**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 10-QSB**

**x****                             ****QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly periodended March 31, 2007**

** **

**o********               ****TRANSITION REPORT UNDER SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the transition periodfrom             to             **

** **

**Commission File Number000-24541**

**CORGENIX MEDICAL CORPORATION**

(Name of Small BusinessIssuer in its Charter)

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

 

**11575 Main Street, Number400, Broomfield, CO 80020**

(Address of principal executive offices, including zipcode)

** **

**(303) 457-4345**

(Issuer’s telephone 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 bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.     Yes x   No  o

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

The number of shares of Common Stock outstanding was13,587,801 as of  May 15, 2007.

Transitional Small Business Disclosure Format.     Yes o   No x

 

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**CORGENIX MEDICALCORPORATIONMay 31, 2007**

**TABLE OF CONTENTS**
| **Part I**                                                              |   | 3      |   |
|-------------------------------------------------------------------------|--------|--------|--------|
|                                                                    |   |   |   |
| **Financial Information**                                               |   | 3      |   |
| ** **                                                              |   |   |   |
| Item 1. Consolidated Financial Statements                               |   | 3      |   |
|                                                                    |   |   |   |
| Item 2.  Management’s Discussion and Analysis or Plan of Operation |   | 17     |   |
|                                                                    |   |   |   |
| Item 3. Controls  and Procedures                                        |   | 23     |   |
|                                                                    |   |   |   |
| **Part II**                                                             |   | 28     |   |
| ** **                                                              |   |   |   |
| **Other  Information**                                                  |   | 28     |   |
|                                                                    |   |   |   |
| Item  1. Legal Proceedings                                              |   | 28     |   |
|                                                                    |   |   |   |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds    |   | 28     |   |
|                                                                    |   |   |   |
| Item 3. Defaults Upon Senior Securities                                 |   | 29     |   |
|                                                                    |   |   |   |
| Item 4. Submission of Matters to a Vote of Security  Holders            |   | 29     |   |
|                                                                    |   |   |   |
| Item  5. Other Information                                              |   | 29     |   |
|                                                                    |   |   |   |
| Item 6. Exhibits and Reports on Form 8-K                                |   | 29     |   |
|                                                                    |   |   |   |
| Certifications                                                          |   |   |   |

 

2

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**PARTIItem 1. Consolidated Financial Statements**

**CORGENIX MEDICALCORPORATIONAND SUBSIDIARIES**

**ConsolidatedBalance Sheets**
| ** **                                                                                                                                                                                                           |       | **March 31, 2007** | ** ** | **June 30, 2006** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                                                                                           | ** ** | **(Unaudited)**              | ** ** | ** **                  | ** ** |
| **Assets**                                                                                                                                                                                                           |       |                         |       |                        |       |
| Current assets:                                                                                                                                                                                                      |       |                         |       |                        |       |
| Cash and cash  equivalents                                                                                                                                                                                           |       | $                            | 1,251,764  |                        | $          | 3,118,494 |   |
| Accounts  receivable, less allowance for doubtful accounts of  $94,097 and $13,097                                                                                                                              |       | 1,136,320                    |       | 1,362,768                   |       |
| Inventories                                                                                                                                                                                                          |       | 2,388,059                    |       | 1,635,549                   |       |
| Prepaid expenses                                                                                                                                                                                                     |       | 93,290                       |       | 64,596                      |       |
| Total current  assets                                                                                                                                                                                                |       | 4,869,433                    |       | 6,181,407                   |       |
| Equipment:                                                                                                                                                                                                           |       |                         |       |                        |       |
| Capitalized  software costs                                                                                                                                                                                          |       | 255,617                      |       | 122,855                     |       |
| Machinery and  laboratory equipment                                                                                                                                                                                  |       | 762,401                      |       | 671,495                     |       |
| Furniture,  fixtures, leaseholds & office equipment                                                                                                                                                              |       | 1,771,455                    |       | 585,399                     |       |
|                                                                                                                                                                                                                 |       | 2,789,473                    |       | 1,379,749                   |       |
| Accumulated  depreciation and amortization                                                                                                                                                                           |       | (700,577                     | )          | (1,113,131                  | )          |
| Net equipment                                                                                                                                                                                                        |       | 2,088,896                    |       | 266,618                     |       |
| Intangible assets:                                                                                                                                                                                                   |       |                         |       |                        |       |
| License                                                                                                                                                                                                              |       | 332,838                      |       | 27,848                      |       |
|                                                                                                                                                                                                                 |       | 332,838                      |       | 27,848                      |       |
| Other assets:                                                                                                                                                                                                        |       |                         |       |                        |       |
| Deferred  financing costs net of amortization of $796,877 and $469,065                                                                                                                                               |       | 819,752                      |       | 1,147,563                   |       |
| Restricted cash                                                                                                                                                                                                      |       | —                       |       | 250,000                     |       |
| Due from officer                                                                                                                                                                                                     |       | 12,000                       |       | 12,000                      |       |
| Other assets                                                                                                                                                                                                         |       | 515,737                      |       | 328,180                     |       |
| Total assets                                                                                                                                                                                                         |       | $                            | 8,638,656  |                        | $          | 8,213,616 |   |
| **Liabilities and Shareholders’ Equity**                                                                                                                                                                        | ** ** | ** **                   |       |                        |       |
| Current liabilities:                                                                                                                                                                                                 |       |                         |       |                        |       |
| Current portion  of notes payable, net of discount                                                                                                                                                                   |       | $                            | 319,163    |                        | $          | 770,151 |   |
| Current portion  of capital lease obligations                                                                                                                                                                        |       | 194,047                      |       | 15,945                      |       |
| Accounts payable                                                                                                                                                                                                     |       | 967,215                      |       | 511,397                     |       |
| Accrued payroll  and related liabilities                                                                                                                                                                             |       | 286,566                      |       | 270,542                     |       |
| Accrued interest                                                                                                                                                                                                     |       | 34,592                       |       | 43,914                      |       |
| Accrued  liabilities                                                                                                                                                                                                 |       | 237,185                      |       | 364,348                     |       |
| Total current  liabilities                                                                                                                                                                                           |       | 2,038,768                    |       | 1,976,297                   |       |
| Notes payable, net of  discount, less current portion                                                                                                                                                                |       | 1,595,122                    |       | 1,290,776                   |       |
| Capital lease  obligations, less current portion                                                                                                                                                                     |       | 409,278                      |       | 5,130                       |       |
| Deferred facility lease  payable, excluding current portion                                                                                                                                                          |       | 1,056,150                    |       | —                      |       |
| Total liabilities                                                                                                                                                                                                    |       | 5,099,318                    |       | 3,272,203                   |       |
| Redeemable common  stock, $0.001 par value. 774,650 shares issued and outstanding, aggregate  redemption value of $420,000, and $450,000 net of unaccreted discount and  issue costs of $0 (note 5)                  |       | 250,000                      |       | 250,000                     |       |
|                                                                                                                                                                                                                 |       |                         |       |                        |       |
| Shareholders’ equity:                                                                                                                                                                                           |       |                         |       |                        |       |
| Convertible  Preferred stock, $0.001 par value. Liquidation preference of $700,000 and  $700,000. Authorized 5,000,000 shares, Issued and outstanding 1,652,725 and  2,000,000 on March 31 and June 30, respectively |       | 1,652,725                    |       | 2,000,000                   |       |
| Common stock,  $0.001 par value. Authorized 100,000,000 shares; Issued and outstanding  13,577,801 and 10,723,205 on March 31 and June 30, respectively                                                              |       | 12,856                       |       | 9,895                       |       |
| Additional paid-in  capital                                                                                                                                                                                          |       | 13,078,424                   |       | 12,060,729                  |       |
| Accumulated deficit                                                                                                                                                                                                  |       | (11,448,250                  | )          | (9,367,556                  | )          |
| Accumulated other  comprehensive income                                                                                                                                                                              |       | (6,417                       | )          | (11,655                     | )          |
| Total  shareholders’ equity                                                                                                                                                                                     |       | 3,289,338                    |       | 4,691,413                   |       |
| Total liabilities and shareholders’ equity                                                                                                                                                                      |       | $                            | 8,638,656  |                        | $          | 8,213,616 |   |

 

See accompanying notes to consolidated financialstatements.

 

3

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**CORGENIX MEDICALCORPORATIONAND SUBSIDIARIES**

**Consolidated Statements of Operations**
| ** **                                                         | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| ** **                                                         | ** ** | **March 31,  2007**         | ** ** | **March 31,  2006**        | ** ** | **March 31,**2007 | ** ** | **March 31,  2006** | ** ** |
| ** **                                                         | ** ** | **(Unaudited)**                  | ** ** | **(Unaudited)**                 | ** ** |
| Net sales                                                          |       | $                                | 2,011,995  |                            | $          | 1,634,446 |   | $ | 5,390,918 |   | $ | 4,850,282 |   |
| Cost of sales                                                      |       | 816,907                          |       | 622,576                         |       | 2,133,815 |   | 1,782,034 |   |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Gross profit                                                       |       | 1,195,088                        |       | 1,011,870                       |       | 3,257,103 |   | 3,068,248 |   |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Operating expenses:                                                |       |                             |       |                            |       |   |   |   |   |
| Selling and  marketing                                             |       | 504,120                          |       | 431,944                         |       | 1,569,858 |   | 1,178,370 |   |
| Research and  development                                          |       | 180,254                          |       | 208,624                         |       | 586,061 |   | 490,380 |   |
| General and  administrative                                        |       | 548,137                          |       | 412,826                         |       | 1,841,616 |   | 1,143,341 |   |
| Total expenses                                                     |       | 1,232,511                        |       | 1,053,394                       |       | 3,997,535 |   | 2,812,091 |   |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Operating income  (loss)                                           |       | (37,423                          | )          | (41,524                         | )          | (740,432 | ) | 256,157 |   |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Other income (expense)                                             |       |                             |       |                            |       |   |   |   |   |
| Other income,  net                                                 |       | 16,513                           |       | 35,335                          |       | 75,785 |   | 49,810 |   |
| Interest expense                                                   |       | (308,460                         | )          | (650,664                        | )          | (1,416,047 | ) | (1,347,455 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Net loss                                                           |       | (329,370                         | )          | (656,853                        | )          | (2,080,694 | ) | (1,041,488 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Imputed dividends on  Convertible                                  |       |                             |       |                            |       |   |   |   |   |
| Preferred Stock                                                    |       | —                           |       | (2,000,000                      | )          | — |   | (2,000,000 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Net loss available to  common                                      |       |                             |       |                            |       |   |   |   |   |
| Shareholders                                                       |       | (329,370                         | )          | (2,656,853                      | )          | (2,080,694 | ) | (3,041,488 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
|  Net loss per share, basic and diluted                        |       | $                                | (0.03      | )                               | (0.27      | ) | (0.17 | ) | (0.33 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Weighted average shares  outstanding, Basic and diluted (note 2)   |       | 13,079,649                       |       | 9,913,950                       |       | 12,047,554 |   | 9,099,598 |   |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Net loss                                                           |       | $                                | (329,370   | )                               | (656,853   | ) | (2,080,694 | ) | (1,041,488 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
| Other comprehensive  loss-foreign currency translation gain (loss) |       | 842                              |       | 867                             |       | 5,238 |   | (568 | ) |
|                                                               |       |                             |       |                            |       |   |   |   |   |
|  Total comprehensive loss                                     |       | $                                | (328,528   | )                               | (655,986   | ) | (2,075,456 | ) | (1,042,056 | ) |
|                                                                    |            |                                  |            |                                 |            |  |  |  |  |  |  |  |  |

 

See accompanying notes to consolidated financialstatements.

