            204,830
            
            
            
            241,168Product
      sales
            
            
            39,528
            
            
            
            2,565
            
            
            
            119,482
            
            
            
            169,443Other
            
            
            6,000
            
            
            
            15,494
            
            
            
            38,190
            
            
            
            494Total
      Revenues
            
            
            130,234
            
            
            
            125,437
            
            
            
            435,057
            
            
            
            476,954COSTS
      AND EXPENSESCost
      of goods sold
            
            
            7,785
            
            
            
            484
            
            
            
            22,783
            
            
            
            138,218Research
      and development
            
            
            376,191
            
            
            
            901,344
            
            
            
            2,006,070
            
            
            
            2,644,104Selling,
      general and administrative
            
            
            981,212
            
            
            
            1,731,877
            
            
            
            5,041,318
            
            
            
            3,966,347Amortization
            
            
            272,102
            
            
            
            272,102
            
            
            
            807,551
            
            
            
            810,469Depreciation
            
            
            46,424
            
            
            
            31,229
            
            
            
            126,002
            
            
            
            81,703Total
      Costs and Expenses
            
            
            1,683,714
            
            
            
            2,937,036
            
            
            
            8,003,724
            
            
            
            7,640,841OPERATING
      (LOSS)
            
            
            (
      1,553,480
            )
            
            
            (2,811,599
            )
            
            
            (7,568,667
            )
            
            
            (7,163,887
            )Other
      Income (Expense)Interest
      and miscellaneous income
            
            
            6,676
            
            
            
            65,868
            
            
            
            42,296
            
            
            
            269,801Interest
      expense
            
            
            (1,926
            )
            
            
            ---
            
            
            
            (1,926
            )
            
            
            ---Loss
      on sale of equipment
            
            
            ---
            
            
            
            ---
            
            
            
            (2,121
            )
            
            
            ---(LOSS)
      BEFORE INCOME TAXES
            
            
            (
      1,548,730
            )
            
            
            (2,745,731
            )
            
            
            (7,530,418
            )
            
            
            (6,894,086
            )Income
      taxes
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---NET
      (LOSS)
            
            $
            (1,548,730
            )
            
            $
            (2,745,731
            )
            
            $
            (7,530,418
            )
            
            $
            (6,894,086
            )Basic
      and diluted net (loss) per common share
            
            $
            (0.02
            )
            
            $
            (0.04
            )
            
            $
            (0.11
            )
            
            $
            (0.11
            )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
            
            
            66,038,079
            
            
            
            64,669,503
            
            
            
            65,723,998
            
            
            
            63,193,491The
      accompanying notes are an integral part of these consolidated financial
      statements.








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ULURU Inc.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





Nine
      Months Ended September 30,2009
            
            
            2008OPERATING
      ACTIVITIES :Net
      (loss)
            
            $
            (7,530,418
            )
            
            $
            (6,894,086
            )Adjustments
      to reconcile net (loss) to net cash (used in) operating
      activities:Amortization
            
            
            807,551
            
            
            
            810,469Depreciation
            
            
            140,702
            
            
            
            91,753Share-based
      compensation for stock and options issued to employees
            
            
            1,366,682
            
            
            
            613,598Share-based
      compensation for options issued to non-employees
            
            
            84,668
            
            
            
            135,513Loss
      on sale of equipment
            
            
            2,121
            
            
            
            ---Change
      in operating assets and liabilities:Accounts
      receivable
            
            
            82,944
            
            
            
            613,128Inventory
            
            
            33,041
            
            
            
            (299,643
            )Prepaid
      expenses and deferred charges
            
            
            243,555
            
            
            
            (91,378
            )Deposits
            
            
            ---
            
            
            
            2,430Accounts
      payable
            
            
            (1,012,140
            )
            
            
            350,613Accrued
      liabilities
            
            
            (252,772
            )
            
            
            225,252Deferred
      revenue
            
            
            (96,965
            )
            
            
            603,657Royalty
      advance
            
            
            (30,417
            )
            
            
            (67,565
            )Total
            
            
            1,368,970
            
            
            
            2,987,827Net
      Cash (Used in) Operating Activities
            
            
            (6,161,448
            )
            
            
            (3,906,259
            )INVESTING
      ACTIVITIES :Purchase
      of property and equipment
            
            
            (14,177
            )
            
            
            (445,798
            )Investment
      in notes receivable
            
            
            (1,018,219
            )
            
            
            ---Proceeds
      from collection of notes receivable
            
            
            1,018,219
            
            
            
            ---Proceeds
      from sale of equipment
            
            
            7,150
            
            
            
            ---Purchase
      of licensing rights
            
            
            ---
            
            
            
            (142,650
            )Net
      Cash (Used in) Investing Activities
            
            
            (7,027
            )
            
            
            (588,448
            )FINANCING
      ACTIVITIES :Proceeds
      from warrant exercises
            
            
            ---
            
            
            
            ---Proceeds
      from stock option exercises
            
            
            ---
            
            
            
            47,500Net
      Cash Provided by Financing Activities
            
            
            ---
            
            
            
            47,500Net
      (Decrease) in Cash
            
            
            (6,168,475
            )
            
            
            (4,447,207
            )Cash,  beginning
      of period
            
            
            7,567,588
            
            
            
            13,979,828Cash,  end
      of period
            
            $
            1,399,113
            
            
            $
            9,532,621Supplemental
      Schedule of Noncash Investing and Financing Activities :For
      the nine months ended September 30, 2008, the issuance of 3,042,600 shares
      of common stock pursuant to cashless exercise of warrants to purchase
      3,066,667 shares of common stock
            
            
            
            
            
            $
            ---OTHER
      SUPPLEMENTAL INFORMATIONCash
      paid for interest
            
            $
            ---
            
            
            $
            ---The
      accompanying notes are an integral part of these consolidated financial
      statements.





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ULURU Inc.





NOTES
TO


CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








NOTE
1.                      COMPANY
OVERVIEW AND BASIS OF PRESENTATION





Company
Overview





ULURU
Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada
corporation.  We are a diversified specialty pharmaceutical company
committed to developing and commercializing a broad range of innovative wound
care and muco-adhesive film products based on our patented NanoflexTM and
OraDiscTM drug
delivery technologies, with the goal of improving outcomes for patients, health
care professionals, and health care payers.





Basis of
Presentation





In the
opinion of management, the accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States of America (“U.S. GAAP”) for interim
financial information and with the instructions to Form 10-Q and include the
account of ULURU Inc., a Nevada corporation, and its wholly-owned subsidiary,
Uluru Delaware Inc., a Delaware corporation.  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
September 30, 2009 and the results of its operations for the three and nine
months ended September 30, 2009 and 2008 and cash flows for the nine months
ended September 30, 2009 and 2008 have been made.





The
preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, as well as disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods.  Actual results
may differ from those estimates and assumptions.  These differences
are usually minor and are included in our consolidated financial statements as
soon as they are known.  Our estimates, judgments, and assumptions are
continually evaluated based on available information and experience. Because of
the use of estimates inherent in the financial reporting process, actual results
could differ from those estimates.





All
intercompany transactions and balances have been eliminated in
consolidation.





Operating
results for the three and nine months ended September 30, 2009 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2009.





These
condensed consolidated financial statements should be read in conjunction with
the financial statements and notes thereto contained in the Company’s Form 10-K
filed with the Securities and Exchange Commission on March 30,
2009.





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NOTE
2.                      SIGNIFICANT
ACCOUNTING POLICIES





Revenue Recognition and
Deferred Revenue





License
Fees





We
recognize revenue from license payments not tied to achieving a specific
performance milestone ratably during the period over which we are obligated to
perform services. The period over which we are obligated to perform services is
estimated based on available facts and circumstances. Determination of any
alteration of the performance period normally indicated by the terms of such
agreements involves judgment on management's part. License revenues with no
specific performance criteria are recognized when received from our foreign
licensee and their various foreign sub-licensees as there is no control by us
over the various foreign sub-licensees and no performance criteria to which we
are subject.





We
recognize revenue from performance payments ratably, when such performance is
substantially in our control and when we believe that completion of such
performance is reasonably probable, over the period during which we estimate
that we will complete such performance obligations.  In circumstances
where the arrangement includes a refund provision, we defer revenue recognition
until the refund condition is no longer applicable unless, in our judgment, the
refund circumstances are within our operating control and unlikely to
occur.





