UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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





For the
quarterly period ended: March 31,
2008





OR





[_]
Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934.





For the
transition period from: ___ to ___.





Commission
File Number: 000-49670





ULURU
Inc.


(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 Drive


Addison,
Texas  75001


(Address
of Principal Executive Offices)





(214)
905-5145


Registrant's
Telephone Number, including Area Code





Indicate
by check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 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.  (Check
one):




Large
      accelerated filer o
            
            Accelerated
      filer þNon-accelerated
      filer o
            
            Smaller
      reporting company o





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





The
number of outstanding shares of our common stock on May 1, 2008 was
62,466,881.





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ULURU Inc.





INDEX
TO FORM 10-Q





For
the Three Months Ended MARCH 31, 2008











PagePART I
            FINANCIAL INFORMATIONItem 1.
            Financial Statements
            3Condensed Consolidated Balance Sheets as of March 31, 2008
      (unaudited) and December 31, 2007
            3Condensed Consolidated Statements of Operations
      (unaudited) for the three months ended March 31, 2008 and
      2007
            4Condensed Consolidated Statements of Cash Flows
      (unaudited) for the three months ended March 31, 2008 and
      2007
            5Notes to Condensed Consolidated Financial Statements
      (unaudited)
            6Item 2.
            Management's Discussion and Analysis of Financial
      Condition and Results of Operations
            14Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            18Item 4.
            Controls and Procedures
            19PART II
            OTHER INFORMATIONItem 1.
            Legal Proceedings
            19Item 1A.
            Risk Factors
            19Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            19Item 3.
            Defaults Upon Senior Securities
            19Item 4.
            Submission of Matters to a Vote of Security
      Holders
            20Item 5.
            Other Information
            20Item 6.
            Exhibits
            20Signatures
            21


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PART 1 – FINANCIAL INFORMATION





ITEM
1.  FINANCIAL STATEMENTS








ULURU Inc.


CONDENSED
CONSOLIDATED BALANCE SHEETS








March
      31, 2008
            
            
            December
      31, 2007(Unaudited)
            
            
            (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            13,171,228
            
            
            $
            13,979,828Accounts
      receivable
            
            
            875,163
            
            
            
            836,075Inventory
            
            
            228,912
            
            
            
            319,413Prepaid
      expenses and deferred charges
            
            
            275,145
            
            
            
            400,830Total
      Current Assets
            
            
            14,550,448
            
            
            
            15,536,146Property
      and Equipment, net
            
            
            1,883,995
            
            
            
            1,532,881Other
      AssetsPatents,
      net
            
            
            10,767,858
            
            
            
            11,033,477Deposits
            
            
            20,499
            
            
            
            20,499Total
      Other Assets
            
            
            10,788,357
            
            
            
            11,053,976TOTAL
      ASSETS
            
            $
            27,222,800
            
            
            $
            28,123,003LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
            
            $
            962,950
            
            
            $
            790,412Accrued
      liabilities
            
            
            345,748
            
            
            
            424,395Deferred
      revenue – current portion
            
            
            101,038
            
            
            
            55,147Royalty
      advance
            
            
            99,509
            
            
            
            120,035Total
      Current Liabilities
            
            
            1,509,245
            
            
            
            1,389,989Long
      Term LiabilitiesDeferred
      revenue, net – less current portion
            
            
            1,035,619
            
            
            
            495,281TOTAL
      LIABILITIES
            
            
            2,544,864
            
            
            
            1,885,270COMMITMENTS
      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;62,466,881
      and 62,416,881 shares issued and outstanding at March 31, 2008 and
      December 31, 2007, respectively
            
            
            62,467
            
            
            
            62,417Additional
      paid-in capital
            
            
            43,244,330
            
            
            
            42,989,518Accumulated  (deficit)
            
            
            (18,628,861
            )
            
            
            (16,814,202
            )TOTAL
      STOCKHOLDERS’ EQUITY
            
            
            24,677,936
            
            
            