 

4

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**CORGENIX MEDICALCORPORATION**AND SUBSIDIARIES

**Consolidated Statement of Shareholders’ EquityFor the nine months ended March 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  shareholders’  equity** | ** ** |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------|------------|----------------------------------------|------------|--------------------------------------------|------------|---------------------------------|------------|----------------------------------|------------|--------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------|------------|
| Balance at June 30, 2006                                                      |   | 2,000,000                                     |       | $                                      | 2,000,000  |                                       | 10,723,205 |                            | $          | 9,895                            |       | $                        | 12,060,729 |                                                      | $          | (9,367,556                            | )          | $ | (11,655 | ) | $ | 4,691,413 |   |
|                                                                          |   |                                          |       |                                   |       |                                       |       |                            |       |                             |       |                     |       |                                                      |       |                                  |       |
| In-kind dividend                                                              |   | 280,000                                       |       | 280,000                                |       | —                                     |       | —                          |       | —                           |       | —                   |       | —                                                    |       | 280,000                               |       |
| Conversion of preferred  stock into common stock                              |   | (627,275                                      | )          | (627,275                               | )          | 1,792,214                                  |       | 1,793                           |       | 625,482                          |       | —                   |       | —                                                    |       | —                                |       |
| Issuance of common stock  for services                                        |   | —                                        |       | —                                 |       | 210,587                                    |       | 211                             |       | 39,842                           |       | —                   |       | —                                                    |       | 40,053                                |       |
| Issuance of common stock  for license                                         |   | —                                        |       | —                                 |       | 214,285                                    |       | 214                             |       | 22,629                           |       | —                   |       | —                                                    |       | 22,843                                |       |
| Issuance of common stock  in exchange for debt and interest                   |   | —                                        |       | —                                 |       | 743,142                                    |       | 743                             |       | 222,201                          |       | —                   |       | —                                                    |       | 222,944                               |       |
| Compensation expense  recorded as a result of common stock and options issued |   | —                                        |       | —                                 |       | —                                     |       | —                          |       | 107,541                          |       | —                   |       | —                                                    |       | 107,541                               |       |
| Cancellation of  redeemable stock upon note pay down                          |   | —                                        |       | —                                 |       | (105,632                                   | )          | —                          |       | —                           |       | —                   |       | —                                                    |       | —                                |       |
| Foreign currency  translation                                                 |   | —                                        |       | —                                 |       | —                                     |       | —                          |       | —                           |       | —                   |       | 5,238                                                     |       | 5,238                                 |       |
| Net loss                                                                      |   | —                                        |       | —                                 |       | —                                     |       | —                          |       | —                           |       | (2,080,694               | )          | —                                                    |       | (2,080,694                            | )          |
|                                                                          |   |                                          |       |                                   |       |                                       |       |                            |       |                             |       |                     |       |                                                      |       |                                  |       |
| Balance at March 31, 2007                                                     |   | 1,652,725                                     |       | $                                      | 1,652,725  |                                       | 13,577,801 |                            | $          | 12,856                           |       | $                        | 13,078,424 |                                                      | $          | (11,448,250                           | )          | $ | (6,417 | ) | $ | 3,289,338 |   |

 

See accompanying notes to consolidated financialstatements.

5

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**CORGENIX MEDICALCORPORATIONAND SUBSIDIARIES**

**Consolidated Statements of Cash Flows**
| ** **                                                                     | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                     | ** ** | **March 31,  2007**        | ** ** | **March 31,  2006** | ** ** |
| ** **                                                                     | ** ** | **(Unaudited)**                 | ** ** | **(Unaudited)** | ** ** |
| Cash flows from  operating activities:                                         |       |                            |       |   |   |
| Net loss                                                                       |       | $                               | (2,080,694 | ) | $ | (1,041,488 | ) |
| Adjustments to  reconcile net loss to net cash (used) in operating activities: |       |                            |       |   |   |
| Depreciation and  amortization                                                 |       | 264,972                         |       | 91,515 |   |
| Accretion of  discount on note payable                                         |       | 711,693                         |       | 780,256 |   |
| Gain on disposal  of equipment                                                 |       | (6,729                          | )          | — |   |
| Bad debt expense                                                               |       | 50,000                          |       | 64,000 |   |
| Common stock  issued for services                                              |       | 40,053                          |       | 123,981 |   |
| Common stock  issued for interest                                              |       | 52,156                          |       | 87,563 |   |
| Compensation  expense recorded for stock options issued                        |       | 107,541                         |       | — |   |
| Amortization of  deferred financing costs                                      |       | 327,812                         |       | 295,432 |   |
| Changes in  operating assets and liabilities:                                  |       |                            |       |   |   |
| Accounts  receivable                                                           |       | 206,940                         |       | (284,257 | ) |
| Inventories                                                                    |       | (749,344                        | )          | (260,838 | ) |
| Prepaid expenses  and other assets, net                                        |       | (494,688                        | )          | (514,654 | ) |
| Accounts payable                                                               |       | 417,790                         |       | (117,808 | ) |
| Accrued payroll  and related liabilities                                       |       | 34,422                          |       | 41,626 |   |
| Accrued interest  and other liabilities                                        |       | 5,309                           |       | (23,385 | ) |
| Net cash used in  operating activities                                         |       | (1,112,767                      | )          | (758,057 | ) |
|                                                                           |       |                            |       |   |   |
| Cash flows used in  investing activities:                                      |       |                            |       |   |   |
| Procceds from  disposal of equipment                                           |       | 43,051                          |       | — |   |
| Additions to  equipment                                                        |       | (231,210                        | )          | (44,836 | ) |
| Net cash used in  investing activities                                         |       | (188,159                        | )          | (44,836 | ) |
| Cash flows provided by  (used in) financing activities:                        |       |                            |       |   |   |
| Proceeds from  issuance of preferred stock                                     |       | —                          |       | 1,771,151 |   |
| Proceeds from  exercise of stock options                                       |       | —                          |       | 4,500 |   |
| Proceeds upon  exercise of warrants                                            |       | —                          |       | 6,900 |   |
| Proceeds from  issuance of notes payable, net of original discount             |       | —                          |       | 1,363,635 |   |
| Payments on  notes payable                                                     |       | (437,547                        | )          | (35,000 | ) |
| Payments on  capital lease obligations                                         |       | (136,088                        | )          | (18,705 | ) |
| Net cash  provided by (used in) financing activities                           |       | (573,635                        | )          | 3,092,481 |   |
|                                                                           |       |                            |       |   |   |
| Net increase  (decrease) in cash and cash equivalents                          |       | (1,874,561                      | )          | 2,289,588 |   |
|                                                                           |       |                            |       |   |   |
| Impact of exchange rate  changes on cash                                       |       | 7,831                           |       | (2,197 | ) |
|                                                                           |       |                            |       |   |   |
| Cash and cash  equivalents at beginning of period                              |       | 3,118,494                       |       | 1,281,965 |   |
| Cash and cash  equivalents at end of period                                    |       | $                               | 1,251,764  |   | $ | 3,569,356 |   |
| Supplemental cash flow  disclosures:                                           |       |                            |       |   |   |
| Cash paid for  interest                                                        |       | $                               | 342,360    |   | $ | 145,400 |   |
| Noncash  investing and financing activities:                                   |       |                            |       |   |   |
| Equipment  acquired under capital leases                                       |       | $                               | 718,338    |   | $ | — |   |
| Issuance of  stock for debt                                                    |       | $                               | 170,788    |   | $ | 279,835 |   |
| Issuance of  stock for licence                                                 |       | $                               | 22,843     |   | — |   |
| Placement  warrants issued in connection with financings                       |       | $                               | —     |   | $ | 360,969 |   |
| Conversion of  redeemable common stock to note payable                         |       | $                               | —     |   | $ | 250,000 |   |
| Imputed dividends on  convertible preferred stock                              |       | $                               | 280,000    |   | $ | 2,000,000 |   |

 

See accompanying notes to consolidated financialstatements.

 

6

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**CORGENIX MEDICAL CORPORATION AND SUBSIDIARIES**

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1.****              DESCRIPTIONOF BUSINESS AND BASIS OF PRESENTATION**

##### *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 51 diagnostic products on a worldwide basis to hospitals,clinical testing laboratories, universities, biotechnology and pharmaceuticalcompanies and research institutions.  Inthe United States and the United Kingdom, we sell directly to thesecustomers.  Elsewhere in the world, weprimarily sell to independent distributors that in turn sell to thelaboratories. We also sell our products to other diagnostic companies undertheir labels, which are then distributed worldwide.

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

·                  Corgenix, Inc. (formerly REAADS Medical Products,Inc.), established in 1990 and located in Broomfield, Colorado. Corgenix, Inc.is responsible 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 use the REAADS trademark andtrade name in the sale of products that we manufacture. In addition to sales ofthe Company’s 51 products, Corgenix UK also sells viral products to researchlaboratories in the UK.

***Recent Developments***

On January 4, 2007the Company filed a complaint in the United States District Court for theDistrict of Colorado against Biosafe Laboratories, Inc., a corporation organizedand existing under the laws of the State of Illinois. The complaint states,among other things, that Corgenix and Biosafe are parties to a non-bindingLetter of Intent dated September 12, 2006 (the “LOI”), under which thecompanies explored the possibility of a licensing arrangement between them forthe sale of some of Biosafe’s products. Upon execution of this non-binding LOI,Corgenix paid to Biosafe a deposit of $250,000. The LOI specifically requiredBiosafe to refund $225,000 of that deposit to Corgenix in the event that abinding agreement was not reached between the parties (the “Refundable Deposit”).A binding agreement was never reached between the two companies and even thoughBiosafe was obligated to refund the Refundable Deposit to Corgenix and demandwas made by Corgenix for said Refundable Deposit, Biosafe refused to return theRefundable Deposit. Corgenix has brought suit against Biosafe, and seeks reliefin the form of, but not limited to, the refund of the Refundable Deposit, inaddition to all damages sustained.

On February 20,2007 Biosafe disputed the above claims and filed a counterclaim against theCompany, which states, among other things, that Corgenix failed to go forwardwith the execution of the binding agreement after the tems of said agreementwere fully negotiated and drafted and that the required funding had beensecured. It also claims that Corgenix failed to disclose, in a timely fashion,that it needed Board of Director approval prior to execution of the bindingagreement, and overall did not deal with Biosafe in good faith and with fairdealing. Biosafe’s counterclaim claims damages of $1,000,000.

On March 12, 2007the Company filed its reply to the above counterclaims denying the validity ofall of the counter claims by Biosafe and again requesting that judgment beentered in its favor and that the Company be awarded its $225,000 deposit andany other costs.

Managementbelieves that  there is little likelihoodof the BioSafe counterclaim being successful and therefore no liability hasbeen accrued.

7

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OnMarch 1, 2007, Corgenix Medical Corporation (the “Company”) executed a licenseagreement (the “Agreement”) with Creative Clinical Concepts (“CCC”).  The Agreement provides that CCC license tothe Company certain products and assets related to determining theeffectiveness of aspirin and / or anti-platelet therapy (collectively, “AspirinEffectiveness Technology,” or the “Licensed Products”).  The Aspirin Effectiveness Technology includesUS trademark registration number 2,688,842, which includes the term “AspirinWorks”®and related designs.

TheCompany believes that there is a present and growing need for non-invasive,simple and accurate confirmation of aspirin effectiveness and aspirin therapy,and that the Agreement will position the Company to provide products to meetthis need.  Since 2004, Corgenix and CCChave been engaged in a collaborative partnership to develop, manufacture andmarket products for aspirin monitoring, including the AspirinWorks® Test Kit, asimple urine test that measures a person’s response to aspirin and allowsphysicians to determine the effect of aspirin therapy on an individualbasis.  Under terms of the originallicense agreement, CCC and Corgenix had agreed to equally share expenses andrevenues that resulted from the business. Under the new Agreement, Corgenix will acquire the remaining 50 percentof the license to CCC’s aspirin resistance business, thereby owning 100 percentof the rights to CCC’s aspirin resistance business.

TheAgreement requires CCC to provide the Company with a worldwide, perpetuallicense for the use of CCC’s Aspirin Effectiveness Technology.  Additionally, CCC will provide the Companywith the names of contacts, customer lists, market information, competitiveinformation and technology related to CCC’s already-developed market in AspirinEffectiveness Technology.  The Agreementrequires CCC to assist with the manufacture of products derived from theAspirin Effectiveness Technology, and also provides the Company with a right offirst refusal with regard to any new products developed by CCC for the purposeof measuring aspirin effectiveness and the use of thromboxane and prostacyclinmetabolites to determine the effect of aspirin on platelets or endothelialcells.

TheCompany may use the Licensed Products in connection with any other asset ortrademark.  The Company may also enterinto sublicense agreements with any other entity for the rights, privileges andlicenses granted to the Company under the Agreement.  The Company must seek CCC’s consent beforeentering any sublicense agreement, but CCC may not unreasonably withhold itsconsent so long as the sublicensee will use its commercially reasonable bestefforts to market and sell the Licensed Products.  The Company must use its 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, the Company must develop and maintain an interactive websitededicated to the Licensed Products.  CCCmay not use any of the Licensed Products.

TheAgreement provides that responsibility for manufacture, distribution, andadministration of the sale of the Licensed Products is with the Company.  However, the Agreement requires CCC to assistand cooperate with the Company in this regard.

