**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**Form 10-QSB**

 

| **x**                                                      | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| ** **                                                 | ** **                                                                                             |
| **For the  quarterly period ended December 31, 2007** |
| ** **                                                 | ** **                                                                                             |
| **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 SmallBusiness Issuer in its Charter)

 

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

 

**11575Main Street, Number 400, Broomfield, CO 80020**(Address ofprincipal executive offices, including zip code)

 

**(303)457-4345**(Issuer’stelephone number, including area code)

 

 

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

 

Check whether the issuer:(1) filed all reports required to be filed by Section 13 or 15(d) ofthe Exchange 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 markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o  No x

 

The number of shares ofCommon Stock outstanding was 26,075,932 as of February 11, 2008.

 

Transitional SmallBusiness Disclosure Format. Yes o  No x

 

 

----

 

**CORGENIXMEDICAL CORPORATION**

 

**December 31,2007**

 

**TABLE OFCONTENTS**

 
| **Part I**            |
|----------------------------|
| ** **                 |
| **Financial  Information** |
|                       |   |   |
| Item  1.                   | Consolidated Financial Statements | 3 |
|                       |   |   |
| Item 2.                    | Management’s  Discussion and Analysis or Plan of Operation | 16 |
|                       |   |   |
| Item 3.                    | Controls and  Procedures | 21 |
|                       |   |   |
| **Part II**           |
| ** **                 |
| **Other  Information**     |
|                       |   |   |
| Item  1.                   | Legal  Proceedings | 25 |
|                       |   |   |
| Item  2.                   | Unregistered  Sales of Equity Securities and Use of Proceeds | 26 |
|                       |   |   |
| Item 3.                    | Defaults  Upon Senior Securities | 26 |
|                       |   |   |
| Item 4.                    | Submission  of Matters to a Vote of Security Holders | 26 |
|                       |   |   |
| Item  5.                   | Other  Information | 26 |
|                       |   |   |
| Item  6.                   | Exhibits  and Reports on Form 8-K | 26 |
|                       |   |   |
| Certifications             |   |
|                            |  |  |  |

 

2

----

 

 

**PART I**

**Item 1. ConsolidatedFinancial Statements**

**CORGENIX MEDICAL CORPORATIONAND SUBSIDIARIES**

 

Consolidated Balance Sheets

 
| ** **                                                                                                                                                                                                                                              | ** ** | **December 31,  2007** | ** ** | **June 30,  2007** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|-------------------------|------------|
| ** **                                                                                                                                                                                                                                              | ** ** | **(Unaudited)**             | ** ** | ** **              | ** ** |
| **Assets**                                                                                                                                                                                                                                              | ** ** | ** **                  | ** ** | ** **              | ** ** |
| Current assets:                                                                                                                                                                                                                                         |       |                        |       |                    |       |
| Cash and cash  equivalents                                                                                                                                                                                                                              |       | $                           | 1,894,416  |                    | $          | 1,324,072 |   |
| Accounts  receivable, less allowance for doubtful accounts of $94,097                                                                                                                                                                                   |       | 1,116,832                   |       | 1,225,677               |       |
| Inventories                                                                                                                                                                                                                                             |       | 2,530,739                   |       | 2,558,456               |       |
| Prepaid expenses                                                                                                                                                                                                                                        |       | 110,624                     |       | 99,767                  |       |
| Total current  assets                                                                                                                                                                                                                                   |       | 5,652,611                   |       | 5,207,972               |       |
| Equipment:                                                                                                                                                                                                                                              |       |                        |       |                    |       |
| Capitalized software  costs                                                                                                                                                                                                                             |       | 255,617                     |       | 255,617                 |       |
| Machinery and  laboratory equipment                                                                                                                                                                                                                     |       | 953,919                     |       | 944,663                 |       |
| Furniture,  fixtures, leaseholds & office equipment                                                                                                                                                                                            |       | 1,667,696                   |       | 1,808,698               |       |
|                                                                                                                                                                                                                                                    |       | 2,877,232                   |       | 3,008,978               |       |
| Accumulated  depreciation and amortization                                                                                                                                                                                                              |       | (981,683                    | )          | (798,362                | )          |
| Net equipment                                                                                                                                                                                                                                           |       | 1,895,549                   |       | 2,210,616               |       |
| Intangible assets:                                                                                                                                                                                                                                      |       |                        |       |                    |       |
| License                                                                                                                                                                                                                                                 |       | 344,591                     |       | 332,838                 |       |
|                                                                                                                                                                                                                                                    |       | 344,591                     |       | 332,838                 |       |
| Other assets:                                                                                                                                                                                                                                           |       |                        |       |                    |       |
| Deferred  financing costs net of amortization of $1,027,432 and $873,729                                                                                                                                                                                |       | 602,284                     |       | 743,070                 |       |
| Due from officer                                                                                                                                                                                                                                        |       | 12,000                      |       | 12,000                  |       |
| Due from Biosafe                                                                                                                                                                                                                                        |       | —                      |       | 125,000                 |       |
| Other assets                                                                                                                                                                                                                                            |       | 214,312                     |       | 257,180                 |       |
| Total assets                                                                                                                                                                                                                                            |       | $                           | 8,721,347  |                    | $          | 8,888,676 |   |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                                                                                          | ** ** | ** **                  | ** ** | ** **              | ** ** |
| Current liabilities:                                                                                                                                                                                                                                    |       |                        |       |                    |       |
| Current portion  of notes payable, net of discount                                                                                                                                                                                                      |       | $                           | 889,353    |                    | $          | 1,014,437 |   |
| Current portion  of capital lease obligations                                                                                                                                                                                                           |       | 233,719                     |       | 223,127                 |       |
| Accounts payable                                                                                                                                                                                                                                        |       | 616,280                     |       | 844,338                 |       |
| Accrued payroll  and related liabilities                                                                                                                                                                                                                |       | 275,266                     |       | 271,994                 |       |
| Accrued interest                                                                                                                                                                                                                                        |       | 24,239                      |       | 26,741                  |       |
| Deferred revenue                                                                                                                                                                                                                                        |       | 1,752                       |       | 465,615                 |       |
| Accrued  liabilities                                                                                                                                                                                                                                    |       | 224,928                     |       | 291,491                 |       |
| Total current  liabilities                                                                                                                                                                                                                              |       | 2,265,537                   |       | 3,137,743               |       |
| Notes payable,  net of discount, less current portion                                                                                                                                                                                                   |       | 472,493                     |       | 1,000,051               |       |
| Capital lease obligations, less current portion                                                                                                                                                                                                         |       | 324,754                     |       | 442,775                 |       |
| Deferred Facility Lease Payable, excluding current portion                                                                                                                                                                                              |       | 909,603                     |       | 1,065,227               |       |
| Total  liabilities                                                                                                                                                                                                                                      |       | 3,972,387                   |       | 5,645,796               |       |
| Redeemable  common stock, $0.001 par value 531,696 (unaudited) and 669,019 shares issued  and outstanding, aggregate redemption value of $350,003 (unaudited), and  $380,003 net of unaccreted discount and issue costs of $0 (note 5)                  |       | 250,000                     |       | 250,000                 |       |
|                                                                                                                                                                                                                                                    |       |                        |       |                    |       |
| Stockholders’ equity:                                                                                                                                                                                                                              |       |                        |       |                    |       |
| Convertible  Preferred stock, $0.001 par value. Liquidation preference of $99,485  (unaudited) and $464,730. Authorized 5,000,000 shares, Issued and outstanding  284,242 (unaudited) and 1,327,800 on December 31 and June 30,  respectively |       | 284,242                     |       | 1,327,800               |       |
| Common stock,  $0.001 par value. Authorized 100,000,000 shares; Issued and outstanding  25,347,825 (unaudited) and 14,483,342 December 31 and June 30,  respectively                                                                          |       | 24,815                      |       | 13,814                  |       |
| Additional paid-in capital                                                                                                                                                                                                                              |       | 16,786,268                  |       | 13,444,483              |       |
| Accumulated deficit                                                                                                                                                                                                                                     |       | (12,556,568                 | )          | (11,808,129             | )          |
| Accumulated other comprehensive income (loss)                                                                                                                                                                                                           |       | (39,797                     | )          | 14,912                  |       |
| Total  stockholders’ equity                                                                                                                                                                                                                        |       | 4,498,960                   |       | 2,992,880               |       |
| Total liabilities and stockholders’ equity                                                                                                                                                                                                         |       | $                           | 8,721,347  |                    | $          | 8,888,676 |   |

 

Seeaccompanying notes to consolidated financial statements.

 

3

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##  

**CORGENIX MEDICAL CORPORATIONAND SUBSIDIARIES**

## Consolidated Statements ofOperations

 
| ** **                                                       | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                       | ** ** | **December 31,  2007**      | ** ** | **December 31,  2006**    | ** ** | **December 31,****2007** | ** ** | **December 31,  2006** | ** ** |
| ** **                                                       | ** ** | **(Unaudited)**                  | ** ** | **(Unaudited)**                | ** ** |
| Net sales                                                        |       | $                                | 2,399,038  |                           | $          | 1,684,811 |   | $ | 4,504,226 |   | $ | 3,378,923 |   |
| Cost of sales                                                    |       | 1,052,837                        |       | 671,799                        |       | 2,016,974 |   | 1,316,908 |   |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Gross profit                                                     |       | 1,346,201                        |       | 1,013,012                      |       | 2,487,252 |   | 2,062,015 |   |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Operating expenses:                                              |       |                             |       |                           |       |   |   |   |   |
| Selling and  marketing                                           |       | 492,175                          |       | 577,752                        |       | 1,023,780 |   | 1,065,738 |   |
| Research and  development                                        |       | 148,572                          |       | 173,120                        |       | 312,265 |   | 405,807 |   |
| General and  administrative                                      |       | 481,230                          |       | 697,179                        |       | 924,960 |   | 1,293,479 |   |
| Total expenses                                                   |       | 1,121,977                        |       | 1,448,051                      |       | 2,261,005 |   | 2,765,024 |   |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Operating income  (loss)                                         |       | 224,224                          |       | (435,039                       | )          | 226,247 |   | (703,009 | ) |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Other income (expense)                                           |       |                             |       |                           |       |   |   |   |   |
| Other income,  net                                               |       | 21,516                           |       | 17,902                         |       | 11,688 |   | 59,272 |   |
| Interest expense                                                 |       | (306,050                         | )          | (490,984                       | )          | (986,374 | ) | (1,107,587 | ) |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Net loss                                                         |       | (60,310                          | )          | (908,121                       | )          | (748,439 | ) | (1,751,324 | ) |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Net loss per share, basic and diluted                            |       | $                                | (0.00      | )                              | $          | (0.08 | ) | $ | (0.03 | ) | $ | (0.15 | ) |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Weighted average shares outstanding, basic and  diluted (note 2) |       | 25,048,943                       |       | 11,959,592                     |       | 22,179,066 |   | 11,542,725 |   |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Net loss                                                         |       | $                                | (60,310    | )                              | $          | (908,121 | ) | (748,439 | ) | (1,751,324 | ) |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Other comprehensive income (loss)-foreign currency  translation  |       | (56,880                          | )          | 2,694                          |       | (54,709 | ) | 4,396 |   |
|                                                             |       |                             |       |                           |       |   |   |   |   |
| Total comprehensive loss                                         |       | $                                | (117,190   | )                              | $          | (905,427 | ) | $ | (803,148 | ) | (1,746,928 | ) |

 

See accompanying notes toconsolidated financial statements.