            26,237,733TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            27,222,800
            
            
            $
            28,123,003The
      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 March 31,2008
            
            
            2007REVENUESLicense
      fees
            
            $
            13,771
            
            
            $
            138,050Royalty
      income
            
            
            75,574
            
            
            
            55,461Product
      sales
            
            
            166,473
            
            
            
            ---Other
            
            
            ---
            
            
            
            190,000Total
      Revenues
            
            
            255,818
            
            
            
            383,511COSTS
      AND EXPENSESCost
      of goods sold
            
            
            137,614
            
            
            
            ---Research
      and development
            
            
            875,216
            
            
            
            565,408General
      and administrative
            
            
            893,235
            
            
            
            595,239Amortization
            
            
            269,185
            
            
            
            265,543Depreciation
            
            
            20,272
            
            
            
            16,703Total
      Costs and Expenses
            
            
            2,195,522
            
            
            
            1,442,893OPERATING
      (LOSS)
            
            
            (1,939,704
            )
            
            
            (1,059,382
            )Other
      Income (Expense)Interest
      and miscellaneous income
            
            
            125,045
            
            
            
            213,805Interest
      expense
            
            
            ---
            
            
            
            (1,574
            )(LOSS)
      BEFORE INCOME TAXES
            
            
            (1,814,659
            )
            
            
            (847,151
            )Income
      taxes
            
            
            ---
            
            
            
            ---NET
      (LOSS)
            
            $
            (1,814,659
            )
            
            $
            (847,151
            )Basic
      and diluted net (loss) per common share
            
            $
            (0.03
            )
            
            $
            (0.01
            )WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
            
            
            62,429,586
            
            
            
            60,729,997The
      accompanying notes are an integral part of these consolidated financial
      statements.


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ULURU Inc.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





Three
      Months Ended March 31,2008
            
            
            2007OPERATING
      ACTIVITIES :Net
      (loss)
            
            $
            (1,814,659
            )
            
            $
            (847,151
            )Adjustments
      to reconcile net (loss) to net cash (used in) provided by operating
      activities:Amortization
            
            
            269,185
            
            
            
            265,543Depreciation
            
            
            20,272
            
            
            
            16,703Share-based
      compensation for stock and options issued to employees
            
            
            167,147
            
            
            
            26,238Share-based
      compensation for options issued to non-employees
            
            
            40,215
            
            
            
            76,350Change
      in operating assets and liabilities:Accounts
      receivable
            
            
            (39,088
            )
            
            
            331,840Inventory
            
            
            90,501
            
            
            
            (314,792
            )Prepaid
      expenses and deferred charges
            
            
            125,685
            
            
            
            101,208Accounts
      payable
            
            
            172,538
            
            
            
            301,337Accrued
      liabilities
            
            
            (78,647
            )
            
            
            (253,810
            )Deferred
      revenue
            
            
            586,229
            
            
            
            591,863Royalty
      advance
            
            
            (20,526
            )
            
            
            (21,118
            )Total
            
            
            1,333,511
            
            
            
            1,121,362Net
      Cash (Used in) Provided by Operating Activities
            
            
            (481,148
            )
            
            
            274,211INVESTING
      ACTIVITIES :Purchase
      of property and equipment
            
            
            (374,952
            )
            
            
            (239,737
            )Net
      Cash (Used in) Investing Activities
            
            
            (374,952
            )
            
            
            (239,737
            )FINANCING
      ACTIVITIES :Proceeds
      from stock option exercises
            
            
            47,500
            
            
            
            ---Net
      Cash Provided by Financing Activities
            
            
            47,500
            
            
            
            ---Net
      (Decrease) Increase in Cash
            
            
            (808,600
            )
            
            
            34,474Cash,  beginning
      of period
            
            
            13,979,828
            
            
            
