Table ofContents

** **

 

** **

**UNITED STATES**

**SECURITIESAND 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 March 31,  2009** |
|                                                    |       |                                                                                                   |
| **o**                                                   | ** ** | **TRANSITION REPORT UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**      |

 

**For thetransition period from          to          **

 

**CommissionFile Number 000-24541**

** **

**CORGENIXMEDICAL CORPORATION**

(Name of Small Business Issuer in its Charter)

 

| **Nevada**                      | ** ** | **93-1223466**                       |
|---------------------------------|------------|--------------------------------------|
| (State or other jurisdiction of |       | (I.R.S. Employer Identification No.) |
| incorporation or organization)  |       |                                 |

 

**11575 Main Street, Number 400, Broomfield, CO 80020**

(Address of principal executive offices, including zip code)

 

**(303) 457-4345**

(Issuer’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed sincelast report)

 

Check whether the issuer:  (1) filedall reports required to be filed by Section 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.    Yes x   No  o

 

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and postsuch files). Yes o  No o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated 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 x |
| (Do not check if a smaller reporting company) |   |                        |

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2of the Act) Yes o No x

 

The number of shares of Common Stock outstanding was 30,294,505 as of May 5,2009.

 

 

 

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Tableof Contents

 

**CORGENIX MEDICAL CORPORATION**

**March 31, 2009**

 

**TABLE OF CONTENTS**

 
| **Part I**            |                                                                                        | 3          |
|----------------------------|---------------------------------------------------------------------------------------------|------------|
|                       |                                                                                        |       |
| **Financial  Information** | 3                                                                                           |
|                       |                                                                                        |       |
| Item 1.                    | Consolidated  Financial Statements                                                          | 3          |
|                       |                                                                                        |       |
| Item 2.                    | Management’s Discussion and Analysis Of Financial  Condition and Results of Operations | 18         |
|                       |                                                                                        |       |
| Item 3.                    | Quantitative and Qualitative Disclosures  About Market Risk                                 | 24         |
|                       |                                                                                        |       |
| Item 4.                    | Controls and Procedures                                                                     | 24         |
|                       |                                                                                        |       |
| **Part II**           | ** **                                                                                  | ** ** |
|                       |                                                                                        |       |
| **Other  Information**     | 24                                                                                          |
|                       |                                                                                        |       |
| Item 1.                    | Legal Proceedings                                                                           | 24         |
|                       |                                                                                        |       |
| Item 2.                    | Unregistered Sales of Equity Securities  and Use of Proceeds                                | 24         |
|                       |                                                                                        |       |
| Item 3.                    | Defaults Upon Senior Securities                                                             | 24         |
|                       |                                                                                        |       |
| Item 4.                    | Submission of Matters to a Vote of  Security Holders                                        | 24         |
|                       |                                                                                        |       |
| Item 5.                    | Other Information                                                                           | 25         |
|                       |                                                                                        |       |
| Item 6.                    | Exhibits and Reports on Form 8-K                                                       | 25         |
|                       |                                                                                        |       |
| Certifications             | 27                                                                                          |

 

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**PART I**

#### **Item 1.Consolidated Financial Statements**

# **CORGENIX MEDICAL CORPORATION**

### **ANDSUBSIDIARIES**

###  

Consolidated Balance Sheets

 
| ** **                                                                                                                                                                                                   | ** ** | **March 31,  2009** | ** ** | **June 30, 2008** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                                                                                   | ** ** | **(Unaudited)**          | ** ** | ** **                  | ** ** |
| **Assets**                                                                                                                                                                                                   | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Current assets:                                                                                                                                                                                              |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                                                                                    |       | $                        | 664,952    |                        | $          | 1,520,099 |   |
| Accounts receivable, less allowance for doubtful accounts of $103,689  as of March 31, 2009 and June 30, 2008                                                                                      |       | 1,054,903                |       | 1,009,313                   |       |
| Inventories                                                                                                                                                                                                  |       | 2,677,148                |       | 2,430,205                   |       |
| Prepaid expenses and other current assets                                                                                                                                                                    |       | 131,609                  |       | 138,585                     |       |
| Total current assets                                                                                                                                                                                         |       | 4,528,612                |       | 5,098,202                   |       |
| Equipment                                                                                                                                                                                                    |       |                     |       |                        |       |
| Capitalized software costs                                                                                                                                                                                   |       | 255,617                  |       | 255,617                     |       |
| Machinery and laboratory equipment                                                                                                                                                                           |       | 996,220                  |       | 980,680                     |       |
| Furniture, fixtures, leaseholds & office equipment                                                                                                                                                  |       | 1,769,480                |       | 1,744,638                   |       |
|                                                                                                                                                                                                         |       | 3,021,317                |       | 2,980,935                   |       |
| Accumulated depreciation and amortization                                                                                                                                                                    |       | (1,495,877               | )          | (1,195,128                  | )          |
| Net equipment                                                                                                                                                                                                |       | 1,525,440                |       | 1,785,807                   |       |
| Intangible assets:                                                                                                                                                                                           |       |                     |       |                        |       |
| Licenses                                                                                                                                                                                                     |       | 369,728                  |       | 388,011                     |       |
| Other assets:                                                                                                                                                                                                |       |                     |       |                        |       |
| Deferred financing costs net of amortization of $1,639,054 and  $1,181,136                                                                                                                                   |       | 313,055                  |       | 435,492                     |       |
| Due from officer                                                                                                                                                                                             |       | 12,000                   |       | 12,000                      |       |
| Other assets                                                                                                                                                                                                 |       | 125,890                  |       | 168,902                     |       |
| Total assets                                                                                                                                                                                                 |       | $                        | 6,874,725  |                        | $          | 7,888,414 |   |
| **Liabilities and Stockholders’  Equity**                                                                                                                                                               | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Current liabilities:                                                                                                                                                                                         |       |                     |       |                        |       |
| Current portion of notes payable, net of discount                                                                                                                                                            |       | $                        | 117,474    |                        | $          | 521,495 |   |
| Current portion of capital lease obligations                                                                                                                                                                 |       | 224,635                  |       | 244,035                     |       |
| Due to factor (note 9)                                                                                                                                                                                       |       | 809,920                  |       | —                      |       |
| Accounts payable                                                                                                                                                                                             |       | 601,873                  |       | 840,474                     |       |
| Accrued payroll and related liabilities                                                                                                                                                                      |       | 385,747                  |       | 293,065                     |       |
| Accrued interest                                                                                                                                                                                             |       | 7,392                    |       | 15,246                      |       |
| Deferred revenue                                                                                                                                                                                             |       | —                   |       | 735                         |       |
| Accrued liabilities                                                                                                                                                                                          |       | 231,835                  |       | 294,643                     |       |
| Total current liabilities                                                                                                                                                                                    |       | 2,378,876                |       | 2,209,693                   |       |
| Notes payable, net of discount, less current portion                                                                                                                                                         |       | 26,200                   |       | 213,121                     |       |
| Capital lease obligations, less current portion                                                                                                                                                              |       | 97,119                   |       | 226,917                     |       |
| Deferred Facility Lease Payable, excluding current portion                                                                                                                                                   |       | 717,955                  |       | 836,099                     |       |
| Total liabilities                                                                                                                                                                                            |       | 3,220,150                |       | 3,485,830                   |       |
| Redeemable common stock, $0.001 par value 440,141and 500,006 shares  issued and outstanding, aggregate redemption value of $266,000, and $284,003  net of unaccreted discount and issue costs of $0 (note 5) |       | 125,000                  |       | 250,000                     |       |
|                                                                                                                                                                                                         |       |                     |       |                        |       |
| Redeemable preferred stock, $0.001 par value shares issued and  outstanding, aggregate redemption value of $59,170, net of unaccreted  discount of $33,609 (note 6)                                          |       | 43,063                   |       | —                      |       |
|                                                                                                                                                                                                         |       |                     |       |                        |       |
| Stockholders’ equity:                                                                                                                                                                                   |       |                     |       |                        |       |
| Common stock, $0.001 par value. Authorized 200,000,000 shares; Issued  and outstanding 30,290,919 and 30,021,935 March 31 and June 30,  respectively                                               |       | 29,850                   |       | 29,521                      |       |
| Additional paid-in capital                                                                                                                                                                                   |       | 18,499,885               |       | 18,049,673                  |       |
| Accumulated deficit                                                                                                                                                                                          |       | (14,984,576              | )          | (13,920,235                 | )          |
| Accumulated other comprehensive income                                                                                                                                                                       |       | (58,647                  | )          | (6,375                      | )          |
| Total stockholders’ equity                                                                                                                                                                              |       | 3,486,512                |       | 4,152,584                   |       |
| Total liabilities and stockholders’ equity                                                                                                                                                              |       | $                        | 6,874,725  |                        | $          | 7,888,414 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

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**CORGENIX MEDICALCORPORATIONAND SUBSIDIARIES**

## Consolidated Statements ofOperations and Comprehensive Loss

 
| ** **                                                      | ** ** | **Three Months Ended** | ** ** | **Nine months Ended** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                      | ** ** | **March 31,  2009**         | ** ** | **March 31,  2008**        | ** ** | **March 31,****2009** | ** ** | **March 31,  2008** | ** ** |
| ** **                                                      | ** ** | **(Unaudited)**                  | ** ** | **(Unaudited)**                 | ** ** |
| Net sales                                                       |       | $                                | 2,032,024  |                            | $          | 1,950,829 |   | $ | 6,028,946 |   | $ | 6,455,055 |   |
| Cost of sales                                                   |       | 888,357                          |       | 811,239                         |       | 2,624,590 |   | 2,828,213 |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Gross profit                                                    |       | 1,143,667                        |       | 1,139,590                       |       | 3,404,356 |   | 3,626,842 |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Operating expenses:                                             |       |                             |       |                            |       |   |   |   |   |
| Selling and marketing                                           |       | 468,251                          |       | 500,235                         |       | 1,404,555 |   | 1,524,014 |   |
| Research and development                                        |       | 172,513                          |       | 165,932                         |       | 572,210 |   | 478,197 |   |
| General and administrative                                      |       | 563,963                          |       | 536,335                         |       | 1,639,007 |   | 1,461,296 |   |
| Total expenses                                                  |       | 1,204,727                        |       | 1,202,502                       |       | 3,615,772 |   | 3,463,507 |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Operating income (loss)                                         |       | (61,060                          | )          | (62,912                         | )          | (211,416 | ) | 163,335 |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Other income (expense)                                          |       |                             |       |                            |       |   |   |   |   |
| Other income, net                                               |       | 80,933                           |       | 12,230                          |       | 90,953 |   | 23,918 |   |
| Interest expense                                                |       | (474,247                         | )          | (301,420                        | )          | (942,944 | ) | (1,287,794 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Net loss                                                        |       | (454,374                         | )          | (352,102                        | )          | (1,063,407 | ) | (1,100,541 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Accreted dividends on convertible preferred stock               |       | 934                              |       | —                          |       | 934 |   | — |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Net loss attributable to common stockholders                    |       | $                                | (455,308   | )                               | $          | (352,102 | ) | $ | (1,064,341 | ) | $ | (1,100,541 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Net loss per share, basic and diluted                           |       | $                                | (0.02      | )                               | $          | (0.01 | ) | $ | (0.04 | ) | $ | (0.05 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Weighted average shares outstanding, basic and diluted (note 2) |       | 30,286,922                       |       | 26,462,150                      |       | 30,219,233 |   | 23,601,550 |   |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Net loss                                                        |       | $                                | (454,374   | )                               | $          | (352,102 | ) | $ | (1,063,407 | ) | $ | (1,100,541 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Other comprehensive income (loss)-foreign currency translation  |       | (4,039                           | )          | 30,645                          |       | (52,272 | ) | (24,064 | ) |
|                                                            |       |                             |       |                            |       |   |   |   |   |
| Total comprehensive loss                                        |       | $                                | (458,413   | )                               | $          | (321,457 | ) | $ | (1,115,679 | ) | $ | (1,124,605 | ) |

 

Seeaccompanying notes to consolidated financial statements.