 

4

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** **

**CORGENIX MEDICAL CORPORATIONAND SUBSIDIARIES**

# Consolidated Statement of Stockholders’ EquityFor the six months ended December 31, 2007(Unaudited)

 
| ** **                                                                      | ** ** | **Preferred  Stock,  Number  of Shares** | ** ** | **Preferred  Stock,  $0.001 par** | ** ** | **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, 2007                                                   |       | 1,327,800                                     |       | $                                      | 1,327,800  |                                       | 14,483,342 |                            | $          | 13,814                           |       | $                        | 13,444,483 |                                                      | $          | (11,808,129                           | )          | $ | 14,912 |   | $ | 2,992,880 |   |
|                                                                            |       |                                          |       |                                   |       |                                       |       |                            |       |                             |       |                     |       |                                                      |       |                                  |       |
| Issuance of  common stock for cash                                              |       | —                                        |       | —                                 |       | 3,956,000                                  |       | 3,956                           |       | 985,044                          |       | —                   |       | —                                                    |       | 989,000                               |       |
| Issuance cost for  common stock offering                                        |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | (137,671                         | )          | —                   |       | —                                                    |       | (137,671                              | )          |
| Issuance of  common stock for services                                          |       | —                                        |       | —                                 |       | 10,000                                     |       | 10                              |       | 7,723                            |       | —                   |       | —                                                    |       | 7,733                                 |       |
| Issuance of  common stock in exchange for debt and interest                     |       | —                                        |       | —                                 |       | 3,193,335                                  |       | 3,192                           |       | 804,734                          |       | —                   |       | —                                                    |       | 807,926                               |       |
| Addition of  discount on convertible notes due to contingent conversion feature |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | 536,874                          |       | —                   |       | —                                                    |       | 536,874                               |       |
| Conversion of  preferred stock into common stock                                |       | (1,043,558                                    | )          | (1,043,558                             | )          | 3,215,869                                  |       | 3,216                           |       | 1,040,342                        |       | —                   |       | —                                                    |       | —                                |       |
| Compensation expense recorded as a result of stock  options issued              |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | 88,566                           |       | —                   |       | —                                                    |       | 88,566                                |       |
| Exercise of warrants                                                            |       | —                                        |       | —                                 |       | 626,600                                    |       | 627                             |       | (627                             | )          | —                   |       | —                                                    |       | —                                |       |
| Issuance of  warrants for license                                               |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | 16,800                           |       | —                   |       | —                                                    |       | 16,800                                |       |
| Cancellation of  redeemable stock upon note pay down                            |       | —                                        |       | —                                 |       | (137,322                                   | )          | —                          |       | —                           |       | —                   |       | —                                                    |       | —                                |       |
| Foreign currency translation                                                    |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | —                           |       | —                   |       | (54,709                                                   | )          | (54,709                               | )          |
| Net loss                                                                        |       | —                                        |       | —                                 |       | —                                     |       | —                          |       | —                           |       | (748,439                 | )          | —                                                    |       | (748,439                              | )          |
|                                                                            |       |                                          |       |                                   |       |                                       |       |                            |       |                             |       |                     |       |                                                      |       |                                  |       |
| Balance at  December 31, 2007                                              |       | 284,242                                       |       | $                                      | 284,242    |                                       | 25,347,825 |                            | $          | 24,815                           |       | $                        | 16,786,268 |                                                      | $          | (12,556,568                           | )          | $ | (39,797 | ) | $ | 4,498,960 |   |

 

See accompanying notes to consolidated financialstatements.

 

5

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** **

**CORGENIX MEDICAL CORPORATIONAND SUBSIDIARIES**

## Consolidated Statements ofCash Flows

 
| ** **                                                                      | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                      | ** ** | **December 31,  2007**    | ** ** | **December 31,  2006** | ** ** |
| ** **                                                                      | ** ** | **(Unaudited)**                | ** ** | **(Unaudited)** | ** ** |
| Cash flows from operating activities:                                           |       |                           |       |   |   |
| Net loss                                                                        |       | $                              | (748,439   | ) | $ | (1,751,324 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities:    |       |                           |       |   |   |
| Depreciation and  amortization                                                  |       | 195,326                        |       | 170,132 |   |
| Accretion of  discount on note payable                                          |       | 649,440                        |       | 582,921 |   |
| Gain on disposal  of equipment                                                  |       | —                         |       | (6,729 | ) |
| Common stock  issued for services                                               |       | 7,733                          |       | 33,645 |   |
| Common stock  issued for interest                                               |       | 86,718                         |       | 52,156 |   |
| Compensation  expense recorded for stock options issued                         |       | 88,566                         |       | 71,694 |   |
| Amortization of  deferred financing costs                                       |       | 153,703                        |       | 250,960 |   |
| Changes in  operating assets and liabilities:                                   |       |                           |       |   |   |
| Accounts  receivable, net                                                       |       | 107,479                        |       | (26,032 | ) |
| Inventories                                                                     |       | 27,121                         |       | (548,770 | ) |
| Prepaid expenses  and other assets, net                                         |       | 137,586                        |       | (243,402 | ) |
| Accounts payable                                                                |       | (280,783                       | )          | (190,286 | ) |
| Accrued payroll  and related liabilities                                        |       | 7,554                          |       | 31,594 |   |
| Accrued interest  and other liabilities                                         |       | (537,394                       | )          | 35,904 |   |
|                                                                            |       |                           |       |   |   |
| Net cash used in  operating activities                                          |       | (105,390                       | )          | (1,104,901 | ) |
|                                                                            |       |                           |       |   |   |
| Cash flows used in investing activities:                                        |       |                           |       |   |   |
| Proceeds from  disposal of equipment                                            |       | —                         |       | 43,051 |   |
| Additions to  equipment                                                         |       | (23,985                        | )          | (214,974 | ) |
| Net cash used in  investing activities                                          |       | (23,985                        | )          | (171,923 | ) |
|                                                                            |       |                           |       |   |   |
| Cash flows from financing activities:                                           |       |                           |       |   |   |
| Proceeds from  issuance of common stock, net of financing costs                 |       | 851,329                        |       | — |   |
| Payments on  notes payable                                                      |       | (44,000                        | )          | (407,547 | ) |
| Payments on  capital lease obligations                                          |       | (107,429                       | )          | (87,632 | ) |
|                                                                            |       |                           |       |   |   |
| Net cash  provided by (used in) financing activities                            |       | 699,900                        |       | (495,179 | ) |
|                                                                            |       |                           |       |   |   |
| Net increase  (decrease) in cash and cash equivalents                           |       | 570,525                        |       | (1,772,003 | ) |
|                                                                            |       |                           |       |   |   |
| Impact of exchange rate changes on cash                                         |       | (181                           | )          | 6,460 |   |
|                                                                            |       |                           |       |   |   |
| Cash and cash equivalents at beginning of period                                |       | 1,324,072                      |       | 3,118,494 |   |
| Cash and cash equivalents at end of period                                      |       | $                              | 1,894,416  |   | $ | 1,352,951 |   |
|                                                                            |       |                           |       |   |   |
| Supplemental cash flow disclosures:                                             |       |                           |       |   |   |
| Cash paid for  interest                                                         |       | $                              | 103,096    |   | $ | 232,385 |   |
| Noncash  investing and financing activities-                                    |       |                           |       |   |   |
| Equipment  acquired under capital leases                                        |       | $                              | —     |   | $ | 718,338 |   |
| Issuance of  warrants for license                                               |       | $                              | 16,800     |   | $ | — |   |
| Issuance of  stock for debt                                                     |       | $                              | 721,208    |   | $ | 170,788 |   |
| Conversion of  preferred stock into common stock                                |       | $                              | 1,043,558  |   | $ | — |   |
| Conversion of  redeemable common stock to note payable                          |       | $                              | —     |   | $ | — |   |
| Restricted asset  applied to note                                               |       | $                              | —     |   | $ | 250,000 |   |
| Preferred Stock  issued in kind for dividend                                    |       | $                              | —     |   | $ | 280,000 |   |
| Addition of  discount on convertible notes due to contingent conversion feature |       | $                              | 536,874    |   | $ | — |   |

 

See accompanying notes to consolidated financialstatements.

 

6

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**CORGENIX MEDICAL CORPORATION ANDSUBSIDIARIES**

** **

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

** **

**1.****                                     ****DESCRIPTION OF BUSINESS AND BASISOF PRESENTATION**

 

##### *Outlook*

#####  

                In fiscal 2008, we are focused on accelerating themarket launch of our AspirinWorks assay, continuing to seek clearance by theFDA of our Anti-AtherOx Test Kit, submission of a 510(k) PremarketNotification to the FDA for the Company’s AtherOx Test Kit, completing furtherclinical studies for our Hyaluronic Acid Test Kit and our Fibromyalgia Test Kitand continuing the development and strategic collaboration towards thedevelopment of a group of products to detect potential bio-terrorism agents.

 

                Our balance sheet, cash flow and liquidity positionshave continued to improve and hopefully will allow us to take advantage ofopportunities, as we focus primarily on the organic growth of our business.

 

##### *Company Overview*

#####  

Corgenix MedicalCorporation, which we refer to as Corgenix or the Company, is engaged in theresearch, development, manufacture, and marketing of in vitro (outside thebody) diagnostic products for use in disease detection and prevention. Wecurrently sell 52 diagnostic products on a worldwide basis to hospitals,clinical testing laboratories, universities, biotechnology and pharmaceutical companiesand research institutions.  In the UnitedStates and the United Kingdom, we sell directly to these customers.  Elsewhere in the world, we primarily sell toindependent distributors that 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 sales andmarketing activities 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.

 

***Recent Developments***

 

OnJuly 25, 2007 and September 17, 2007, we entered into subscriptionand other agreements to complete a private placement with certain institutionaland other accredited investors.

 

Ouroffering consisted of common stock in the Company (the “Shares”) at the priceof $0.25 per share.  For each Sharepurchased, every investor received an equal number of common stock purchasewarrants (the “Warrants”).  One-third ofthe Warrants issued to each investor are exercisable at $0.34 per share with aone-year term, one-third are exercisable at $0.375 per share with a two-yearterm, and the remaining third are exercisable at $0.40 per share with a  five-year term.