TheCompany’s first cash payment to CCC amounting to $50,000 became due at theexecution of the Agreement.  The Companyhas provided a combination of cash, shares of the Company’s common stock, andwarrants to purchase the Company’s common stock.  Following FDA clearance of the first LicensedProduct, the Company will be required to make additional payments to CCC.  On the first, second and third anniversary ofthat clearance, the Company will be obligated to make payments consisting ofcash, shares of common stock, and warrants to purchase shares of commonstock.  The amount of cash and number ofshares and warrants due in these anniversary payments will be determined byapplication of a formula including a certain dollar value, the total cumulativerevenue received by the Company from sales of the Licensed Products during thatyear, and the Company’s common stock share price on the relevantanniversary.  The dollar value applicableto that ratio increases with each anniversary.

TheAgreement imposes caps on the total amount of cash, common stock, and warrantpayments from the Company to CCC from the date of execution through to andincluding the third anniversary payment. Under that cap provision, the total anniversary payments will not exceed$200,000 in cash, $300,000 in value of shares of common stock (as valued on thedate of issue), and 300,000 warrants to purchase shares of common stock.

TheAgreement also requires that, for all sales of the Licensed Products subsequentto the execution of the agreement, the Company pay CCC a quarterly royalty feeequal to seven percent of net sales of the Licensed Products during theimmediately preceding quarter.  TheAgreement’s caps on payments from the Company to CCC do not apply to royaltypayments.

8

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TheCompany and CCC anticipate that the Agreement will remain in effect inperpetuity; however, the Agreement provides for termination in the event ofmaterial breach, or if the Company becomes insolvent or files for protectionunder the United States Bankruptcy Code. Termination would cause all the Company’s rights under the LicenseAgreement to revert to CCC, although any rights sublicensed to a third partywould not be revoked or infringed by any such termination.

TheAgreement requires that the Company forgive all unpaid fees, costs and expensesdue to the Company under that certain Product Developing, Manufacturing, andDistribution Agreement between the Company and CCC dated May 13, 2004.  The Agreement also requires that the Companyforgive all unpaid fees, costs, expenses and charges due to the Company underthat certain License Agreement between the parties and McMaster University,dated October 19, 2004.  The total valueof such forgiven fees, costs, expenses and charges is approximately $230,000which has been recorded as license rights in the accompanying balance sheet.

***Our Business***

**Introduction**

Our business includes theresearch, development, manufacture, and marketing of in vitro diagnosticproducts for use in disease detection and prevention. We sell 51 diagnosticproducts on a worldwide basis to hospitals, clinical testing laboratories,universities, biotechnology and pharmaceutical companies and researchinstitutions. We have developed and we manufacture most of our products at ourColorado facility, and we purchase what we refer to as OM Products from otherhealthcare manufacturers for resale by us. All of these products are used in clinical laboratories for the diagnosisand/or monitoring of three important areas of health care:

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

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

·                  Liverdiseases (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 asInstrumentation Laboratories, Helena Laboratories and Diagnostic Grifols, S.A.

Most of ourproducts are based on our patented and proprietary application of Enzyme LinkedImmunoSorbent Assay, or ELISA, technology, a clinical testing methodologycommonly used worldwide. Most of our current products are based on thisplatform technology in a delivery format convenient for clinical testinglaboratories. The delivery format, which is referred to as “Microplate,” allowsthe testing 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 availability and broad acceptance of ELISAMicroplate products reduces entry barriers worldwide for our new products thatemploy this technology and delivery format. Our products are sold as “test kits”that include all of the materials required to perform the test, except forroutine laboratory chemicals and instrumentation. A test using ELISA technologyinvolves a series of reagent additions into the Microplate, triggering acomplex immunological reaction in which a resulting color occurs. The amount ofcolor developed in the final step of the test is directly proportional to theamount of the specific marker being tested for in the patient or unknownsample. The amount of color is measured and the results calculated usingroutine laboratory instrumentation.  Ourtechnology specifies a process by which biological materials are attached tothe fixed surface of a diagnostic test platform. Products developed using thisunique attachment method typically demonstrate a more uniform and stablemolecular configuration, providing a longer average shelf life, increasedaccuracy and superior specificity than the products of our competitors.

Some of the OMproducts which we obtain from other manufacturers and sell through ourdistribution network utilize technologies other than our patented andproprietary ELISA technology.

Our diagnostictests are intended to aid in the identification of the causes of illness anddisease, enabling a physician to select appropriate patient therapy.

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Internally andthrough collaborative arrangements, we are developing additional products thatare intended to broaden the range of applications for our existing products andto result in the introduction of new products.

Since 1990, oursales force and distribution partners have sold over 12 million tests worldwideunder the REAADS and Corgenix labels, as well as products sold under othermanufacturers’ labels, referred to as OEM products. An integral part of ourstrategy is to work with corporate partners to develop market opportunities andaccess important resources. We believe that our relationships with current andpotential partners will enable us to enhance our menu of diagnostic productsand accelerate our ability to penetrate the worldwide markets for new products.

We currently usethe REAADS and Corgenix trademarks and trade names in the sale of the productswhich we manufacture. These products constitute the majority of our productsales.

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 unaudited consolidatedfinancial statements. These unaudited consolidated financial statements shouldbe read in conjunction with the financial statements and notes thereto includedin the Company’s Annual Report on Form 10-KSB for the fiscal year ended June30, 2006.  The results of operations forthe nine months ended March 31, 2007 and 2006 are not necessarily indicative ofthe operating results for the full year.

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

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

Basicearnings (loss) per share is computed by dividing net loss attributable tocommon shareholders by the weighted average number of common sharesoutstanding.  Diluted earnings (loss) pershare is computed by dividing net loss attributable to common shareholders bythe weighted average number of common shares outstanding increased forpotentially dilutive common shares outstanding during the period.  The dilutive effect of stock options andtheir equivalents is calculated using the treasury stock method.  Stock options to purchase 220,000 shares weregranted in fiscal 2006. No stock options to purchase shares were granted duringthe quarter ended March 31, 2007. Stock options to purchase 860,000 shares weregranted during the nine months ended March 31, 2007. Options and warrants topurchase common stock totaling 34,085,426 and 33,221,103 shares as of March 31,2007 and 2006, respectively, are not included in the calculation of weightedaverage common shares-diluted below as their effect is anti-dilutive.Redeemable common stock is included in the common shares outstanding forpurposes of calculating net income (loss) per share.
| ** **                                                          | ** ** | **3 Months ended  March 31,  2007** | ** ** | **3 Months ended  March 31,  2006** | ** ** | **9 Months ended  March 31,  2007** | ** ** | **9 Months ended  March 31,  2006** | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------|------------|
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Net loss  attributable to common shareholders                       |       | $                                                  | (329,370   | )                                                  | $          | (2,,656,853                                        | )          | $                                                  | (2,080,694 | ) | $ | 3,041,488 | ) |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Common and  common equivalent shares outstanding:                   |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Historical  common shares outstanding at beginning of year          |       | 10,723,205                                         |       | 8,172,435                                          |       | 10,723,205                                         |       | 8,172,435                                          |       |
| Weighted average  common equivalent shares issued during the period |       | 2,356,444                                          |       | 1,741,515                                          |       | 1,324,349                                          |       | 927,163                                            |       |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Weighted average  common shares — basic and diluted            |       | 13,079,649                                         |       | 9,913,950                                          |       | 12,047,554                                         |       | 9,099,598                                          |       |
|                                                                |       |                                               |       |                                               |       |                                               |       |                                               |       |
| Net loss per share —  basic and diluted                        |       | $                                                  | (0.03      | )                                                  | $          | (0.27                                              | )          | $                                                  | (0.17      | ) | $ | (0.33 | ) |

 

**3.             INCOME TAXES**

A valuation allowance was provided for deferred tax assets, as theCompany is unable to conclude under relevant accounting standards that it ismore likely than not that deferred tax assets will be realizable.

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**4.             SEGMENT INFORMATION**

The Company hastwo segments of business: North American and International operations.  North American operations transacts all salesin North America (US, Canada and Mexico). International operations transactsall other sales.  The following tablesets forth selected financial data for these segments for the three-andnine-month periods ended March 31, 2007 and 2006.
| ** **                | ** ** | ** ** | ** ** | **Three Months Ended March 31,** | ** ** | **Nine Months Ended March 31,** | ** ** |
|---------------------------|------------|------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                | ** ** | ** ** | ** ** | **Domestic**                                         | ** ** | **International**                                   | ** ** | **Total** | ** ** | **Domestic** | ** ** | **International** | ** ** | **Total** | ** ** |
| Net sales                 |       | 2007       |       | $                                                    | 1,456,522  |                                                | 555,473    |   | 2,011,995 |   | 3,937,923 |   | 1,452,995 |   | 5,390,918 |   |
|                      |       | 2006       |       | $                                                    | 1,271,122  |                                                | 363,324    |   | 1,634,446 |   | 3,667,326 |   | 1,182,956 |   | 4,850,282 |   |
|                      |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Net income  (loss)        |       | 2007       |       | $                                                    | (529,522   | )                                                   | 200,152    |   | (329,370 | ) | (2,547,990 | ) | 467,296 |   | (2,080,694 | ) |
|                      |       | 2006       |       | $                                                    | (777,154   | )                                                   | 120,301    |   | (656,853 | ) | (1,491,196 | ) | 449,708 |   | (1,041,488 | ) |
|                      |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Depreciation and          |       | 2007       |       | $                                                    | 93,690     |                                                | 1,150      |   | 94,840 |   | 261,590 |   | 3,382 |   | 264,972 |   |
| Amortization              |       | 2006       |       | $                                                    | 18,613     |                                                | 1,033      |   | 19,646 |   | 89,010 |   | 2,505 |   | 91,515 |   |
|                      |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Interest  expense, net    |       | 2007       |       | $                                                    | (307,775   | )                                                   | (685       | ) | (308,460 | ) | (1,413947 | ) | (2,100 | ) | (1,416,047 | ) |
|                      |       | 2006       |       | $                                                    | (614,559   | )                                                   | (770       | ) | (615,329 | ) | (1,294002 | ) | (3,643 | ) | (1,297,645 | ) |
|                      |       |       |       |                                                 |       |                                                |       |   |   |   |   |   |   |   |   |
| Segment assets  March 31, |       | 2007       |       | $                                                    | 8,049,227  |                                                | 589,429    |   | 8,638,656 |   | 8,049,227 |   | 589,429 |   | 8,638,656 |   |
| June 30,                  |       | 2006       |       | $                                                    | 7,625,303  |                                                | 588,313    |   | 8,213,616 |   | 7,625,303 |   | 588,313 |   | 8,213,616 |   |

 

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

On July 1, 2002,as part of the Medical & Biological Laboratories Co., Ltd. (MBL) Agreement,MBL purchased shares of the Company’s common stock for $500,000, which MBL canrequire the Company to repurchase at the same price in the event that apreviously existing distribution agreement with their wholly owned subsidiaryRhiGene, Inc. (“Rhigene”) is terminated. For no additional consideration, MBLwas also issued warrants to purchase an additional 880,282 shares of CommonStock at a price of $.568 per share, which is equal to an aggregate amount of$500,000. These warrants expire on July 3, 2007 and may be exercised in wholeor in part at any time prior to their expiration.  The estimated fair value of the warrants uponissuance was calculated as $401,809 using the Black-Scholesoption-pricing model with the following assumptions:  no expected dividend yield, 143% volatility,risk free interest rate of 4.2% and an expected life of five years**. **The gross proceedsof $500,000 were allocated $277,221 to redeemable common stock and $222,779 tothe related warrants based on the relative fair values of the respectiveinstruments to the fair value of the aggregate transaction. Issuance costs andthe discount attributed to the redeemable common stock upon issuance wereaccreted over the 33-month period to the first date whereupon the put option maybe exercised, which was the expiration date of the distribution agreementbetween the Company and RhiGene, Inc. (March 31, 2005). Furthermore, pursuantto the agreement with MBL, as long as MBL holds at least 50% of the commonstock purchased under the MBL agreement, MBL must give its written consent withrespect to the payment of any dividend, the repurchase of any of the Company’sequity securities, the liquidation or dissolution of the Company or theamendment of any provision of the Company’s Articles of Incorporation or Bylawswhich would adversely affect the rights of MBL under the stock purchasetransaction documents.  MBL was grantedstandard anti-dilution rights with respect to stock issuances not registeredunder the Securities Act.  MBL also receivedstandard piggyback registration rights along with certain demand registrationrights.