            16,918,007Cash,  end
      of period
            
            $
            13,171,228
            
            
            $
            16,952,481Supplemental
      Schedule of Noncash Investing and Financing Activities :For
      the three months ended March 31, 2007, the issuance of 1,510,937 shares of
      common stock pursuant to cashless exercise of warrants to purchase
      1,514,400 shares of common stock
            
            
            
            
            
            $
            -0-OTHER
      SUPPLEMENTAL INFORMATIONCash
      paid for interest
            
            $
            ---
            
            
            $
            1,574The
      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 an emerging pharmaceutical company focused on
establishing a market leadership position in the development of wound
management, plastic surgery and oral care products utilizing innovative drug
delivery solutions to improve the clinical outcome of patients and provide a
pharmacoeconomic benefit to healthcare providers.





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 American (“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
March 31, 2008 and the results of its operations for the three months ended
March 31, 2008 and 2007 and cash flows for the three months ended March 31, 2008
and 2007 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 months ended March 31, 2008 are not necessarily indicative
of the results that may be expected for the year ending December 31,
2008.





These
condensed consolidated financial statements should be read in conjunction with
the financial statements and notes thereto contained in the Company’s Form
10-KSB filed with the Securities and Exchange Commission on March 28,
2008.





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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.






Basic and Diluted Net Loss
Per Share





In
accordance with SFAS No. 128, 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 March 31, 2008 and December 31, 2007:





March
      31, 2008
            
            
            December
      31, 2007Antidilutive
      warrants to purchase common stock
            
            
            5,861,667
            
            
            
            5,861,667Antidilutive
      options to purchase common stock
            
            
            3,515,000
            
            
            
            2,225,000Restricted
      vesting common stock
            
            
            126,872
            
            
            
            55,195Total
            
            
            9,503,539
            
            
            
            8,141,862








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NOTE
3.                      THE
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
 In
September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, Fair Value
Measurements (“SFAS No. 157”), which defines fair value, establishes
a framework for measuring fair value under GAAP, and expands disclosures about
fair value measurements. SFAS No. 157 will be effective for fiscal years
beginning after November 15, 2007, which is the Company’s fiscal year 2008.
The adoption did not have a material effect on our consolidated financial
statements.


In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an Amendment of FASB Statement No.
115. This statement permits entities to choose to measure many financial
instruments and certain other items at fair value. Most of the provisions of
SFAS No. 159 apply only to entities that elect the fair value option. However,
the amendment to SFAS No. 115 Accounting for Certain Investments
in Debt and Equity Securities applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity's first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157.  The adoption did not have a material
effect on our consolidated financial statements.





In
June 2007, the Emerging Issues Task Force (“EITF”) issued Issue
No. 07-3, Accounting for
Nonrefundable Advance Payments for Goods or Services To Be Used in Future
Research and Development Activities (“EITF 07-3”) which concluded that
nonrefundable advance payments for goods or services to be received in the
future for use in research and development activities should be deferred and
capitalized. The capitalized amounts should be expensed as the related goods are
delivered or services are performed. Such capitalized amounts should be charged
to expense if expectations change such that the goods will not be delivered or
services will not be performed. The provisions of EITF 07-3 are effective for
new contracts entered into during fiscal years beginning after December 15,
2007. The consensus on EITF 07-3 may not be applied to earlier periods and early
adoption is not permitted. The adoption did not have a material effect on our
consolidated financial statements.






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 and from two licensees for international activities.





Revenues
per geographic area for the three months ended March 31 are summarized as
follows:





Revenues
            
            2008
            
            
            %
            
            
            2007
            
            
            %Domestic
            
            $
            187,000
            
            
            
            73
            %
            
            $
            211,118
            
            
            
            55
            %International
            
            
            68,818
            
            
            
            27
            %
            
            
            172,393
            
            
            
            45
            %Total
            
            $
            255,818
            
            
            
            100
            %
            
            $
            383,511
            
            
            
            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 months ended March 31 are represented on the following table:





Customers
            
            Product
            
            2008
            
            
            2007Discus Dental, Inc.
            