 

TheShares and Warrants were offered and sold in reliance on exemptions fromregistration pursuant to Section 4(2) of the Securities Act of 1933,and Rule 506 of Regulation D there under. Each investor is an “accredited investor” as defined in Rule 501 ofthe same.

 

Thesale of the Shares and Warrants also included a Registration Rights Agreementwhereby we provided the purchasers with “piggy back” registration rights if wepropose to register securities under the 1933 Act.

 

As of September 17,2007, we had sold the maximum amount plus over allotment amounting to $989,000in Shares and Warrants.

 

7

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Terra Nova Financial,LLC, an Illinois limited liability company (“Terra Nova”), acted as a placementagent for the Company. Iliad Advisors, LLC, an Illinois limited liabilitycompany (“Iliad Advisors”), provided advisory services to Terra Nova on thetransaction.  As compensation for TerraNova’s services, we paid Terra Nova a fee equal to 7% of the aggregate offeringprice, at each close of each stage of the transaction.

 

Terra Nova’s fee alsoincluded warrants, due to Terra Nova at the close of the transaction, topurchase shares of our common stock at the exercise price of $0.25 pershare.  Since Terra Nova succeeded inselling the maximum offering plus the over-allotment, totaling an aggregate of$989,000, it received $69,230 in cash, and warrants to purchase 276,920 sharesof common stock at an exercise price of $0.25 per share.

 

On March 1, 2007, weexecuted an exclusive license agreement (the “License Agreement”) with CreativeClinical Concepts, Inc. (“CCC”). The License Agreement provides that CCC license to us certain productsand assets related to determining the effectiveness of aspirin and / oranti-platelet therapy (collectively, “Aspirin Effectiveness Technology,” or the“Licensed Products”).  The AspirinEffectiveness Technology includes US trademark registration number 2,688,842,which includes the term “AspirinWorks”® and related designs.

 

We believe that there isa present and growing need for non-invasive, simple and accurate confirmationof aspirin effectiveness and aspirin therapy, and that the License Agreementwill position us to provide products to meet this need.  Since 2005, Corgenix and CCC have beenengaged in a collaborative partnership to develop, manufacture and marketproducts for aspirin monitoring, including the AspirinWorks® Test Kit, a simpleurine test that measures a person’s response to aspirin and allows physiciansto determine the effect of aspirin therapy on an individual basis.  Under terms of the original agreement, CCCand Corgenix had agreed to equally share expenses and revenues that resultedfrom the business.  Under the License Agreement,Corgenix acquired the remaining 50 percent of the license to CCC’s AspirinEffectiveness Technology, thereby owning 100 percent of the rights to CCC’sAspirin Effectiveness Technology.

 

The License Agreementrequires CCC to provide us with a worldwide, perpetual license for the use ofCCC’s Aspirin Effectiveness Technology. Additionally, CCC provided us with the names of contacts, customerlists, market information, competitive information and technology related toCCC’s already-developed market in Aspirin Effectiveness Technology.  The License Agreement requires CCC to assistwith the manufacture of products derived from the Aspirin EffectivenessTechnology, and also provide us with a right of first refusal with regard toany new products developed by CCC for the purpose of measuring aspirineffectiveness and the use of thromboxane and prostacyclin metabolites todetermine the effect of aspirin on platelets or endothelial cells.

 

We may use the LicensedProducts in connection with any other asset or trademark.  We may also enter into sublicense agreementswith any other entity for the rights, privileges and licenses granted to usunder the License Agreement.  We mustseek CCC’s consent before entering any sublicense agreement, but CCC may notunreasonably withhold its consent so long as the sublicensee will use itscommercially reasonable best efforts to market and sell the LicensedProducts.  We must use our commerciallyreasonable best efforts to market and sell the Licensed Products.  To this end, within ninety days of the datethe FDA grants clearance for the Licensed Products, and for five yearsthereafter, we must develop and maintain an interactive website dedicated tothe Licensed Products.  CCC may not useor license or in any way transfer rights to any of the Licensed Products to anythird party.

 

The License Agreementprovides that responsibility for manufacture, distribution, and administrationof the sale of the Licensed Products is with us.  However, the Agreement requires CCC to assistand cooperate with us in this regard.

 

Our first payment to CCCbecame due at the execution of the Agreement. We have provided a combination of cash, shares of the Company’s commonstock, and warrants to purchase the Company’s common stock.  Following FDA clearance of the first LicensedProduct, we are required to make additional payments to CCC.  On the first, second and third anniversary ofthat clearance, we will be obligated to make payments consisting of cash,shares of common stock, and warrants to purchase shares of common stock.  The amount of cash and number of shares and warrantsdue in these anniversary payments will be determined by application of aformula including a certain dollar value, the total cumulative revenue receivedby us from sales of the Licensed Products during that year, and our commonstock share price on the relevant anniversary. The dollar value applicable to that ratio increases with eachanniversary.

 

The License Agreementimposes caps on the total amount of cash, common stock, and warrant paymentsfrom us to CCC from the date of execution through to and including the thirdanniversary payment.  Under that caplimitation, the total anniversary payments will not exceed $200,000 in cash,$300,000 in value of shares of common stock (as valued on the date of issue),and 300,000 warrants to purchase shares of common stock at an exercise price of$0.35 per share.

 

8

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The License Agreementalso requires that, for all sales of the Licensed Products subsequent to theexecution of the agreement, we pay CCC a quarterly royalty fee equal to sevenpercent of net sales of the Licensed Products during the immediately precedingquarter.  The License Agreement’s caps onpayments from us to CCC do not apply to royalty payments. Royalty payments forthe quarter ended December 31, 2007 were minimal.

 

The Company and CCCanticipate that the License Agreement will remain in effect in perpetuity;however, the License Agreement provides for termination in the event ofmaterial breach, or if we become insolvent or file for protection under theU.S. Bankruptcy Code.  Termination wouldcause all of our rights under the License Agreement to revert to CCC, althoughany rights sublicensed to a third party would not be revoked or infringed byany such termination.

 

The License Agreement requiredthat we forgive all unpaid fees, costs and expenses due to us under thatcertain Product Developing, Manufacturing, and Distribution Agreement betweenus and CCC dated May 13, 2005.  TheLicense Agreement also requires that we forgive all unpaid fees, costs,expenses and charges due to us under that certain license agreement between theparties and McMaster University, dated October 19, 2005.  The total value of such forgiven fees, costs,expenses and charges was approximately $230,000 and was capitalized as part ofthe license on the accompanying balance sheet.

 

Certaininformation and note disclosures normally included in financial statementsprepared in accordance with accounting principles generally accepted in theUnited States of America (GAAP) have been omitted from these unauditedconsolidated financial statements. These unaudited consolidated financialstatements should be read in conjunction with the financial statements andnotes thereto included in the Company’s Annual Report on Form 10-KSB forthe fiscal year ended June 30, 2007. The results of operations for the three months and six months ended December 31,2007 and 2006 are not necessarily indicative of the operating results for thefull year.

 

In the opinion ofmanagement, all adjustments, consisting only of normal recurring accruals, havebeen made to present fairly the Company’s financial position at December 31,2007 and the results of operations and its cash flows for the three months andsix months ended December 31, 2007 and 2006.

 

***Our Business***

 

***          *****Introduction**

 

Our business includes theresearch, development, manufacture, and marketing of in vitro diagnosticproducts for use in disease detection and prevention.  We currently sell 52 diagnostic products on aworldwide basis to hospitals, clinical testing laboratories, universities,biotechnology and pharmaceutical companies and research institutions.  We have developed and we manufacture most ofour products at our Colorado facility, and we purchase what we refer to as OM Productsfrom other healthcare manufacturers for resale by us.  All of these products are used in clinicallaboratories for the diagnosis and/or monitoring of three important areas ofhealth care:

 

·                 Autoimmune disease (diseases in which anindividual creates antibodies to one’s self, for example systemic lupuserythematosus (“SLE”) and rheumatoid arthritis (“RA”);

 

·                 Vascular disease (diseases associatedwith certain types of thrombosis or clot formation, for exampleantiphospholipid syndrome, deep vein thrombosis, stroke and coronaryocclusion); and

 

·                 Liver diseases (fibrosis, and cirrhosis).

 

In addition to ourcurrent products, we are actively developing new laboratory tests in otherimportant diagnostic testing areas. 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 arebased on our patented and proprietary application of Enzyme LinkedImmunoSorbent Assay, or ELISA, technology, a clinical testing methodologycommonly used worldwide.  Most of ourcurrent products are based on this platform technology in a delivery formatconvenient for clinical testing laboratories. The delivery format, which is referred to as “Microplate,” allows thetesting of up to 96 samples per plate, and is one of the most commonly usedformats, employing conventional testing equipment found in virtually allclinical laboratories.  The availabilityand broad acceptance of ELISA Microplate products reduces entry barriersworldwide for our new products that employ this technology and delivery format.  Our products are sold as “test kits” thatinclude all of the materials required to perform the test, except 

 

9

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for routine laboratorychemicals and instrumentation.  A testusing ELISA technology involves a series of reagent additions into theMicroplate, triggering a complex immunological reaction in which a resultingcolor occurs.  The amount of colordeveloped in the final step of the test is directly proportional to the amountof the specific marker being tested for in the patient or unknown sample.  The amount of color is measured and theresults 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 thanthe products of our competitors.

 

Some of the OM productswhich we obtain from other manufacturers and sell through our distributionnetwork utilize technologies other than our patented and proprietary ELISAtechnology.

 

Our diagnostic tests areintended to aid in the identification of the causes of illness and disease,enabling a physician to select appropriate patient therapy.

 

Internally and throughcollaborative arrangements, we are developing additional products that areintended to broaden the range of applications for our existing products and toresult in the introduction of new products.

 

Since 1990, our salesforce and distribution partners have sold over 12 million tests worldwide underthe REAADS and Corgenix labels, as well as products sold under othermanufacturers’ labels, referred to as OEM products.  An integral part of our strategy is to workwith corporate partners to develop market opportunities and access importantresources.  We believe that ourrelationships with current and potential partners will enable us to enhance ourmenu of diagnostic products and accelerate our ability to penetrate theworldwide markets for new products.