Substantive
at-risk milestone payments, which are based on achieving a specific performance
milestone when performance of such milestone is contingent on performance by
others or for which achievement cannot be reasonably estimated or assured, are
recognized as revenue when the milestone is achieved and the related payment is
due, provided that there is no substantial future service obligation associated
with the milestone.





Royalty
Income





We
receive royalty revenues under license agreements with a number of third parties
that sell products based on technology we have developed or to which we have
rights. The license agreements provide for the payment of royalties to us based
on sales of the licensed product. We record these revenues based on estimates of
the sales that occurred during the relevant period. The relevant period
estimates of sales are based on interim data provided by licensees and analysis
of historical royalties we have been paid (adjusted for any changes in facts and
circumstances, as appropriate).





We
maintain regular communication with our licensees in order to gauge the
reasonableness of our estimates. Differences between actual royalty revenues and
estimated royalty revenues are reconciled and adjusted for in the period in
which they become known, typically the following quarter. Historically,
adjustments have not been material based on actual amounts paid by licensees. As
it relates to royalty income, there are no future performance obligations on our
part under these license agreements. To the extent we do not have sufficient
ability to accurately estimate revenue; we record it on a cash
basis.





Product
Sales





We
recognize revenue and related costs from the sale of our products at the time
the products are shipped to the customer.


Sponsored Research
Income





Sponsored
research income has no significant associated costs since it is being paid only
for information pertaining to a specific research and development project in
which the sponsor may become interested in acquiring products developed
thereby.  Payments received prior to the Company’s performance are
deferred. Contract amounts are not recognized as revenue until the customer
accepts or verifies the research has been completed.





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NOTE
3.                      THE
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS





Recently Adopted Accounting
Standards





In June
2009, the Financial Accounting Standards Board (the “FASB”) issued Statement No.
168, The FASB Accounting
Standards CodificationTM and the Hierarchy of Generally Accepted Accounting
Principles—a replacement of FASB Statement No. 162, hereafter referred to
as Accounting Standards
Codification (the “Codification,” “ASC”, or “ASC Topic
105”).  ASC Topic 105 is the sole source of authoritative U.S. GAAP
recognized by the FASB to be applied by nongovernmental
entities.  Rules and interpretive releases of the SEC under authority
of federal securities laws are also sources of authoritative US GAAP for SEC
registrants.  The Codification supersedes all then-existing non-SEC
accounting and reporting standards.  All other non-grandfathered
non-SEC accounting literature not included in the Codification are
non-authoritative.  Following the adoption of the Codification, the
FASB will issue Accounting Standards Updates, which the FASB will not consider
as authoritative in their own right, but which will serve only to update the
Codification, provide background information about the guidance, and provide the
bases for conclusions on the change(s) in the Codification.  We
adopted ASC Topic 105 effective with our consolidated financial statements as of
September 30, 2009.  The adoption of ASC Topic 105 did not have a
material impact on our consolidated financial statements.





In May
2009, FASB issued SFAS No. 165, Subsequent Events, which was
primarily codified into Topic 855 Subsequent Events (“ASC 855”)
in the ASC.  ASC 855 is intended to establish general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued.  Specifically, ASC 855 requires entities to disclose the date
through which they have evaluated subsequent events and whether the date
corresponds with the issuance of their financial statements. ASC 855 is
effective for interim and annual reporting periods ending after June 15,
2009. We adopted this statement in the second quarter of fiscal 2009 and
the adoption did not have a material impact on our condensed consolidated
financial statements.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, (“SFAS
No. 141R”), which was primarily codified into Topic 805 Business Combinations (“ASC
805”) in the ASC.  ASC 805 retains the principles and requirements for
how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, including goodwill, the liabilities assumed and
any non-controlling interest in the acquiree.  ASC 805 also
establishes disclosure requirements to enable users of the financial statements
to evaluate the nature and financial effects of the business
combination.  ASC 805 is effective for business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008.  The impact of
adopting ASC 805 will be dependent on the future business combinations that the
Company may pursue after its effective date.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements - an Amendment of Accounting Research Bulletin
No. 51(“SFAS No. 160”), which was primarily codified into Topic 810
Consolidations (“ASC
810”) in the ASC.  ASC 810 establishes accounting and reporting
standards for ownership interests in subsidiaries held by parties other than the
parent, the amount of consolidated net income attributable to the parent and to
the noncontrolling interest, changes in a parent’s ownership interest and the
valuation of retained noncontrolling equity investments when a subsidiary is
deconsolidated.  ASC 810 also establishes reporting requirements that
provide sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling
owners.  ASC 810 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15,
2008.  The adoption did not have a material effect on our consolidated
financial statements.





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NOTE
4.                      SEGMENT
INFORMATION





We
operate in one business segment: the research, development and commercialization
of pharmaceutical products.  Our corporate headquarters in the United
States collects product sales, licensing fees, royalties, and sponsored research
revenues from our arrangements with external customers and
licensees.  Our entire business is managed by a single management
team, which reports to the Chief Executive Officer.





Our
revenues are currently derived primarily from one licensee for domestic
activities, two licensees for international activities, and our own domestic
sales of AltrazealTM.





Revenues
per geographic area for the three and nine months ended September 30 are
summarized as follows:





Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,Revenues
            
            2009
            
            
            %
            
            
            2008
            
            
            %
            
            
            2009
            
            
            %
            
            
            2008
            
            
            %Domestic
            
            $
            68,246
            
            
            
            52
            %
            
            $
            32,995
            
            
            
            26
            %
            
            $
            191,084
            
            
            
            44
            %
            
            $
            227,007
            
            
            
            48
            %International
            
            
            61,988
            
            
            
            48
            %
            
            
            92,442
            
            
            
            74
            %
            
            
            243,973
            
            
            
            56
            %
            
            
            249,947
            
            
            
            52
            %Total
            
            $
            130,234
            
            
            
            100
            %
            
            $
            125,437
            
            
            
            100
            %
            
            $
            435,057
            
            
            
            100
            %
            
            $
            476,954
            
            
            
            100
            %





A
significant portion of our revenues are derived from a few major
customers.  Customers with greater than 10% of total sales for the
three and nine months ended September 30 are represented on the following
table:





Three
      Months Ended September 30,
            
            
            Nine
      Months Ended September 30,Customers
            Product
            
            2009
            
            
            2008
            
            
            2009
            
            
            2008Discus Dental, Inc.
            Aphthasol®
            
            
            17
            %
            
            
            20
            %
            
            
            15
            %
            
            
            49
            %Meldex International
            OraDiscTM B
            
            
            18
            %
            
            
            22
            %
            
            
            16
            %
            
            
            14
            %ProStrakan, Ltd.
            Zindaclin®
            
            
            28
            %
            
            
            44
            %
            
            
            32
            %
            
            
            36
            %Total
            
            
            
            63
            %
            
            
            86
            %
            
            
            63
            %
            
            
            99
            %





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NOTE
5.                      INVENTORY





As of
September 30, 2009, our inventory was comprised of raw materials, manufacturing
costs incurred in the production of AltrazealTM, and AltrazealTM finished
goods.  Inventory consisted of the following at September 30, 2009 and
December 31, 2008:





Inventory
            
            September
      30, 2009
            
            
            December
      31, 2008Raw materials
            
            $
            112,002
            
            
            $
            113,916Work-in-progress
            
            
            372,603
            
            
            
            344,921Finished goods
            
            
            562,620
            
            
            
            621,429Total
            
            $
            1,047,225
            
            
            $
            1,080,266








NOTE
6.                      PROPERTY
AND EQUIPMENT





Property
and equipment, net, consisted of the following at September 30, 2009 and
December 31, 2008:





Property and equipment
            
            September
      30, 2009
            
            
            December
      31, 2008Laboratory equipment
            
            $
            424,888
            
            
            $
            427,888Manufacturing equipment
            
            
            1,483,223
            
            
            
            1,469,046Computers, office equipment, and furniture
            
            
            140,360
            
            
            
            150,589Computer software
            
            
            4,108
            
            
            
            4,108Leasehold improvements
            
            
            95,841
            
            
            
            95,8412,148,420
            
            
            
            2,147,472Less: accumulated depreciation and amortization
            
            
            (
      466,873
            )
            
            
            (
      319,432
            )Property and equipment, net
            
            $
            1,681,547
            
            
            $
            1,828,040





Depreciation
and amortization expense on property and equipment was $49,990 and $34,794 for
the three months ended September 30, 2009 and 2008, respectively and was
$136,699 and $92,400 for the nine months ended September 30, 2009 and 2008,
respectively.