 

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**CORGENIX MEDICAL CORPORATION****AND SUBSIDIARIES**

# Consolidated Statement ofStockholders’ Equity

For the nine months ended March 31, 2009

(Unaudited)

 
| ** **                                                         | ** ** | **Common  Stock,  Number of  Shares** | ** ** | **Common  Stock,  $0.001  par** | ** ** | **Additional  Paid-in  Capital** | ** ** | **Accumulated  Deficit** | ** ** | **Accumulated  other  comprehensive  income (loss)** | ** **  | **Total  stockholders’  equity** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------|------------|---------------------------------|------------|----------------------------------|------------|--------------------------|------------|-----------------------------------------------------------|-------------|---------------------------------------|------------|
| Balance at  June 30, 2008                                     |       | 30,021,935                                 |       | $                               | 29,521     |                             | $          | 18,049,673               |       | $                                                         | (13,920,235 | )                                     | $          | (6,375 | ) | $ | 4,152,584 |   |
|                                                               |       |                                       |       |                            |       |                             |       |                     |       |                                                      |        |                                  |       |
| Issuance of  common stock for services                             |       | 258,725                                    |       | 259                             |       | 56,080                           |       | —                   |       | —                                                    |        | 56,339                                |       |
| Warrant  extensions as a result of note modification               |       | —                                     |       | —                          |       | 279,527                          |       | —                   |       | —                                                    |        | 279,527                               |       |
| Compensation  expense recorded as a result of stock options issued |       | —                                     |       | —                          |       | 81,382                           |       | —                   |       | —                                                    |        | 81,382                                |       |
| Issuance of  common stock for license                              |       | 70,124                                     |       | 70                              |       | 20,266                           |       | —                   |       | —                                                    |        | 20,336                                |       |
| Issuance of  warrants for license                                  |       | —                                     |       | —                          |       | 12,957                           |       | —                   |       | —                                                    |        | 12,957                                |       |
| Cancellation of  redeemable stock upon note pay down               |       | (59,865                                    | )          | —                          |       | —                           |       | —                   |       | —                                                    |        | —                                |       |
| Accreted dividend  on redeemable preferred stock                   |       | —                                     |       | —                          |       | —                           |       | (934                     | )          | —                                                    |        | (934                                  | )          |
| Foreign currency  translation                                      |       | —                                     |       | —                          |       | —                           |       | —                   |       | (52,272                                                   | )           | (52,272                               | )          |
| Net loss                                                           |       | —                                     |       | —                          |       | —                           |       | (1,063,407               | )          | —                                                    |        | (1,063,407                            | )          |
|                                                               |       |                                       |       |                            |       |                             |       |                     |       |                                                      |        |                                  |       |
| Balance at  March 31, 2009                                    |       | 30,290,919                                 |       | $                               | 29,850     |                             | $          | 18,499,885               |       | $                                                         | (14,984,576 | )                                     | $          | (58,647 | ) | $ | 3,486,512 |   |

 

See accompanyingnotes to consolidated financial statements.       

 

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**CORGENIXMEDICAL CORPORATIONAND SUBSIDIARIES**

 

## **Consolidated Statements of Cash Flows**

 
| ** **                                                                                            | ** ** | **Nine months Ended** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                            | ** ** | **March 31,  2009**        | ** ** | **March 31,  2008** | ** ** |
| ** **                                                                                            | ** ** | **(Unaudited)**                 | ** ** | **(Unaudited)** | ** ** |
| Cash flows from operating activities:                                                                 |       |                            |       |   |   |
| Net loss                                                                                              |       | $                               | (1,063,407 | ) | $ | (1,100,541 | ) |
| Adjustments to reconcile net loss to net cash provided (used) in  operating activities:               |       |                            |       |   |   |
| Depreciation and amortization                                                                         |       | 333,989                         |       | 303,698 |   |
| Accretion of discount on note payable                                                                 |       | 322,273                         |       | 800,291 |   |
| Common stock issued for services                                                                      |       | 56,339                          |       | 16,224 |   |
| Accrued stock-based compensation                                                                      |       | 105,037                         |       | — |   |
| Common stock issued for interest                                                                      |       | —                          |       | 142,458 |   |
| Compensation expense recorded for stock options issued                                                |       | 81,382                          |       | 145,028 |   |
| Amortization of deferred financing costs                                                              |       | 457,918                         |       | 230,555 |   |
| Changes in operating assets and liabilities:                                                          |       |                            |       |   |   |
| Accounts receivable, net                                                                              |       | (203,081                        | )          | 3,237 |   |
| Inventories                                                                                           |       | (277,377                        | )          | (189,640 | ) |
| Prepaid expenses and other assets, net                                                                |       | 53,928                          |       | 110,533 |   |
| Accounts payable                                                                                      |       | (55,288                         | )          | (98,509 | ) |
| Accrued payroll and related liabilities                                                               |       | 1,797                           |       | 15,050 |   |
| Accrued interest and other liabilities                                                                |       | (195,858                        | )          | (553,006 | ) |
|                                                                                                  |       |                            |       |   |   |
| Net cash used in operating activities                                                                 |       | (382,348                        | )          | (174,622 | ) |
|                                                                                                  |       |                            |       |   |   |
| Cash flows used in investing activities:                                                              |       |                            |       |   |   |
| Additions to equipment                                                                                |       | (37,544                         | )          | (41,786 | ) |
|                                                                                                  |       |                            |       |   |   |
| Cash flows from financing activities:                                                                 |       |                            |       |   |   |
| Increase in amount due to factor                                                                      |       | 809,920                         |       | — |   |
| Proceeds from issuance of common stock, net of financing costs                                        |       | —                          |       | 768,664 |   |
| Payments on notes payable                                                                             |       | (1,038,215                      | )          | (62,000 | ) |
| Payments on capital lease obligations                                                                 |       | (187,717                        | )          | (162,078 | ) |
| Net cash provided by (used in) financing activities                                                   |       | (416,012                        | )          | 544,586 |   |
|                                                                                                  |       |                            |       |   |   |
| Net increase (decrease) in cash and cash equivalents                                                  |       | (835,904                        | )          | 328,178 |   |
| Impact of exchange rate changes on cash                                                               |       | (19,243                         | )          | (170 | ) |
| Cash and cash equivalents at beginning of period                                                      |       | 1,520,099                       |       | 1,324,072 |   |
| Cash and cash equivalents at end of period                                                            |       | $                               | 664,952    |   | $ | 1,652,080 |   |
| Supplemental cash flow disclosures:                                                                   |       |                            |       |   |   |
| Cash paid for interest                                                                                |       | $                               | 151,993    |   | $ | 119,978 |   |
| Noncash investing and financing activities                                                            |       |                            |       |   |   |
| Issuance of warrants for license                                                                      |       | $                               | 12,957     |   | $ | 16,800 |   |
| Equipment acquired through capital lease                                                              |       | $                               | 43,538     |   | $ | — |   |
| Issuance of common stock for license                                                                  |       | $                               | 20,336     |   | $ | — |   |
| Issuance of stock for debt                                                                            |       | $                               | —     |   | $ | 906,899 |   |
| Conversion of preferred stock into common stock                                                       |       | $                               | —     |   | $ | 1,327,800 |   |
| Addition of discount on convertible notes due to contingent  conversion feature                       |       | $                               | —     |   | $ | 536,874 |   |
| Conversion of redeemable common stock to note payable                                                 |       | $                               | 125,000    |   | $ | — |   |
| Issuance of redeemable convertible preferred stock as additional  consideration for note modification |       | $                               | 42,129     |   | $ | — |   |
| Warrant extensions as a result of note modification                                                   |       | $                               | 279,527    |   | $ | — |   |
| Accreted dividends on redeemable preferred stock                                                      |       | $                               | 934        |   | $ | — |   |

 

Seeaccompanying notes to consolidated financial statements.

 

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**CORGENIX MEDICAL CORPORATION AND SUBSIDIARIES**

 

NOTES TOCONSOLIDATED FINANCIAL STATEMENTS

 

**1.****           ****DESCRIPTION OFBUSINESS AND BASIS OF PRESENTATION**

 

##### *Outlook*

#####  

In fiscal2009, we are focused on accelerating the market launch of our AspirinWorksassay, beginning the market launch of our Anti-AtherOx Test Kit, submission ofa 510(k) Premarket Notification to the FDA for the Company’s Atherox TestKit, completing further clinical studies for our Hyaluronic Test Kit and ourFibromyalgia Test Kit and continuing the development and strategiccollaboration towards the development of a group of products to detectpotential bio-terrorism agents.

 

##### *Company Overview*

#####  

Corgenix Medical Corporation, which we referto as Corgenix or the Company, is engaged in the research, development,manufacture, and marketing of in vitro (outside the body) diagnostic productsfor use in disease detection and prevention. We currently sell 52 diagnostic productson a worldwide basis to hospitals, clinical testing laboratories, universities,biotechnology and pharmaceutical companies and research institutions.  In the United States and the United Kingdom,we sell directly to these customers. Elsewhere in the world, we primarily sell to independent distributorsthat in turn sell to the laboratories.

 

Our corporate headquarters is located in Broomfield,Colorado. We have two wholly owned operating subsidiaries:

 

·      Corgenix, Inc. (formerly REAADS Medical Products, Inc.),established in 1990 and located in Broomfield, Colorado. Corgenix, Inc. isresponsible for sales and marketing activities for North America, and alsoexecutes product development, product support, clinical and regulatory affairs,and product manufacturing.

 

·      Corgenix (UK) Ltd, incorporated in the United Kingdomin 1996 (formerly REAADS Bio-Medical Products (UK) Limited) and located inPeterborough, England. Corgenix UK manages our international distributorrelationships except for distribution in North America, which is theresponsibility of Corgenix, Inc.

 

We continue to usethe REAADS trademark and trade name in the sale of products that wemanufacture.