OnMarch 31, 2005 our distribution agreement with RhiGene expired, and the Companysigned a new distribution and OEM Supply Agreement with MBL International, Inc.(“MBLI”), a wholly owned subsidiary of MBL, which grants the Companynon-exclusive rights to distribute MBL’s complete diagnostic line of autoimmunetesting products in the United States and exclusive distribution rights to theOEM Label products worldwide excluding the United States, Japan, Korea andTaiwan.  In addition, on August 1, 2005the 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 (8.25% as of March 31, 2007) plus two percent.The shares being exchanged for the promissory note are returned to the Companyquarterly on a pro rata basis as payments are made on the promissory note. Asof March 31, 2007, 158,448 redeemable shares have been returned to the Company 

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underthis agreement. The remaining 440,141 shares will be redeemable by the Companyat $0.568 per share as of August 1, 2008 for any shares still owned at thattime by MBL and only to the extent that MBL has not realized at least $250,000in gross proceeds upon the sales of its redeemable shares in the open marketfor the time period August 1, 2005 through August 30, 2008.  Through March 31, 2007, to the best ofour knowledge, no open market proceeds have been realized by MBL. Finally, thewarrants originally issued to MBL to purchase 880,282 shares have been extendedto August 31, 2008 and re-priced from $0.568 per share to $0.40 per share.

**6.****              STOCK-BASEDCOMPENSATION**

*Adoptionof SFAS 123(R)*

EffectiveJuly 1, 2006, the Company adopted the provisions of Statement of FinancialAccounting Standard No. 123 (revised 2004), “*Share-BasedPayment”*(SFAS 123(R)”) using the modified prospective transitionmethod. In addition, the Securities and Exchange Commission issued StaffAccounting Bulletin No. 107, “*Share-Based Payment*(“SAB107”) in March 2005, which provides supplemental SFAS 123(R) applicationguidance based on the views of the SEC. Under the modified prospectivetransition method, compensation cost recognized in the quarterly and nine-monthperiods ended March 31, 2007 includes: (a) compensation cost for allshare-based payments granted prior to, but not yet vested as of July 1, 2006,based on the grant date fair value estimated in accordance with the originalprovisions of SFAS No. 123, and (b) compensation cost for all share-basedpayments granted beginning July 1, 2006, based on the grant date fair valueestimated in accordance with the provision so SFAS 123(R). In accordance withthe modified prospective transition method, results for prior periods have notbeen restated.

Theadoption of SFAS 123(R) resulted in stock compensation expense for thequarterly and nine-month periods ended March 31, 2007 of $35,847 and $107,541charged to general and administrative expenses. This expense increased basicand diluted loss per share by less than $0.01 for the quarter and nine-monthperiod. The Company did not recognize a tax benefit from the stock compensationexpense because the Company considers more than likely than not that therelated deferred tax assets, which have been reduced by a full valuationallowance, will not be realized.

TheBlack-Scholes option-pricing model was used to estimate the option fair values.The option-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 calculatedusing the “simplified” method permitted by SAB 107.

*Pro-Forma StockCompensation Expense for the Quarterly and Nine-Month Periods Ended March  31, 2006*

For the quarterly andnine-month periods ended March 31, 2006, the Company applied the intrinsicvalue method of accounting for stock options as prescribed by APB 25. Since alloptions granted to employees during the quarterly and nine-month periods endedMarch 31, 2006 had an exercise price equal to the closing market price of theunderlying common stock on the grant date, no compensation expense wasrecognized. If compensation expense had been recognized based on the estimatedfair value of each option granted in accordance with the provisions of SFAS 123as amended by Statement of Financial Accounting Standard 148, our net loss andnet loss per share would have been reduced to the following pro-forma amounts:

|                                                                                                                        | ** ** | **Three Months** | ** ** | **Nine Months** | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|----------------------|------------|
| ** **                                                                                                             | ** ** | **Ended**             | ** ** | **Ended**            | ** ** |
| ** **                                                                                                             | ** ** | **March 31,**    | ** ** | **March 31,**   | ** ** |
| ** **                                                                                                             | ** ** | **2006**              | ** ** | **2006**             | ** ** |
|                                                                                                                   |       |                  |       |                 |       |
| Net loss  available to common shareholders as reported                                                                 |       | $                     | (2,656,853 | )                    | $          | (3,041,488 | ) |
| Deduct total  stock-based employee compensation expense determined under fair-value method  for all awards, net of tax |       | (30,041               | )          | $                    | (90,122    | ) |
| Pro forma net  loss available to common shareholders                                                                   |       | (2,686,894            | )          | $                    | (3,131,610 | ) |
| Net loss per  share, basic and diluted as reported                                                                     |       | $                     | (0.27      | )                    | $          | (0.34 | ) |
| Net loss per share,  basic and diluted pro forma                                                                       |       | $                     | (0.27      | )                    | $          | (0.34 | ) |

 

Pro-forma compensationexpense under SFAS 123, among other computational differences, does notconsider 

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potential pre-vesting forfeitures. Becauseof these differences, the pro-forma stock compensation expense presented abovefor the prior quarterly and six-month period ended December 31, 2005 under SFAS123(R) are not directly comparable. In accordance with the modified prospectivetransition method of SFAS 123(R), the prior comparative quarterly results havenot been restated.

*Stock Options asof the Nine-Month Period Ended March 31, 2007*

The Company’s Amendedand Restated 1999 Incentive Stock Plan and the 2006 Incentive Compensation Plan(the “Plan”) provides for two separate components. The Stock Option GrantProgram, administered by the Compensation Committee (the “Committee”) appointedby the Company’s 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.

The following tablesummarizes stock options outstanding and changes during the nine-month periodended March 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, 2006  |       | 1,247,300                    |       | 0.40 |   | 59.74 |   |   |   |
| Granted                                |       | 860,000                      |       | 0.38 |   | 80.0 |   |   |   |
| Exercised                              |       | —                       |       | — |   | — |   |   |   |
| Cancelled or forfeited                 |       | (26,700                      | )          | 1.53 |   | 3.43 |   |   |   |
| Options  outstanding at March 31, 2007 |       | 2,080,600                    |       | 0.38 |   | 64.38 |   | $ | — |   |
| Options exercisable at  March 31, 2007 |       | 767,267                      |       | 0.43 |   | 46.29 |   | $ | — |   |

 

The total intrinsic value, or the difference between the exercise priceand the market price on the date of exercise, of all options exercised duringthe nine-month period ended March 31, 2007, was zero as no options were exercised.Consequently, no cash was received, nor did the Company realize any taxdeductions related to exercise of stock options during the quarter.

Stock options outstanding and currently exercisable at March 31, 2007 areas 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                 |       | 83,500                       |       | 11.0 |   | 0.79 |   | 83,500 |   | 0.79 |   |
| 0.30 – 0.46                   |       | 1,997,100                    |       | 64.7 |   | 0.36 |   | 683,767 |   | 0.38 |   |
|                               |       |                         |       |   |   |   |   |   |   |   |   |
|                               |       | 2,080,600                    |       | 64.4 |   | $ | 0.38 |   | 767,267 |   | $ | 0.43 |   |
|                                    |            |                              |            |  |  |  |  |  |  |  |  |  |  |

 

Total estimated unrecognized compensation cost from unvested stockoptions as of March 31, 2007 was approximately $437,787 which is expected to berecognized over a weighted average period of approximately 22.6 months.

The weighted average per share fair value of stock options granted duringthe nine-month periods ending March 31, 2007 and 2006 was $0.38 and $0.30,respectively. The fair value was estimated as of the grant date using theBlack-Scholes option pricing model with the following assumptions:

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| ** **               | ** ** | **Nine Months Ended March 31,** | ** ** |
|--------------------------|------------|-----------------------------------------------------|------------|
| ** **               | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| Volatility               |       | 111.5                                               | %          | 159.9 | % |
| Expected option  term    |       | 7 years                                             |       | 7 years |   |
| Risk-free  interest rate |       | 4.39                                                | %          | 3.30 | % |
| 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 $3,333and $9,999 for the three and nine months ended March 31, 2007. No suchshare-based compensation expense was recognized for the quarter and nine monthsended March 31, 2006. The following table summarizes Non-vested RestrictedStock and the related activity as of and for the nine months ended March 31,2007:

|                               | ** ** | ** ** | ** ** | **Weighted**        | ** ** |
|-------------------------------|------------|------------|------------|---------------------|------------|
| ** **                    | ** ** | ** ** | ** ** | **Average**         | ** ** |
| ** **                    | ** ** | ** ** | ** ** | **Grant-Date**      | ** ** |
| ** **                    | ** ** | **Shares** | ** ** | **Fair Value** | ** ** |
| Non-vested at  July 1, 2006   |       | 100,000    |       | $                   | 0.40       |   |
| Granted                       |       | —     |       | —              |       |
| Non-vested at March 31,  2007 |       | 66,667     |       | $                   | 0.40       |   |

 

**7.****             ****RECENTLY ISSUED ACCOUNTINGPRONOUNCEMENTS**

*FAS 155 Disclosure. *In February 2006, the FASB issued SFAS No. 155, “Accountingfor Certain Hybrid Financial Instruments.” This Statement amends FASBStatements No. 133, Accounting for Derivative Instruments and HedgingActivities, and No. 140, Accounting for Transfers and Servicing FinancialAssets and Extinguishments of Liabilities. This Statement resolves issuesaddressed in Statement 133 Implementation Issue No. D1, “Application ofStatement 133 to Beneficial Interests in Securitized Financial Assets.” SFASNo. 155 permits fair value remeasurement for any hybrid financial instrumentthat contains an embedded derivative that otherwise would require bifurcation,clarifies which interest-only strips and principal-only strips are not subjectto the requirements of Statement 133, and establishes a requirement to evaluateinterests in securitized financial assets to identify interests that arefreestanding derivatives or that are hybrid financial instruments that containan embedded derivative requiring bifurcation. It also clarifies thatconcentrations of credit risk in the form of subordination are not embeddedderivatives and amends Statement 140 to elimininate the prohibition on aqualifying special-purpose entity from holding a derivative financialinstruments that pertains to a beneficial interest other than anotherderivative financial instrument. This Statement is effective for all financialinstruments acquired or issued after the beginning of an entity’s first fiscalyear that begins after September 15, 2006. The Company has not yet determinedthe impact of the adoption of FAS 155 on its financial statements, if any.

*SFAS No. 156Disclosure*, “Accounting for Servicing of FinancialAssets-An Amendment to FASB Statement No. 140”. In March 2006,the FASB issued SFAS No. 156, “Accounting for Servicing of FinancialAssets-an amendment to FASB Statement No. 140 (“SFAS 156”). SFAS 156requires that all separately recognized servicing rights be initially measuredat fair value, if practicable. In addition, this statement permits an entity tochoose between two measurement methods (amortization method or fair valuemeasurement method) for each class of separately recognized servicing assetsand liabilities. SFAS 156 is effective for the Company as of January 1,2007. The Company does not believe that the adoption of SFAS 156 will havea material impact on its consolidated financial statements.

*FASBInterpretation No. 48 Disclosure*, “Accounting forUncertainty in Income Taxes-an interpretation of FASB Statement No. 109.In July 2006, the FASB issued Interpretation No. 48, “Accounting forUncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN48”). This interpretation clarifies the application of SFAS 109 by defining acriterion that an individual tax position must meet for any part of the benefitof that position to be recognized in an enterprise’s financial statements andalso provides guidance on measurement, de-recognition, classification, interestand penalties, accounting in interim periods and disclosure. FIN 48 iseffective for the Company as of July 1, 2007. At this time, we have notcompleted our review and assessment of the impact of adoption of FIN 48.

*FAS 157, “FairValue Measurements.”*In September, 2006, the FASB issuedStatement No. 157, “Fair Value Measurements”. SFAS 157 defines fair value, establishes a framework and gives guidanceregarding the methods used for measuring fair value, and expands disclosuresabout fair value measurements. SFAS 157 is effective for financial statements 

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issued for fiscal yearsbeginning after November 15, 2007, and interim periods within those fiscalyears. We are currently assessing the impact that SFAS 157 will have on ourresults of operations and financial position.

*SFAS 158,* *“Employers’ Accounting for Defined Benefit Pension and OtherPostretirement Plans.*” * *In September 2006, the FASB issuedStatement of Financial Accounting Standards No. 158. “Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans” ( SFAS158). SFAS 158 requires employers to fully recognize the obligations associatedwith single-employer defined benefit pension, retiree healthcare and otherpostretirement plans in their financial statements. The provisions of SFAS 158are effective as of the end of the fiscal year ending June 30, 2007. TheCompany does not believe that the adoption of SFAS 156 will have amaterial impact on its consolidated financial statements.