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NOTE
7.                      PATENTS





Patents,
net, consisted of the following at September 30, 2009 and December 31,
2008:





Patents
            
            September
      30, 2009
            
            
            December
      31, 2008Patents
            
            $
            13,354,938
            
            
            $
            13,354,938Less: accumulated amortization
            
            
            (
      4,186,623
            )
            
            
            (
      3,389,769
            )Patents, net
            
            $
            9,168,315
            
            
            $
            9,965,169





Amortization
expense on patents was $268,536 and $268,536 for the three months ended
September 30, 2009 and 2008, respectively and was $796,854 and $799,772 for the
nine months ended September 30, 2009 and 2008, respectively.  The
future aggregate amortization expense for patent assets, remaining as of
September 30, 2009, is as follows:





Year
      Ending December 31,
            
            Future
      Amortization
              Expense2009 (Three months)
            
            $
            268,5362010
            
            
            1,065,3902011
            
            
            1,015,4362012
            
            
            723,4282013
            
            
            721,4522014 & Beyond
            
            
            5,374,073Total
            
            $
            9,168,315








NOTE
8.                      STOCKHOLDERS’
EQUITY





Common
Stock





As of
September 30, 2009 the Company had 66,099,419 shares of common stock issued and
outstanding.  The Company issued 144,546 shares of common stock during
the three months ended September 30, 2009 pursuant to the vesting of restricted
stock awards held by various employees.





Warrants





The
following table summarizes the warrants outstanding and the number of shares of
common stock subject to exercise as of September 30, 2009 and the changes
therein during the nine months then ended:





Number
      of Shares of Common Stock Subject to Exercise
            
            
            Weighted
      – Average
              Exercise
      PriceBalance
      as of December 31, 2008
            
            
            2,795,000
            
            
            $
            1.07Warrants
      issued
            
            
            ---
            
            
            
            ---Warrants
      exercised
            
            
            ---
            
            
            
            ---Warrants
      cancelled
            
            
            ---
            
            
            
            ---Balance
      as of September 30, 2009
            
            
            2,795,000
            
            
            $
            1.07





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Of the
warrant shares subject to exercise as of September 30, 2009, expiration of the
right to exercise is as follows:


Date of expiration
            
            Number
      of Warrant Shares of Common Stock Subject to ExpirationAugust 30, 2011
            
            
            1,125,000December 6, 2011
            
            
            1,670,000Total
            
            
            2,795,000








NOTE
9.                      EARNINGS
PER SHARE





Basic and Diluted Net Loss
Per Share





In
accordance with FASB ASC Topic 260 Earnings per Share, basic
earnings (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding for the
period.  Diluted earnings (loss) per common share is computed by
dividing net income (loss) by the weighted average number of common shares
outstanding during the period, increased to include potential dilutive common
shares.  The effect of outstanding stock options, restricted vesting
common stock and warrants, when dilutive, is reflected in diluted earnings
(loss) per common share by application of the treasury stock
method.  We have excluded all outstanding stock options, restricted
vesting common stock and warrants from the calculation of diluted net loss per
common share because all such securities are antidilutive for all periods
presented.





Shares
used in calculating basic and diluted net loss per common share exclude these
potential common shares as of September 30, 2009 and December 31,
2008:





September
      30, 2009
            
            
            December
      31, 2008Antidilutive
      warrants to purchase common stock
            
            
            2,795,000
            
            
            
            2,795,000Antidilutive
      options to purchase common stock
            
            
            3,306,000
            
            
            
            3,706,000Restricted
      vesting common stock
            
            
            405,882
            
            
            
            154,918Total
            
            
            6,506,882
            
            
            
            6,655,918














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NOTE
10.                      SHARE
BASED COMPENSATION





The
Company’s share-based compensation plan, the 2006 Equity Incentive Plan
(“Incentive Plan”), is administered by the compensation committee of the Board
of Directors, which selects persons to receive awards and determines the number
of shares subject to each award and the terms, conditions, performance measures
and other provisions of the award.





We
account for share-based compensation under FASB ASC Topic 718 Compensation – Stock
Compensation (“ASC 718”).  ASC 718 requires the measurement and
recognition of compensation expense for all share-based payment awards made to
employees, consultants, and directors in the financial statements and is
measured based on the estimated fair value of the award on the grant
date.  We use the Black-Scholes option-pricing model to estimate the
fair value of share-based awards with the following weighted average assumptions
for the nine months ended September 30:





2009
            
            
            2008Incentive Stock OptionsExpected
      volatility  (1)
            
            
            ---
            
            
            
            67.7
            %Risk-free
      interest rate %  (2)
            
            
            ---
            
            
            
            2.77
            %Expected
      term (in years)
            
            
            ---
            
            
            
            5.0Dividend
      yield  (3)
            
            
            ---
            
            
            
            0.0
            %Forfeiture
      rate
            
            
            ---
            
            
            
            5.1
            %Nonstatutory Stock OptionsExpected
      volatility  (1)
            
            
            73.7
            %
            
            
            69.4
            %Risk-free
      interest rate %  (2)
            
            
            1.79
            %
            
            
            3.23
            %Expected
      term (in years)
            
            
            3.0
            
            
            
            3.3Dividend
      yield  (3)
            
            
            0.0
            %
            
            
            0.0
            %Forfeiture
      rate
            
            
            0.0
            %
            
            
            0.0
            %





(1)
            Expected
      volatility assumption was based upon a combination of historical stock
      price volatility measured on a daily basis and an estimate of expected
      future stock price volatility(2)
            Risk-free
      interest rate assumption is based upon U.S. Treasury bond interest rates
      appropriate for the term of the stock options.(3)
            The
      Company does not currently intend to pay cash dividends, thus has assumed
      a 0% dividend yield.











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Our Board
of Directors granted the following incentive stock option awards to executives
or employees and nonstatutory stock option awards to directors or non-employees
for the three and nine months ended September 30:





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008Incentive Stock OptionsQuantity
            
            
            ---
            
            
            
            75,000
            
            
            
            ---
            
            
            
            1,450,000Weighted
      average fair value per share
            
            
            ---
            
            
            $
            0.89
            
            
            
            ---
            
            
            $
            1.23Fair
      value
            
            
            ---
            
            
            $
            66,702
            
            
            
            ---
            
            
            $
            1,788,711Nonstatutory Stock OptionsQuantity
            
            
            ---
            
            
            
            ---
            
            
            
            75,000
            
            
            
            355,000Weighted
      average fair value per share
            
            
            ---
            
            
            
            ---
            
            
            $
            0.14
            
            
            $
            0.70Fair
      value
            
            
            ---
            
            
            
            ---
            
            
            $
            10,672
            
            
            $
            249,375








Stock Options (Incentive and
Nonstatutory)





The
following table summarizes share-based compensation related to stock options for
the three and nine months ended September 30:





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008Research
      and development
            
            $
            23,325
            
            
            $
            38,821
            
            
            $
            218,066
            
            
            $
            106,822Selling,
      general and administrative
            
            
            112,789
            
            
            
            223,699
            
            
            
            931,324
            
            
            
            590,794Total share-based compensation expense
            
            $
            136,114
            
            
            $
            262,520
            
            
            $
            1,149,390
            
            
            $
            697,616





At
September 30, 2009, the balance of unearned share-based compensation to be
expensed in future periods related to unvested stock option awards, as adjusted
for expected forfeitures, is approximately $1,054,063.  The period
over which the unearned share-based compensation is expected to be recognized is
approximately three years.