 

*Inventory*

 

Inventories are recorded at the lower of average cost or market, usingthe first-in, first-out method. A provision is recorded to reduce excess andobsolete inventories to their estimated net realizable value, when necessary.No such provision was recorded for the nine months and one year ended March 31,2009 and June 30, 2008, respectively. Components of inventories are asfollows:

 
| ** **      | ** ** | **3-31-2009** | ** ** | **6-30-2008** | ** ** |
|-----------------|------------|---------------|------------|---------------|------------|
| Raw materials   |       | $             | 587,410    |          | $          | 588,288 |   |
| Work-in-process |       | 692,725       |       | 911,590       |       |
| Finished goods  |       | 1,397,013     |       | 930,327       |       |
|            |       | $             | 2,677,148  |          | $          | 2,430,205 |   |

 

***Recent Developments***

 

On February 3,2009, the Company entered into two agreements (the “Agreements”) to restructurethe debt evidenced by convertible term notes that Truk Opportunity Fund, LLC, aDelaware company; Truk International Fund, LP, a Cayman Islands company(collectively, “Truk”); and CAMOFI Master LDC, a Cayman Islands company,formerly named DCOFI Master LDC, (“CAMOFI”) purchased on May 19, 2005 and December 28,2005. The Agreements suspended all amortizing principal amount paymentsotherwise due under each note, beginning November 1, 2008 and ending onthe earlier 

 

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of (i) the first day of the month next succeeding the closing ofany new financing transaction or (ii) May 1, 2009 (the “RepaymentDate”), at which time payments would again have become due and payable on thefirst day of each subsequent month until December 31, 2009 (the “MaturityDate”).  Payments would be equal to theamount of principal outstanding divided by the number of months from theRepayment Date until the Maturity Date. On the Maturity Date, the amortizing principal amount for each of theterm notes and all other amounts due and owing must be repaid in full, whether by payment of cash, or at Truk’s orCAMOFI’s option, by the conversion into common stock.

 

Under theAgreements, Truk and CAMOFI agreed that their security interest in the Company’saccounts receivable and inventory would only be subordinated to that of thelenders in any new financing, but that their security interest in all otherassets of the Company will remain a perfected first security interest. Thisprovision was effective upon completion of the Financing Agreement withBenefactor, summarized below. In addition, upon the closing of the FinancingAgreement with Benefactor, the remaining principal balance of each outstandingterm note held by Truk was increased by five percent (5%), and is being accountedfor as additional interest expense.

 

Simultaneouslywith the execution of the Agreements:

 

(1) the Company paid $22,466 to Truk and CAMOFI for accrued andunpaid interest from November 1, 2008 to February 3, 2009 withrespect to term notes held by each;

 

(2) the Company extended the expiry dates of common stock purchasewarrants held by the note-holders (warrants dated May 19, 2005 wereextended to expire May 19, 2017 rather than May 19, 2012 and commonstock purchase warrants dated December 28, 2005 were extended to expire December 28,2015 rather than December 28, 2010);

 

(3) the Company issued to CAMOFI 200,000 shares of the Company’s Series BConvertible Preferred Stock (“Series B”), with a liquidation preference of$50,000, which will be convertible into 800,000 shares of the Company’s commonstock at the rate of $0.25; and

 

(4) the Company issued to Truk 36,680 shares of the Company’s Series BConvertible Preferred Stock, with a liquidation preference of $9,170, whichwill be convertible into 146,720 shares of the Company’s common stock at therate of $0.25. The calculated cost of items (2) through (4) above,were charged to deferred finance costs and are being amortized over nine monthsthrough December 2009.

 

On March 18, 2009, we entered into a financing agreementcollateralized by all of the assets of the Company (the “Financing Agreement”)with Benefactor Funding Corp., a Colorado corporation (“Benefactor”).  We used the initial proceeds of  $800,374 to retire the debt evidenced byconvertible term notes that CAMOFI (referenced above) purchased on May 19,2005 and December 28, 2005.  We alsoused  the proceeds to retire fiftypercent of the debt evidenced by the convertible term notes that Truk purchased on December 28, 2005,leaving the notes purchased by Truk on May 19, 2005 outstanding. As aresult, the proceeds from the Financing Agreement were used to retire 92.3% ofthe then currently outstanding convertible debt. Our wholly owned subsidiary,Corgenix, Inc. has also entered into a financing agreement withBenefactor  on substantially similarterms as the Agreement.  The Company andCorgenix Inc. guaranty each other’s obligations to Benefactor.

 

Under the Financing Agreement, the Company agreed to sell all of theCompany’s right, title and interest in and to specified accounts and allmerchandise represented by those accounts.

 

Under the Financing Agreement, which also included a $250,000 advancecollateralized by the Company’s inventories, the purchase price for each soldaccount is equal to (i) 85% of the face amount of the account (that figureis 95% for the first 60 days of the Agreement’s term) less certain fees andcommissions set forth in the Agreement. The commission rate is 1.4% of the faceamount of the underlying account (the “Commission”).  The Company will pay Benefactor no “fee” forthe first thirty days of an account’s term, and then will pay .05% of theaccount’s face amount for each day thereafter (the “Benefactor Fee”). We haveagreed to sell at least $300,000 in face amount of accounts receivable for eachmonth that the Financing Agreement is in effect.  If the minimum is not met, the Company mustpay, for each such month, 1.4% times $300,000 less the actual amount ofreceivables sold.

 

Pursuant to the Financing Agreement, certain recourse events and eventsof default will trigger early payment obligations of the Company, andBenefactor has certain rights as a secured party in case of any default orrecourse event.  

 

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One feature that secures the Company’s obligations is the “ReserveAccount.”  The operation of the ReserveAccount is outlined in the Financing Agreement.

 

Under the Financing Agreement, we make certain covenants,representations and warranties typical of a secured financing arrangement, andhave agreed to report certain information to Benefactor.

 

The FinancingAgreement will continue in full force and effect for a period of 12 months;however the Company may terminate the Financing Agreement early at any time bygiving Benefactor not less than sixty days prior written notice, and Benefactormay terminate the Financing Agreement early at any time without notice shouldany event of default or recourse event occur.

 

Certain information and note disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America (GAAP)have been omitted from these unaudited consolidated financial statements. Theseunaudited consolidated financial statements should be read in conjunction withthe financial statements and notes thereto included in the Company’s AnnualReport on Form 10-KSB for the fiscal year ended June 30, 2008.  The results of operations for the threemonths and nine months ended March 31, 2009 and 2008 are not necessarilyindicative of the operating results for the full year.

 

In the opinion of management, alladjustments, consisting only of normal recurring accruals, have been made topresent fairly the Company’s financial position at March 31, 2009 and theresults of operations and its cash flows for the three months and nine monthsended March 31, 2009 and 2008.

 

***Our Business***

 

**Introduction**

 

Our business includes the research, development,manufacture, and marketing of in vitro diagnostic products for use in diseasedetection and prevention.  We currentlysell 52 diagnostic products on a worldwide basis to hospitals, clinical testinglaboratories, universities, biotechnology and pharmaceutical companies andresearch institutions.  We have developedand we manufacture most of our products at our Colorado facility, and wepurchase what we refer to as OM Products from other healthcare manufacturersfor resale by us.  All of these productsare used in clinical laboratories for the diagnosis and/or monitoring of threeimportant areas of health care:

 

·      Autoimmunedisease (diseases in which an individual creates antibodies to one’s self, forexample systemic lupus erythematosus (“SLE”) and rheumatoid arthritis (“RA”);

 

·      Vasculardisease (diseases associated with certain types of thrombosis or clotformation, for example antiphospholipid syndrome, deep vein thrombosis, strokeand coronary occlusion); and

 

·      Liver diseases (fibrosis andcirrhosis).

 

In addition to our current products, we are actively developing newlaboratory tests in other important diagnostic testing areas.  See “— Other Strategic Relationships.”  We manufacture and market to clinicallaboratories and other testing sites worldwide. Our customers include large and emerging health care companies such asdiaDexus, Inc., Bio Rad Laboratories, Inc., InstrumentationLaboratories, Helena Laboratories and Diagnostic Grifols, S.A.

 

Most of our products are based on our patented and proprietaryapplication of Enzyme Linked ImmunoSorbent Assay, or ELISA, technology, aclinical testing methodology commonly used worldwide.  Most of our current products are based onthis platform technology in a delivery format convenient for clinical testinglaboratories.  The delivery format, whichis referred to as “Microplate,” allows the testing of up to 96 samples perplate, and is one of the most commonly used formats, employing conventionaltesting equipment found in virtually all clinical laboratories.  The availability and broad acceptance ofELISA Microplate products reduces entry barriers worldwide for our new productsthat employ this technology and delivery format.  Our products are sold as “test kits” thatinclude all of the materials required to perform the test, except for routinelaboratory chemicals and instrumentation. A test using ELISA technology involves a series of reagent additionsinto the Microplate, triggering a complex immunological reaction in which aresulting color occurs.  The amount ofcolor 

 

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developed in the final step of the test is directly proportional to theamount of the specific marker being tested for in the patient or unknownsample.  The amount of color is measuredand the results calculated using routine laboratory instrumentation.  Our technology specifies a process by whichbiological materials are attached to the fixed surface of a diagnostic testplatform.  Products developed using thisunique attachment method typically demonstrate a more uniform and stablemolecular configuration, providing a longer average shelf life, increasedaccuracy and superior specificity than the products of our competitors.

 

Some of the OM products which we obtain from other manufacturers andsell through our distribution network utilize technologies other than ourpatented and proprietary ELISA technology.

 

Our diagnostic tests are intended to aid in the identification of thecauses of illness and disease, enabling a physician to select appropriatepatient therapy.

 

Internally and through collaborative arrangements, we are developingadditional products that are intended to broaden the range of applications forour existing products and to result in the introduction of new products.

 

Since 1990, our sales force and distribution partners have sold over 12million tests worldwide under the REAADS and Corgenix labels, as well asproducts sold under other manufacturers’ labels, referred to as OEMproducts.  An integral part of ourstrategy is to work with corporate partners to develop market opportunities andaccess important resources.  We believethat our relationships with current and potential partners will enable us toenhance our menu of diagnostic products and accelerate our ability to penetratethe worldwide markets for new products.

 

We currently use the REAADS and Corgenix trademarks and trade names inthe sale of the products which we manufacture. These products constitute the majority of our product sales.

 

**2.****           ****EARNINGS (LOSS)PER SHARE**

 

Basic earnings (loss)per share is computed by dividing net loss attributable to common stockholdersby the weighted average number of common shares outstanding.  Diluted earnings (loss) per share is computedby dividing net loss attributable to common stockholders by the weightedaverage number of common shares outstanding increased for potentially dilutivecommon shares outstanding during the period. The dilutive effect of stock options and their equivalents is calculatedusing the treasury stock method.  Duringthe nine months ended March 31, 2009, stock options to purchase 40,000 shares were granted and stock optionsto purchase 150,000 shares were granted during the nine months ended March 31,2008. Options and warrants to purchase common stock totaling 37,703,968 and34,366,238 shares as of March 31, 2009 and 2008, respectively, are notincluded in the calculation of weighted average common shares-diluted below astheir effect is anti-dilutive. Redeemable common stock is included in thecommon shares outstanding for purposes of calculating net income (loss) pershare.