*SAB 108, “Consideringthe Effects of Prior Year Misstatements when Quantifying Misstatements inCurrent Year Financial Statements.”* In September 2006,the SEC staff issued Staff Accounting Bulletin No. 108, “Considering theEffects of Prior Year Misstatements when Quantifying Misstatements in CurrentYear Financial Statements” (SAB 108). SAB 108 requires public companies toquantify errors using both a balance sheet and income statement approach andevaluate whether either approach results in quantifying a misstatement asmaterial, when all relevant quantitative and qualitative factors areconsidered. The guidance in SAB 108 is effective for the fiscal year endingJune 30, 2007. The Company does not believe that the adoption ofSFAS 156 will have a material impact on its consolidated financialstatements.

*SFAS 159,The Fair Value Option for Financial Assets and Financial Liabilities —Including an Amendment of FASB Statement No. 115”*whichis effective for fiscal years beginning after November 15, 2007. This statementpermits an entity to choose to measure many financial instruments and certainother items at fair value at specified election dates. Subsequent unrealizedgains and losses on items for which the fair value option has been elected willbe reported in earnings. The Company does not believe that the adoption of SFAS159 will have a material impact on its consolidated financial statements.

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

Notes payable consist ofthe following at March 31, 2007 and June 30, 2006:

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| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** ** | **March 31, 2007** | ** ** | **June 30, 2006** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Secured,  amortizing convertible term note payable to institutional investors, net of  discount of $264,297, with interest at the greater of 12%, as adjusted by a  stock trading formula, or prime plus 3% (11.25% as of March 31, 2007),  interest only from June 1, 2005 through October 1, 2005 and, via a note  modification dated November 30, 2006, December 1, 2006 through November 1,  2007 and then due in monthly installments of $39,430.56 plus interest from  December 1, 2007 through November 1, 2009, collateralized by commercial  security agreements and a partial guaranty by an officer of the company |       | $                            | 680,533    |                        | $          | 695,740 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |                         |       |                        |       |
| Secured,  amortizing convertible term note payable to institutional investors, net of  discount of $586,248 with interest at the greater of 12%, as adjusted by a  stock trading formula, or prime plus 3% (11.25% as of March 31, 2007), interest  only from December 28, 2005 through June, 2006 and, via a note modification  dated November 30, 2006, December 1, 2006 through November 1, 2007 and then  due in monthly installments of $50,000 plus interest through November 1,  2009, collateralized by commercial security agreements                                                                                |       | 613,752                      |       | 415,187                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |                         |       |                        |       |
| Secured,  non-amortizing convertible term note payable to institutional investors, with  interest at the greater of 12%, as adjusted by a stock trading formula, or  prime plus 3% (11.25% as of March 31, 2007), interest only payments  commencing June 1, 2005 until May 19, 2008, collateralized by commercial  security agreements                                                                                                                                                                                                                                                                                       |       | 500,000                      |       | 500,000                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |                         |       |                        |       |
| Secured,  restricted, non-amortizing convertible term note payable to institutional  investors, under its original terms with interest at prime, interest only  payments commencing June 1, 2005 until the earlier of May 19, 2008 or the  date the proceeds to the company are no longer restricted, collateralized by  commercial security agreements. As a result of the note modification dated  November 30, 2006, referred to above, this note was deemed paid in full                                                                                                                                                  |       | —             |       | 250,000                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |                         |       |                        |       |
| Note payable,  unsecured, to redeemable common shareholders, with interest at prime plus  2.0% (10.25% at March 31, 2007) due in monthly installments with principal  payments ranging from $5,000 to $10,000 plus interest through August 2008                                                                                                                                                                                                                                                                                                                                                                               |       | 120,000                      |       | 200,000                     |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       |                         |       |                        |       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | 1,914,285                    |       | 2,060,927                   |       |
| Current portion,  net of current portion of discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |       | (319,163                     | )          | (770,151                    | )          |
| Notes payable,  excluding current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |       | $                            | 1,595,122  |                        | $          | 1,290,776 |   |

 

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

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**Item 2.**

**CORGENIXMEDICAL CORPORATION**

**Management’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**

Since the Company’s inception, we have been primarilyinvolved in the research, development, manufacturing and marketing/distributionof diagnostic tests for sale to clinical laboratories. We currently market 51products covering autoimmune disorders, vascular diseases, infectious diseasesand liver disease. Our products are sold in the United States, the UK and othercountries through our marketing and sales organization that includes directsales representatives, contract sales representatives, internationally throughan extensive distributor network, and to several significant OEM partners.

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

Except for the fiscal year ending June 30, 1997, wehave experienced revenue growth since our inception, primarily from sales ofproducts and contract revenues from strategic partners. Contract revenuesconsist of service fees from research and development agreements with strategicpartners.

Beginning in fiscal year 1996, we began adding third-party OM licensedproducts to our diagnostic product line. Currently we sell 128 productslicensed from or manufactured by third party manufacturers. We expect to expandour relationships with other companies in the future to gain access toadditional products.

Although we have experienced growth in revenues everyyear since 1990, except for 1997, there can be no assurance that, in thefuture, we will sustain revenue growth, current revenue levels, or achieve ormaintain profitability. Our results of operations may fluctuate significantlyfrom period-to-period as the result of several factors, including: (i) whetherand when new products are successfully developed and introduced, (ii) marketacceptance of current or new products, (iii) seasonal customer demand, (iv)whether and when we receive research and development payments from strategicpartners, (v) changes in reimbursement policies for the products that we sell,(vi) competitive pressures on average selling prices for the products that wesell, and (vii) changes in the mix of products that we sell.

**Recently Issued Accounting Pronouncements**

*FAS 155Disclosure. *In February 2006, the FASB issued SFAS No. 155, “Accounting for CertainHybrid Financial Instruments.” This Statement amends FASB Statements No. 133,Accounting for Derivative Instruments and Hedging Activities, and No. 140,Accounting for Transfers and Servicing Financial Assets and Extinguishments ofLiabilities. This Statement resolves issues addressed in Statement 133Implementation Issue No. D1, “Application of Statement 133 to BeneficialInterests in Securitized Financial Assets.” SFAS No. 155 permits fair valueremeasurement for any hybrid financial instrument that contains an embeddedderivative that otherwise would require bifurcation, clarifies whichinterest-only strips and principal-only strips are not subject to therequirements of Statement 133, and establishes a requirement to evaluateinterests in securitized financial assets to identify interests that arefreestanding derivatives or that are hybrid financial instruments that containan embedded derivative requiring bifurcation. It also clarifies thatconcentrations of credit risk in the form of subordination are not embeddedderivatives and amends Statement 140 to elimininate the prohibition on aqualifying special-purpose entity from holding a derivative financialinstruments that pertains to a beneficial interest other than anotherderivative financial instrument. This Statement is effective for all financialinstruments acquired or issued after the beginning of an entity’s first fiscalyear that begins after September 15, 2006. The Company has not yet determinedthe impact of the adoption of FAS 155 on its financial statements, if any.

*SFAS No. 156Disclosure*, “Accounting for Servicing of FinancialAssets-An Amendment to FASB Statement No. 140.” In March 2006,the FASB issued SFAS No. 156, “Accounting for Servicing of FinancialAssets-an amendment to 

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FASB StatementNo. 140 (“SFAS 156”). SFAS 156 requires that all separatelyrecognized servicing rights be initially measured at fair value, ifpracticable. In addition, this statement permits an entity to choose betweentwo measurement methods (amortization method or fair value measurement method)for each class of separately recognized servicing assets and liabilities. SFAS156 is effective for the Company as of January 1, 2007. The Company doesnot believe that the adoption of SFAS 156 will have a material impact onits consolidated financial statements.

*FASBInterpretation No. 48 Disclosure*, “Accounting forUncertainty in Income Taxes-an interpretation of FASB Statement No. 109.In July 2006, the FASB issued Interpretation No. 48, “Accounting forUncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN48”). This interpretation clarifies the application of SFAS 109 by defining acriterion that an individual tax position must meet for any part of the benefitof that position to be recognized in an enterprise’s financial statements andalso provides guidance on measurement, de-recognition, classification, interestand penalties, accounting in interim periods and disclosure. FIN 48 iseffective for the Company as of July 1, 2007. At this time, we have notcompleted our review and assessment of the impact of adoption of FIN 48.

*FAS 157, “FairValue Measurements.”*In September, 2006, the FASB issuedStatement No. 157 “Fair Value Measurements”. SFAS 157 defines fair value, establishes a framework and gives guidanceregarding the methods used for measuring fair value, and expands disclosuresabout fair value measurements. SFAS 157 is effective for financial statementsissued for fiscal years beginning after November 15, 2007, and interim periodswithin those fiscal years. We are currently assessing the impact that SFAS 157will have on our results of operations and financial position.

*SFAS 158,**“Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans.*” In September 2006, the FASBissued Statement of Financial Accounting Standards No. 158, “Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS158).  SFAS 158 requires employers tofully recognize the obligations associated with single-employer defined benefitpension, retiree healthcare and other postretirement plans in their financialstatements. The provisions of  SFAS 158are effective as of the end of the fiscal year ending June 30, 2007. TheCompany does not believe that the adoption of SFAS 156 will have amaterial impact on its consolidated financial statements.

*SAB 108, “Consideringthe Effects of Prior Year Misstatements when Quantifying Misstatements inCurrent Year Financial Statements.”* In September 2006, the SEC staff issued StaffAccounting Bulletin No. 108, “Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements” (SAB 108). SAB 108 requires public companies to quantify errorsusing both a balance sheet and income statement approach and evaluate whethereither approach results in quantifying a misstatement as material, when allrelevant quantitative and qualitative factors are considered. The guidance inSAB 108 is effective for the fiscal year ending June 30, 2007. The Companydoes not believe that the adoption of SFAS 156 will have a material impacton its consolidated financial statements.

*SFAS 159,The Fair Value Option for Financial Assets and Financial Liabilities —Including an Amendment of FASB Statement No. 115”*whichis effective for fiscal years beginning after November 15, 2007. This statementpermits an entity to choose to measure many financial instruments and certainother items at fair value at specified election dates. Subsequent unrealizedgains and losses on items for which the fair value option has been elected willbe reported in earnings. The Company does not believe that the adoption of SFAS159 will have a material impact on its consolidated financial statements.

**CriticalAccounting Policies**

The Company’s 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 financial statements in conformity with GAAP requiresmanagement to make estimates and assumptions that affect reported amounts ofassets, liabilities, disclosure of contingent assets and liabilities at thedate of the financial statements and reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ significantly from those estimates.

The Company disclosed in Note 1 to its consolidated financialstatements included in the Form 10-KSB those accounting policies that itconsiders to be significant in determining its results of operations andfinancial position. Other than the Company’s compliance with the new accountingrequirements of SFAS No. 123(R), as described below, there have been nomaterial changes to or application of the accounting policies previouslyidentified and described in the Form 10-KSB.

Prior to July 1, 2006, the Company accounted for stock option awardsgranted under the Company’s Incentive 

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Compensation Plan in accordance with the recognitionand measurement provisions of Accounting Principles Board Opinion No. 25, “*Accounting for Stock Issued to Employees,”*(“APB 25”) andrelated Interpretations, as permitted by Statement of Financial AccountingStandards No. 123, “*Accounting for Stock-BasedCompensation,” *(SFAS 123).Share-based employee compensation expense was not recognized in the Company’sconsolidated statements of operations prior to July 1, 2006 as all stock optionawards granted to employees had an exercise price equal to or greater than themarket value of the common stock on the date of the grant. As permitted by SFAS123, the Company reported pro-forma disclosures presenting results and earnings(loss) per share as if the Company had used the fair value recognitionprovisions of SFAS 123 in the Notes to Consolidated Financial Statements.Stock-based compensation related to non-employees was accounted for based onthe fair value of the related stock or options in accordance with SFAS 123 andits interpretations.

Effective July 1, 2006, the Company adopted the provisions of Statementof Financial Accounting Standard No. 123 (revised 2004), “*Share-BasedPayment,”*(SFAS 123(R)) using the modified prospective transitionmethod. See Note 2 for further detail on the impact of SFAS 123(R) to theCompany’s consolidated financial statements.

The Company maintains an allowance for doubtful accounts based on itshistorical experience and provides for any specific collection issues that areidentified.  Such allowances havehistorically been adequate to provide for our doubtful accounts but involve asignificant degree of management judgment and estimation.  Worse than expected future economicconditions, unknown customer credit problems and other factors may requireadditional allowances for doubtful accounts to be provided for in futureperiods.