The
activity for stock options is summarized as follows:





Stock
      Options
            
            
            Weighted
      Average Exercise Price per ShareOutstanding
      as of December 31, 2008
            
            
            3,706,000
            
            
            $
            2.37Granted
            
            
            75,000
            
            
            
            0.29Forfeited/cancelled
            
            
            (475,000
            )
            
            
            2.25Exercised
            
            
            ---
            
            
            
            ---Outstanding
      as of September 30, 2009
            
            
            3,306,000
            
            
            $
            2.34





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The
following table presents the stock option grants outstanding and exercisable as
of September 30, 2009:





Options
      Outstanding
            
            
            Options
      ExercisableStock
      Options Outstanding
            
            
            Weighted
      Average Exercise Price per Share
            
            
            Weighted
      Average Remaining Contractual Life in Years
            
            
            Stock
      Options Exercisable
            
            
            Weighted
      Average Exercise Price per Share940,000
            
            
            $
            0.89
            
            
            
            7.7
            
            
            
            536,456
            
            
            $
            0.95615,000
            
            
            
            1.57
            
            
            
            7.8
            
            
            
            551,146
            
            
            
            1.56931,000
            
            
            
            2.43
            
            
            
            5.7
            
            
            
            368,520
            
            
            
            2.43820,000
            
            
            
            4.47
            
            
            
            7.9
            
            
            
            504,062
            
            
            
            4.453,306,000
            
            
            $
            2.34
            
            
            
            7.2
            
            
            
            1,960,184
            
            
            $
            2.30








Restricted Stock
Awards





Restricted
stock awards, which typically vest over a period of two to five years, are
issued to certain key employees and are subject to forfeiture until the end of
an established restriction period.  We utilize the market price on the
date of grant as the fair market value of restricted stock awards and expense
the fair value on a straight-line basis over the vesting period.





The
following table summarizes share-based compensation related to restricted stock
awards for the three and nine months ended September 30:





Three
      Months Ended
              September
      30,
            
            
            Nine
      Months Ended
              September
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008Research
      and development
            
            $
            7,778
            
            
            $
            4,544
            
            
            $
            68,094
            
            
            $
            12,499Selling,
      general and administrative
            
            
            13,659
            
            
            
            14,090
            
            
            
            233,866
            
            
            
            38,996Total share-based compensation expense
            
            $
            21,437
            
            
            $
            18,634
            
            
            $
            301,960
            
            
            $
            51,495





At
September 30, 2009, the balance of unearned share-based compensation to be
expensed in future periods related to restricted stock awards, as adjusted for
expected forfeitures, is approximately $155,330.





The
activity of our non-vested restricted stock awards is summarized as
follows:





Restricted
      stock
            
            
            Weighted
      Average Grant Date Fair ValueOutstanding
      as of December 31, 2008
            
            
            154,918
            
            
            $
            2.70Shares
      granted
            
            
            871,530
            
            
            
            0.19Shares
      forfeited/cancelled
            
            
            (30,628
            )
            
            
            0.26Shares
      exercised/issued
            
            
            (589,938
            )
            
            
            0.62Outstanding
      as of September 30, 2009
            
            
            405,882
            
            
            $
            0.51





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Summary of
Plans





2006
Equity Incentive Plan





In March
2006 our board of directors (“Board”) adopted and our stockholders approved our
2006 Equity Incentive Plan (“Incentive Plan”), which initially provided for the
issuance of up to 2 million shares of our Common Stock pursuant to stock option
and other equity awards.  At the annual meeting of the stockholders
held on May 8, 2008, our stockholders approved an amendment to the Incentive
Plan to increase from 2 million shares to 6 million shares the total number of
shares of Common Stock issuable under the Incentive Plan pursuant to stock
option and other equity awards.  As of September 30, 2009, we had
granted options to purchase 4,210,000 shares of Common Stock since the inception
of the Incentive Plan, of which 3,306,000 were outstanding at a weighted average
exercise price of $2.34 per share and we had granted awards for 1,029,242 share
of restricted stock since the inception of the Incentive Plan, of which 405,882
were outstanding.  As of September 30, 2009, there were 1,643,180
shares that remained available for future grant under our Incentive
Plan.








NOTE
11.                      INCOME
TAXES





There was
no current federal tax provision or benefit recorded for any period since
inception, nor were there any recorded deferred income tax assets, as such
amounts were completely offset by valuation allowances.








NOTE
12.                      COMMITMENTS
AND CONTINGENCIES





Operating
Lease





On
January 31, 2006 we entered into a lease agreement for office and laboratory
space in Addison, Texas.  The lease, which commenced on April 1, 2006
and continues until April 1, 2013, currently requires a monthly lease obligation
of $9,228 per month, which is inclusive of monthly operating
expenses.





As of
September 30, 2009, the future minimum lease payments are as
follows:





Year
      Ending December 31,
            
            Amount2009 (Three
      months)
            
            $
            27,6852010
            
            
            110,7402011
            
            
            114,7552012
            
            
            116,0942013
            
            
            29,024Total minimum lease payments
            
            $
            398,298





Rent
expense for our operating lease amounted to $27,415 and $23,831 for the three
months ended September 30, 2009 and 2008, respectively and was $81,140 and
$79,678 for the nine months ended September 30, 2009 and 2008,
respectively.





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Indemnification





In the
normal course of business, we enter into contracts and agreements that contain a
variety of representations and warranties and provide for general
indemnifications. Our exposure under these agreements is unknown because it
involves claims that may be made against us in the future, but have not yet been
made. To date, we have not paid any claims or been required to defend any action
related to our indemnification obligations. However, we may record charges in
the future as a result of these indemnification obligations.





In
accordance with our restated articles of incorporation and our amended and
restated bylaws, we have indemnification obligations to our officers and
directors for certain events or occurrences, subject to certain limits, while
they are serving at our request in their respective capacities. There have been
no claims to date and we have a director and officer insurance policy that
enables us to recover a portion of any amounts paid for future potential claims.
We have also entered into contractual indemnification agreements with each of
our officers and directors.





Employment
Agreements





As of
September 30, 2009 the Company is party to employment agreements with its
officers, which include Renaat Van den Hooff, President and Chief Executive
Officer and Terrance K. Wallberg, Vice President and Chief Financial Officer, as
well as other key executives including Daniel G. Moro, Vice President – Polymer
Drug Delivery and John V. St. John, Ph.D., Vice President - Research and
Development.  The employment agreement with Mr. Van den Hooff has an
initial term of two years and includes an automatic one-year term renewal for
each year thereafter.  The employment agreements with Mssrs. Wallberg,
Moro, and St. John each have a term of one year and include an automatic
one-year term renewal for each year thereafter.  Each employment
agreement provides for a base salary, bonus, stock options, stock grants, and
eligibility for Company provided benefit programs.  Under certain
circumstances, the employment agreements provide for certain severance benefits
in the event of termination or a change in control.  The employment
agreements also contain non-solicitation, confidentiality and non-competition
covenants, and a requirement for the assignment of certain invention and
intellectual property rights to the Company.





Separation
Agreement





On March
9, 2009 the Company entered into a separation agreement (the “Agreement”) with
Kerry P. Gray, the Company’s former Chief Executive Officer, whereby the Company
will provide certain benefits to Mr. Gray, including: (i) payments totaling
$400,000 during the initial 12 month period following the date of the Agreement;
(ii) commencing March 1, 2010 and continuing for a period of forty-eight (48)
months, the Company will pay to Mr. Gray a payment of $12,500 per month; (iii)
full acceleration of all vesting schedules for all outstanding Company stock
options and shares of restricted stock of the Company held by Mr. Gray, with all
such Company stock options remaining exercisable by Mr. Gray until March 1,
2012, provided that Mr. Gray has forfeited 300,000 stock options previously held
by him; and (iv) for a period of twenty-four (24) months following the date of
the Agreement the Company will maintain and provide coverage under Mr. Gray’s
existing health coverage plan.  Certain of such payments are secured
by a security interest in favor of Mr. Gray in our intellectual property
relating to Zindaclin®.  The Agreement also provides that Mr. Gray
would serve as a consultant to the Company for up to two full days per month
through August 31, 2009.  Mr. Gray was not paid for the performance of
such consulting services.  The Agreement contains a mutual release of
claims, certain stock lock-up provisions, and other standard
provisions.