 

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| ** **                                                          | ** ** | **3 Months ended  March 31,  2009** | ** ** | **3 Months ended  March 31,  2008** | ** ** | **9 Months ended  March 31,  2009** | ** ** | **9 Months ended  March 31,  2008** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|
| Net loss                                                            |       | $                                                  | (454,374   | )                                                  | $          | (352,102                                           | )          | (1,063,407                                         | )          | $ | (1,100,541 | ) |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Common and common equivalent shares  outstanding:                   |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Historical common shares outstanding at  beginning of period        |       | 30,263,246                                         |       | 25,347,825                                         |       | 30,021,935                                         |       | 14,483,342                                         |       |
| Weighted average common equivalent shares  issued during the period |       | 23,676                                             |       | 1,114,325                                          |       | 197,298                                            |       | 9,118,208                                          |       |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Weighted average common shares — basic and  diluted            |       | 30,286,922                                         |       | 26,462,150                                         |       | 30,219,233                                         |       | 23,601,550                                         |       |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Net loss per share — basic and diluted                         |       | $                                                  | (0.02      | )                                                  | $          | (0.01                                              | )          | $                                                  | (0.04      | ) | $ | (0.05 | ) |
|                                                                     |            |                                                    |            |                                                    |            |                                                    |            |                                                    |            |  |  |  |  |

 

**3.****            INCOME TAXES**

 

On July 1, 2007, the Companyadopted FASB Interpretation No. 48 (“FIN 48”), *“Accountingfor Uncertainty in Income Taxes*—*an interpretation of FASBStatement 109,”*which was issued in July 2007. FIN 48prescribes a comprehensive model for recognizing, measuring, presenting anddisclosing in the financial statements, tax positions taken or expected to betaken on a tax return, including a decision whether to file or not to file in aparticular jurisdiction. If there are changes in net assets as a result ofapplication of FIN 48, these will be accounted for as an adjustment to retainedearnings. There were no unrecognized tax benefits as of July 1, 2007, thedate that FIN 48 was adopted. If there was an adjustment related toimplementation of FIN 48, there would be a reduction to the deferred tax assetsand a corresponding reduction to the valuation allowance, resulting in no neteffect on accumulated deficit. If any unrecognized benefit would be recognized,it would not affect the Company’s effective tax rate since it is subject to afull valuation allowance.

 

The Company’s practice is torecognize interest and/or penalties related to income tax matters in income taxexpense. The Company has accrued $0 for interest and penalties as of March 31,2009.

 

A valuation allowance wasprovided for deferred tax assets, as the Company is unable to conclude underrelevant accounting standards that it is more likely than not that deferred taxassets will be realizable.

 

The Company did not record aprovision for income taxes for the three month or nine month periods ended March 31,2009 or 2008 as a result of operating losses and current estimated operatingresults for the current fiscal year. The Company has recorded valuationallowances to fully reserve its deferred tax assets, as management believes itis more likely than not that these assets will not be realized. It is possiblethat management’s estimates as to the likelihood of realization of its deferredtax assets could change as a result of changes in estimated operating results.Should management conclude that it is more likely than not that these deferredtax assets are, at least in part, realizable, the valuation allowance will bereduced and recognized as a deferred income tax benefit in the statement ofoperations in the period of change, except as noted herein.

 

**4.****             SEGMENT INFORMATION**

 

The Company has two segments of business:North American and International operations. North American operations transact all sales in North America (US,Canada and Mexico). International operations transact all other sales.  The following table sets forth selectedfinancial data for these segments for the three-and nine-month periods ended March 31,2009 and 2008.

 

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| ** **            | ** ** | ** ** | ** ** | **Three Months Ended March 31,** | ** ** | **Nine months Ended March 31,** | ** ** |
|-----------------------|------------|------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **            | ** ** | ** ** | ** ** | **North  America**                                   | ** ** | **International**                                   | ** ** | **Total** | ** ** | **North America** | ** ** | **International** | ** ** | **Total** | ** ** |
| Net sales             |       | 2009       |       | $                                                    | 1,440,751  |                                                | $          | 591,273 |   | $ | 2,032,024 |   | $ | 4,300,270 |   | $ | 1,728,676 |   | $ | 6,028,946 |   |
|                  |       | 2008       |       | $                                                    | 1,412,552  |                                                | $          | 538,277 |   | $ | 1,950,829 |   | $ | 4,779,256 |   | $ | 1,675,799 |   | $ | 6,455,055 |   |
|                  |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Net income (loss)     |       | 2009       |       | $                                                    | (652,599   | )                                                   | $          | 198,225 |   | $ | (454,374 | ) | $ | (1,586,102 | ) | $ | 522,695 |   | $ | (1,063,407 | ) |
|                  |       | 2008       |       | $                                                    | (551,046   | )                                                   | $          | 198,944 |   | $ | (352,102 | ) | $ | (1,642,207 | ) | $ | 541,666 |   | $ | (1,100,541 | ) |
|                  |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Depreciation and      |       | 2009       |       | $                                                    | 106,859    |                                                | $          | 5,090 |   | $ | 111,949 |   | $ | 320,149 |   | $ | 13,840 |   | $ | 333,989 |   |
| Amortization          |       | 2008       |       | $                                                    | 107,439    |                                                | $          | 933 |   | $ | 108,372 |   | $ | 300,371 |   | $ | 3,327 |   | $ | 303,698 |   |
|                  |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Interest expense, net |       | 2009       |       | $                                                    | (473,871   | )                                                   | $          | (376 | ) | $ | (474,247 | ) | $ | (941,267 | ) | $ | (1,677 | ) | $ | (942,944 | ) |
|                  |       | 2008       |       | $                                                    | (300,889   | )                                                   | $          | (531 | ) | $ | (301,420 | ) | $ | (1,285,286 | ) | $ | (2,508 | ) | $ | (1,287,794 | ) |
|                  |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Segment assets:       |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| March 31,        |       | 2009       |       | $                                                    | 6,651,608  |                                                | $          | 223,117 |   | $ | 6,874,725 |   | $ | 6,651,608 |   | $ | 223,117 |   | $ | 6,874,725 |   |
| June 30,         |       | 2008       |       | $                                                    | 7,842,810  |                                                | $          | 814,619 |   | $ | 8,657,429 |   | $ | 7,842,810 |   | $ | 814,619 |   | $ | 8,657,429 |   |

 

**5.****             REDEEMABLECOMMON STOCK**

 

On July 1, 2002, as part of the Medical & BiologicalLaboratories Co., Ltd. (MBL) Agreement, MBL purchased shares of theCompany’s common stock for $500,000.Under the MBL agreement, MBL could requirethe Company to repurchase at the same price in the event that a previouslyexisting distribution agreement with RhiGene, Inc. is terminated. For noadditional consideration, MBL was also issued warrants to purchase anadditional 880,282 shares of Common Stock at a price of $.568 per share, whichwas equal to an aggregate amount of $500,000. These warrants were due to expireon July 3, 2008.Pursuant to the agreement with MBL, as long as MBL held atleast 50% of the common stock purchased under the MBL agreement, MBL must giveits written consent with respect to the payment of any dividend, the repurchaseof any of the Company’s equity securities, the liquidation or dissolution ofthe Company or the amendment of any provision of the Company’s Articles ofIncorporation or Bylaws which would adversely affect the rights of MBL underthe stock purchase transaction documents. MBL was granted standardanti-dilution rights with respect to stock issuances not registered under theSecurities Act. MBL also received standard piggyback registration rights alongwith certain demand registration rights.

 

On March 31, 2005, the Company’s distribution agreement withRhiGene expired, and the Company signed a new distribution and OEM SupplyAgreement with MBL International, Inc. (“MBLI”), a wholly owned subsidiaryof MBL, which grants the Company non-exclusive rights to distribute MBL’scomplete diagnostic line of autoimmune testing products in the U.S. and exclusivedistribution rights to the OEM label products worldwide excluding theU.S., Japan, Korea and Taiwan. In addition, on August 1, 2005 the Companyand MBL executed an Amendment to the 2002 Common Stock Purchase Agreement andCommon Stock Purchase Warrant wherein one-half, or 440,141, of the originalredeemable shares were exchanged for a three-year promissory note payable withinterest at prime (5.00% as of June 30, 2008) plus two percent withpayments having commenced in September, 2005. The shares exchangedfor the promissory note will be returned to the Company quarterly on a pro ratabasis as payments are made on the promissory note. As of March 31, 2009, atotal of 440,161 shares have been returned to the Company. The remaining440,141 shares not covered by the promissory note were originally due tobe redeemed by the Company at $0.568 per share on August 1, 2008 forany shares still owned at that time by MBL but only to the extent that MBLhad not realized at least $250,000 in gross proceeds upon the sales of itsredeemable shares in the open market for the time period August 1,2007 through August 1, 2008. Finally, the warrants originally issued toMBL to purchase 880,282 shares were initially extended to August 31,2008 and re-priced from $0.568 per share to $0.40 per share.

 

As of July 15, 2008, the Company reached agreement with MBL toamend certain provisions of our February 1, 2005 Exclusive DistributionAgreement,  entered into a Memorandum ofUnderstanding Regarding Aspirin Works Distribution Rights in Japan, andexecuted a Second Amendment to Common Stock Purchase Agreement and Warrant.These new agreements and amendments add certain products and transfer prices,call for the discussion of terms whereby MBL 

 

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wouldbe granted a worldwide OEM agreement for certain of the products in adesignated territory, call for the payment by Corgenix of royalties on certainproprietary products, which include proprietary technology of MBL, and call forthe negotiation of terms of an exclusive distribution agreement for sales ofAspirinWorks in Japan. In addition, the Company and MBL, pursuant to the SecondAmendment to Common Stock Purchase Agreement and Warrant, agreed that thewarrant term will be extended to August 1, 2010 and that one-half, or220,070, of the remaining 440,171 redeemable shares  were exchanged for a two-year promissory note payable with interest at prime(3.25% as of March 31, 2009) plus two percent with payments havingcommenced September 1, 2008. The applicable prime rate is adjusted on amonthly basis. Based on our recalculations of the fair value of the extendedterm warrants, we determined that the newly calculated value of said warrantsdid not materially increase in value as a result of this modification, andtherefore, no adjustment to our financial statements was considered necessary.The shares exchanged for the promissory note will be returned to theCompany quarterly on a pro rata basis as payments are made on the promissorynote. The companies further agree that beginning September 1, 2008, andcontinuing through August 1, 2010 (the maturity date of the SecondPromissory Note), MBL will attempt to sell on the open market, the remaining220,071 shares not subject to the Second Promissory Note, at a price of$0.62 or greater. At the close of business on August 1, 2010, MBL willthen have the right to sell, and Corgenix will have the obligation to purchase,any remaining stock then held by MBL, at a price of $0.568 per share.