Equipment and software are recorded at cost.  Equipment under capital leases is recordedinitially at the present value of the minimum lease payments.  Depreciation and amortization is calculatedprimarily using the straight-line method over the estimated useful lives of therespective assets that range from 3 to 7 years.

The internal and external costs of developing and enhancing softwarecosts related to website development, other than initial design and other costsincurred during the preliminary project stage, are capitalized until thesoftware has been completed.  Suchcapitalized amounts began to be amortized commencing when the website wasplaced in service on a straight-line basis over a three-year period.

When assets are sold, retired or otherwise disposed of, the cost andrelated accumulated depreciation are eliminated from the accounts and a gain orloss is recognized.

Repair and maintenance costs are expensed as incurred.

We evaluate the realizability of our long-lived assets, includingproperty and equipment, whenever events or changes in circumstances indicatethat the carrying amount of an asset may not be recoverable.

Revenue from sale of products is recognized upon shipment of products.

Revenue from research and development contracts represents amountsearned pursuant to agreements to perform research and development activitiesfor third parties and is recognized as earned under the respectiveagreement.  Because research anddevelopment services are provided evenly over the contract period, revenue isrecognized ratably over the contract period. Research and development agreements in effect in 2007 and 2006 providedfor fees to the Company based on time and materials in exchange for performingspecified research and development functions.  Research and development and advertising costs are expensed whenincurred. Inventories are recorded at the lower of cost or market, using thefirst-in, first-out method.

# **Resultsof Operations**

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

*Net sales.*Netsales for the quarter ended March 31, 2007 were $2,011,996, a 23.1% increasefrom  $1,634,446 in the same quarter offiscal 2006. Total North American sales increased 14.6% while total sales tointernational distributors increased 52.9% from year to year.  With respect to the Company’s major revenuecategories and product lines, North American direct product-only salesdecreased less than 1%, whereas international direct product-only salesincreased 59.9%. Worldwide category results were as follows: Phospholipids kitsales increased 1.8% for the quarter, Coagulation kit sales decreased 21.5%, HAkit sales increased 67.0%, and Autoimmune kit sales increased 101.4%.Additionally, worldwide 

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OEM/contractmanufacturing revenues increased 148.8%. Sales of products manufactured for usby other companies while still relatively small, are expected to continue toincrease during fiscal 2007.

*Cost of sales*.  Cost of sales, as a percentage of sales,increased to 40.6% for the quarter ended March 31, 2007, from 38.1% in 2006primarily due to product mix reduction from higher gross margin products inaddition to higher direct labor and material costs.

*Selling and marketing. *For the quarter ended March31, 2007, selling and marketing expenses increased 16.7% to $504,120 from$431,944 in 2006. The increase was due to increases in consulting fees andoutside services, labor-related expenses, business promotion expenditures, rentand office supplies.

*Research and development.*Research and development expenses decreased 13.6% to $180,254 for the quarterended March 31, 2007, from $208,624 in 2006. This decrease involved decreasesin labor-related costs, consulting and outside services. The overall reductionin this expense category was primarily due to the capitalization of all costsrelated to the Aspirin Works development effort, upon the execution of saidlicense, which had previously been charged to research and developmentexpenses.

*General and administrative.*For the quarter ended March 31, 2007, general and administrative expensesincreased $135,311, or 32.8% to $548,137 from $412,826 in 2006. This increasewas primarily attributable to increases in labor-related expenses, abortedlicensing costs, terminated merger-related expenses, bad debt expense, bankcharges, consulting and outside services, sales and use taxes, and facilitysupplies.

*Interest expense.*Interest expense decreased 52.6% to $308,460 for the quarter ended March 31,2007, from $650,664 in 2006 due primarily to the reduction of the amortizationof deferred financing costs and discount on the notes payable as a result ofthe recently completed principal payment deferral on the Company’s convertibledebt.

***Nine  Months Ended March 31, 2007 compared to 2006***

*Net sales.*Netsales for the nine months ended March 31, 2007 were $5,390,919, a 11.1%increase from  $4,850,282 in the firstnine months of fiscal 2006. Total North American sales increased 7.4% whiletotal sales to international distributors increased 22.8% from year toyear.  One of the reasons for the smallersize of the increase in sales for the nine month period was related to therelocation into new facilities both in the United States and the UK with theresultant manufacturing, shipping and receiving shut-down during the majorityof July 2006. With respect to the Company’s major revenue categories andproduct lines, North American direct product-only sales decreased 1.4%, whereasinternational direct product-only sales increased 59.9%.  Worldwide category results were as follows:Phospholipids kit sales increased 6.8% for the period, Coagulation kit salesdecreased 7.8%, HA kit sales increased 19.2%, and Autoimmune kit salesincreased 8.4%. Additionally, worldwide OEM/contract manufacturing revenuesincreased 77.9%.   Sales of productsmanufactured for us by other companies while still relatively small, areexpected to continue to increase during fiscal 2007.

*Cost of sales*.  Cost of sales, as a percentage of sales,increased to 39.6% for the nine ended March 31, 2007, from 36.7% in 2006primarily due to product mix reduction from higher gross margin products inaddition to higher direct labor and material costs.

*Selling and marketing. *For the nine months endedMarch 31, 2007, selling and marketing expenses increased 33.2% to $1,569,858from $1,178,370 in 2006. The increase was due to increases in consulting feesand outside services, labor-related expenses, business promotion expenditures,rent and office supplies.

*Research and development.*Research and development expenses increased 19.5% to $586,061 for the ninemonths ended March 31, 2007, from $490,380 in 2006.  This increase was primarily due to increasesin labor-related costs and facility-related expenses, offset to a significantdegree by the capitalization of all costs related to the Aspirin Worksdevelopment effort, upon the execution of said license, which had previously beencharged to research and development expenses.

*General and administrative.*For the nine months ended March 31, 2007, general and administrative expensesincreased $698,275, or 61.1% to $1,841,616 from $1,143,341 in 2006. Thisincrease was primarily attributable to increases in labor-related expenses,aborted licensing costs, terminated merger-related expenses, bad debt expense,bank charges, consulting and outside services, sales and use taxes, andfacility supplies.

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*Interest expense.*Interest expense increased 5.1% to $1,416,047 for the nine months ended March31, 2007, from $1,347,455 in 2006 due primarily to a full nine months worthof  amortization of deferred financingcosts and discount on the notes payable as a result of the second traunch ofthe  private debt placement completed inDecember, 2005.

**Liquidity and Capital Resources**

Cash used in operating activities was $1,112,767 forthe current fiscal nine months compared to cash used in operating activities of$758,057 during the prior year’s first fiscal nine months.  The increase in cash used in operationsresulted primarily from the larger net loss for the current period in additionto increases in inventories, prepaid expenses and other assets partially offsetby an increase in accounts payable and a decrease in accounts receivable. Thesubstantial increase in inventories from year to year was primarily due toincreases in overhead as a result of the move to a considerably largerfacility, plus increases in direct labor costs, purchases of raw materials andfreight charges. The Company believes that uncollectible accounts receivablewill not have a significant effect on future liquidity, as a significantportion of its accounts receivable are due from financially sound enterprises.

Net cash used by investing activities and the purchaseof equipment, was $231,210 in the nine-month period, compared to $44,836 forthe prior year’s same nine-month period. The increase was mainly attributableto increased spending on laboratory, refrigeration and manufacturing equipmentto equip the new facility in addition to data processing equipment.

Net cash used by financing activities amounted to$573,635 during the recent nine months compared to $3,092,481 provided byfinancing activities the prior fiscal year. This decrease in cash used versusthe comparable prior year was primarily due to there being no proceeds fromeither the issuance of preferred stock or notes payable in the current periodplus increased cash payments on notes payable and capital lease obligations.

Historically, we have financed our operationsprimarily through long-term debt and the sales of common, redeemable common andpreferred stock.  We have also financedoperations through sales of diagnostic products and agreements with strategicpartners.  Accounts receivable increased3.5% to $1,136,320, from $1,097,805 as of March 31, 2006 primarily as a resultof sales increases.

We have incurredsignificant losses and have had negative cash flows from operations for most ofour history.   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. Management has been successful in increasing revenues inthe prior fiscal year ended June 30, 2006 by $1,070,944 or 19.2% and for thefirst nine months of fiscal 2007 in increasing revenues by $540,637 or 11.1%,and is forecasting continued revenue growth for the remainder of this fiscalyear as well as the fiscal year ended June 30, 2008. However, management hasnot yet achieved the necessary level of operating efficiencies to lower our costof sales and operating expenses, and consequently, we have been forced to scaleback expenditures, delay payments on accounts payable, and, in November of2006, enter into a twelve month principal deferral agreement with ourconvertible debt holders in order to maintain financial liquidity. Thisdeferral was previously reported in filings to the SEC. There are significantrisks associated with the operating plan and we might be forced to furthermodify the plan as circumstances change in order to achieve the goals of achievingprofitability and cash flow from operations.

Although theoperating plan is intended to achieve sustainable profitability and positivecash flow from operations, we may not be successful in our efforts. Even withour operating plan, we expect to continue incurring operating losses for theremainder of fiscal 2007 and at least for the first six months of fiscal 2008,as it will take time for our strategic and operating initiatives to have apositive effect on our business operations and cash flow. In view of this, wehave undertaken a process to consider all available strategic and legal alternatives.

We expect tocontinue to incur operating losses for the remainder of fiscal 2007 and atleast the first six months of fiscal 2008 while we implement our strategic andoperating initiatives that are intended to have a positive effect on ourbusiness operations.

Should any othersignificant negative events occur, our financial position will be negativelyimpacted by our not achieving positive cash flow from operations, or by ourexperiencing further increases in negative cash flow and losses. Given all ofthese circumstances, we are currently seeking additional 

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financing. We may alsoexperience future defaults under the agreements with our convertible debtholders and/or redeemable common shareholder, in which case they would beentitled to accelerate the amounts payable to them. To satisfy our workingcapital requirements we are currently seeking to raise additional funds throughthe sale of equity securities. In addition, we may need to explore theincurrence of additional indebtedness and/or enter into collaborativeagreements with third parties or evaluate the possible divestiture of productlines. In addition, we may be required to reduce our sales and marketingactivities, reduce the scope of or eliminate our research and developmentprograms, or relinquish rights to technologies or products that we mightotherwise seek to develop or commercialize.

Additional equityor debt financing may not be available on acceptable terms, or at all.  Although our common stock has, since Februaryof 1998, been traded on the OTC Bulletin Board, the trading has been sporadicwith typically insignificant volume. This low level of liquidity will likelymake it considerably more difficult to raise additional capital. If we do raiseadditional equity financing, our current stockholders will be further diluted.If we incur additional indebtedness to fund our operations, we may have togrant the lender a secondary security interest in our assets since all of ourassets are currently pledged as security related to our convertible debt.

Alternatives withrespect to our business and assets might also include entering into strategicalliances with or seeking to merge or combine with another medical device,diagnostic or life-sciences company with greater resources and infrastructure.If a suitable candidate cannot be found, we will continue to fully explore andassess all of the strategic and legal options available to us. Due to theuncertainty of the cash flow from operations and the success of the operatingplan, there can be no assurance that we will have adequate resources tocontinue operations for longer than 12 months.

**Off-Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements.

**Contractual Obligations and Commitments**

OnFebruary 8, 2006, Corgenix Medical Corporation (the “Company”) entered into aLease Agreement (the “Lease”) with York County, LLC, a California limitedliability company (“Landlord”) pursuant to which the Company leasesapproximately 32,000 rentable square feet (the “Property”) of Landlord’sapproximately 102,400 square foot building, commonly known as Broomfield Oneand located at 11575 Main Street, Broomfield, Colorado 80020.  The Property is part of Landlord’smulti-tenant real property development known as the Broomfield CorporateCenter.  The Company will use theProperty for its headquarters, laboratory research and development facilitiesand production facilities.

The term of theLease (the “Term”) is seven years and five months commencing on  July 6, 2006 withtenant options to extend theTerm for up to two periods of five years each. We have a one time right of first refusal to lease contiguous premises.

The initial base leaserate payable on the 25,600 square foot portion of the premises was $0.00 persquare foot, plus estimated operating expenses of $1.61 per square foot.

The base lease ratepayable on the 25,600 square foot portion of the premises increasef to $4.00per square 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 the 25,600square foot portion of the premises increases to $5.64 per square foot onJanuary 28, 2008, with fixed annual increases each January 28 thereafter duringthe initial Term, plus the amortization of tenant improvements of $5.24 persquare foot, and estimated operating expenses of $1.61 per square foot.