Milestone
Payments





We were
subject to paying Access Pharmaceuticals, Inc. (“Access”) for certain milestones
based on our achievement of certain annual net sales, cumulative net sales,
and/or our having reached certain defined technology milestones including
licensing agreements and advancing products to clinical
development.  As of September 30, 2009, the future milestone
obligations that we are subject to paying Access, if the milestones related
thereto are achieved, total $4,750,000.  Such milestones are based on
total annual sales of 20 and 40 million dollars of certain products, annual
sales of 20 million dollars of any one certain product, and cumulative sales of
such products of 50 and 100 million dollars.





On March
7, 2008, the Company terminated the license agreement with ProStrakan Ltd. for
Amlexanox-related products in the United Kingdom and Ireland.  As part
of the termination, the Company agreed to pay ProStrakan Ltd. a royalty of 30%
on any future payments received by the Company from a new licensee in the United
Kingdom and Ireland territories, up to a maximum of $1,400,000.  On
November 17, 2008, the Company conveyed the Amlexanox-related product rights to
the United Kingdom and Ireland territories to MEDA AB.





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NOTE
13.                      SUBSEQUENT
EVENTS





We have
evaluated, for potential recognition and disclosure, subsequent events through
November 16, 2009, the date when we issued our condensed consolidated financial
statements for the quarter ended September 30, 2009 and determined the following
subsequent event to be disclosed.





On
November 9, 2009, the Company entered into an engagement letter (the “Engagement
Letter”) with Rodman & Renshaw, LLC (the “Placement Agent”), pursuant to
which the Placement Agent agreed to act as exclusive placement agent on a
reasonable best efforts basis for a proposed offering of our
securities.





On
November 11, 2009, we entered into a Securities Purchase Agreement with several
institutional investors (the “Securities Purchase
Agreement”).  Pursuant to the Securities Purchase Agreement, we agreed
to issue to those investors the following securities (the
“Offering”):





§
            10,714,467
      shares of our common stock, par value $0.001 per share;
  and§
            Warrants
      to purchase up to 5,357,233 shares of our common stock (the
      “Warrants”);





The
Warrants have an initial exercise price of $0.19 per share, and may be exercised
at any time and from time to time on or after May 15, 2010 through and including
May 15, 2015.





The
closing of the Offering took place on November 16, 2009.  The Placement
Agent received a placement fee equal to 7% of the aggregate gross proceeds
of the Offering as well as warrants to purchase up to an aggregate of
535,723 shares of our common stock at an exercise price equal to $0.238 per
share.





The
aggregate net proceeds from the Offering, after deducting the Placement Agents’
fees and estimated offering expenses payable by us (and excluding any proceeds
from exercise of the Warrants), were approximately $1.35 million.





We made
the offering and sale of the above shares and warrants pursuant to a shelf
registration statement on Form S-3 (Registration No. 333-160568) declared
effective by the Securities and Exchange Commission on July 23, 2009, and a base
prospectus dated as of the same date, as supplemented by a prospectus supplement
filed with the Securities and Exchange Commission on November 13,
2009.








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ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION








You
should read the following discussion and analysis together with all financial
and non-financial information appearing elsewhere in this report and with our
consolidated financial statements and related notes included in our 2008 Annual
Report on Form 10-K, referred to as our 2008 Form 10-K, which has been
previously filed with the Securities and Exchange Commission. In addition to
historical information, the following discussion and other parts of this report
contain forward-looking information that involves risks and uncertainties,
including the statement that our cash and cash equivalents are sufficient to
fund our operations through March 2011.  Our actual results could
differ materially from those anticipated by such forward-looking information due
to competitive factors and other risks discussed in our 2008 Form 10-K under
“Risks Associated with our Business”.





Business
Overview





ULURU
Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada
corporation.  We are a diversified specialty pharmaceutical company
committed to developing and commercializing a broad range of innovative wound
care and muco-adhesive film products based on our patented NanoflexTM and
OraDiscTM drug
delivery technologies, with the goal of improving outcomes for patients, health
care professionals, and health care payers.





Our
strategy is threefold:





§
            Establish
      the foundation for a market leadership position in wound management by
      developing and commercializing a customer focused portfolio of innovative
      wound care products based on the NanoflexTM
      technology to treat the various phases of wound
healing;§
            Develop
      our oral-transmucosal technology (OraDiscTM)
      and generate revenues through multiple licensing agreements;
      and§
            Develop
      our NanoflexTM
      technology for the medical aesthetics market and enter into one or more
      strategic partnerships to bring these products to
  market.





- 19
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Recent
Developments





On
November 9, 2009, the Company entered into an engagement letter (the “Engagement
Letter”) with Rodman & Renshaw, LLC (the “Placement Agent”), pursuant to
which the Placement Agent agreed to act as exclusive placement agent on a
reasonable best efforts basis for a proposed offering of our
securities.





On
November 11, 2009, we entered into a Securities Purchase Agreement with several
institutional investors (the “Securities Purchase
Agreement”).  Pursuant to the Securities Purchase Agreement, we agreed
to issue to those investors the following securities (the
“Offering”):





§
            10,714,467
      shares of our common stock, par value $0.001 per share;
  and§
            Warrants
      to purchase up to 5,357,233 shares of our common stock (the
      “Warrants”);





The
Warrants have an initial exercise price of $0.19 per share, and may be exercised
at any time and from time to time on or after May 15, 2010 through and including
May 15, 2015.





The
closing of the Offering took place on November 16, 2009.  The Placement
Agent received a placement fee equal to 7% of the aggregate gross proceeds
of the Offering as well as warrants to purchase up to an aggregate of
535,723 shares of our common stock at an exercise price equal to $0.238 per
share.





The
aggregate net proceeds from the Offering, after deducting the Placement Agents’
fees and estimated offering expenses payable by us (and excluding any proceeds
from exercise of the Warrants), were approximately $1.35
million.





We made
the offering and sale of the above shares and warrants pursuant to a shelf
registration statement on Form S-3 (Registration No. 333-160568) declared
effective by the Securities and Exchange Commission on July 23, 2009, and a base
prospectus dated as of the same date, as supplemented by a prospectus supplement
filed with the Securities and Exchange Commission on November 13,
2009.





On
September 16, 2009, the Company announced the results from the first completed
randomized clinical trial for Altrazeal.  The recently completed
clinical study compared healing, pain and comfort of skin graft donor sites
treated with either AltrazealTM or
with a leading commercial sodium carboxymethylcellulose-silver (“CMC-Ag”)
dressing.





Major
results from the study indicated that there was a significant difference in
patient’s pain scores, all favoring Altrazeal with lower pain scores at each
time point (p<0.0001).  When asked about the comfort of the wound
dressing at the edges, these subjects found Altrazeal to be more comfortable
(p<0.001) and less painful when the dressing came in contact with clothes or
bedding (p<0.001).  The study endpoints validated the hypothesis
for time to healing for both dressings in this particular type of acute surgical
wound.





The study
was a single-center, prospective randomized trial in which each patient served
as his/her own control. Each patient had at least two split-thickness donor
sites of which one was dressed with AltrazealTMand
the other one with the CMC-Ag dressing.





On July
23, 2009, the Company received a notice of effectiveness for the Company’s
registration statement on Form S-3, using a “shelf” registration process, from
the Securities and Exchange Commission. Under this shelf registration process,
we may from time to time sell common stock, preferred stock, debt securities or
warrants to purchase common stock, preferred stock or debt securities, or any
combination of the foregoing, either individually or as units comprised of one
or more of the other securities, in one or more offerings up to a total dollar
amount of $25,000,000.  As discussed above, the Offering was made
pursuant to this registration statement declared effective on July 23, 2009 and
a base prospectus dated as of the same date, as supplemented by a prospectus
supplement filed with the Securities and Exchange Commission on November 13,
2009.





In July
2009 the Company implemented a revised business plan in order to reduce
operating expenses, optimize operations, and conserve cash while seeking
strategic relationships for its products and fund raising to provide needed
liquidity.





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RESULTS OF
OPERATIONS





Fluctuations in Operating
Results





Our
results of operations have fluctuated significantly from period to period in the
past and are likely to continue to do so in the future. We anticipate that our
quarterly and annual results of operations will be impacted for the foreseeable
future by several factors, including the timing and amount of payments received
pursuant to our current and future collaborations, and the progress and timing
of expenditures related to our development and commercialization efforts. Due to
these fluctuations, we believe that the period-to-period comparisons of our
operating results may not be a good indication of our future
performance.