 

**6.****            EQUITY**

 

***(a) Employee Stock PurchasePlan***

 

Effective January 1, 1999, the Company adopted an Employee StockPurchase Plan to provide eligible employees an opportunity to purchase sharesof its common stock through payroll deductions, up to 10% of eligiblecompensation. On April 26, 2007, Shareholders approved the Company’sSecond Amended and Restated Employee Stock Purchase Plan. These plans fullycomply with Section 423 of the Internal Revenue Code of 1986. Eachquarter, participant account balances are used to purchase shares of stock atthe lesser of 85% of the fair value of shares on the first business day (grantdate) and last business day (exercise date) of each quarter. No right topurchase shares shall be granted if, immediately after the grant, the employeewould own stock aggregating 5% or more of the total combined voting power orvalue of all classes of stock. A total of 600,000 common shares have beenregistered with the Securities and Exchange Commission (SEC) for purchase underthe two plans. In the quarter ended March 31, 2009, 27,673 shares wereissued under the plans. In the quarter ended March 31, 2008, 11,724 shareswere issued under the plans.

 

***(b) Incentive Stock Option Plan***

 

*Stock Options as of March 31, 2009*

 

The Company’s Amended and Restated 1999 Incentive Stock Plan and the2007 Incentive Compensation Plan (the “Plan”) provides for two separatecomponents. The Stock Option Grant Program, administered by the CompensationCommittee (the “Committee”) appointed by the Company’s Board of Directors,provides for the grant of incentive and non-statutory stock options to purchasecommon stock to employees, directors or other independent advisors designatedby the Committee. The Restricted Stock Program administered by the Committee,provides for the issuance of Restricted Stock Awards to employees, directors orother independent advisors designated by the Committee.

 

The following table summarizes stock options outstanding as of March 31,2009, and changes during the nine months then ended:

 
| ** **                                 | ** ** | **Outstanding Options** | ** ** |
|--------------------------------------------|------------|------------------------------|------------|
| ** **                                 | ** ** | **Number of  Shares**   | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term (in  months)** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
| Options outstanding at June 30, 2008  |       | 2,497,100                    |       | $ | 0.36 |   | 52.27 |   | $ | — |   |
| Granted                                    |       | 40,000                       |       | $ | 0.06 |   | 82.0 |   |   |   |
| Exercised                                  |       | —                       |       | $ | — |   | — |   |   |   |
| Cancelled, expired or forfeited            |       | (29,500                      | )          | $ | 0.42 |   | 44.5 |   |   |   |
| Options outstanding at March 31, 2009 |       | 2,507,600                    |       | $ | 0.36 |   | 46.9 |   | $ | — |   |
| Options exercisable at March 31, 2009 |       | 2,174,267                    |       | $ | 0.35 |   | 48.8 |   | $ | — |   |

 

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The total intrinsic value as of March 31, 2009 measures thedifference between the market price as of March 31, 2009 and the exerciseprice. No options were exercised during the nine months ended March 31,2009 and March 31, 2008. Consequently, no cash was received, nor did theCompany realize any tax deductions related to exercise of stock options duringthe periods.

 

Total estimated unrecognized compensation cost from unvested stockoptions as of March 31, 2009, was approximately $113,864, which isexpected to be recognized over a weighted average period of  59.4 months.

 

The weighted average per share fair value range of stock optionsgranted during the nine-month periods ending March 31, 2009 was $0.046 andfor the nine-month period ended March 31, 2008 was $0.022-$0.34. The fairvalue was estimated as of the grant date using the Black-Scholes option pricingmodel with the following assumptions:

 
| ** **                     | ** ** | **Quarters Ended** | ** ** | **Nine months Ended** | ** ** |
|--------------------------------|------------|-------------------------|------------|---------------------------------|------------|
| ** **                     | ** ** | **March 31,**      | ** ** | **March 31,**              | ** ** |
| **Valuation Assumptions** | ** ** | **2009**                | ** ** | **2008**                        | ** ** | **2009** | ** ** | **2008** | ** ** |
|                           |       |                    |       |                            |       |   |   |   |   |
| Expected life                  |       | 7.0                     |       | 7.0                             |       | 7.0 |   | 7.0 |   |
| Risk-free interest rate        |       | 2.69                    | %          | 4.40                            | %          | 2.69 | % | 4.40 | % |
| Expected volatility            |       | 84.7                    | %          | 84.7                            | %          | 84.7 | % | 84.7 | % |
| Expected dividend yield        |       | 0                       | %          | 0                               | %          | 0 | % | 0 | % |

 

In addition to the stock options discussed above, the Companyrecognized share-based compensation expense related to Restricted Stock awardsof $3,333 and $8,888 for the three and nine month periods ended March 31,2009 and $3,333 and $9,999 for the same periods ended March 31, 2008. Thefollowing table summarizes non-vested restricted stock and the related activityas of and for the three months ended March 31, 2009:

 

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| ** **                                          | ** ** | **Shares** | ** ** | **Weighted  Average  Grant-Date  Fair Value** | ** ** |
|-----------------------------------------------------|------------|------------|------------|----------------------------------------------------|------------|
| Non-vested Restricted Stock at July 1,  2008   |       | 33,334     |       | $                                                  | 0.40       |   |
| Granted                                             |       | —     |       | —                                             |       |
| Vested                                              |       | 33,334     |       | 0.40                                               |       |
| Non-vested Restricted Stock at  March 31, 2009 |       | —     |       | $                                                  | —     |   |

 

As of March 31, 2009, there were also 35,206,868 warrantsissued to institutional investors, consultants, and employees outstanding andexercisable ranging in prices from $.23 to $.50 per share with a weightedaverage exercise price of $.37 per share. Of these warrants, none were newly orincrementally issued in the current quarter or nine month period ended March 31,2009. No warrants were newly or incrementally issued in the quarter ended March 31,2008, whereas 4,446,999 warrants were newly or incrementally issued in the ninemonth period ended March 31, 2008.

 

On September 8, 2008, the Board of Directors granted an equityaward of 206,000 shares of common stock to the five officers of the Company inrecognition of the Company’s achievements for the prior two years, as no stockoptions had been granted since August, 2007. The closing price of thecompany’s stock on September 8 was $0.20 and the value of the stock awardsamounted to $41,200.

 

**7.****           ****RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**

 

In November 2007, the FASB issued *SFAS No. 141 (revised 2007), Business Combination*(FAS 141(R)) and SFAS No. 160, *NoncontrollingInterests in Consolidated Financial Statements, an amendment of ARB No. 51*(FAS 160). FAS 141(R) will change how business acquisitions areaccounted for and will impact financial statements both on the acquisition dateand in subsequent periods. FAS 160 will change the accounting andreporting for minority interests, which will be recharacterized asnoncontrolling interests and classified as a component of equity. FAS 141(R) andFAS 160 are effective for both public and private companies forfiscal years beginning on or after December 15, 2008(fiscal 2010 for the Company). FAS 141(R) will be appliedprospectively. FAS 160 requires retroactive adoption of the presentationand disclosure requirements for existing minority interests. All otherrequirements of FAS 160 will be applied prospectively. Early adoption isprohibited for both standards. Management is currently evaluating therequirements of FAS 141(R) and FAS 160 and has not yetdetermined the impact on its financial statements.

 

**Fair Value Measurements**

 

As of July 1, 2008, we adopted FASB Statement of Financing Accounting Standards No. 157, “*Fair ValueMeasurements*(“SFAS 157”). SFAS 157established a framework for measuring fair value in GAAP and clarified thedefinition of fair value within that framework. SFAS 157 does not require anynew fair value measurements in GAAP. SFAS 157 introduced, or reiterated anumber of key concepts which form the foundation of the fair value measurementapproach to be utilized for financial reporting purposes. The fair value of ourfinancial instruments reflect the amounts that would be received upon sale ofan asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date (exit price). SFAS 157 alsoestablished a fair value hierarchy that prioritizes the use of inputs used invaluation techniques into the following three levels:

 

Level 1-quoted prices in active markets for identical assets andliabilities.

 

Level 2-observable inputs other than quoted prices in active marketsfor identical assets and liabilities.

 

Level 3-unobservable inputs.

 

The adoption of  SFAS 157 did nothave a material effect on our financial condition and results of operations,but SFAS 157 introduced new disclosures about how we value certain assets andliabilities. Much of the disclosure requirement is focused on the inputs usedto measure fair value, particularly in instances where the measurement usessignificant unobservable (Level 3) inputs. Our financial instruments are valuedusing quoted prices in active markets or based upon other 

 

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observableinputs. The following table sets forth the fair value of our financial assetsthat were measured on a recurring basis as of March 31, 2009 (inthousands):

 
| ** **                   | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------|------------|
| Money market funds |       | $                | 505,073    |             |       |             |       |      | $          | 505,073 |   |
| Total                        |       | $                | 505,073    |             |       |             |       |      | $          | 505,073 |   |

 

**8.****           ****INTANGIBLE ASSETS**

 

Intangibleassets consist of purchased licenses. Purchased licenses are amortized usingthe straight-line method over the shorter of 15 years or the remaininglife of the license. The Company adopted the provisions of Statement ofFinancial Accounting Standards (SFAS) No. 142, Goodwill and OtherIntangible Assets (SFAS No. 142) on July 1, 2002. Pursuant toSFAS No. 142, goodwill and intangible assets acquired in a purchasebusiness combination and determined to have indefinite lives and licensesacquired with no definite term are not amortized, but instead are tested forimpairment at least annually in accordance with the provisions of thisstatement. Identifiable intangibles with estimated useful lives continue to beamortized over their respective estimated useful lives and reviewed forimpairment in accordance with SFAS No. 144, Accounting for Impairmentor Disposal of Long Lived Assets.

 

On March 1, 2007, we executed an exclusive license agreement (the “LicenseAgreement”) with Creative Clinical Concepts, Inc. (“CCC”). TheLicense Agreement provides that CCC license to us certain products andassets related to determining the effectiveness of aspirin and / oranti-platelet therapy (collectively, “Aspirin Effectiveness Technology,” or the“Licensed Products”). The Aspirin Effectiveness Technology includes UStrademark registration number 2,688,842, which includes the term “AspirinWorks”® and related designs.

 

The License Agreement imposes caps on the total amount of cash, commonstock, and warrant payments from us to CCC from the date of executionthrough to and including the third anniversary payment. Under that caplimitation, the total of all anniversary payments will not exceed $200,000 incash, with each anniversary cash payment determined by multiplying $50,000 byan anniversary ratio which is the ratio of cumulative revenue at the respectiveanniversary date divided by the cumulative sales target for the same period oftime. Likewise, the total of all anniversary common stock payments will notexceed $300,000 in value of shares of common stock (as valued on the date ofissue), with the number of shares for each anniversary stock issuancedetermined by dividing 75,000 by the closing stock price as of the respectiveanniversary date and multiplying that result by the anniversary ratio notedabove. Finally, the total of all anniversary warrant payments will not exceed300,000 warrants, with the value of each anniversary warrant issuancedetermined by multiplying 75,000 (the number of warrants to be issued) by anewly calculated Black Scholes value per warrant as of the fiscal quarter end.As of March 31, 2009, the Company had accrued a total of $8,283 payable toCCC as a result of the anniversary calculations.