            Aphthasol®
            
            
            73
            %
            
            
            5
            %ProStrakan, Ltd.
            
            Zindaclin®
            
            
            22
            %
            
            
            43
            %Wyeth Pharmaceuticals, Inc.
            
            Sponsored research
            
            
            ---
            
            
            
            47
            %Total
            
            
            
            
            95
            %
            
            
            95
            %





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NOTE
5.                      INVENTORY





As of
March 31, 2008, our inventory was comprised of raw materials, used in the
production of Aphthasol® and AltrazealTM, and work-in-progress costs for the
production of AltrazealTM.  Inventory consisted of the following at
March 31, 2008 and December 31, 2007:





Inventory
            
            March
      31, 2008
            
            
            December
      31, 2007Raw materials
            
            $
            103,672
            
            
            $
            137,311Work-in-progress
            
            
            125,240
            
            
            
            182,102Total
            
            $
            228,912
            
            
            $
            319,413






NOTE
6.                      PROPERTY
AND EQUIPMENT





Property
and equipment, net, consisted of the following at March 31, 2008 and December
31, 2007:





Property and equipment
            
            March
      31, 2008
            
            
            December
      31, 2007Laboratory equipment
            
            $
            414,623
            
            
            $
            412,683Manufacturing equipment
            
            
            1,440,072
            
            
            
            1,071,173Computers, office equipment, and furniture
            
            
            120,066
            
            
            
            115,953Computer software
            
            
            4,108
            
            
            
            4,108Leasehold improvements
            
            
            95,841
            
            
            
            95,8412,074,710
            
            
            
            1,699,758Less: accumulated depreciation and amortization
            
            
            (
      190,715
            )
            
            
            (
      166,877
            )Property and equipment, net
            
            $
            1,883,995
            
            
            $
            1,532,881





Depreciation
and amortization expense on property and equipment was $20,272 and $16,703 for
the three months ended March 31, 2008 and 2007, respectively.






NOTE
7.                      PATENTS





Patents,
net, consisted of the following at March 31, 2008 and December 31,
2007:





Patents
            
            March
      31, 2008
            
            
            December
      31, 2007Patents
            
            $
            13,354,938
            
            
            $
            13,354,938Less: accumulated amortization
            
            
            (
      2,587,080
            )
            
            
            (
      2,321,461
            )Patents, net
            
            $
            10,767,858
            
            
            $
            11,033,477





Amortization
expense on patents was $265,619 and $262,703 for the three months ended March
31, 2008 and 2007, respectively.  The future aggregate amortization
expense for patent assets, remaining as of March 31, 2008, is as
follows:





Calendar
      Years
            
            Future
      Amortization
              Expense2008 (Nine months)
            
            $
            802,6892009
            
            
            1,065,3902010
            
            
            1,065,3902011
            
            
            1,015,4362012
            
            
            723,4282013 & Beyond
            
            
            6,095,525Total
            
            $
            10,767,858





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NOTE
8.                      STOCKHOLDERS’
EQUITY





Common
Stock





The
Company had 62,466,881 shares of common stock issued and outstanding as of March
31, 2008.  The Company issued 50,000 shares of common stock during the
three months ended March 31, 2008 pursuant to the exercise of stock
options.





Warrants





The
following table summarizes the warrants outstanding and the number of shares of
common stock subject to exercise as of March 31, 2008 and the changes therein
during the three months then ended:





Number
      of Shares of Common Stock Subject to Exercise
            
            
            Weighted
      – Average
              Exercise
      PriceBalance
      as of December 31, 2007
            
            
            5,861,667
            
            
            $
            0.52Warrants
      issued
            
            
            ---
            
            
            
            ---Warrants
      exercised
            
            
            ---
            
            
            
            ---Warrants
      cancelled
            
            
            ---
            
            
            
            ---Balance
      as of March 31, 2008
            
            
            5,861,667
            
            
            $
            0.52






Of the
warrant shares subject to exercise as of March 31, 2008, expiration of the right
to exercise is as follows:




Date of expiration
            
            Number
      of Warrant Shares of Common Stock Subject to ExpirationOctober 12, 2010
            
            
            3,066,667August 30, 2011
            
            
            1,125,000December 6, 2011
            
            
            1,670,000Total
            
            
            5,861,667





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NOTE
9.                      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 follow
the fair value recognition provisions of SFAS 123R, Share-Based Payments ("SFAS
No. 123(R)"), which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees, consultants, and
directors based on estimated fair values.  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 three months ended March
31:





2008
            
            
            2007Incentive
      Stock OptionsExpected
      volatility  (1)
            
            
            67.1
            %
            
            
            ---Risk-free
      interest rate %  (2)
            
            
            2.70
            %
            
            
            ---Expected
      term (in years)
            
            
            5.0
            
            
            
            ---Dividend
      yield  (3)
            
            
            0.0
            %
            
            
            ---Forfeiture
      rate
            
            
            3.8
            %
            
            
            ---Nonstatutory
      Stock OptionsExpected
      volatility  (1)
            
            
            67.1
            %
            
            
            50.2
            %Risk-free
      interest rate %  (2)
            
            
            2.71
            %
            
            
            4.85
            %Expected
      term (in years)
            
            
            4.4
            
            
            
            1.0Dividend
      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.





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 months ended March 31:
 
 2008
              
              
              2007Incentive
      Stock OptionsQuantity
              
              
              1,255,000
              
              
              
              ---Weighted
      average fair value per share
              
              $
              1.30
              
              
              
              ---Fair
      value
              
              $
              1,631,404
              
              
              
              ---Nonstatutory
      Stock OptionsQuantity
              
              
              85,000
              
              
              
              75,000Weighted
      average fair value per share
              
              $
              1.25
              
              
              $
              0.87Fair
      value
              
              $
              106,649
              
              
              $
              65,235





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Stock Options (Incentive and
Nonstatutory)





The
following table summarizes share-based compensation related to stock options for
the three months ended March 31:





2008
            
            
            2007Research
      and development
            
            $
            32,129
            
            
            $
            26,410General
      and administrative
            
            
            160,606
            
            
            
            65,124Total share-based compensation expense
            
            $
            192,735
            
            
            $
            91,534





At March
31, 2008, 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 $3,023,703.  The period over which the
unearned share-based compensation is expected to be recognized is approximately
four years.





The
activity for stock options is summarized as follows:





Stock
      Options
            
            
            Weighted
      Average Exercise Price per ShareOutstanding
      as of December 31, 2007
            
            
            2,225,000
            
            
            $
            2.54Granted
            
            
            1,340,000
            
            
            
            2.44Forfeited/cancelled
            
            
            ---
            
            
            
            ---Exercised
            
            
            (50,000
            )
            
            
            0.95Outstanding
      as of March 31, 2008
            
            
            3,515,000
            
            
            $
            2.52





The
following table presents the stock option grants outstanding and exercisable as
of March 31, 2008:
 
 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 Share650,000
              
              
              $
              0.95
              
              
              
              8.7
              
              
              
              203,124
              
              
              $
              0.95650,000
              
              
              
              1.65
              
              
              
              8.7
              
              
              
              650,000
              
              
              
              1.651,340,000
              
              
              
              2.44
              
              
              
              6.9
              
              
              
              ---
              
              
              
              ---105,000
              
              
              
              4.00
              
              
              
              8.7
              
              
              
              85,624
              
              
              
              4.00690,000
              
              
              
              4.48
              
              
              
              9.5
              
              
              
              ---
              
              
              
              ---80,000
              
              
              
              4.95
              
              
              
              9.1
              
              
              
              ---
              
              
              
              ---3,515,000
              
              
              $
              2.52
              
              
              
              8.3
              
              
              
              938,748
              
              
              $
              1.71


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Restricted Stock
Awards





Restricted
stock awards, which typically vest over a period of 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 months ended March 31:





2008
            
            
            2007Research
      and development
            
            $
            3,658
            
            
            $
            3,166General
      and administrative
            
            
            10,969
            
            
            
            7,888Total share-based compensation expense
            
            $
            14,627
            
            
            $
            11,054





At March
31, 2008, 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 $317,015.