 

We currently use theREAADS and Corgenix trademarks and trade names in the sale of the productswhich we manufacture.  These productsconstitute 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.   Stockoptions to purchase 150,000 shares were granted during the quarter ended September 30,2007. No options were granted during the quarter ended December 31, 2007.Options and warrants to purchase common stock totaling 36,516,735 shares as of December 31,2007, are not included in the calculation of weighted average commonshares-diluted below as their effect is anti-dilutive. Redeemable common stockis included in the common shares outstanding for purposes of calculating netincome (loss) per share.

 
| ** **                                                          | ** ** | **3 Months ended  December 31,  2007** | ** ** | **3 Months ended  December 31,  2006** | ** ** | **6 Months ended  December 31,  2007** | ** ** | **6 Months ended  December 31,  2006** | ** ** |
|---------------------------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------------|------------|
| Net loss                                                            |       | $                                                     | (60,310    | )                                                     | $          | (908,121                                              | )          | (748,439                                              | )          | $ | (1,751,324 | ) |
|                                                                |       |                                                  |       |                                                  |       |                                                  |       |                                                  |       |
| Common and  common equivalent shares outstanding:                   |       |                                                  |       |                                                  |       |                                                  |       |                                                  |       |
| Historical  common shares outstanding at beginning of period        |       | 24,725,431                                            |       | 11,318,291                                            |       | 14,483,342                                            |       | 10,723,205                                            |       |
| Weighted average  common equivalent shares issued during the period |       | 323,512                                               |       | 641,301                                               |       | 7,695,724                                             |       | 819,520                                               |       |
|                                                                |       |                                                  |       |                                                  |       |                                                  |       |                                                  |       |
| Weighted average  common shares — basic and diluted            |       | 25,048,943                                            |       | 11,959,592                                            |       | 22,179,066                                            |       | 11,542,725                                            |       |
|                                                                |       |                                                  |       |                                                  |       |                                                  |       |                                                  |       |
| Net loss per share — basic and diluted                         |       | $                                                     | (0.00      | )                                                     | $          | (0.08                                                 | )          | $                                                     | (0.03      | ) | $ | (0.15 | ) |
|                                                                     |            |                                                       |            |                                                       |            |                                                       |            |                                                       |            |  |  |  |  |

 

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

 

On July 1, 2007, we adopted FASB Interpretation No. 48 (“FIN 48”),*“Accounting for Uncertainty in Income Taxes — aninterpretation of FASB Statement 109,”*which was issued in July 2006.FIN 48 prescribes a comprehensive model for recognizing, measuring, presentingand disclosing in the financial statements, tax positions taken or expected tobe taken on a tax return, including a decision whether to file or not to filein a particular 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 our effective tax rate since it is subject to a fullvaluation allowance.

 

Our practice is to recognize interest and/or penalties related to incometax matters in income tax expense. We have accrued $0 for interest andpenalties as of  December 31, 2007.

 

A valuation allowance was provided for deferred tax assets, as we areunable to conclude under relevant accounting standards that it is more likelythan not that deferred tax assets will be realizable.

 

We did not record a provision for income taxes for the three and sixmonth periods ended December 31, 2007 or 2006 as a result of operatinglosses and current estimated operating results for the current fiscal year. Wehave recorded valuation allowances to fully reserve our deferred tax assets, asmanagement believes it is more likely than not that these assets will not berealized. It is possible that management’s estimates as to the likelihood ofrealization of its deferred tax assets could change as a result of changes inestimated operating results. Should management conclude that it is more likelythan not that these deferred tax assets are, at least in part, realizable, thevaluation allowance will be reduced and recognized as a deferred income taxbenefit in the statement of operations in the period of change, except as notedherein.

 

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

 

TheCompany has two segments of business: North American and Internationaloperations. North American operations transacts all sales in North America (US,Canada and Mexico). International operations transacts all other sales. Thefollowing table sets forth selected financial data for these segments for thethree-and six-month periods ended December 31, 2007 and 2006.

 
| ** **            | ** ** | ** ** | ** ** | **Three Months Ended December 31,** | ** ** | **Six Months Ended December 31,** | ** ** |
|-----------------------|------------|------------|------------|---------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **            | ** ** | ** ** | ** ** | **North America**                                       | ** ** | **International**                                     | ** ** | **Total** | ** ** | **North America** | ** ** | **International** | ** ** | **Total** | ** ** |
| Net sales             |       | 2007       |       | $                                                       | 1,736,015  |                                                  | $          | 663,023 |   | $ | 2,399,038 |   | $ | 3,366,704 |   | $ | 1,137,522 |   | $ | 4,504,226 |   |
|                  |       | 2006       |       | $                                                       | 1,188,375  |                                                  | $          | 496,436 |   | $ | 1,684,811 |   | $ | 2,481,401 |   | $ | 897,522 |   | $ | 3,378,923 |   |
|                  |       |       |       |                                                    |       |                                                  |       |   |   |   |   |   |   |   |   |
| Net income (loss)     |       | 2007       |       | $                                                       | (295,427   | )                                                     | $          | 235,117 |   | $ | (60,310 | ) | $ | (1,091,628 | ) | $ | 343,189 |   | $ | (748,439 | ) |
|                  |       | 2006       |       | $                                                       | (1,049,929 | )                                                     | $          | 141,808 |   | $ | (908,121 | ) | $ | (2,020,530 | ) | $ | 269,206 |   | $ | (1,751,324 | ) |
|                  |       |       |       |                                                    |       |                                                  |       |   |   |   |   |   |   |   |   |
| Depreciation and      |       | 2007       |       | $                                                       | 111,738    |                                                  | $          | 1,128 |   | $ | 112,866 |   | $ | 193,094 |   | $ | 2,232 |   | $ | 195,326 |   |
| Amortization          |       | 2006       |       | $                                                       | 91,598     |                                                  | $          | 1,128 |   | $ | 92,726 |   | $ | 167,900 |   | $ | 2,232 |   | $ | 170,132 |   |
|                  |       |       |       |                                                    |       |                                                  |       |   |   |   |   |   |   |   |   |
| Interest expense, net |       | 2007       |       | $                                                       | (305,104   | )                                                     | $          | (946 | ) | $ | (306,050 | ) | $ | (984,397 | ) | $ | (1,977 | ) | $ | (986,374 | ) |
|                  |       | 2006       |       | $                                                       | (490,094   | )                                                     | $          | (890 | ) | $ | (490,984 | ) | $ | (1,106172 | ) | $ | (1,415 | ) | $ | (1,107,587 | ) |
|                  |       |       |       |                                                    |       |                                                  |       |   |   |   |   |   |   |   |   |
| Segment assets:       |       |       |       |                                                    |       |                                                  |       |   |   |   |   |   |   |   |   |
| December 31,     |       | 2007       |       | $                                                       | 8,021,972  |                                                  | $          | 699,375 |   | $ | 8,721,347 |   | $ | 8,021,972 |   | $ | 699,375 |   | $ | 8,721,347 |   |
| June 30,         |       | 2007       |       | $                                                       | 8,156,103  |                                                  | $          | 732,573 |   | $ | 8,888,676 |   | $ | 8,156,103 |   | $ | 732,573 |   | $ | 8,888,676 |   |

 

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**5.****                                     ****REDEEMABLE COMMON STOCK**

 

On July 1,2002, as part of the Medical & Biological Laboratories Co., Ltd. (MBL)Agreement, MBL purchased shares of our common stock for $500,000, which MBL canrequire us to repurchase at the same price in the event that a previouslyexisting distribution agreement with their wholly owned subsidiary RhiGene, Inc.(“Rhigene”) is terminated. For no additional consideration, MBL was also issuedwarrants to purchase an additional 880,282 shares of Common Stock at a price of$.568 per share, which is equal to an aggregate amount of $500,000. Thesewarrants originally expired on July 3, 2007 and were to be exercised inwhole or in part at any time prior to their expiration. The estimated fairvalue of the warrants upon issuance was calculated as $401,809 using theBlack-Scholes option-pricing model with the following assumptions: no expecteddividend yield, 143% volatility, risk free interest rate of 4.2% and anexpected life of five years**.**The grossproceeds of $500,000 were allocated $277,221 to redeemable common stock and$222,779 to the related warrants based on the relative fair values of therespective instruments to the fair value of the aggregate transaction. Issuancecosts and the discount attributed to the redeemable common stock upon issuancewere accreted over the 33-month period to the first date whereupon the putoption may be exercised, which was the expiration date of the distributionagreement between the Company and RhiGene, Inc. (March 31, 2005).Furthermore, pursuant to the agreement with MBL, as long as MBL holds at least50% of the common stock purchased under the MBL agreement, MBL must give itswritten consent with respect to the payment of any dividend, the repurchase ofany of our equity securities, the liquidation or dissolution of the Company orthe amendment of any provision of our Articles of Incorporation or Bylaws whichwould adversely affect the rights of MBL under the stock purchase transactiondocuments. MBL was granted standard anti-dilution rights with respect to stockissuances not registered under the Securities Act. MBL also received standardpiggyback registration rights along with certain demand registration rights.

 

On March 31, 2005 our distribution agreement withRhiGene expired, and we signed a new distribution and OEM Supply Agreement withMBL International, Inc. (“MBLI”), a wholly owned subsidiary of MBL, whichgrants us non-exclusive rights to distribute MBL’s complete diagnostic line ofautoimmune testing products in the United States and exclusive distributionrights to the OEM Label products worldwide excluding the United States, Japan,Korea and Taiwan.  In addition, on August 1,2005 the Company and MBL executed an Amendment to the Common Stock PurchaseAgreement and Common Stock Purchase Warrant wherein one-half or 440,141 of theoriginal redeemable shares are exchanged for a three-year promissory notepayable with interest at prime (7.25% as of December 31, 2007) plus twopercent with payments commencing before September 1, 2005.  The shares being exchanged for the promissorynote will be returned to the Company quarterly on a pro rata basis as paymentsare made on the promissory note. As of December 31, 2007,  348,586 redeemable shares have been returnedto us under this agreement. The remaining 440,141 shares will be redeemable byus at $0.568 per share as of August 1, 2008 for any shares still owned atthat time by MBL and only to the extent that MBL has not realized at least$250,000 in gross proceeds upon the sales of its redeemable shares in the openmarket for the time period August 1, 2005 through August 30,2008.  Finally, the warrants originallyissued to MBL to purchase 880,282 shares have been extended to August 31,2008 and re-priced from $0.568 per share to $0.40 per share.

 

**6.****                                     ****STOCK-BASED COMPENSATION**

 

*Adoption of SFAS123(R)*

 

Effective July 1,2006, we adopted the provisions of Statement of Financial Accounting Standard No. 123(revised 2004), “*Share-Based Payment”,*(SFAS123(R)”) using the modified prospective transition method. In addition, theSecurities and Exchange Commission issued Staff Accounting Bulletin No. 107“*Share-Based Payment*(“SAB 107”) in March 2005,which provides supplemental SFAS 123(R) application guidance based on theviews of the SEC. Under the modified prospective transition method,compensation cost recognized in the quarterly and six-month periods ended December 31,2007 includes: (a) compensation cost for all share-based payments grantedprior to, but not yet vested as of July 1, 2006, based on the grant datefair value estimated in accordance with the original provisions of SFAS No. 123,and (b) compensation cost for all share-based payments granted beginning July 1,2006, based on the grant date fair value estimated in accordance with theprovision so SFAS 123(R). In accordance with the modified prospectivetransition method, results for prior periods have not been restated.