 

The License Agreement also requires that, for all sales of the LicensedProducts subsequent to the execution of the agreement, we pay CCC aquarterly royalty fee equal to seven percent of net sales of the LicensedProducts during the immediately preceding quarter. The License Agreement’s capson payments from us to CCC do not apply to royalty payments.

 

**9.****           ****DUE TO FACTOR**

 

On March 17, 2009, the Company entered into an agreement withBenefactor Funding Corp. (“Benefactor”) whereby Benefactor agreed to factor thecompany’s domestic accounts receivable invoices. The term of the agreement isfor one year but can be terminated by the Company with 60 days written notice.In accordance with the terms of the agreement, Benefactor will purchase theinvoices that it approves for an initial payment of 85% (95% for the first 60days of the agreement) of the amount of the invoice with the remaining 15% paidupon collection, less any deductions from the customer. Benefactor charges afee of 1.4% of the gross amount of the invoice and a maintenance fee equal to..05% per day (annual rate of 18.25%) on the unpaid invoice amounts outstandingin excess of 30 days from the purchase date. The Company has agreed, beginning March 17,2009, to factor with Benefactor a minimum of $300,000 of invoices monthly. TheCompany is responsible for any invoices which are unpaid after 91 days or aresubject to other defaults by the customer and this obligation is collateralizedby the Company with a security interest granted to Benefactor on all assets. Asof March 31, 2009, Benefactor had advanced the Company $676,041 againstinvoices totaling $711,623. Fees paid to Benefactor for interest and otherservices for the quarter and nine months ended March 31, 2009 totaled$19,618. The receivables are 

 

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considered recourse and are presented atgross value in the accompanying consolidated balance sheets.

 

In addition to the advances made by the factor on accounts receivable,on March 17, 2009, Benefactor advanced the company $250,000,collateralized by the inventories of the company with a face value of $294,118.Benefactor charged a fee of 1.3% of the face value of the inventory and willcharge a maintenance fee equal to .043% per day (annual rate of 15.70%) on theunpaid advance in excess of 30 days from the initial advance.

 

**10.****          NOTES PAYABLE**

 

Notes payable consist of thefollowing at March 31, 2009 and June 30, 2008:

 
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** ** | **March 31, 2009** | ** ** | **June 30, 2008** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Convertible term note payable to institutional investors, net of  discount of $0 with interest at the greater of 12%, as adjusted by a stock  trading formula, or prime plus 3% (6.25% and 11.75% as of March 31, 2009  and June 30, 2008), interest only from June 1, 2006 through  October 1, 2006 and, via a note modification dated November 30,  2006, December 1, 2006 through November 1, 2007 and then due in  monthly installments of $19,350.71 plus interest from December 1, 2007  through November 1, 2009, collateralized by all assets of the company  and a partial guaranty by an officer of the Company                                                                                                               |       | $                            | —     |                        | $          | 265,676 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                         |       |                        |       |
| Convertible term note payable to institutional investors, net of  discount of $5,350 with interest at the greater of 12%, as adjusted by a  stock trading formula, or prime plus 3% (6.25% and 10.75% as of  March 31, 2009 and June 30, 2008), interest only from  December 28, 2005 through June, 2006 and, via a note modification dated  November 30, 2006, December 1, 2006 through November 1, 2007  and then due in monthly installments of $42,546.04 plus interest from  December 1, 2007 through March 16, 2009, and via note modification  dated February 3, 2009, due in monthly installments of $6,713.76 plus  interest, collateralized by all assets of the company and a partial guaranty  by an officer of the Company |       | 55,074                       |       | 458,940                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                         |       |                        |       |
| Note payable, unsecured, to redeemable common stockholders, with  interest at prime plus 2.0% (6.25% as of March 31, 2009) due in monthly  installments with principal payments of $5,200 plus interest through  August 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | 88,600                       |       | —                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                         |       |                        |       |
| Note payable, unsecured, to redeemable common stockholders, with  interest at prime plus 2.0% (6.25% and 11.55% as of March 31, 2009 and  June 30, 2008) due in monthly installments with principal payments  ranging from $5,000 to $10,000 plus interest through August 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | —                       |       | 10,000                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | 143,674                      |       | 734,616                     |       |
| Current portion, net of current portion of  discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       | (117,474                     | )          | (521,495                    | )          |
| Notes payable, excluding current portion and net of long-term portion  of discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       | $                            | 26,200     |                        | $          | 213,121 |   |

 

The convertible notes payablerestrict the payment of dividends on the Company’s common stock.

 

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**Item 2.**

 

**Management’s Discussion andAnalysis ofFinancial Condition and Results of Operations**

 

The following discussion should be read inconjunction with the consolidated financial statements and accompanying notesincluded elsewhere herein.

 

**Forward-Looking Statements**

 

This 10-Q includes statements that are not purelyhistorical and are “forward-looking statements” within the meaning of Section 21Eof the Securities Act of 1934, as amended, including statements regarding ourexpectations, beliefs, intentions or strategies regarding the future.  All statements other than historical factcontained in this 10-Q, including, without limitation, statements regarding futurecapital requirements, acquisition strategies, strategic partnershipexpectations, technological developments, the development, the availability ofnecessary components, research and development programs and distribution plans,are forward-looking statements.  Allforward-looking statements included in this 10-Q are based on informationavailable to us on the date hereof, and we assume no obligation to update suchforward-looking statements.  Although webelieve that the assumptions and expectations reflected in such forward-lookingstatements are reasonable, we can give no assurance that such expectations willprove to have been correct or that we will take any actions that may presentlybe planned.

 

**General**

 

Since the Company’s inception, we have been primarilyinvolved in the research, development, manufacturing and marketing/distributionof diagnostic tests for sale to clinical laboratories. We currently market 52products covering autoimmune disorders, vascular diseases, infectious diseasesand liver disease. Our products are sold in the United States, the UK and othercountries through our marketing and sales organization that includes directsales representatives, contract sales representatives, internationally throughan extensive distributor network, and to several significant OEM partners.

 

We manufacture products for inventory based uponexpected sales demand, shipping products to customers, usually within 24 hoursof receipt of orders if in stock. Accordingly, we do not operate with a significant customer orderbacklog.

 

Except for the fiscal year ending June 30,1997, we have experienced revenue growth since our inception, primarily fromsales of products and contract revenues from strategic partners. Contractrevenues consist of service fees from research and development agreements withstrategic partners.

 

Beginning in fiscal year 1996, we began addingthird-party OM licensed products to our diagnostic product line. Currently wesell 128 products licensed from or manufactured by third party manufacturers.We expect to expand our relationships with other companies in the future togain access to additional products.

 

Although we have experienced growth in revenuesevery year since 1990, except for 1997 and the current year to date, there canbe no assurance that, in the future, we will sustain revenue growth, currentrevenue levels, or achieve or maintain profitability. Our results of operationsmay fluctuate significantly from period-to-period as the result of severalfactors, including: (i) whether and when new products are successfullydeveloped and introduced, (ii) market acceptance of current or newproducts, (iii) seasonal customer demand, (iv) whether and when wereceive research and development payments from strategic partners, (v) changesin reimbursement policies for the products that we sell, (vi) competitivepressures on average selling prices for the products that we sell, and (vii) changesin the mix of products that we sell.

 

**Recently Issued AccountingPronouncements**

 

In November 2007,the FASB issued *SFAS No. 141(revised 2007), Business Combination* (FAS 141(R)) andSFAS No. 160, *NoncontrollingInterests in Consolidated Financial Statements, an amendment of ARB No. 51*(FAS 160). FAS 141(R) will change how business acquisitions areaccounted for and will impact financial statements both on the acquisition dateand in subsequent periods. FAS 160 will change the accounting andreporting for minority interests, which 

 

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will be recharacterized as noncontrolling interestsand classified as a component of equity. FAS 141(R) and FAS 160are effective for both public and private companies for fiscal yearsbeginning on or after December 15, 2008 (fiscal 2010 for theCompany). FAS 141(R) will be applied prospectively. FAS 160requires retroactive adoption of the presentation and disclosure requirementsfor existing minority interests. All other requirements of FAS 160 will beapplied prospectively. Early adoption is prohibited for both standards.Management is currently evaluating the requirements of FAS 141(R) andFAS 160 and has not yet determined the impact on its financial statements.

 

**Critical Accounting Policies**

 

Our consolidatedfinancial statements are prepared in accordance with accounting principlesgenerally accepted in the U.S. (“GAAP”) and our significant accounting policiesare summarized in Note 1 to the accompanying consolidated financialstatements. The preparation of financial statements in conformity with GAAPrequires management to make estimates and assumptions that affect reportedamounts of assets, liabilities, disclosure of contingent assets and liabilitiesat the date of the financial statements and reported amounts of revenues andexpenses during the reporting period. Actual results could differ significantlyfrom those estimates.

 

We maintain anallowance for doubtful accounts based on its historical experience and providefor any specific collection issues that are identified. Such allowances havehistorically been adequate to provide for our doubtful accounts but involve asignificant degree of management judgment and estimation. Worse than expectedfuture economic conditions, unknown customer credit problems and other factorsmay require additional allowances for doubtful accounts to be provided for infuture periods.

 

Equipment andsoftware are recorded at cost. Equipment under capital leases is recordedinitially at the present value of the minimum lease payments. Depreciation andamortization is calculated primarily using the straight-line method over theestimated useful lives of the respective assets which range from 3 to7 years.

 

The internal andexternal costs of developing and enhancing software costs related to websitedevelopment, other than initial design and other costs incurred during thepreliminary project stage, are capitalized until the software has beencompleted. Such capitalized amounts began to be amortized commencing when thewebsite was placed in service on a straight-line basis over a three-yearperiod.

 

When assets aresold, retired or otherwise disposed of, the cost and related accumulateddepreciation are eliminated from the accounts and a gain or loss is recognized.Repair and maintenance costs are expensed as incurred.

 

We evaluate therealizability of our long-lived assets, including property and equipment,whenever events or changes in circumstances indicate that the carrying amountof an asset may not be recoverable. Revenue from sale of products is recognizedupon shipment of products.

 

Revenue fromresearch and development contracts represents amounts earned pursuant toagreements to perform research and development activities for third parties andis recognized as earned under the respective agreement. Because research anddevelopment services are provided evenly over the contract period, revenue isrecognized ratably over the contract period. Research and development andadvertising costs are expensed when incurred.

 

Inventories arerecorded at the lower of cost or market, using the first-in, first-out method.