The
activity for restricted stock awards is summarized as follows:





Restricted
      stock
            
            
            Weighted
      Average Grant Date Fair ValueOutstanding
      as of December 31, 2007
            
            
            55,195
            
            
            $
            4.00Granted
            
            
            71,677
            
            
            
            2.50Forfeited/cancelled
            
            
            ---
            
            
            
            ---Exercised
            
            
            ---
            
            
            
            ---Outstanding
      as of March 31, 2008
            
            
            126,872
            
            
            $
            3.15








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, 2007, 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 March 31, 2008, we granted
options to purchase 3,570,000 shares of Common Stock, of which 3,515,000 were
outstanding at a weighted average exercise price of $2.52 per share and 126,872
shares of restricted stock.  There are 2,303,128 shares that remain
available for future grant under our Incentive Plan.








NOTE
10.                      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
11.                      SUBSEQUENT
EVENTS





None.


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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 2007 Annual
Report on Form 10-KSB, referred to as our 2007 Form 10-KSB, 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 for the foreseeable future.  Our actual results
could differ materially from those anticipated by such forward-looking
information due to competitive factors and other risks discussed in our 2007
Form 10-KSB under “Risks Associated with our Business”.





Business
Overview





ULURU
Inc. (hereinafter “we”, “our”, “us”, “ULURU”, or the “Company”) is a Nevada
corporation.  We are an emerging pharmaceutical company focused on
establishing a market leadership position in the development of wound
management, plastic surgery and oral care products utilizing innovative drug
delivery solutions to improve the clinical outcome of patients and provide a
pharmacoeconomic benefit to healthcare providers.  Utilizing our
technologies, three of our products have been approved for marketing in various
global markets.  In addition, numerous additional products are under
development utilizing our Mucoadhesive Film and Nanoparticle Aggregate
technologies with AltrazealTM, the first
product developed from our Nanoparticle Aggregate technology, scheduled for
launch in the United States in the second quarter 2008.








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 March 31, 2008 and 2007





Total
Revenues





Revenues
were $255,818 for the three months ended March 31, 2008, as compared to revenues
of $383,511 for the three months ended March 31, 2007, and were comprised of
licensing fees of $13,771 for an OraDiscTM B licensing agreement, domestic
royalties of $20,526 from the sale of Aphthasol® by our distributor, foreign
royalties of $55,048 from the sale of Zindaclin®, and Aphthasol® product sales
to our distributor of $166,473.





The first
quarter 2008 revenues represent an overall decrease of $127,693 versus the
comparative first quarter 2007 revenues, primarily due to decreases of $190,000
in sponsored research and $124,279 in Zindaclin® license fees, both of which
were non-recurring revenues.  These decreases were partially offset by
an increase of $21,000 in Zindaclin royalties and by Aphthasol® product sales of
$166,473 that occurred in 2008 with no product sales occurring in
2007.





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Costs and
Expenses





Cost
of Goods Sold





Cost of
goods sold for the three months ended March 31, 2008 was $137,614 and consisted
entirely of costs associated with the manufacture of Aphthasol® for our domestic
distributor.  We did not sell any finished goods in the first quarter
of 2007; therefore we had no direct cost of sales.