The initial base leaserate payable on the 6,400 square foot portion of the premises is $0.00 persquare foot, plus estimated operating expenses of $1.61 per square foot.  The base lease rate on the 6,400 square foot portionof the premises increases to $3.00 per square foot commencing on August 28,2007, and increases to $3.09 on January 28, 2008, with fixed 

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annual increases eachJanuary 28 thereafter during the initial Term, plus estimated operatingexpenses of $1.61 per square foot.

Thus, the estimated totalrent  (this is dependent upon the actualoperating expenses) on the whole (32,000 sf) of the premises is initially $1.61per square foot, then increased to approximately $9.00 per square foot onJanuary 28, 2007, then increases to approximately $9.60 per square foot onAugust 28 2007, then increases to approximately $10.93 per square foot onJanuary 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 lease rate foran extension period is 100% of the then prevailing market rental rate (but inno event less than the rent for the last month of the then current Term) andshall thereafter increase annually by 3% for the remainder of the applicableextension period.

**Item 3.**

**Controls and Procedures**

Evaluation of disclosure controls and procedures.  The Company, under the supervision and withthe participation of the Company’s management, including its Chief ExecutiveOfficer and Chief Financial Officer, carried out an evaluation of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures (as defined in Rules 240.13a-14(c) and 15d-14(c) under theSecurities Exchange Act of 1934  (the “ExchangeAct”) as of the end of the period covered by this quarterly report (the “EvaluationDate”).  Based upon this evaluation, theChief Executive Officer and Chief Financial Officer concluded that, as of theEvaluation Date, the Company’s disclosure controls and procedures wereeffective for the purposes of recording, processing, summarizing and timelyreporting information required to be disclosed by the Company in the reportsthat it files under the Securities Exchange Act of 1934 and that suchinformation is accumulated and communicated to the Company’s management inorder to allow timely decisions regarding required disclosure.

Changes in internal controls.  There have been no significant changes in theCompany’s internal controls or in other factors that could significantly affectthe Company’s disclosure controls and procedures subsequent to the EvaluationDate.

**Forward-Looking Statements and Risk Factors**

This 10-QSB includes statements that are not purelyhistorical and are “forward-looking statements” within the meaning of Section21E of the Securities Act of 1934, as amended, including statements regardingour expectations, beliefs, intentions or strategies regarding the future.  All statements other than historical factcontained in this 10-QSB, including, without limitation, statements regardingfuture capital requirements, acquisition strategies, strategic partnershipexpectations, technological developments, the development, the availability ofnecessary components, research and development programs and distribution plans,are forward-looking statements.  Allforward-looking statements included in this 10-QSB are based on informationavailable to us on the date hereof, and we assume no obligation to update suchforward-looking statements.  Although webelieve that the assumptions and expectations reflected in such forward-lookingstatements are reasonable, we can give no assurance that such expectations willprove to have been correct or that we will take any actions that may presentlybe planned.

An investment in Corgenix entails certain risks thatshould be carefully considered. In addition, these risk factors could causeactual results to differ materially from those expected include the following:

**We continue to incur losses andrequire additional financing.**

We have incurredoperating losses and negative cash flow from operations for most of ourhistory.  Losses incurred since ourinception have aggregated $11,448,250 and there can be no assurance that wewill be able to generate positive cash flows to fund our operations in thefuture or to pursue our strategic objectives.

We have incurredsignificant losses and have had negative cash flows from operations for most ofour history.   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. Management has been successful in increasing revenues inthe prior fiscal year ended June 30, 2006 by $1,070,944 or 19.2% and for thefirst nine months of fiscal 2007 in increasing revenues by $540,637 or 11.1%, andis forecasting continued revenue growth for the remainder of this fiscal yearas well as the fiscal year ended June 30, 2008. However, management has not yetachieved the necessary level of operating efficiencies 

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to lower our cost ofsales and operating expenses, and consequently, we have been forced to scaleback expenditures, delay payments on accounts payable, and, in November of2006, enter into a twelve month principal deferral agreement with ourconvertible debt holders in order to maintain financial liquidity. Thisdeferral was previously reported in filings to the SEC. There are significantrisks associated with the operating plan and we might be forced to furthermodify the plan as circumstances change in order to achieve the goals of achievingprofitability and cash flow from operations.

Although theoperating plan is intended to achieve profitability and positive cash flow fromoperations, we may not be successful in our efforts. Even with our operatingplan, we expect to continue incurring operating losses for the remainder offiscal 2007 and at least for the first six months of fiscal 2008, as it willtake time for our strategic and operating initiatives to have a positive effecton our business operations and cash flow. In view of this, we have undertaken aprocess to consider all available strategic and legal alternatives.

We expect tocontinue to incur operating losses for the remainder of fiscal 2007 and atleast the first six months of fiscal 2008 while we implement our strategic andoperating initiatives that are intended to have a positive effect on ourbusiness operations.

Should any othersignificant negative events occur, our financial liquidity position will benegatively impacted by our not achieving positive cash flow from operations, orby our experiencing further increases in negative cash flow and losses. Givenall of these circumstances, we are currently seeking additional financing. Wemay also experience future defaults under the agreements with our convertibledebt holders and/or redeemable common shareholder, in which case they would beentitled to accelerate the amounts payable to them. To satisfy our workingcapital requirements we are currently seeking to raise additional funds throughthe sale of equity securities. In addition, we may need to explore theincurrence of additional indebtedness and/or enter into collaborativeagreements with third parties or evaluate the possible divestiture of productlines. In addition, we may be required to reduce our sales and marketingactivities, reduce the scope of or eliminate our research and developmentprograms, or relinquish rights to technologies or products that we mightotherwise seek to develop or commercialize.

Additional equityor debt financing may not be available on acceptable terms, or at all.  Although our common stock has, since Februaryof 1998, been traded on the OTC Bulletin Board, the trading has been sporadicwith typically insignificant volume. This low level of liquidity will likelymake it considerably more difficult to raise additional capital. If we do raiseadditional equity financing, our current stockholders will be further diluted.If we incur additional indebtedness to fund our operations, we may have to grantthe lender a secondary security interest in our assets since all of our assetsare currently pledged as security related to our convertible debt.

Alternatives withrespect to our business and assets might also include entering into strategicalliances with or seeking to merge or combine with another medical device,diagnostic or life-sciences company with greater resources and infrastructure.If a suitable candidate cannot be found, we will continue to fully explore andassess all of the strategic and legal options available to us. Due to theuncertainty of the cash flow from operations and the success of the operatingplan, there can be no assurance that we will have adequate resources tocontinue operations for longer than 12 months.

**Wedepend upon collaborative relationships and third parties for productdevelopment and commercialization.**

We have historically entered into research anddevelopment agreements with collaborative partners, from which we derivedrevenues in past years.  Pursuant tothese agreements, our collaborative partners have specific responsibilities forthe costs of development, promotion, regulatory approval and/or sale of ourproducts.  We will continue to rely onfuture collaborative partners for the development of products and technologies.  There can be no assurance that we will beable 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 establishsuch arrangements, we could be forced to undertake such activities entirely atour own expense.  The amount and timingof resources that any of these partners devotes to these activities may bebased on progress by us in our product development efforts.  Collaborative arrangements may be terminatedby the partner upon prior notice without cause and there can be no assurancethat any of these partners will perform its contractual obligations or that itwill not terminate its agreement.  Withrespect to any products manufactured by third parties, there can be noassurance that any third-party manufacturer will perform acceptably orthat failures by third parties will not delay clinical trials or the submissionof products for regulatory approval or impair our ability to deliver productson a timely basis.

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**There can be no assurance ofsuccessful or timely development of additional products.**

Our business strategy includes the development ofadditional diagnostic products for the diagnostic business.  Our success in developing new products willdepend on our ability to achieve scientific and technological advances and totranslate these advances into commercially competitive products on a timelybasis.  Development of new productsrequires significant research, development and testing efforts.  We have limited resources to devote to thedevelopment of products and, consequently, a delay in the development of oneproduct or the use of resources for product development efforts that proveunsuccessful may delay or jeopardize the development of other products.  Any delay in the development, introductionand marketing of future products could result in such products being marketedat a time when their cost and performance characteristics would not enable themto compete effectively in their respective markets.  If we are unable, for technological or otherreasons, to complete the development and introduction of any new product or ifany new product 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.

**Competitionin the human medical diagnostics industry is, and is expected to remain,significant.**

Our competitors range from development stage diagnosticscompanies to major domestic and international pharmaceutical and biotechnologycompanies. Many of these companies have financial, technical, marketing, sales,manufacturing, distribution and other resources significantly greater thanours.  In addition, many of thesecompanies have name recognition, established positions in the market and longstanding relationships with customers and distributors also greater than ours.Moreover, the diagnostics industry continues to demonstrate a degree consolidation,whereby some of the large domestic and international pharmaceutical companieshave been acquiring mid-sized diagnostics companies, further increasingthe concentration of resources.  Therecan be no assurance that technologies will not be introduced that could bedirectly competitive with or superior to our technologies.

**Ourproducts and activities are subject to regulation by various governments andgovernment agencies.**

The testing, manufacture and sale of our products is subject toregulation by numerous governmental authorities, principally the United StatesFood and Drug Administration and certain foreign regulatory agencies.  Pursuant to the Federal Food, Drug, andCosmetic Act, and the regulations promulgated there under, the FDA regulatesthe preclinical and clinical testing, manufacture, labeling, distribution andpromotion of medical devices.  We arelimited in our ability to commence marketing or commercial sales in the UnitedStates of new products under development until we receive clearance or approvalfrom the FDA. The testing for, preparation of and subsequent FDA regulatoryreview of required filings can be a lengthy, expensive and uncertainprocess.  Noncompliance with applicablerequirements can result in, among other consequences, fines, injunctions, civilpenalties, recall or seizure of products, repair, replacement or refund of thecost of products, total or partial suspension of production, failure of thegovernment to grant pre-market clearance or pre-market approval for devices,withdrawal of marketing clearances or approvals, and criminal prosecution.

There can be no assurance that we will be able toobtain necessary regulatory approvals or clearances for our products on atimely basis, if at all, and delays in receipt of or failure to receive suchapprovals or clearances, the loss of previously received approvals orclearances, limitations on intended use imposed as a condition of suchapprovals or clearances or failure to comply with existing or future regulatoryrequirements could negatively impact our sales and thus have a material adverseeffect on our business.

As a manufacturer of medical devices for marketing inthe United States, we are required to adhere to applicable regulations settingforth detailed good manufacturing practice requirements, which include testing,control and documentation requirements. We must also comply with Medical Device Report (MDR) requirements, whichrequire that a manufacturer reports to the FDA any incident in which itsproduct may have caused or contributed to a death or serious injury, or inwhich its product malfunctioned and, if the malfunction were to recur, it wouldbe likely to cause or contribute to a death or serious injury.  We are also subject to routine inspection bythe FDA for compliance with Quality System Regulations requirements, MDRrequirements and other applicable regulations. Labeling and promotionalactivities are subject to scrutiny by the FDA and, in certain circumstances, bythe 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.

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Distribution of diagnostic products outside the UnitedStates is subject to extensive foreign government regulation. Theseregulations, including the requirements for approvals or clearance to market,the time required for regulatory review and the sanctions imposed forviolations, vary from country to country. We may be required to incur significant costs in obtaining ormaintaining foreign regulatory approvals. In addition, the export of certain of our products that have not yetbeen cleared for United States commercial distribution may be subject to FDAexport restrictions. Failure to obtain necessary regulatory approval or thefailure to comply with regulatory requirements could reduce our product salesand thus have a potentially material adverse effect on our business, financialcondition and results of operations.

**We depend upon distribution partnersfor sales of diagnostic products in international markets.**

We have entered into distribution agreements withcollaborative partners in which we have granted distribution rights for certainof our products to these partners within specific international geographicareas. Pursuant to these agreements, our collaborative partners have certainresponsibilities for market development, promotion, and sales of the products.If any of these partners fails to perform its contractual obligations orterminates its agreement, this could reduce our sales and cash flow and thushave a potentially material adverse effect on our business, financial conditionand results of operations.