 

The adoption of SFAS 123(R) resultedin stock compensation expense for the quarterly and six-month period ended December 31,2007 of $48,501 and $88,566 respectively, charged to general and administrativeexpenses. This expense decreased basic and diluted income per share by lessthan $0.01 for the quarter ended December 31, 2007, and increased basicand diluted loss per share by less than $0.01 for the six months ended December 31,2007 compared to reported basic and diluted income per share of $0.00 for thequarter and loss per share of $0.03 for the six-month period. We did notrecognize a tax benefit from the stock compensation expense because we considerit more likely than not that the related 

 

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deferred tax assets, which have beenreduced by a full valuation allowance, will not be realized.

 

The Black-Scholesoption-pricing model was used to estimate the option fair values. Theoption-pricing model requires a number of assumptions, of which the mostsignificant are expected stock price volatility, the expected pre-vestingforfeiture rate and the expected option term (the amount of time from the grantdate until the options are exercised or expire). Expected volatility wascalculated based upon actual historical stock price movements over recentperiods equal to the expected option term. Expected pre-vesting forfeitureswere estimated based on actual historical pre-vesting forfeitures over recentperiods for the expected option term. The expected option term was calculated usingthe “simplified” method permitted by SAB 107.

 

*Stock Options asof the Six-Month Period Ended December 31, 2007*

 

The Company’s Amended andRestated 1999 Incentive Stock Plan, the 2006 and 2007 Incentive CompensationPlans (the “Plans”) provide for two separate components. The Stock Option GrantProgram, administered by the Compensation Committee (the “Committee”) appointedby our Board of Directors, provides for the grant of incentive andnon-statutory stock options to purchase common stock to employees, directors orother independent advisors designated by the Committee. The Restricted StockProgram administered by the Committee, provides for the issuance of RestrictedStock Awards to employees, directors or other independent advisors designatedby the Committee.

 

Thefollowing table summarizes stock options outstanding and changes during thesix-month period ended December 31, 2007:

 
| ** **                                    | ** ** | **Outstanding Options** | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|
| ** **                                    | ** ** | **Number of  Shares**   | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term (in  months)** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
| Options outstanding at June 30, 2007     |       | 2,305,600                    |       | 0.38 |   | 64.38 |   | $ | — |   |
| Granted                                       |       | 150,000                      |       | 0.44 |   | 84.0 |   |   |   |
| Exercised                                     |       | —                       |       | — |   | — |   | — |   |
| Cancelled or  forfeited                       |       | 6,000                        |       | 0.625 |   | — |   | — |   |
| Options outstanding at December 31, 2007 |       | 2,449,600                    |       | 0.381 |   | 56.25 |   | $ | 171,539 |   |
| Options exercisable at December 31, 2007 |       | 1,582,933                    |       | 0.43 |   | 40.49 |   | $ | 77,606 |   |

 

The total intrinsic value, or the difference between the exercise priceand the market price on the exercise dates, of all options exercised during thesix-month period ended December 31, 2007, was zero as no options wereexercised. Consequently, no cash was received, nor did the Company realize anytax deductions related to exercise of stock options during the quarter.

 

Stock options outstanding and currently exercisable at December 31,2007 are as follows:

 
| **Outstanding options** | ** ** | **Exercisable options** | ** ** |
|------------------------------|------------|------------------------------|------------|
| **Range of exercise price**  | ** ** | **Number**                   | ** ** | **Weighted  average  remaining  contractual  life (months)** | ** ** | **Weighted  average  exercise  price** | ** ** | **Number** | ** ** | **Weighted  average  exercise  price** | ** ** |
| 0.625 — 1.375           |       | 77,500                       |       | 2.205 |   | $ | 0.80 |   | 77,500 |   | $ | 0.80 |   |
| 0.30 — 0.46             |       | 2,372,100                    |       | 58.020 |   | 0.368 |   | 1,505,433 |   | 0.41 |   |
|                         |       |                         |       |   |   |   |   |   |   |   |   |
|                         |       | 2,449,600                    |       | 56.254 |   | $ | 0.381 |   | 1,582,933 |   | $ | 0.43 |   |

 

Total estimated unrecognized compensation cost from unvested stockoptions as of December 31, 2007 was approximately $152,926 which isexpected to be recognized over a weighted average period of approximately 65months.

 

The weighted average per share fair value of stock options granted duringthe six-month periods ending December 31, 2007 and 2006 was $0.34 and$0.33, respectively. The fair value was estimated as of the grant date usingthe Black-Scholes option pricing model with the following assumptions:

 

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| ** **              | ** ** | **Six Months Ended December 31,** | ** ** |
|-------------------------|------------|-------------------------------------------------------|------------|
| ** **              | ** ** | **2007**                                              | ** ** | **2006** | ** ** |
| Volatility              |       | 84.7                                                  | %          | 111.5 | % |
| Expected option term    |       | 7 years                                               |       | 7 years |   |
| Risk-free interest rate |       | 4.40                                                  | %          | 4.39 | % |
| Expected dividend yield |       | 0                                                     | %          | 0 | % |

 

In addition to the stock options discussed above, the Company recognizedshare-basis compensation expense related to Restricted Stock awards, of $3,333for the three months ended December 31, 2007 and 2006. The following tablesummarizes Non-vested Restricted Stock and the related activity as of and forthe quarter ended December 31, 2007:

 

| ** **                           | ** ** | ** ** | ** ** | **Weighted**        | ** ** |
|--------------------------------------|------------|------------|------------|---------------------|------------|
| ** **                           | ** ** | ** ** | ** ** | **Average**         | ** ** |
| ** **                           | ** ** | ** ** | ** ** | **Grant-Date**      | ** ** |
| ** **                           | ** ** | **Shares** | ** ** | **Fair Value** | ** ** |
| Non-vested at July 1, 2007      |       | 66,667     |       | $                   | 0.40       |   |
| Granted                              |       | —     |       | —              |       |
| Vested                               |       | —     |       | —              |       |
| Non-vested at December 31, 2007 |       | 66,667     |       | $                   | 0.40       |   |

 

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

 

*FAS 157, Fair Value Measurements.** *In September, 2006, the FASB issued Statement ofFinancial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines fair value, establishes aframework and gives guidance regarding the methods used for measuring fairvalue, and expands disclosures about fair value measurements.  SFAS 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years. We are currently assessing the impact that SFAS 157 will have onour results of operations and financial position.

 

*SFAS 159, “The Fair Value Option for FinancialAssets and Financial Liabilities — Including an Amendment of FASB Statement No. 115**.” *In November 2007, the FASB issued Statement ofFinancial Accounting Standards No. 159, The Fair Value Option forFinancial Assets and Financial Liabilities — Including an Amendment of FASBStatement No. 115 (“SFAS 159”).* *SFAS 159 is effective for fiscalyears beginning after November 15, 2007. SFAS 159 permits an entity tochoose to measure many financial instruments and certain other items at fairvalue at specified election dates. Subsequent unrealized gains and losses on items for which the fair valueoption has been elected will be reported in earnings.  We do not believe that the adoption of SFAS159 will have a material impact on our consolidated financial statements.

 

In November 2007,the FASB issued SFAS No. 141 (revised 2007), *Business Combination* (FAS 141(R)) and SFAS No. 160,*Noncontrolling Interests in ConsolidatedFinancial 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 for fiscalyears beginning 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.

 

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**8.****                                     ****NOTES PAYABLE**

 

Notes payable consist of thefollowing at December 31, 2007 and June 30, 2007:

 
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** ** | **December 30, 2007** | ** ** | **June 30, 2007** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|-----------------------------|------------|
| Convertible term note  payable to institutional investors, net of discount of $117,317 with interest  at the greater of 12%, as adjusted by a stock trading formula, or prime plus  3% (10.75% and 11.25% as of December 31, 2007 and June 30, 2007),  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 |       | $                               | 327,746    |                        | $          | 720,992 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                            |       |                        |       |
| Convertible term note  payable to institutional investors, net of discount of $490,459 with interest  at the greater of 12%, as adjusted by a stock trading formula, or prime plus  3% (10.75% and 11.25% as of December 31, 2007 and June 30, 2007),  interest only from December 28, 2006 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 November 1, 2009,  collateralized by all assets of the company and a partial guaranty by an  officer of the Company      |       | 488,100                         |       | 703,496                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                            |       |                        |       |
| Term note payable to  institutional investors, with interest at the greater of 12% or prime plus 3%  (10.75% and 11.25% as of December 31, 2007 and June 30, 2007),  interest only payments commencing June 1, 2006 until May 19, 2008,  collateralized by all assets of the Company                                                                                                                                                                                                                                                                                                                                                                          |       | 500,000                         |       | 500,000                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                            |       |                        |       |
| Note payable,  unsecured, to redeemable common stockholders, with interest at prime plus  2.0% (9.75% and 10.25% as of December 31, 2007 and June 30, 2007)  due in monthly installments with principal payments ranging from $5,000 to  $10,000 plus interest through August 2008                                                                                                                                                                                                                                                                                                                                                                                 |       | 46,000                          |       | 90,000                      |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | 1,361,846                       |       | 2,014,488                   |       |
| Current portion, net of current portion of discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | (889,353                        | )          | (1,014,437                  | )          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |       |                            |       |                        |       |
| Notes payable,  excluding current portion and net of long-term portion of discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |       | $                               | 472,493    |                        | $          | 1,000,051 |   |

 

The convertible notespayable restrict the payment of dividends on the Company’s common stock.

 

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** **

**Item 2.**

** **

**CORGENIX MEDICAL CORPORATIONManagement’s Discussion and Analysis OfFinancial Condition and Results of Operations**

 

Thefollowing discussion should be read in conjunction with the consolidatedfinancial statements and accompanying notes included elsewhere herein.

 

**General**

 

Sincethe Company’s inception, we have been primarily involved in the research,development, manufacturing and marketing/distribution of diagnostic tests forsale to clinical laboratories. We currently market 52 products coveringautoimmune disorders, vascular diseases, infectious diseases and liver disease.Our products are sold in the United States, the UK and other countries throughour marketing and sales organization that includes direct salesrepresentatives, contract sales representatives, internationally through anextensive distributor network, and to several significant OEM partners.

 

Wemanufacture products for inventory based upon expected sales demand, shippingproducts to customers, usually within 24 hours of receipt of orders if instock. Accordingly, we do not operate with a significant customer orderbacklog.

 

Exceptfor the fiscal year ending June 30, 1997, we have experienced revenuegrowth since our inception, primarily from sales of products and contractrevenues from strategic partners. Contract revenues consist of service feesfrom research and development agreements with strategic 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.