Research
and Development





Research
and development expenses totaled $875,216 for the three months ended March 31,
2008, including $35,787 in share-based compensation, compared to $565,408 for
the three months ended March 31, 2007, including $29,576 in share-based
compensation.  The increase of $309,808 in research and development
expenses was due primarily to increases in direct research costs of $116,000,
clinical testing expenses for our wound care technologies of $89,000, and
additional scientific personnel costs of approximately $90,000.  The
direct research and development expenses for the three months ended March 31,
2008 and 2007 were as follows:





Three
      Months Ended March 31,Technology
            
            2008
            
            
            2007Wound care & nanoparticle
            
            $
            238,316
            
            
            $
            99,867OraDiscTM
            
            
            99,349
            
            
            
            115,560Aphthasol® & other technologies
            
            
            18,294
            
            
            
            24,042Total
            
            $
            355,959
            
            
            $
            239,469






General
and Administrative





General
and administrative expenses totaled $893,235 for the three months ended March
31, 2008, including $171,575 in share-based compensation, compared to $595,239
for the three months ended March 31, 2007, including $73,012 in share-based
compensation.  The increase of $297,996 in general and administrative
expenses was due primarily to increased salary and benefit expenses of
approximately $279,000 to include the recognition of additional share-based
compensation of $122,000, an increase in executive personnel due to hiring of
our executive vice president of operations, and the associated employer
costs.  Other factors affecting the increase were costs of
approximately $95,000 for sales and marketing relating expenses, including:
compensation and benefits of $24,000, brand marketing expenses of $69,000, and
sales related expenses of $2,000.  Each of these factors was partially
offset by a decreased in legal expense of approximately $58,000 as last year’s
expense included fees associated with a registration statement and various other
non-recurring legal matters, and a decrease of approximately $34,000 in expenses
associated with accounting and auditing services.





Amortization





Amortization
expense totaled $269,185 for the three months ended March 31, 2008 as compared
to $265,543 for the three months ended March 31, 2007.  The expense
for each period consists primarily of amortization associated with our
patents.  There were no additional purchases of patents during the
three months ended March 31, 2008.





Depreciation





Depreciation
expense totaled $20,272 for the three months ended March 31, 2008 as compared to
$16,703 for the three months ended March 31, 2007.  The increase of
$3,569 is attributable to our purchase of additional equipment during
2008.





Interest
and Miscellaneous Income





Interest
and miscellaneous income totaled $125,045 for the three months ended March 31,
2008 as compared to $213,805 for the three months ended March 31,
2007.  The decrease of $88,760 is attributable to a decrease in
interest income due to lower cash balances and interest yields in
2008.




Interest
Expense
 
 There was
no interest expense for the three months ended March 31, 2008 as compared to the
expense of $1,574 for the three months ended March 31, 2007.  The
interest expense for the first quarter of 2007 consisted of financing costs for
our insurance policies.




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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 funding for
operations. Our principal source of liquidity is cash and cash
equivalents.  As of March 31, 2008 our cash and cash equivalents were
$13,171,228 which is a decrease of $808,600 as compared to our cash and cash
equivalents at December 31, 2007 of $13,979,828.  Our working capital
(current assets less current liabilities) was $13,041,203 at March 31, 2008 as
compared to our working capital at December 31, 2007 of
$14,146,157.





Consolidated
Cash Flow Data





Three
      Months Ended March 31,Net Cash Provided by (Used
    in)
            
            2008
            
            
            2007Operating activities
            
            $
            (481,148
            )
            
            $
            274,211Investing activities
            
            
            (374,952
            )
            
            
            (239,737
            )Financing activities
            
            
            47,500
            
            
            
            ---Net (Decrease) Increase in cash and cash equivalents
            
            $
            (808,600
            )
            
            $
            34,474






Operating
Activities





For the
three months ended March 31, 2008, net cash used in operating activities was
$481,148.  The principal components of net cash used for the three
months ended March 31, 2008 were our net loss of $1,814,659, an increase in
accounts receivable due to timing of Aphthasol sales to our domestic
distributor, a decrease in our royalty advance for Aphthasol® due to sales by
our distributor, and a decrease in accrued liabilities.  Our net loss
for the three months ended March 31, 2008 included substantial non-cash charges
in the form of share-based compensation, amortization of patents, and
depreciation.  These non-cash charges totaled $496,819.