Comparison of the three
months ended September 30, 2009 and 2008





Total
Revenues





Revenues
were $130,234 for the three months ended September 30, 2009, as compared to
revenues of $125,437 for the three months ended September 30, 2008, and were
comprised of licensing fees of approximately $23,000 for two OraDiscTM licensing
agreements, $23,000 for domestic royalties from the sale of Aphthasol® by our
distributor, $39,000 of foreign royalties from the sale of Zindaclin®, $6,000
for sponsored research associated with OraDiscTM technologies, and $40,000 of
Altrazeal® product sales.





The third
quarter 2009 revenues represent an overall increase of approximately $5,000
versus the comparative third quarter 2008 revenues, primarily due to an increase
of $37,000 in Altrazeal revenues.  This increase was partially offset
by decreases of $18,000 in Zindaclin® royalties and licensing fees, $9,000 in
sponsored research, and $2,000 in Aphthasol® royalties.





Costs and
Expenses





Cost
of Goods Sold





Cost of
goods sold for the three months ended September 30, 2009 was $7,785 and
consisted of product costs for our Altrazeal® wound dressing.  Cost of
goods sold for the three months ended September 30, 2008 were only $484, as
AltrazealTM was initially launched in June 2008.





Research
and Development





Research
and development expenses totaled $376,191 for the three months ended September
30, 2009, including $31,103 in share-based compensation, compared to $901,344
for the three months ended September 30, 2008, including $43,365 in share-based
compensation.  The decrease of approximately $525,000 in research and
development expenses was due primarily to a decrease in direct research costs of
$248,000, a decrease in regulatory consulting costs of $44,000 along with
savings of $258,000 due to the Company’s compensation reduction plan that was
initiated in July 2009.  These decreases were partially offset by an
increase in clinical testing expenses associated with our wound care
technologies of $27,000.





The
direct research and development expenses for the three months ended September
30, 2009 and 2008 were as follows:





Three
      Months Ended
              September
      30,Technology
            
            2009
            
            
            2008Wound care & nanoparticle
            
            $
            4,636
            
            
            $
            140,393OraDiscTM
            
            
            4,200
            
            
            
            138,945Aphthasol® & other technologies
            
            
            28,617
            
            
            
            6,132Total
            
            $
            37,453
            
            
            $
            285,470





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Selling,
General and Administrative




Selling,
general and administrative expenses totaled $981,212 for the three months
ended


September
30, 2009, including $126,448 in share-based compensation, compared to $1,731,877
for the three months ended September 30, 2008, including $237,789 in share-based
compensation.  The decrease of approximately $751,000 in selling,
general and administrative expenses was due primarily to reduced costs for
marketing and selling expenses of $509,000, savings of $158,000 due to the
Company’s compensation reduction plan, decreased corporate travel expenses of
$37,000, decreased investor relations costs of $14,000, lower patent-related
legal fees of $9,000, decreased administrative operating expenses of $12,000,
and savings of $48,000 in Director fees.





These
decreases were partially offset by an increase of $27,000 in legal and
consulting fees, along with an increase of $6,000 in insurance
costs.





Amortization





Amortization
expense totaled $272,102 for the three months ended September 30, 2009, which is
the same amount of amortization expense for the three months ended September 30,
2008.  The expense for each period consisted primarily of amortization
associated with our patents.  There were no additional purchases of
patents during the three months ended September 30, 2009.





Depreciation





Depreciation
expense totaled $46,424 for the three months ended September 30, 2009 as
compared to $31,229 for the three months ended September 30,
2008.  The increase of approximately $15,000 is attributable to our
purchase of additional equipment, primarily manufacturing items, during
2009.








Interest
and Miscellaneous Income





Interest
and miscellaneous income totaled $6,676 for the three months ended September 30,
2009 as compared to $65,868 for the three months ended September 30,
2008.  The decrease of approximately $59,000 is attributable to a
decrease in interest income due to lower cash balances and interest yields in
2009.





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Comparison of the nine
months ended September 30, 2009 and 2008





Total
Revenues





Revenues
were $435,057 for the nine months ended September 30, 2009, as compared to
revenues of $476,954 for the nine months ended September 30, 2008, and were
comprised of licensing fees of $74,775 from two OraDiscTM licensing agreements,
domestic royalties of $65,601 from the sale of Aphthasol® by our distributor,
foreign royalties of $137,009 from the sale of Zindaclin®, OraDiscTM related
sponsored research program fees of $38,190, and Altrazeal® product sales of
$119,482.





The nine
months ended September 30, 2009 revenues represent an overall decrease of
approximately $42,000 versus the comparative nine months ended September 30,
2008 revenues, primarily due to a decrease of $166,000 in Aphthasol® product
sales, which was non-recurring revenue from the prior year, and a decrease of
$34,000 in Zindaclin® royalties.  These decreases were partially
offset by an increase of $116,000 in AltrazealTM product sales, increased
licensing fees of $6,000 for OraDisc technologies, and increased Ora DiscTM
related sponsored research program fees of $37,000.





Costs and
Expenses





Cost
of Goods Sold





Cost of
goods sold for the nine months ended September 30, 2009 was $22,783 and
consisted entirely of costs associated with the manufacture of Altrazeal®,
whereas the cost of goods sold for the nine months ended September 30, 2008 was
comprised of $137,615 in costs associated with the manufacture of Aphthasol® and
$603 for costs associated with the manufacture of Altrazeal®.





Research
and Development





Research
and development expenses totaled $2,006,070 for the nine months ended September
30, 2009, including $286,160 in share-based compensation, compared to $2,644,104
for the nine months ended September 30, 2008, including $119,321 in share-based
compensation.  The decrease of approximately $638,000 in research and
development expenses was due primarily to decreases in direct research costs of
$682,000 relating to our wound care and OraDiscTM technologies and savings of
$133,000 due to the Company’s compensation reduction plan.  These
decreases were partially offset by increased clinical testing expenses for our
wound care technologies of $38,000 and increased regulatory consulting and
expenses of $141,000.





The
direct research and development expenses for the nine months ended September 30,
2009 and 2008 were as follows:





Nine
      Months Ended
              September
      30,Technology
            
            2009
            
            
            2008Wound care & nanoparticle
            
            $
            54,421
            
            
            $
            572,843OraDiscTM
            
            
            163,326
            
            
            
            328,608Aphthasol® & other technologies
            
            
            34,710
            
            
            
            32,713Total
            
            $
            252,457
            
            
            $
            934,164





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Selling,
General and Administrative





Selling,
general and administrative expenses totaled $5,041,318 for the nine months ended
September 30, 2009, including $1,165,190 in share-based compensation, compared
to $3,966,347 for the nine months ended September 30, 2008, including $629,790
in share-based compensation.





The
increase of approximately $1,075,000 in selling, general and administrative
expenses was due primarily to additional costs of approximately $602,000 for the
ramp-up of our sales and marketing efforts, distribution services of $140,000
and a net increase of administrative compensation costs of
$244,000.  The net increase in administrative compensation costs
includes approximately $454,000 of share based compensation increases relating
to the Company’s compensation reduction plan in September 2009 and costs of
$47,000 associated with the Separation Agreement with our former chief executive
officer; which are offset by a decrease of $263,000 in accruals for
incentives.





We also
incurred increases in legal services associated with our patent filings of
$33,000, increases of $8,000 in accounting fees, and legal fees of $309,000
associated with filings made with the Securities and Exchange Commission,
financing activities, and the proposed York Pharma acquisition.





Each of
these factors were partially offset by a decrease of $73,000 in corporate travel
expenses, lower consulting fees of $23,000, a decrease in investor relations
expenses of $19,000, lower shareholder expenses of $24,000 due to having the
Company’s annual shareholder meeting at a later date than in prior years,
decreased director compensation of $60,000, and lower due diligence costs of
$64,000 associated with financing activities.