 

**Resultsof Operations**

 

*Three Months Ended March 31,2009****compared to 2008*

 

*Net sales.*Net sales forthe quarter ended March 31, 2009 were $2,032,024, a 4.2% increase from$1,950,829 for the quarter ended March 31, 2008. Total North Americansales increased $28,199 or 2.0% to $1,440,751 while total sales tointernational distributors increased $52,996 or 9.8% to $591,273 from $538,277year to year. With respect to the Company’s major revenue categories andproduct lines, North American direct product-only sales decreased $54,236 or4.7% to $1,109,178, whereas international direct product-only sales increased$43,018 or 12.0% to $401,305.  Worldwidecategory results were as follows: Phospholipids kit sales increased $20,480 or2.2% to $966,397 for the period. Coagulation kit sales decreased $31,262 or7.4% to $388,398. HA kit sales decreased $32,598 or 12.2% to $234,397, andAutoimmune kit sales 

 

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increased $18,259 or 50.5% to $54,401.Additionally, worldwide OEM/contract manufacturing revenues increased $88,019,or 48.5% to $269,497. Overall, worldwide non-product revenue increased $4,395,or 1.8% to $252,045. Finally, AspirinWorks sales increased 10.8% to $37,598.

 

*Cost of sales*.  Cost of sales, as a percentage of sales,increased to 43.7% for the quarter ended March 31, 2009 from 41.6% in2008. The increase was primarily attributable to increases in raw material,labor and overhead costs.

 

*Selling and marketing. *For the quarter ended March 31, 2009, selling and marketingexpenses decreased 6.4% to $468,251 from $500,235 for the quarter ended March 31,2008. The decreasevs. the prior year was primarily due to decreases in advertising, salescommissions, labor-related expense, royalties, and trade show expenses, partially offset by increases in  Corgenix UK selling and marketing expenses,retention kits, and travel.

 

*Research and development.* Research anddevelopment expenses increased 4.0% to $172,513 for the quarter ended March 31,2009, from $165,932 for the quarter ended March 31, 2008. The increase vs.the prior year primarily involved increases in labor-related expenses andclinical studies expense, partially offset by decreases in laboratory supplies,and product testing expense, .

 

*General and administrative.* For thequarter ended March 31, 2009, general and administrative expensesincreased $27,628 or 5.2% to $563,963 from $536,335 for the quarter ended March 31,2008. The increase vs. the prior year was primarily attributable to increasesin Corgenix-UK general and administrative expenses, labor-related expenses,board of director fees, aborted financing costs, travel, outside services, andpatent renewal fees, partially offset by decreases in consulting fees and legalexpenses. As part of managements’ cost control program, the Company is making aconcerted effort to reduce our on-going general and administrative expenses.

 

*Interest expense.* Interestexpense increased $172,827, or 57.3% to $474,247 for the quarter ended March 31,2009, from $301,420 for the quarter ended March 31, 2008 due primarily tothe accelerated write off of 92.3% of the unaccreted discount and unamortizeddeferred financing costs related to the convertible notes due to the March 2009payoffs which resulted from the Benefactor financing mentioned above.

 

*Nine months Ended March 31,2009****compared to 2008*

 

*Net sales.*Net sales forthe nine months ended March 31, 2009 were $6,028,946, a 6.6% decrease from$6,455,055 for the nine months ended March 31, 2008. As a result of theoverall global economic recession, total North American sales decreased$478,986 or 10.0% to $4,300,270 while total sales to international distributorsincreased  $52,877 or 3.2% to $1,728,676from $1,675,799 year to year. With respect to the Company’s major revenuecategories and product lines, North American direct product-only salesdecreased $240,268 or 7.0% to $3,183,786 whereas international directproduct-only sales increased $32,432 or 2.6% to $1,284,037. Worldwide categoryresults were as follows: Phospholipids kit sales decreased $60,694 or 2.2% to $2,806,016for the period. Coagulation kit sales decreased $150,111 or 10.9% to$1,232,458. HA kit sales decreased $97,132 or 11.1% to $777,388, whileAutoimmune kit sales increased $48,134 or 53.6% to $137,875. Additionally,worldwide OEM/contract manufacturing revenues decreased $291,555, or 25.6% to$846,547. Overall, worldwide non-product revenue increased $73,283 or 11.4% to$714,577. Finally, AspirinWorks sales decreased 2.4% to $108,416. Sales ofproducts manufactured for us by other companies, primarily sold by Corgenix UKLtd,  while still relatively small, areexpected to continue to increase during fiscal 2009, as they continue to expandtheir product offerings. Net sales and revenues have not been materially impactedby inflation and changing prices over the past two years.

 

*Cost of sales*.  Cost of sales, as a percentage of sales,decreased slightly to 43.5% for the nine months ended March 31, 2009 from43.8% in 2008. This decrease was primarily attributable to an unexpectedscrapping of numerous production lots of one of our larger product lines whichoccurred in the prior year’s first fiscal nine months.

 

*Selling and marketing. *For the nine months ended March 31,2009, selling and marketing expenses decreased 7.8% to $1,404,555 from$1,524,014 for the nine months ended March 31, 2008. The decrease vs. theprior year was primarily due to decreases in consulting fees, conventions andseminars expense, labor-related expenses, trade show expense, and royalties,partially offset by increases in Corgenix UK selling & marketingexpenses, sales commissions, and travel.

 

*Research and development.* Research anddevelopment expenses increased 19.7% to $572,210 for the nine months ended March 31,2009, from $478,197 for the nine months ended March 31, 2008. This increaseover the prior year primarily 

 

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involved increases in clinical studiesexpenses, and labor-related expenses, partially offset by decreases in legalfees, outside services, laboratory supplies, and product testing.

 

*General and administrative.* For the ninemonths ended March 31, 2009, general and administrative expenses increased$177,711 or 12.2% to $1,639,007 from $1,461,296 for the nine months ended March 31,2008. This increase over the prior year was primarily attributable to increasesin Corgenix UK general and administrative expenses, labor-related costs, boardof director fees, travel, aborted financing costs, outside services, and patentrenewal fees, partially offset by decreases in consulting fees, and legal fees.

 

*Interest expense.* Interestexpense decreased $344,850 or 26.8% to $942,944 for the nine months ended March 31,2009, from $1,287,794 for the nine months ended March 31, 2008 dueprimarily to the additional discount and acceleration of the discountamortization on the convertible notes due to the contingent conversion feature,which occurred in the prior year’s first fiscal nine months, mitigated by theaccelerated write off of 92.3% of the unaccreted discount and unamortizeddeferred financing costs related to the convertible notes due to the March 2009payoffs which resulted from the Benefactor financing mentioned above.

 

**EBITDA**

 

The Company’s earnings before interest, taxes,depreciation, amortization and non cash expense associated with stock-basedcompensation (“Adjusted EBITDA”) decreased $128,884 or 19.1% to $547,237   for the nine months ended March 31,2009 compared with $676,121 for the corresponding nine month period in fiscal2008. Although adjusted EBITDA is not a GAAP measure of performance orliquidity, the Company believes that it may be useful to an investor inevaluating the Company’s ability to meet future debt service, capitalexpenditures and working capital requirements. However, investors should notconsider these measures in isolation or as a substitute for operating income,cash flows from operating activities or any other measure for determining theCompany’s operating performance or liquidity that is calculated in accordancewith GAAP. In addition, because adjusted EBITDA is not calculated in accordancewith GAAP, it may not necessarily be comparable to similarly titled measuresemployed by other companies. A reconciliation of Adjusted EBITDA to netearnings (loss) can be made by adding depreciation and amortization expense,corporate stock-based compensation expense, interest expense, and income taxexpense to net income (loss) as in the following table:

 
| ** **                             | ** ** | **Three Months**        | ** ** | **Nine Months**          | ** ** |
|----------------------------------------|------------|------------------------------|------------|-------------------------------|------------|
| ** **                             | ** ** | **Ended March 31** | ** ** | **Ended March 31,** | ** ** |
| **RECONCILIATION OF ADJUSTED EBITDA:** |       |                         |       |                          |       |   |   |   |   |
| Net loss                               |       | $                            | (454,374   | )                             | $          | (352,102 | ) | $ | (1,063,407 | ) | $ | (1,100,541 | ) |
| Add back:                              |       |                         |       |                          |       |   |   |   |   |
| Depreciation and Amortization          |       | 111,949                      |       | 108,372                       |       | 333,989 |   | 303,698 |   |
| Stock-based compensation expense       |       | 135,490                      |       | 64,953                        |       | 242,758 |   | 161,252 |   |
| Interest expense                       |       | 474,247                      |       | 301,420                       |       | 942,944 |   | 1,287,794 |   |
| Adjusted EBITDA                        |       | $                            | 267,312    |                          | $          | 122,643 |   | $ | 456,284 |   | $ | 652,203 |   |

 

**Liquidity and Capital Resources**

 

For the nine months ended March 31, 2009, cash used by operatingactivities amounted to $382,348, versus cash used by operating activities of$174,622 for the nine months ended March 31, 2008. The increase in thecash used by operations for the current nine month period resulted primarilyfrom the increase in accounts receivable and inventories plus a decrease inaccounts payable, and accrued interest and other liabilities.

 

Net cash used in investing activities, the purchase of laboratoryequipment, leasehold improvements and computer equipment was $37,544 for thenine months ended March 31, 2009, compared to purchases of laboratory,computer and office equipment totaling $41,786 for the nine months ended March 31,2008.

 

Net cash used by financing activities amounted to $416,012 for the ninemonths ended March 31, 2009 compared to cash provided by financingactivities of $544,586 for the nine months ended March 31, 2008. Thislarge difference versus the comparable prior year was primarily due to theproceeds from the year-earlier common stock private placement, in addition tothe March 2009 payoff of the vast majority of the convertible debt.

 

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Cash on the balance sheet amounted to $664,952 as of March 31,2009 compared to $1,520,099 as of June 30, 2008.

 

Working capital as of March 31, 2009 amounted to $2,149,736compared to $2,888,509 as of June 30, 2008.

 

Total liabilities were $3,220,150 as of March 31, 2009 compared to$3,485,830 as of June 30, 2008.

 

Stockholders’ equity amounted to $3,486,512 as of March 31, 2009compared to $4,152,584 as of June 30, 2008.

 

The Company has incurred operating losses andnegative cash flow from operations for most of its history. Losses incurredsince its inception, net of dividends on convertible preferred stock, haveaggregated $12,703,642, and there can be no assurance that the Company will beable to generate positive cash flows to fund its operations in the future or topursue its strategic objectives. Historically, the Company has financed its operations primarily throughlong-term debt and the sales of common, redeemable common, and preferred stock.  The Company has also financed operationsthrough sales of diagnostic products and agreements with strategicpartners.  Accounts receivable showed adecrease of 15.7% to $1,054,903 from $1,220,311 as of March 31, 2008.

 

Wehave developed and are continuing to strive to implement an operating planintended to eventually achieve sustainable profitability and positive cash flowfrom operations.  Key components of thisplan include accelerating revenue growth and the cash to be derived fromexisting product lines as well as new diagnostic products, expansion of ourstrategic alliances with other biotechnology and diagnostic companies,improving operating efficiencies to reduce cost of sales, thereby improvinggross margins, and lowering overall operating expenses.  Management is forecasting continued revenuegrowth subsequent to this fiscal year, primarily generated from the continuedevolution of the market for AspirinWorks along with the future FDA approval ofAtherOx,, but is not forecasting the same for the remainder of the fiscal yearended June 30, 2009.  Asdemonstrated by the first nine months’ results, management has not yet achievedthe necessary level of sales, cost of sales and operating efficiencies toachieve consistent profitability and positive cash flow from operations.  Given the severe recessionary environment inwhich we find ourselves, there are significant short- term and potentiallyintermediate-term risks associated with the operating plan and we might beforced to further modify the plan, in order to achieve the goals of sustainedprofitability and positive cash flow from operations.