The
aforementioned net cash used for the three months ended March 31, 2008 was
partially offset by an increase in deferred revenues associated with a $600,000
milestone payment due from our distributor for OraDiscTM B, an increase in
accounts payable due to timing, and decreases in prepaid expenses and
inventory.





For the
first quarter of 2007, net cash provided by operating activities was
$274,211.  The principal sources of net cash for the three months
ended March 31, 2007  was our receipt of a milestone of $600,000 for
the signing of a licensing agreement for OraDiscTMB, an increase in accounts
payable due to timing, and a decrease in accounts receivable.  These
net cash sources were partially offset by our net loss $847,151 which included
non-cash charges of $384,834 for share-based compensation, patent amortization,
and depreciation, an increase in inventory associated with Aphthasol®
manufacture, and a decrease in accrued liabilities.





Investing
Activities





Net cash
used in investing activities during the three months ended March 31, 2008 was
$374,952 for the purchase of manufacturing equipment for our AltrazealTM and
OraDiscTM products.  For the first quarter of 2007, we purchased
$239,737 for manufacturing equipment for the same two products.




Financing
Activities





Net cash
provided by financing activities during the three months ended March 31, 2008
was $47,500 from the exercise of stock options to purchase 50,000 shares of our
common stock.  For the first quarter of 2007, there were no financing
activities.





Liquidity





As
discussed above, we have cash and cash equivalents totaling $13,171,228 as of
March 31, 2008, which we believe is sufficient to fund our operations for the
foreseeable future.  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. We continue to search both domestically and
internationally for opportunities that will enable us to continue expanding our
business and explore alternative financing sources for these activities,
including the possibility of public and/or private offerings of debt and equity
securities. 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.






Off-Balance
Sheet Arrangements





As of
March 31, 2008, 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 passed these price increases along to our
customers.  However, there can be no assurance that possible future
inflation would not impact our operations.





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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-KSB for the year
ended December 31, 2007.  We had no significant changes in our
critical accounting policies since our last annual report.








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, 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, 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 2007 Annual Report on Form 10-KSB,
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.


- 17
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 Table of Contents







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
(FDIC).  At March 31, 2008 and December 31, 2007 our cash and cash
equivalents totaled $13,171,228 and $13,979,828,
respectively.  However, because deposits are maintained at high
quality 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 March
31, 2008 and at December 31, 2007.  As of March 31, 2008, four
customers exceeded the 5% threshold.  Two customers exceeded the 5%
threshold at December 31, 2007.  We believe that the customer accounts
are fully collectible as of March 31, 2008.






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.





- 18
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 Table of Contents





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 March 31, 2008 that have materially affected, or are reasonably
likely to material affect, our internal controls over financial
reporting.








PART II: OTHER INFORMATION








ITEM 1 -
LEGAL PROCEEDINGS





None.






ITEM 1A –
RISK FACTORS





There has
been no material changes in our risk factors from those disclosed in our 2007
Annual Report on Form 10-KSB filed on March 28, 2008.





ITEM 2
- UNREGISTERED SALE OF EQUITY SECURITIES




None.
   ITEM 3
- DEFAULTS UPON SENIOR SECURITIES





None.





- 19
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ITEM
4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.








ITEM 5:
OTHER INFORMATION





None.








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 Amended31.2
            Certification of Principal Accounting Officer of ULURU
      Inc. Pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities
      Exchange Act of 1934, as Amended32.1*
            Certification of Chief Executive Officer of ULURU Inc.
      pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 200232.2*
            Certification of Chief Financial Officer of ULURU Inc.
      pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002*
            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.





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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:  May 9,
      2008
            
            By:
            /s/ Kerry P. GrayKerry
      P. GrayChief
      Executive Officer and President(Principal
      Executive Officer)Date:  May
      9, 2008
            
            By:
            /s/ Terrance K. WallbergTerrance
      K. WallbergChief
      Financial Officer and Vice President(Principal
      Financial and Accounting Officer)









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