 

Althoughwe have experienced growth in revenues every year since 1990, except for 1997,there can be no assurance that, in the future, we will sustain revenue growth,current revenue levels, or achieve or maintain profitability. Our results ofoperations may fluctuate significantly from period-to-period as the result ofseveral factors, including: (i) whether and when new products aresuccessfully developed and introduced, (ii) market acceptance of currentor new products, (iii) seasonal customer demand, (iv) whether andwhen we receive 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**

 

*FAS 157, Fair Value Measurements.** *In September, 2006, the FASB issued Statement ofFinancial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines fair value, establishes aframework and gives guidance regarding the methods used for measuring fairvalue, and expands disclosures about fair value measurements.  SFAS 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007, andinterim periods within those fiscal years. We are currently assessing the impact that SFAS 157 will have onour results of operations and financial position.

 

*SFAS 159, “The Fair Value Option for FinancialAssets and Financial Liabilities — Including an Amendment of FASB Statement No. 115**.” *In November 2007, the FASB issued Statement ofFinancial Accounting Standards No. 159, The Fair Value Option forFinancial Assets and Financial Liabilities — Including an Amendment of FASBStatement No. 115 (“SFAS 159”).* *SFAS 159 is effective for fiscalyears beginning after November 15, 2007. SFAS 159 permits an entity tochoose to measure many financial instruments and certain other items at fairvalue at specified election dates. Subsequent unrealized gains and losses on items for which the fair valueoption has been elected will be reported in earnings.  We do not believe that the adoption of SFAS159 will have a material impact on our consolidated financial statements.

 

In November 2007,the FASB issued SFAS No. 141 (revised 2007), *Business Combination* (FAS 141(R)) and SFAS No. 160,*Noncontrolling Interests in ConsolidatedFinancial 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 recharacterizedas noncontrolling interests and classified as a component of equity.FAS 141(R) and FAS 160 are effective for both public and privatecompanies for fiscal years beginning on or after December 15, 2008 (fiscal2010 for the Company). FAS 141(R) will be applied prospectively.FAS 160 requires retroactive adoption of the presentation and disclosurerequirements for existing minority interests. All other requirements ofFAS 160 will be applied prospectively. Early adoption is prohibited forboth 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 consolidated financial statements are prepared inaccordance with accounting principles generally accepted in the United States (“GAAP”)and our significant accounting policies are summarized in Note 1 to theaccompanying consolidated financial statements. The preparation of financialstatements in conformity with GAAP requires management to make estimates andassumptions that affect reported amounts of assets, liabilities, disclosure ofcontingent assets and liabilities at the date of the financial statements andreported amounts of revenues and expenses during the reporting period. Actualresults could differ significantly from those estimates.

 

We disclosed in Note 1 to its consolidated financialstatements included in the Form 10-KSB those accounting policies that weconsider to be significant in determining our results of operations andfinancial position. There have been no material changes to or application ofthe accounting policies previously identified and described in the Form 10-KSB.

 

We maintain an allowance for doubtful accounts basedon our historical experience and provides for any specific collection issuesthat are identified. Such allowances have historically been adequate to providefor our doubtful accounts but involve a significant degree of managementjudgment and estimation. Worse than expected future economic conditions,unknown customer credit problems and other factors may require additionalallowances for doubtful accounts to be provided for in future periods.

 

Equipment and software are recorded at cost. Equipmentunder capital leases is recorded initially at the present value of the minimumlease payments. Depreciation and amortization is calculated primarily using thestraight-line method over the estimated useful lives of the respective assetsthat range from 3 to 7 years.

 

The internal and external costs of developing andenhancing software costs related to website development, other than initialdesign and other costs incurred during the preliminary project stage, arecapitalized until the software has been completed. Such capitalized amountsbegan to be amortized commencing when the website was placed in service on astraight-line basis over a three-year period.

 

When assets are sold, retired or otherwise disposedof, the cost and related accumulated depreciation are eliminated from theaccounts and a gain or loss is recognized.

 

Repair and maintenance costs are expensed as incurred.

 

We evaluate the realizability of our long-livedassets, including property and equipment, whenever events or changes incircumstances indicate that the carrying amount of an asset may not berecoverable.

 

Revenue from sale of products is recognized uponshipment of products.

 

Revenue from research and development contractsrepresents amounts earned pursuant to agreements to perform research anddevelopment activities for third parties and is recognized as earned under therespective agreement. Because research and development services are providedevenly over the contract period, revenue is recognized ratably over thecontract period. Research and development agreements in effect in 2007 and 2006provided for fees to the Company based on time and materials in exchange forperforming specified research and development functions. Research anddevelopment and advertising costs are expensed when incurred. Inventories arerecorded at the lower of cost or market, using the first-in, first-out method.

 

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# **Resultsof Operations**

#  

***Three Months Ended December 31,2007************compared to 2006***

 

*Net sales.*Net sales for the quarter ended December 31, 2007were $2,399,038 a 42.4% increase from $1,684,811 for the quarter ended December 31,2006. This increase resulted primarily from an increase in worldwide demand formost of our product lines. Total North American sales increased $547,640 or46.1%  to $1,736,015 while total sales tointernational distributors increased $166,587 or 33.6% to $663,023 from year toyear. With respect to the Company’s major revenue categories and product lines,North American direct product-only sales increased $213,837 or 23.2 % to$1,134,809 whereas international direct product-only sales increased $122,354or 31.1% to $515,778.  Worldwide categoryresults were as follows: Phospholipids kit sales increased $237,503 or 31.5% to$990,754 for the period. Coagulation kit sales increased $32,808 or 7.7% to$460,107. HA kit sales increased $110,924 or 41.7% to $363,321, whileAutoimmune kit sales decreased $9,315 or 32.0% to $19,773. Additionally,worldwide OEM/contract manufacturing revenues increased $397,754, or  71.2% to $956,624. Overall, worldwidenon-product revenue increased $104,498, or 109.4% to $200,040. Sales ofproducts manufactured for us by other companies while still relatively small,are expected to continue to increase during fiscal 2008.

 

*Cost of sales*.  Cost ofsales, as a percentage of sales, increased to 43.9% for the quarter ended December 31,2007 from 39.9% in 2006. This increase was primarily attributable to increasesin raw material costs due to price increases of certain key materials.

 

*Selling and marketing. *For thequarter ended December 31, 2007, selling and marketing expenses decreased14.8% to $492,175 from $577,752 for the quarter ended December 31,2006.  The decrease was primarily due todecreases in labor-related expense and consulting expenses, partially offset byincreases in royalties, trade show expenses, travel-related expenses,commissions and advertising.

 

*Research and development.* Research and development expenses decreased 14.2% to$148,572 for the quarter ended December 31, 2007, from $173,120 for thequarter ended December 31, 2006. This decrease primarily involved decreases in labor-related costs,laboratory supplies, and product testing expenses, partially offset byincreases in legal fees, clinical studies expense and legal expense.

 

*General and administrative.* For the quarter ended December 31, 2007, generaland administrative expenses decreased $215,949 or 31.0% to $481,230 from$697,179 for the quarter ended December 31, 2006.  This decrease was primarily attributable todecreases in aborted licensing costs, merger related costs, outside services,sales and use taxes, consulting expenses, and bad debt expense partially offsetby increases in bank charges, insurance expense, labor-related expenses,repairs and maintenance, and legal expenses.

 

*Interest expense.* Interest expense decreased $184,934 or 37.7% to$306,050 for the quarter ended December 31, 2007, from $490,984 for thequarter ended December 31, 2006 due primarily to a reduction of theamortization of deferred financing costs and discount on the notes payable as aresult of the twelve month principal payment deferral on the Company’sconvertible debt which commenced in November 2006, partially offset by theadditional discount and amortization on the convertible notes triggered by thecommon stock private placement during the first fiscal quarter.

 

***Six Months Ended December 31,2007************compared to 2006***

 

*Net sales.*Net sales for the six months ended December 31,2007 were $4,504,226 a 33.3% increase from $3,378,923 for the six months ended December 31,2006. This increase resulted primarily from an increase in worldwide demand formost of our product lines. Total North American sales increased $885,303 or35.7 to $3,366,704 while total sales to international distributors increased$240,000 or 26.7% to $1,137,522 from year to year. With respect to the Company’smajor revenue categories and product lines, North American direct product-onlysales increased $350,956 or 18.4% to $1,134,140 whereas international directproduct-only sales increased $135,560 or 17.9% to $892,445.  Worldwide category results were as follows:Phospholipids kit sales increased $294,420 or 18.1% to $1,922,557 for theperiod. Coagulation kit sales increased $150,524 or 18.5% to $962,724. HA kitsales increased $167,964 or 38.6% to $603,619, while Autoimmune kit sales decreased$1,472 or 2.7% to $53,567. Additionally, worldwide OEM/contract manufacturingrevenues increased $397,754, or  71.2% to$956,624. Overall, worldwide non-product revenue increased $201,406, or 004.5%to $394,157. Sales of products manufactured for us by other companies whilestill relatively small, are expected to continue to increase during fiscal2008.

 

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*Cost of sales*.  Cost ofsales, as a percentage of sales, increased to 44.8% for the six months ended December 31,2007 from 39.0% in 2006. This increase was primarily attributable to anincrease in raw materials costs as mentioned above plus unexpected scrapping ofnumerous production lots of one of our larger product lines during the firstfiscal quarter. This, normally difficult to produce product, encounterednumerous difficulties during the first fiscal quarter which resulted in a muchhigher than normal failure rate. Management has implemented a number of changesto the manufacturing process and the quality control testing protocols, andthis problem did not reoccur during the second fiscal quarter.

 

*Selling and marketing. *For thesix months ended December 31, 2007, selling and marketing expensesdecreased 3.9% to $1,023,780 from $1,065,738 for the six months ended December 31,2006.  The decrease was primarily due todecreases in  labor-related expense,trade show expenses, and retention kits partially offset by an increase inroyalties.

 

*Research and development.* Research and development expenses decreased 23.1% to$312,265 for the six months ended December 31, 2007, from $405,807 for thesix months ended December 31, 2006. This decrease primarily involved decreases in labor-related costs,travel-related expenses, and product testing expenses, partially offset byincreases in legal fees and laboratory supplies.

 

*General and administrative.* For the six months ended December 31, 2007,general and administrative expenses decreased $368,519 or 28.5% to $924,960from $1,293,479 for the six months ended December 31, 2006.  This decrease was primarily attributable todecreases in aborted licensing costs, merger related costs, labor-relatedexpenses, outside services, consulting expenses, and supplies, partially offsetby increases in equipment lease expense, rent and legal expenses.

 

*Interest expense.* Interest expense decreased $121,213 or 10.9% to$986,374 for the six months ended December 31, 2007, from $1,107,587 forthe six months ended December 31, 2006 due primarily to a reduction of theamortization of deferred financing costs and discount on the notes payable as aresult of the twelve month principal payment deferral on the Company’sconvertible debt which commenced in November 2006, partially offset by theadditional discount and acceleration of the discount amortization on theconvertible notes triggered by the common stock private placement during thefirst fiscal quarter.