**Thirdparty reimbursement for purchases of our diagnostic products is uncertain.**

In the United States, health care providers thatpurchase diagnostic products, such as hospitals and physicians, generally relyon third party payers, principally private health insurance plans, federalMedicare and state Medicaid, to reimburse all or part of the cost of thepurchase.  Third party payers areincreasingly scrutinizing and challenging the prices charged for medicalproducts and services and they can affect the pricing or the relativeattractiveness of the product. Decreases in reimbursement amounts for testsperformed using our diagnostic products, failure by physicians and other usersto obtain reimbursement from third party payers, or changes in government andprivate third 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.

**Oursuccess depends, in part, on our ability to obtain patents and license patentrights, to maintain trade secret protection and to operate without infringingon the proprietary rights of others.**

There can be no assurance that our issued patent willafford meaningful protection against a competitor, or that patents issued orlicensed to us will not be infringed upon or designed around by others, or thatothers will not obtain patents that we would need to license or design around.We could incur substantial costs in defending the Company or our licensees inlitigation brought by others. The potential for reduced sales and increasedlegal expenses would have a negative impact on our cash flow and thus ouroverall business could be adversely affected.

**We maynot be able to successfully implement our plans to acquire other companies ortechnologies.**

Our growth strategy includes the acquisition ofcomplementary companies, products or technologies. There is no assurance thatwe will be able to identify appropriate companies or technologies to beacquired, to negotiate satisfactory terms for such an acquisition, or to obtainsufficient capital to make such acquisitions. Moreover, because of limited cashresources, we will be unable to acquire any significant companies ortechnologies for cash and our ability to effect acquisitions in exchange forour capital stock may depend upon the market prices for our common stock, whichcould result in significant dilution to its existing shareholders.  If we do complete one or more acquisitions, anumber of risks arise, such as disruption of our existing business, short-termnegative effects on our reported operating results, diversion of management’sattention, 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.

**Wedepend on suppliers for our products’ components.**

The components of our products include chemical,biological and packaging supplies that are generally available from severalsuppliers, except certain antibodies and other critical components, which wepurchase from single suppliers.  Wemitigate the risk of a loss of supply by maintaining a sufficient supply ofsuch antibodies to ensure an uninterrupted 

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supplyfor at least three months. We have also qualified second vendors for allcritical raw materials and believe that we can substitute a new supplier withrespect to any of these components in a timely manner. If, for some reason, welose our main supplier for a given material, there can be no assurances that wewill be able to substitute a new supplier in a timely manner and failure to doso could impair the manufacturing of certain of our products and thus have amaterial adverse effect on our business, financial condition and results ofoperations.

**We haveonly limited manufacturing experience with certain products.**

Although we have manufactured over twelve milliondiagnostic tests based on our proprietary applications of ELISA (enzyme linkedimmuno-absorbent assay) technology, certain of our diagnostic products inconsideration for future development, incorporate technologies with which wehave limited manufacturing experience. 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 assurance that such work canbe completed in a timely manner and that such new products can be manufacturedcost-effectively, to regulatory standards or in sufficient volume.

**Due tothe specialized nature of our business, our success will be highly dependentupon our ability to attract and retain qualified scientific and executivepersonnel.**

We believe our success will depend to a significantextent on the efforts and abilities of Dr. Luis R. Lopez and Douglass T.Simpson, who would be difficult to replace. There can be no assurance that we will be successful in attracting andretaining such skilled personnel, who are generally in high demand by othercompanies.  The loss of, inability toattract, or poor performance by key scientific and executive personnel may havea material adverse effect on our business, financial condition and results ofoperations.

**Thetesting, manufacturing and marketing of medical diagnostic devices entails aninherent risk of product liability claims.**

To date, we have experienced no product liabilityclaims, but any such claims arising in the future could have a material adverseeffect on our business, financial condition and results of operations.Potential product liability claims may exceed the amount of our insurancecoverage or may be excluded from coverage under the terms of our policy orlimited by other claims under our umbrella insurance policy.  Additionally, there can be no assurance thatour existing 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 are held liable for aclaim against which we are not insured or for damages exceeding the limits ofour insurance coverage, such claim could have a material adverse effect on ourcash flow and thus potentially a materially adverse effect on our business,financial condition and results of operations.

**Therehas, to date, been no active public market for our Common Stock, and there canbe no assurance that an active public market will develop or be sustained.**

Although our Common Stock has been traded on the OTCBulletin Board® since February 1998, the trading has been sporadic withinsignificant volume.

Moreover, the over-the-counter markets for securitiesof very small companies historically have experienced extreme price and volumefluctuations.  These broad marketfluctuations and other factors, such as new product developments, trends in ourindustry, the investment markets, economic conditions generally, and quarterlyvariation in our results of operations, may adversely affect the market priceof our common stock.  In addition, ourcommon stock is subject to rules adopted by the Securities and ExchangeCommission regulating broker-dealer practices in connection with transactionsin “penny stocks.”  Such rules requirethe delivery prior to any penny stock transaction of a disclosure scheduleexplaining the penny stock market and all associated risks and impose varioussales practice requirements on broker-dealers who sell penny stocks to personsother than established customers and accredited investors, which are generallydefined as institutions or an investor with a net worth in excess of $1,000,000or annual income exceeding $200,000 or $300,000 together with the spouse.  For these types of transactions thebroker-dealer must make a special suitability determination for the purchaserand have received the purchaser’s written consent to the transaction prior tosale.  The additional burdens imposedupon broker-dealers by such requirements may discourage broker-dealers fromeffecting transactions in securities subject to the penny stock rules.

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**There are risks associated withfluctuating exchange rates.**

Our financial statements are presented in US dollars. At the end of eachfiscal quarter and the fiscal year, we convert the financial statements ofCorgenix UK, which operates in pounds sterling, into US dollars, andconsolidate them with results from Corgenix, Inc.  We may, from time to time, also need toexchange currency from income generated by Corgenix UK. Foreign exchange ratesare volatile and can change in an unknown and unpredictable fashion. Should theforeign exchange rates change to levels different than anticipated by us, ourbusiness, financial condition and results of operations may be adverselyaffected.

**CORGENIXMEDICAL CORPORATION**

**PART II**

**OtherInformation**

**Item 1.    Legal Proceedings**

On January 4, 2007the Company filed a complaint in the United States District Court for theDistrict of Colorado against Biosafe Laboratories, Inc., a corporationorganized and existing under the laws of the State of Illinois. The complaintstates, among other things, that Corgenix and Biosafe are parties to anon-binding Letter of Intent dated September 12, 2006 (the “LOI”), under whichthe companies explored the possibility of a licensing arrangement between themfor the sale of some of Biosafe’s products. Upon execution of this non-bindingLOI, Corgenix paid to Biosafe a deposit of $250,000. The LOI specificallyrequired Biosafe to refund $225,000 of that deposit to Corgenix in the eventthat a binding agreement was not reached between the parties (the “RefundableDeposit”). A binding agreement was never reached between the two companies andeven though Biosafe was obligated to refund the Refundable Deposit to Corgenixand demand was made by Corgenix for said Refundable Deposit, Biosafe refused toreturn the Refundable Deposit. Corgenix has brought suit against Biosafe, andseeks relief in the form of, but not limited to, the refund of the RefundableDeposit, in addition to all damages sustained.

On February 20,2007 Biosafe disputed the above claims and filed a counterclaim against theCompany, which states, among other things, that Corgenix failed to go forwardwith the execution of the binding agreement after the tems of said agreementwere fully negotiated and drafted and that the required funding had beensecured. It also claims that Corgenix failed to disclose, in a timely fashion,that it needed Board of Director approval prior to execution of the bindingagreement, and overall did not deal with Biosafe in good faith and with fairdealing. Biosafe’s counterclaim claims damages of $1,000,000.

On March 12, 2007the Company filed its reply to the above counterclaims denying the validity ofall of the counter claims by Biosafe and again requesting that judgment beentered in its favor and that the Company be awarded its $225,000 deposit andany other costs.

**Item 2.    Unregistered Sales of Equity Securities andUse of Proceeds**

 The Company’s first payment to CCC (see *Recent Developments*above) became due at the execution ofthe Agreement.  The Company has provideda combination of cash, shares of the Company’s common stock, and warrants topurchase the Company’s common stock. Following FDA clearance of the first Licensed Product, the Company willbe required to make additional payments to CCC. On the first, second and third anniversary of that clearance, theCompany will be obligated to make payments consisting of cash, shares of commonstock, and warrants to purchase shares of common stock.  The amount of cash and number of shares andwarrants due in these anniversary payments will be determined by application ofa formula including a certain dollar value, the total cumulative revenue receivedby the Company from sales of the Licensed Products during that year, and theCompany’s common stock share price on the relevant anniversary.  The dollar value applicable to that ratioincreases with each anniversary.

TheAgreement imposes caps on the total amount of cash, common stock, and warrantpayments from the Company to CCC from the date of execution through to andincluding the third anniversary payment. Under that 

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cap provision, thetotal anniversary payments will not exceed $200,000 in cash, $300,000 in valueof shares of common stock (as valued on the date of issue), and 300,000warrants to purchase shares of common stock.

**Item 3.    Defaults Upon Senior Securities**

None

**Item 4.    Submission of Matters to a Vote of SecurityHolders**

# The following proposals were voted by the shareholdersat the April 26, 2007 Annual Shareholders’ Meeting:

# Proposal 1 — Election of Directors

Dr. Luis Lopez: 8,885,420votes for; 377,438 votes withheldC. David Kikumoto: 8,891,690 votes for; 371,168 votes withheldLarry G. Rau: 8,889,690 votes for; 373,168 votes withheldCharles H. Scoggin: 8,885,420 votes for; 377,438 votes withheldDouglass T. Simpson: 8,881,620 votes for; 381,238 votes withheldRobert Tutag: 8,891,690 votes for; 371,168 votes withheldDennis Walczewski: 8,891,590 votes for; 371,268 votes withheld

Proposal 2 — Approval ofthe 2007 Incentive Compensation Plan

Approval:  4,278,228 votes for; 1,537,511 votes against;108,491 votes abstain; 3,338,628 not voted.

# Proposal 3 — Approval of the Second Amended andRestated Employee Stock Purchase Plan

Approval:  4,345,660 votes for; 1,491,171 votes against;87,399 votes abstain; 3,338,628 not voted.

# Proposal 4 — Ratification of Hein & Associates

Approval:  5,889,111 votes for; 24,920 votes against;10,199 votes abstain; 3,338,628 not voted

**Item 5.    Other Information**

None

I**tem 6.  Exhibitsand Reports on Form 8-K**

**a.****               Index to andDescription of Exhibits.**
| Exhibit  Number | ** ** | **Description of Exhibit**                                                                                                                                                                 |
|-----------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **      | ** ** | ** **                                                                                                                                                                                 |
| 10.1*           |       | Consulting Agreement dated March 1, 2006, between  Corgenix Medical Corporation and Gordon E. Ens.                                                                                         |
|            |       |                                                                                                                                                                                       |
| 10.2*           |       | License Agreement dated March 1, 2007, between  Corgenix Medical Corporation and Creative Clinical Concepts, Inc. (1)                                                                      |
|            |       |                                                                                                                                                                                       |
| 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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*                    Filedherewith.

(1)                                  Exhibitomits certain information that has been filed separately, with the Securitiesand Exchange Commission pursuant to a confidential treatment request under Rule24b-2 of the Securities and Exchange Act of 1934, as amended.

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**(b)           Reports on Form 8-K.**

1.                  Form 8-K filedJanuary 4, 2007 *Other Events*

2.                  Form 8-K filedFebruary 14, 2007 *Results of Operations and FinancialConditions*

3.                  Form 8-K filedMarch 1, 2007 *Entry into a Material Definitive Agreementand Unregistered Sales of Equity Securities*

4.                  Form 8-K filedApril 26, 2007 *Annual Shareholders’ Meeting*

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**SIGNATURES**

In accordance withthe requirements of the Securities Exchange Act of 1934, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.
|              |       |       | CORGENIX MEDICAL CORPORATION |
|--------------|------------|------------|------------------------------|
|         |       |       |                         |   |
|         |       |       |                         |   |
| May 15, 2007 |       |       | By:                          | /s/ Douglass T. Simpson |
|         |       |       |                         | Douglass T. Simpson |
|         |       |       |                         | President and Chief Executive Officer |
| ** **   | ** ** | ** ** | ** **                   | **(Principal Executive Officer)** |
|         |       |       |                         |   |
|         |       |       |                         |   |
|         |       |       | By:                          | /s/ William H. Critchfield |
|         |       |       |                         | William H. Critchfield |
|         | ** ** | ** ** |                         | Chief Financial Officer |
|         | ** ** | ** ** |                         | **(Principal Financial and Accounting Officer)** |

 

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