 

Althoughthe operating plan is intended to eventually achieve sustainable profitabilityand positive cash flow from operations, it is possible that we may not besuccessful in our efforts.  Even with ouroperating plan, we may continue to incur operating losses for the next severalquarters, as it will, given the current and foreseeable state of our economy,still take time for our strategic and operating initiatives to have a positiveeffect on our business operations and cash flow. In view of this, we haveundertaken a process to review and reduce wherever possible, all operatingexpenses.

 

Giventhe potential for a reduction in our future sales caused by the severerecession, management sought and has been successful in obtaining debt reliefand a modification of the existing convertible notes from our two institutionalconvertible debt holders in conjunction with and addition to securingadditional debt financing (see Recent Developments above). As of March 31,2009, we had reached agreement with the institutional convertible debt holdersto waive previous defaults and to amend the original debt agreements whichfurther enabled us to secure new debt financing from other sources.  As a result of the recent debt financing, inaddition to a pick-up of sales in the quarter ended March 31, 2009, andtaking into consideration the forecasted results of operations for theremainder of the current fiscal year, management believes that we will haveadequate resources to continue operations for longer than 12 months.

 

**Off -Balance Sheet Arrangements**

 

We use what is known as a “factor” for creditadministration and cash flow purposes. Under the factoring agreement, thefactor purchases most (a minimum of $300,000 per month), of the Company’seligible domestic sales invoices, with recourse, from the Company. In doing so,for the first 60 days of the agreement (until May 17, 2009), we can draw95% of the dollar value of the invoices sold (85% after May 17, 2009), fora charge of 1.4% of the gross invoice amount. The factor holds as securitysubstantially all assets of the Company and charges interest at a rate of .05%per day for each day over 30 days outstanding from the date of their purchase of the respective invoices.The factoring agreement expires on March 17, 2010.

 

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**ContractualObligations and Commitments**

 

On February 8, 2006, we entered into aLease Agreement (the “Lease”) with York County, LLC, a California limitedliability company (“Landlord”) pursuant to which we leased approximately 32,000rentable square feet (the “Property”) of Landlord’s approximately 102,400square foot building, commonly known as Broomfield One and located at 11575Main Street, Broomfield, Colorado 80020. In 2008, the Property was sold to The Krausz Companys, Inc. aCalifornia corporation, and  is part ofLandlord’s multi-tenant real property development known as the BroomfieldCorporate Center.  We use the Propertyfor our headquarters, laboratory research and development facilities andproduction facilities.

 

On the following dates, we executed the following amendments to theLease:

 

·                 December 1, 2006- The First Amendment to theLease Agreement (the “First Amendment”) established July 6, 2006 as thedate of the commencement of the Lease

 

·                 June 19, 2007- The Second Amendment to the LeaseAgreement (the “Second Amendment”) redefined the amount of available rentalspace from 32,480 to 32,000 square feet and recalculated the lease rates persquare foot, and

 

·                 July 19, 2007- The Third Amendment to the LeaseAgreement (the “Third Amendment”) established the base rent matrix for theperiod 11/28/2013 to 12/05/2013 which was inadvertently omitted in the SecondAmendment.

 

The term of the Lease (the “Term”) is seven yearsand five months and commenced on July 6, 2006 with tenant options toextend the Term for up to two five-year periods.  We have a one time right of first refusal tolease contiguous premises.

 

Initially therewas no base lease rate payable on 25,600 square feet of the Property, plusestimated operating expenses of $1.61 per square foot.

 

The base leaserate payable on 25,600 square feet of the Property increased to $4.00 persquare foot on January 28, 2007, plus amortization of tenant improvementsof $5.24 per square foot, plus estimated operating expenses of $1.61 per squarefoot.  The base lease rate on 25,600square feet of the Property increases to $5.64 per square foot on January 28,2008, with fixed annual increases each January 28 thereafter during theinitial Term, plus the amortization of tenant improvements of $5.24 per squarefoot, and estimated operating expenses of $1.61 per square foot.

 

Initially, therewas no base lease rate payable on 6,400 square feet of the Property, plusestimated operating expenses of $1.61 per square foot.  The base lease rate on 6,400 square feet ofthe Property increases to $3.00 per square foot commencing on August 28,2007, and increases to $3.09 on January 28, 2008, with fixed annualincreases each January 28 thereafter during the initial Term, plusestimated operating expenses of $1.61 per square foot.

 

Thus, theestimated total rent (this is dependent upon the actual operating expenses) onthe entire 32,000 square feet of the Property is initially $1.61 per squarefoot, then increased to approximately $9.00 per square foot on January 28,2007, then increased to approximately $9.60 per square foot on August 282007, then increases to approximately $10.93 per square foot on January 28,2008, with annual increases in the base lease rate each January 28thereafter during the initial Term, up to an estimated total rent of $13.18 persquare foot during the final year of the initial Term.

 

The base leaserate for an extension period is 100% of the then prevailing market rental rate(but in no event less than the rent for the last month of the then currentTerm) and shall thereafter increase annually by 3% for the remainder of theapplicable extension period.

 

We have notinvested in any real estate or real estate mortgages.

 

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**Item 3.**

 

**Quantitative and Qualitative Disclosures aboutMarket Risk**

 

Not required forsmaller reporting companies.

 

**Item 4.**

 

**Controlsand Procedures**

 

Underthe supervision and with the participation of the Company’s President and ChiefFinancial Officer, the Company’s management has evaluated the effectiveness ofthe Company’s disclosure controls and procedures as of the end of the periodcovered by this report as defined in Rule 13a-15(b) or Rule 15(d)-15(e) underthe Securities Exchange Act of 1934 (the “Exchange Act”). Based on thatevaluation, the President and Chief Accounting Officer have concluded that, asof the end of the period covered by this report, the Company’s disclosurecontrols and procedures are effective and ensure that information required tobe disclosed in the Company’s Exchange Act reports is (1) recorded,processed, summarized and reported in a timely manner, and (2) accumulatedand communicated to management, including the President and our Chief FinancialOfficer, as appropriate, to allow timely decisions regarding requireddisclosure.

 

   There wereno changes in the Company’s internal control over financial reporting as of theend of the period covered by this report that materially affected, or arereasonably likely to materially affect, the Company’s internal control overfinancial reporting.

 

**PART II**

 

**Other Information**

 
| **Item 1.** | ** ** | **Legal Proceedings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Item 2.** | ** ** | **Unregistered Sales of Equity Securities and Use  of Proceeds**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | On  February 3, 2009, the Company entered into two agreements (the  “Agreements”) to restructure the debt evidenced by convertible term notes  that Truk Opportunity Fund, LLC, a Delaware company; Truk International Fund,  LP, a Cayman Islands company (collectively, “Truk”); and CAMOFI Master LDC, a  Cayman Islands company, formerly named DCOFI Master LDC, (“CAMOFI”) purchased  on May 19, 2005 and December 28, 2005.

 

Under the  Agreements, the Company issued to CAMOFI 200,000 shares of the Company’s  Series B Convertible Preferred Stock (“Series B”), with a  liquidation preference of $50,000, which will be convertible into 800,000  shares of the Company’s common stock at the rate of $0.25 and issued to Truk  36,680 shares of the Company’s Series B Convertible Preferred Stock, with  a liquidation preference of $9,170, which will be convertible into 146,720  shares of the Company’s common stock at the rate of $0.25. |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Item 3.** | ** ** | **Defaults Upon Senior Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Item 4.** | ** ** | **Submission of Matters to a Vote of Security  Holders**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |       | Annual  Shareholders Meeting held December 16, 2008

 

**Proposal  Number 1 — Election of Directors**

** **

Dr. Luis Lopez:  22,331,815 votes for; 996,639 votes withheld, 995,537 abstenstions, 2,659,566  broker non-votesDouglass T. Simpson: 22,336,702 votes for; 991,752 votes  withheld, 995,537 abstenstions, 2,659,566 broker non-votes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

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| ** **  | ** ** | Robert Tutag:  22,327,372 votes for; 1,001,082 votes withheld, 995,537 abstenstions,  2,659,566 broker non-votesDennis Walczewski: 22,327,259 votes for; 1,001,195  votes withheld, 995,537 abstenstions, 2,659,566 broker non-votes

Larry G. Rau:  22,332,597 votes for; 995,857 votes withheld, 995,857 abstenstions, 2,659,566  broker non-votesC. David Kikumoto: 22,332,917 votes for; 995,537  votes withheld, 995,537 abstenstions, 2,659,566 broker non-votes

Stephen P Gouze:  22,332,917 votes for; 995,537 votes withheld, 995,537 abstenstions, 2,659,566  broker non-votes

** **

**Proposal Number 2 — Ratification of  Hein & Associates**

** **

Approval:  21,756,919 votes for; 815,573 votes against; 755,962 votes abstain; 2,663,187  broker non votes. |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Item 5.** | ** ** | **Other Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |       | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| I**tem 6.** | ** ** | **Exhibits  and Reports on Form 8-K.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **  | ** ** | **a.  Index to and Description of Exhibits***.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                                                                  |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                        |
| 31.1*               |       | Certification  of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley  Act of 2002.                                                                                  |
|                |       |                                                                                                                                                                                        |
| 31.2*               |       | Certification  of Chief Financial Officers pursuant to section 302 of the  Sarbanes-Oxley Act of 2002.                                                                                 |
|                |       |                                                                                                                                                                                        |
| 32.1*               |       | Certification  by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, or adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. |

 

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*                 Filed herewith.

 
|   | **(b)** | **Reports on Form 8-K.** |
|--------|---------|-------------------------------|
|   |    | ** **                    |
|   |    | 1.                            | Form 8-K  filed February 3, 2009. *Entry into  Material Definitive Agreements* |
|   |    |                          |   |
|   |    | 2.                            | Form 8-K filed March 19, 2009*. Entry into Material Definitive Agreements* |

 

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**SIGNATURES**

 

In accordance with the requirements of the Securities Exchange Act of1934, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|                     | CORGENIX  MEDICAL CORPORATION |
|--------------------------|-------------------------------|
|                     |                          |
|                     |                          |
| May  14,  2009 | By:                           | /s/  Douglass T. Simpson |
|                     |                          | Douglass  T. Simpson |
|                     |                          | President  and Chief Executive Officer |
| ** **               | ** **                    | **(Principal  Executive Officer)** |
|                     |                          |   |
|                     |                          |   |
|                     | By:                           | /s/  William H. Critchfield |
|                     |                          | Chief  Financial Officer |
| ** **               | ** **                    | **(Principal  Financial and Accounting Officer)** |

 

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