 

**Liquidity and Capital Resources**

 

For the six monthsended December 31, 2007, cash used by operating activities amounted to$105,390, versus $1,104,901 for the six months ended December 31, 2006.The significant decrease in cash used by operations for the current six monthperiod resulted primarily from a substantially reduced net loss for the currentperiod, plus a decrease in accounts receivable, and a decrease in prepaidexpenses and other assets partially offset by a large decrease in accountspayable and accrued interest and other liabilities plus a small increase ininventories.

 

Net cash used ininvesting activities, the purchase of laboratory equipment, leaseholdimprovements and computer equipment was $23,985 for the six months ended December 31,2007, compared to purchases of laboratory, computer and office equipmenttotaling $171,923 for the six months ended December 31, 2006. Thissubstantial decrease in capital expenditures was due to the June 2007 moveto a new and larger facility, which necessitated increased spending on newfurniture, computers, laboratory and refrigeration equipment and flooring inthe prior fiscal year.

 

                Net cash provided by financingactivities amounted to $699,900 for the six months ended December 31, 2007compared to cash used by financing activities of $495,179 for the six monthsended December 31, 2006. This large difference in cash provided byfinancing activities versus the amount used by financing activities in thecomparable prior year was primarily due to the proceeds of the recently closedcommon stock private placement, in addition to the decreased principal paymentson notes payable in the current period as a result of the principal deferralagreement reached in November 2006.

 

                Cash on the balance sheetamounted to $1,894,416 as of December 31, 2007 compared to $1,324,072 asof  June 30, 2007.

 

                Working capital as of  December 31, 2007 amounted to $3,387,074compared to $2,070,229 as of June 30, 2007.

 

                Total liabilities were$3,972,387 as of December 31, 2007 compared to $5,645,796 as of June 30,2007.

 

                Stockholders’ equity amounted to$4,498,960 as of December 31, 2007 compared to $2,992,880 as of June 30,2007.

 

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Wehave incurred operating losses and negative cash flow from operations for mostof our history. Losses incurred since its inception, net of dividends onconvertible preferred stock, have aggregated $10,276,568, and there can be noassurance that we will be able to generate positive cash flows to fund ouroperations in the future or to pursue our strategic objectives.  Historically, we have financed its operationsprimarily through long-term debt and the sales of common, redeemable common,and preferred stock.  We have alsofinanced operations through sales of diagnostic products and agreements withstrategic partners.  Accounts receivabledecreased 8.9% to $1,116,832 from $1,225,677 as of June 30, 2007,primarily as a result of accelerated collection procedures.

 

We have developed and arecontinuing to strive to implement an operating plan intended to eventuallyachieve sustainable profitability and positive cash flow from operations.  Key components of this plan includeaccelerating revenue growth and the cash to be derived  from existing product lines as well as newdiagnostic products, expansion of our strategic alliances with otherbiotechnology and diagnostic companies, improving operating efficiencies toreduce cost of sales, thereby improving gross margins, and lowering overalloperating expenses.  Although we cannotyet conclude that the above objectives have been fully met, management has beensuccessful in increasing revenues in the current six months ended December 31,2007 by $1,125,303 or 33.3%, and is forecasting continued revenue growth forthe remainder of the fiscal year ended June 30, 2008.  In addition, during the initial six months offiscal 2008, management has been successful in reducing operating expenses by$521,716 or 18.9%, converting an operating loss of $703,009 for the priorfiscal year’s initial six-month period into operating income of $286,911 in thecurrent period and substantially reducing our negative cash flow fromoperations.

 

Although the operatingplan is intended to achieve sustainable profitability and positive cash flowfrom operations, it is possible that we may not be fully successful in ourefforts, as it will take additional time for our strategic and operatinginitiatives to have a sustained positive effect on our business operations andcash flow.  In view of this, in July 2007,we reported that we had entered into subscription and other agreements tocomplete a private placement with certain institutional and other accreditedinvestors.  As of September 30, 2007we had sold the maximum $989,000 in interests in this placement.

 

Should any othersignificant negative events occur, our financial liquidity position will mostlikely be negatively impacted by our not achieving positive cash flow fromoperations.  Given all of thesecircumstances, as noted above, we have secured additional equityfinancing.  It is also possible that wemay also experience future defaults under the agreements with our convertibledebt holders and/or redeemable common shareholder, e.g., for non payment ofamounts due, in which case they would be entitled to accelerate the amountspayable to them.  However, we do not believethat any defaults will occur in fiscal 2008 or thereafter. Management believesthat we will have adequate resources to continue operations for longer than 12months.

 

**Off-Balance Sheet Arrangements**

 

We donot have any off-balance sheet arrangements.

 

**Contractual Obligations 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. The Property is part of Landlord’s multi-tenant real propertydevelopment known as the Broomfield Corporate Center.  We use the Property for our headquarters,laboratory research and development facilities and production 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

 

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·                 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.

 

Theterm of the Lease (the “Term”) is seven years and five months and commenced on July 6,2006 with tenant options to extend the Term for up to two five-yearperiods.  We have a one time right offirst refusal to lease 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 increased 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.

 

**Item 3.**

 

**Controls and Procedures**

 

Underthe supervision and with the participation of our President and ChiefAccounting Officer, our management has evaluated the effectiveness of ourdisclosure controls and procedures as of the end of the period covered by thisreport as defined in Rule 13a-15(b) or Rule 15(d)-15(e) underthe Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation,the President and Chief Accounting Officer have concluded that, as of the endof the period covered by this report, our disclosure controls and proceduresare effective and ensure that information required to be disclosed in ourExchange Act reports is (1) recorded, processed, summarized and reportedin a timely manner, and (2) accumulated and communicated to management,including the President and our Chief Accounting Officer, as appropriate, toallow timely decisions regarding required disclosure.

 

There were no changes in our internal control overfinancial reporting as of the end of the period covered by this report thatmaterially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

 

**Forward-LookingStatements and Risk Factors**

 

This10-QSB includes statements that are not purely historical and are “forward-lookingstatements” within the meaning of Section 21E of the Securities Act of1934, as amended, including statements regarding our expectations, beliefs,intentions or strategies regarding the future. All statements other thanhistorical fact contained in this 10-QSB, including, without limitation,statements regarding future capital requirements, acquisition strategies,strategic partnership expectations, 

 

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technologicaldevelopments, the development, the availability of necessary components,research and development programs and distribution plans, are forward-lookingstatements. All forward-looking statements included in this 10-QSB are based oninformation available to us on the date hereof, and we assume no obligation toupdate such forward-looking statements. Although we believe that theassumptions and expectations reflected in such forward-looking statements arereasonable, we can give no assurance that such expectations will prove to havebeen correct or that we will take any actions that may presently be planned.

 

Aninvestment in Corgenix entails certain risks that should be carefullyconsidered. In addition, these risk factors could cause actual results todiffer materially from those expected include the following:

 

**We continue to incur losses and are likely to requireadditional financing.**

 

We have incurredoperating losses and negative cash flow from operations for most of ourhistory. Losses incurred since our inception have aggregated $10,276,568 andthere can be no assurance that we will be able to generate positive cash flowsto fund our operations in the future or to pursue our strategic objectives.Assuming no significant changes from our budget, we believe that we will havesufficient cash to satisfy our needs for at least the next twelve months. If weare not able to operate profitably and generate positive cash flows, we willundoubtedly need to raise additional capital, most likely via the sale ofequity securities, to fund our operations. If we do in fact need additionalfinancing to meet our requirements, there can be no assurance that we will beable to obtain such financing on terms satisfactory to us, if at all.Alternatively, any additional equity financing may be dilutive to existingstockholders, and debt financing, if available, may include restrictivecovenants. If adequate funds are not available, we might be required to limitour research and development activities or our selling, marketing andadministrative activities any of which could have a material adverse effect onthe future of the business.

 

**We depend upon collaborative relationships and third partiesfor product development and commercialization.**

 

Wehave historically entered into research and development agreements withcollaborative partners, from which we derived revenues in past years. Pursuantto these agreements, our collaborative partners have specific responsibilitiesfor the costs of development, promotion, regulatory approval and/or sale of ourproducts. We will continue to rely on future collaborative partners for thedevelopment of products and technologies. There can be no assurance that we willbe able to negotiate such collaborative arrangements on acceptable terms, if atall, or that current or future collaborative arrangements will be successful.To the extent that we are not able to establish such arrangements, we could beforced to undertake such activities entirely at our own expense. The amount andtiming of resources that any of these partners devotes to these activities maybe based on progress by us in our product development efforts. Collaborativearrangements may be terminated by the partner upon prior notice without causeand there can be no assurance that any of these partners will perform itscontractual obligations or that it will not terminate its agreement. Withrespect to any products manufactured by third parties, there can be noassurance that any third-party manufacturer will perform acceptably or thatfailures by third parties will not delay clinical trials or the submission ofproducts for regulatory approval or impair our ability to deliver products on atimely basis.

 

**There can be no assurance of successful or timely developmentof additional products.**

 

Ourbusiness strategy includes the development of additional diagnostic productsfor the diagnostic business. Our success in developing new products will dependon our ability to achieve scientific and technological advances and totranslate these advances into commercially competitive products on a timelybasis. Development of new products requires significant research, developmentand testing efforts. We have limited resources to devote to the development ofproducts and, consequently, a delay in the development of one product or theuse of resources for product development efforts that prove unsuccessful maydelay or jeopardize the development of other products. Any delay in thedevelopment, introduction and marketing of future products could result in suchproducts being marketed at a time when their cost and performancecharacteristics would not enable them to compete effectively in theirrespective markets. If we are unable, for technological or other reasons, tocomplete the development and introduction of any new product or if any newproduct is not approved or cleared for marketing or does not achieve asignificant level of market acceptance, our ability to remain competitive inour product niches would be impaired.

 

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**Competition in the human medical diagnostics industry is, andis expected to remain, significant.**

 

Ourcompetitors range from development stage diagnostics companies to majordomestic and international pharmaceutical and biotechnology companies. Many ofthese companies have financial, technical, marketing, sales, manufacturing,distribution and other resources significantly greater than ours. In addition,many of these companies have name recognition, established positions in themarket and long standing relationships with customers and distributors alsogreater than ours. Moreover, the diagnostics industry continues to demonstratea degree consolidation, whereby some of the large domestic and internationalpharmaceutical companies have been acquiring mid-sized diagnostics companies,further increasing the concentration of resources. There can be no assurancethat technologies will not be introduced that could be directly competitivewith or superior to our technologies.

 

**Our products and activities are subject to regulation byvarious governments and government agencies.**

 

The testing, manufacture and sale of our products issubject to regulation by numerous governmental authorities, principally theUnited States Food and Drug Administration and certain foreign regulatoryagencies. Pursuant to the Federal Food, Drug, and Cosmetic Act, and theregulations promulgated there under, the FDA regulates the preclinical andclinical testing, manufacture, labeling, distribution and promotion of medicaldevices. We are limited in our ability to commence marketing or commercialsales in the United States of new products under development until we receiveclearance or approval from the FDA. The testing for, preparation of andsubsequent FDA regulatory review of required filings can be a lengthy,expensive and uncertain process. Noncompliance with applicable requirements canresult in, among other consequences, fines, injunctions, civil penalties,recall or seizure of products, repair, replacement or refund of the cost ofproducts, total or partial suspension of production, failure of the governmentto grant pre-market clearance or pre-market approval for devices, withdrawal ofmarketing clearances or approvals, and criminal prosecution.