Amortization





Amortization
expense totaled $807,551 for the nine months ended September 30, 2009 as
compared to $810,469 for the nine months ended September 30,
2008.  The expense for each period consists primarily of amortization
associated with our patents.  There were no additional purchases of
patents during the nine months ended September 30, 2009.





Depreciation





Depreciation
expense totaled $126,002 for the nine months ended September 30, 2009 as
compared to $81,703 for the nine months ended September 30, 2008.  The
increase of approximately $44,000 is attributable to our purchase of additional
equipment, primarily manufacturing items, during 2009.





Interest
and Miscellaneous Income





Interest
and miscellaneous income totaled $42,296 for the nine months ended September 30,
2009 as compared to $269,801 for the nine months ended September 30,
2008.  The decrease of approximately $228,000 is attributable to a
decrease in interest income due to lower cash balances and interest yields in
2009.





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LIQUIDITY AND CAPITAL
RESOURCES





We have
funded our operations primarily through the private sales of convertible
debentures and common stock.  Product sales, royalty payments,
contract research, licensing fees and milestone payments from our corporate
alliances have provided, and are expected in the future to provide partial
funding for operations.  As of September 30, 2009 our cash and cash
equivalents were $1,399,113 which is a decrease of $6,168,475 as compared to our
cash and cash equivalents at December 31, 2008 of $7,567,588.  Our
working capital (current assets less current liabilities) was $1,857,118 at
September 30, 2009 as compared to our working capital at December 31, 2008 of
$7,068,928.





Consolidated
Cash Flow Data


Nine
      Months Ended September 30,Net Cash Provided by (Used
    in)
            
            2009
            
            
            2008Operating activities
            
            $
            (6,161,448
            )
            
            $
            (3,906,259
            )Investing activities
            
            
            (7,027
            )
            
            
            (588,448
            )Financing activities
            
            
            ---
            
            
            
            47,500Net (Decrease) in cash and cash equivalents
            
            $
            (6,168,475
            )
            
            $
            (4,447,207
            )





Operating
Activities





For the
nine months ended September 30, 2009, net cash used in operating activities was
$6,161,448.  The principal component of net cash used for the nine
months ended September 30, 2009 stems from our net loss of approximately
$7,530,000.  This net loss for the nine months ended September 30,
2009 included substantial non-cash charges in the form of share-based
compensation, amortization of patents, and depreciation.  These
non-cash charges totaled approximately $2,400,000.





Additional
uses of our net cash included a decrease of $1,012,000 in accounts payable due
to timing of vendor payments, a decrease of $253,000 in accrued liabilities for
employee benefits and incentives, the amortization of deferred revenues of
$97,000, and a decrease of $30,000 in our royalty advance for Aphthasol® due to
sales by our distributor.  These uses of net cash were partially
offset by a decrease of $244,000 in prepaid expenses due to expense
amortization, a decrease of $83,000 in accounts receivable, and a decrease of
$33,000 in inventory due to AltrazealTM product sales.





For the
comparable nine months of 2008, net cash used in operating activities was
$3,906,259.  The principal component of net cash used for the nine
months ended September 30, 2008 stems from our net loss of approximately
$6,894,000 which included $1,651,000 of non-cash charges in the form of
share-based compensation, amortization of patents, and
depreciation.





Additional
uses of our net cash included an increase of approximately $300,000 in inventory
due to the work-in-progress manufacturing costs for AltrazealTM, an increase of
$91,000 for renewal fees with the Food & Drug Administration, and a decrease
of $67,000 in our royalty advance for Aphthasol® due to domestic sales by our
distributor.  These uses of net cash were partially offset by a
decrease of $613,000 in accounts receivable due to customer collections, an
increase of $350,000 in accounts payable due to costs for product manufacturing,
an increase in accrued liabilities of $225,000 due to timing, and an increase in
deferred revenues of $604,000 from the receipt of licensing agreements
associated with our OraDiscTM technologies.


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Investing
Activities





Net cash
used in investing activities during the nine months ended September 30, 2009 was
$7,027.  The investing activities include approximately $1,018,000 in
notes receivable associated with the loan to York Pharma in April 2009, the
subsequent collection of the York loan in July 2009, and a decrease of $14,000
associated with the purchase of AltrazealTM manufacturing
equipment.  The uses of net cash were partially offset by $7,000 of
proceeds from the sale of laboratory equipment.





For the
comparable nine months of 2008, net cash used in investing activities was
$588,448 and consisted primarily of manufacturing equipment purchases for our
AltrazealTM and OraDiscTM products along with $142,650 for the buy-back of
OraDiscTM licensing rights previously held by Zambon S.p.A.





Financing
Activities





There
were no financing activities during the nine months ended September 30,
2009.





Net cash
provided by financing activities during the nine months ended September 30, 2008
was $47,500 from the exercise of stock options to purchase 50,000 shares of our
common stock.





Liquidity





In July
2009, the Company restructured its operations in efforts reduce operating
expenses, optimize operations and to conserve the necessary cash to further the
Company’s revised business plan.  Currently, a core management group
is being supplemented by a small selection of external consultants to support
the Company’s primary business activities. Selling efforts for AltrazealTM are
continuing through a network of independent sales representatives throughout the
country.





On
November 11, 2009, we entered into a Securities Purchase Agreement with several
institutional investors (the “Securities Purchase
Agreement”).  Pursuant to the Securities Purchase Agreement, we agreed
to issue to those investors the following securities (the
“Offering”):





§
            10,714,467
      shares of our common stock, par value $0.001 per share;
  and§
            Warrants
      to purchase up to 5,357,233 shares of our common stock (the
      “Warrants”);





The
Warrants have an initial exercise price of $0.19 per share, and may be exercised
at any time and from time to time on or after May 15, 2010 through and including
May 15, 2015.





The
closing of the Offering took place on November 16, 2009.  Rodman and
Renshaw, LLC, acting as our placement agent, received a placement fee equal
to 7% of the aggregate gross proceeds of the Offering as well as warrants
to purchase up to an aggregate of 535,723 shares of our common stock at an
exercise price equal to $0.238 per share.





The
aggregate net proceeds from the Offering, after deducting the Placement Agents’
fees and estimated offering expenses payable by us (and excluding any proceeds
from exercise of the Warrants), were approximately $1.35
million.


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The
Company continues to seek a strategic relationship whereby the Company can more
effectively maximize the revenue potential of AltrazealTM as well as continuing,
with the assistance of an investment bank, to explore future fund raising using
the Company’s effective registration statement on Form S-3 or through the sale
of assets.





As of
November 1, 2009, we had cash and cash equivalents of approximately
$1,177,000.  We expect to use our cash, cash equivalents, and
investments on working capital and general corporate purposes, products, product
rights, technologies, property and equipment, the payment of contractual
obligations, and regulatory or sales milestones that may become
due.  Our long-term liquidity will depend to a great extent on our
ability to fully commercialize our AltrazealTM and OraDiscTM technologies;
therefore we are continuing to search both domestically and internationally for
opportunities that will enable us to continue our business.  At this
time, we cannot accurately predict the effect of certain developments on the
rate of sales growth during 2009 and beyond, such as the degree of market
acceptance, patent protection and exclusivity of our products, the impact of
competition, the effectiveness of our sales and marketing efforts, and the
outcome of our current efforts to develop, receive approval for, and
successfully launch our near-term product candidates.





Based on
the proceeds from the closing of our Offering, our existing liquidity, the
expected level of operating expenses, projected sales of our existing products
and estimated sales from our product candidates, if approved, combined with
other revenues and interest income, we believe that we will be able to meet our
working capital and capital expenditure requirements at least through March
2011.  We do not expect any material changes in our capital
expenditure spending during the remainder of 2009.  However, we cannot
be sure that our anticipated revenue growth will be realized or that we will
generate significant positive cash flow from operations.





As we
continue to expend funds to advance our business plan, there can be no assurance
that changes in our research and development plans, capital expenditures and/or
acquisitions of products or businesses, or other events affecting our operations
will not result in the earlier depletion of our funds.  In appropriate
situations, we may seek financial assistance from other sources, including
contribution by others to joint ventures and other collaborative or licensing
arrangements for the development, testing, manufacturing and marketing of
products under development.  Additionally, we may explore alternative
financing sources for our business activities, including the possibility of
loans from banks and public and/or private offerings of debt and equity
securities; however we cannot be certain that funding will be available on terms
acceptable to us, or at all.