 

Therecan be no assurance that we will be able to obtain necessary regulatoryapprovals or clearances for our products on a timely basis, if at all, anddelays in receipt of or failure to receive such approvals or clearances, theloss of previously received approvals or clearances, limitations on intendeduse imposed as a condition of such approvals or clearances or failure to complywith existing or future regulatory requirements could negatively impact oursales and thus have a material adverse effect on our business.

 

As amanufacturer of medical devices for marketing in the United States, we arerequired to adhere to applicable regulations setting forth detailed goodmanufacturing practice requirements, which include testing, control anddocumentation requirements. We must also comply with Medical Device Report(MDR) requirements, which require that a manufacturer reports to the FDA anyincident in which its product may have caused or contributed to a death orserious injury, or in which its product malfunctioned and, if the malfunctionwere to recur, it would be likely to cause or contribute to a death or seriousinjury. We are also subject to routine inspection by the FDA for compliance withQuality System Regulations requirements, MDR requirements and other applicableregulations. Labeling and promotional activities are subject to scrutiny by theFDA and, in certain circumstances, by the Federal Trade Commission. We mayincur significant costs to comply with laws and regulations in the future,which would decrease our net income or increase our net loss and thus have apotentially material adverse effect upon our business, financial conditions andresults of operations.

 

Distributionof diagnostic products outside the United States is subject to extensiveforeign government regulation. These regulations, including the requirementsfor approvals or clearance to market, the time required for regulatory reviewand the sanctions imposed for violations, vary from country to country. We maybe required to incur significant costs in obtaining or maintaining foreignregulatory approvals. In addition, the export of certain of our products thathave not yet been cleared for United States commercial distribution may besubject to FDA export restrictions. Failure to obtain necessary regulatoryapproval or the failure to comply with regulatory requirements could reduce ourproduct sales and thus have a potentially material adverse effect on ourbusiness, financial condition and results of operations.

 

**We depend upon distribution partners for sales of diagnosticproducts in international markets.**

 

Wehave entered into distribution agreements with collaborative partners in whichwe have granted distribution rights for certain of our products to thesepartners within specific international geographic areas. Pursuant to theseagreements, our collaborative partners have certain responsibilities for marketdevelopment, promotion, and sales of the products. If any of these partnersfails to perform its contractual obligations or terminates its agreement, thiscould reduce our sales and cash flow and thus have a potentially materialadverse effect on our business, financial condition and results of operations.

 

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**Third party reimbursement for purchases of our diagnosticproducts is uncertain.**

 

In theUnited States, health care providers that purchase diagnostic products, such ashospitals and physicians, generally rely on third party payers, principallyprivate health insurance plans, federal Medicare and state Medicaid, toreimburse all or part of the cost of the purchase. Third party payers areincreasingly scrutinizing and challenging the prices charged for medical productsand services and they can affect the pricing or the relative attractiveness ofthe product. Decreases in reimbursement amounts for tests performed using ourdiagnostic products, failure by physicians and other users to obtainreimbursement from third party payers, or changes in government and privatethird party payers’ policies regarding reimbursement of tests utilizingdiagnostic products, may affect our ability to sell our diagnostic productsprofitably. Market acceptance of our products in international markets is alsodependent, in part, upon the availability of reimbursement within prevailinghealth care payment systems.

 

**Our success depends, in part, on our ability to obtainpatents and license patent rights, to maintain trade secret protection and tooperate without infringing on the proprietary rights of others.**

 

Therecan be no assurance that our issued patent will afford meaningful protectionagainst a competitor, or that patents issued or licensed to us will not beinfringed upon or designed around by others, or that others will not obtainpatents that we would need to license or design around. We could incursubstantial costs in defending the Company or our licensees in litigationbrought by others. The potential for reduced sales and increased legal expenseswould have a negative impact on our cash flow and thus our overall businesscould be adversely affected.

 

**We may not be able to successfully implement our plans toacquire other companies or technologies.**

 

Ourgrowth strategy includes the acquisition of complementary companies, productsor technologies. There is no assurance that we will be able to identifyappropriate companies or technologies to be acquired, to negotiate satisfactoryterms for such an acquisition, or to obtain sufficient capital to make suchacquisitions. Moreover, because of limited cash resources, we will be unable toacquire any significant companies or technologies for cash and our ability toeffect acquisitions in exchange for our capital stock may depend upon the marketprices for our common stock, which could result in significant dilution to itsexisting stockholders. If we do complete one or more acquisitions, a number ofrisks arise, such as disruption of our existing business, short-term negativeeffects on our reported operating results, diversion of management’s attention,unanticipated problems or legal liabilities, and difficulties in theintegration of potentially dissimilar operations. Any of these factors couldmaterially harm Corgenix’s business or its operating results.

 

**We depend on suppliers for our products’ components.**

 

Thecomponents of our products include chemical, biological and packaging suppliesthat are generally available from several suppliers, except certain antibodiesand other critical components, which we purchase from single suppliers. Wemitigate the risk of a loss of supply by maintaining a sufficient supply ofsuch antibodies to ensure an uninterrupted supply for at least three months. Wehave also qualified second vendors for all critical raw materials and believethat we can substitute a new supplier with respect to any of these componentsin a timely manner. If, for some reason, we lose our main supplier for a givenmaterial, there can be no assurances that we will be able to substitute a newsupplier in a timely manner and failure to do so could impair the manufacturingof certain of our products and thus have a material adverse effect on ourbusiness, financial condition and results of operations.

 

**We have only limited manufacturing experience with certainproducts.**

 

Althoughwe have manufactured over twelve million diagnostic tests based on ourproprietary applications of ELISA (enzyme linked immuno-absorbent assay)technology, certain of our diagnostic products in consideration for futuredevelopment, incorporate technologies with which we have limited manufacturingexperience. Assuming successful development and receipt of required regulatoryapprovals, significant work may be required to scale up production for each newproduct prior to such product’s commercialization. There can be no assurancethat such work can be completed in a timely manner and that such new productscan be manufactured cost-effectively, to regulatory standards or in sufficientvolume.

 

**Due to the specialized nature of our business, our successwill be highly dependent upon our ability to attract and retain qualifiedscientific and executive personnel.**

 

Webelieve our success will depend to a significant extent on the efforts andabilities of Dr. Luis R. Lopez and Douglass T. Simpson, who would bedifficult to replace. There can be no assurance that we will be successful inattracting 

 

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and retaining suchskilled personnel, who are generally in high demand by other companies. Theloss of, inability to attract, or poor performance by key scientific andexecutive personnel may have a material adverse effect on our business,financial condition and results of operations.

 

**The testing, manufacturing and marketing of medicaldiagnostic devices entails an inherent risk of product liability claims.**

 

Todate, we have experienced no product liability claims, but any such claimsarising in the future could have a material adverse effect on our business,financial condition and results of operations. Potential product liabilityclaims may exceed the amount of our insurance coverage or may be excluded fromcoverage under the terms of our policy or limited by other claims under ourumbrella insurance policy. Additionally, there can be no assurance that ourexisting insurance can be renewed by us at a cost and level of coveragecomparable to that presently in effect, if at all. In the event that we areheld liable for a claim against which we are not insured or for damages exceedingthe limits of our insurance coverage, such claim could have a material adverseeffect on our cash flow and thus potentially a materially adverse effect on ourbusiness, financial condition and results of operations.

 

**There has, to date, been no active public market for ourCommon Stock, and there can be no assurance that an active public market willdevelop or be sustained.**

 

Althoughour Common Stock has been traded on the OTC Bulletin Board® since February 1998,the trading has been sporadic with insignificant volume.

 

Moreover, the over-the-counter markets for securitiesof very small companies historically have experienced extreme price and volumefluctuations. These broad market fluctuations and other factors, such as newproduct developments, trends in our industry, the investment markets, economicconditions generally, and quarterly variation in our results of operations, mayadversely affect the market price of our common stock. In addition, our commonstock is subject to rules adopted by the Securities and ExchangeCommission regulating broker-dealer practices in connection with transactionsin “penny stocks.” Such rules require the delivery prior to any pennystock transaction of a disclosure schedule explaining the penny stock marketand all associated risks and impose various sales practice requirements onbroker-dealers who sell penny stocks to persons other than establishedcustomers and accredited investors, which are generally defined as institutionsor an investor with a net worth in excess of $1,000,000 or annual incomeexceeding $200,000 or $300,000 together with the spouse. For these types oftransactions the broker-dealer must make a special suitability determinationfor the purchaser and have received the purchaser’s written consent to thetransaction prior to sale. The additional burdens imposed upon broker-dealersby such requirements may discourage broker-dealers from effecting transactionsin securities subject to the penny stock rules.

 

**There are risks associated with fluctuating exchange rates.**

 

Our financial statements are presented in US dollars.At the end of each fiscal quarter and the fiscal year, we convert the financialstatements of Corgenix UK, which operates in pounds sterling, into US dollars,and consolidate them with results from Corgenix, Inc. We may, from time totime, also need to exchange currency from income generated by Corgenix UK.Foreign exchange rates are volatile and can change in an unknown andunpredictable fashion. Should the foreign exchange rates change to levelsdifferent than anticipated by us, our business, financial condition and resultsof operations may be adversely affected.

 

**CORGENIXMEDICAL CORPORATION**

 

**PART II**

 

**Other Information**

 

**Item 1.   LegalProceedings**

 

None

 

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**Item 2.   UnregisteredSales of Equity Securities and Use ofProceeds**

 

None

 

**Item 3.   DefaultsUpon Senior Securities**

 

None

 

**Item 4.   Submissionof Matters to a Vote of Security Holders**

 

None

 

**Item 5.   OtherInformation**

 

None

 

I**tem 6.   Exhibitsand 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.**

 

None

 

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**SIGNATURES**

 

In accordance with therequirements of the Securities Exchange Act of 1934, the registrant caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                   | CORGENIX MEDICAL CORPORATION                     |
|------------------------|--------------------------------------------------|
|                   |                                             |
|                   |                                             |
| February 11, 2008 | By:                                              | /s/ Douglass T. Simpson |
|                   | Douglass T. Simpson                              |
|                   | President and Chief Executive Officer            |
|                   | **(Principal Executive Officer)**                |
|                   |                                             |
|                   |                                             |
|                   | /s/ William H. Critchfield                       |
|                   | William H. Critchfield                           |
|                   | Chief Financial Officer                          |
|                   | **(Principal Financial and Accounting Officer)** |

 

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