Our
future capital requirements and adequacy of available funds will depend on many
factors including:





§
            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; and§
            Successful
      regulatory filings.





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Contractual
Obligations





The
following table summarizes our outstanding contractual cash obligations as of
September 30, 2009, which consists of a lease agreement for office and
laboratory space in Addison, Texas which commenced on April 1, 2006 and a
separation agreement with our former chief executive officer which was effective
on March 9, 2009.





Payments
      Due By PeriodContractual
      Obligations
            
            Total
            
            
            Less
      Than
              1
      Year
            
            
            2-3
              Years
            
            
            4-5
              Years
            
            
            After
      5
              YearsOperating lease
            
            $
            398,298
            
            
            $
            110,740
            
            
            $
            229,511
            
            
            $
            58,047
            
            
            $
            ---Separation agreement
            
            
            662,500
            
            
            
            150,000
            
            
            
            300,000
            
            
            
            212,500
            
            
            
            ---Total contractual cash obligations
            
            $
            1,060,798
            
            
            $
            260,740
            
            
            $
            529,511
            
            
            $
            270,547
            
            
            $
            ---








Off-Balance
Sheet Arrangements





As of
September 30, 2009, we did not have any off balance sheet
arrangements.








Impact
of Inflation





We have
experienced only moderate price increases under our agreements with third-party
manufacturers as a result of raw material and labor price
increases.  We have generally passed these price increases along to
our customers.  However, there can be no assurance that possible
future inflation would not impact our operations.








CRITICAL ACCOUNTING POLICIES
AND ESTIMATES





Management’s
Discussion and Analysis of Financial Condition and Results of Operations
addresses our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States (“GAAP”) for
interim financial information. The preparation of our financial statements
requires that we make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis, we
evaluate these estimates and judgments. We base our estimates and judgments on
historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.  Our critical
account policies are summarized in our Annual Report on Form 10-K for the year
ended December 31, 2008.  We had no significant changes in our
critical accounting policies since our last annual report.





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SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS





This
quarterly report on Form 10-Q (including documents incorporated by reference)
and other written and oral statements the Company makes from time to time
contain certain “forward-looking” statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. You can identify these forward-looking statements by the fact they use
words such as “should”, “expect”, “anticipate”, “estimate”, “target”, “may”,
“project”, “guidance”, “intend”, “plan”, “believe” and other words and terms of
similar meaning and expression in connection with any discussion of future
operating or financial performance. One can also identify forward-looking
statements by the fact that they do not relate strictly to historical or current
facts.  Such forward-looking statements are based on current
expectations and involve inherent risks and uncertainties, including factors
that could delay, divert or change any of them, and could cause actual outcomes
to differ materially from current expectations. These statements are likely to
relate to, among other things, statements regarding the Company’s expected cash
and cash equivalents and working capital being sufficient until March 2011, and
other statements, including, the Company’s goals, plans and projections
regarding its financial position, results of operations, cash flows, market
position, product development, product approvals, sales efforts, expenses,
performance or results of current and anticipated products and the outcome of
contingencies such as legal proceedings, acquisitions, and financial results,
which are based on current expectations that involve inherent risks and
uncertainties, including internal or external factors that could delay, divert
or change any of them in the next several years. The Company has included
important factors in the cautionary statements included in its 2008 Annual
Report on Form 10-K, particularly under “Risk Associated with our Business”,
that the Company believes could cause actual results to differ materially from
any forward-looking statement.




Although
the Company believes it has been prudent in its plans and assumptions, no
assurance can be given that any goal or plan set forth in forward-looking
statements can be achieved and readers are cautioned not to place undue reliance
on such statements, which speak only as of the date made. The Company undertakes
no obligation to release publicly any revisions to forward-looking statements as
a result of new information, future events or otherwise.






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ITEM 3:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Concentrations
of Credit Risk





Concentration
of credit risk with respect to financial instruments, consisting primarily of
cash and cash equivalents, potentially expose us to concentrations of credit
risk due to the use of a limited number of banking institutions and due to
maintaining cash balances in banks, which, at times, may exceed the limits of
amounts insured by the Federal Deposit Insurance
Corporation.  Currently, we utilize Bank of America and Bank of
America Investment Services, Inc. as our banking institutions.  At
September 30, 2009 and December 31, 2008 our cash and cash equivalents totaled
$1,399,113 and $7,567,588, respectively.  However, because deposits
are maintained at these two financial institutions, we do not believe that there
is a significant risk of loss of uninsured amounts.  We also invest
cash in excess of immediate requirements in money market accounts, certificates
of deposit, corporate commercial paper with high quality ratings, and U.S.
government securities.  These investments are not held for trading or
other speculative purposes.  We are exposed to credit risk in the
event of default by these high quality corporations.





Concentration
of credit risk with respect to trade accounts receivable are customers with
balances that exceed 5% of total consolidated trade accounts receivable at
September 30, 2009 and at December 31, 2008.  As of September 30,
2009, five customers exceeded the 5% threshold.  Two customers
exceeded the 5% threshold at December 31, 2008.  We believe that these
customer accounts are fully collectible as of September 30, 2009.





Foreign
Currency Exchange Rate Risk





The
royalty revenues we receive on Zindaclin® are a percentage of the net sales made
by the various sub-licensees of our licensee, ProStrakan Ltd.  All of
these sales are made in foreign countries and the majority are denominated in
foreign currencies. The royalty payment on these foreign sales is calculated
initially in the foreign currency in which the sale is made and is then
converted into U.S. dollars to determine the amount that ProStrakan Ltd pays us
for royalty revenues. Fluctuations in the exchange ratio of the U.S. dollar and
these foreign currencies will have the effect of increasing or decreasing our
royalty revenues even if there is a constant amount of sales in foreign
currencies. For example, if the U.S. dollar weakens against a foreign currency,
then our royalty revenues will increase given a constant amount of sales in such
foreign currency.





The
impact on our royalty revenues from foreign currency exchange rate risk is based
on a number of factors, including the exchange rate (and the change in the
exchange rate from the prior period) between a foreign currency and the U.S.
dollar, and the amount of Zindaclin® sales by the various sub-licensees of
ProStrakan Ltd that are denominated in foreign currencies. We do not currently
hedge our foreign currency exchange rate risk.








ITEM 4:
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 the Company, 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 September 30, 2009 that have materially affected, or are
reasonably likely to material affect, our internal controls over financial
reporting.





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PART II: OTHER INFORMATION








ITEM 1 - LEGAL
PROCEEDINGS





The
Company was served in April 2009 with a compliant in an action in the Supreme
Court for New York County, State of New York.  The plaintiff, R.C.C.
Ventures, LLC, alleges that it is due a fee for its performance in procuring or
arranging a loan for the Company.  The Company denies all allegations
of the complaint and any liability to the plaintiff and will vigorously defend
against this claim.  The Company has also made a counterclaim against
R.C.C. Ventures, LLC for breach of contract and is seeking monetary
damages.








ITEM 1A
– RISK FACTORS





There
have been no material changes in our risk factors from those disclosed in our
2008 Annual Report on Form 10-K, filed on March 30, 2009.








ITEM 2 - UNREGISTERED SALE OF EQUITY
SECURITIES





None.








ITEM 3 -
DEFAULTS UPON SENIOR SECURITIES





None.








ITEM 4:
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.








ITEM 5:
OTHER INFORMATION





None.





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ITEM
6: EXHIBITS





Exhibit
      Number
            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 Amended.31.2
            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 Amended.32.1*
            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 2002.32.2*
            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.*
            This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the
      Securities Exchange Act of 1934 or otherwise subject to the liabilities of
      that Section nor shall it be deemed incorporated by reference in any
      filings under the Securities Act of 1933 or the Securities and Exchange
      Act of 1934.








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:  November 16,
      2009
            
            By:
            /s/
      Renaat Van den HooffRenaat
      Van den HooffChief
      Executive Officer and President(Principal
      Executive Officer)Date:  November 16,
      2009
            
            By:
            /s/
      Terrance K. WallbergTerrance
      K. WallbergChief
      Financial Officer and Vice President(Principal
      Financial and Accounting Officer)









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