The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere herein.

(a) Forward-Looking Statements

This 10-Q includes statements that are not purely historical and are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, beliefs, intentions or strategies regarding the future. All statements other than historical fact contained in this 10-Q, including, without limitation, statements regarding future capital guidance, acquisition strategies, strategic partnership expectations, technological developments, the development, the availability of necessary components, research and development programs and distribution plans, are forward-looking statements. All forward-looking statements included in this 10-Q are based on information available to us on the date hereof, and we assume no obligation to update such forward-looking statements. Although we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct or that we will take any actions that may presently be planned.

(b) General

Since our inception, we have been primarily involved in the research, development, manufacturing and marketing/distribution of diagnostic tests for sale to clinical laboratories. We currently market 52 products covering autoimmune disorders, vascular diseases, infectious diseases and liver disease. Our products are sold in the United States, the UK and other countries through our marketing and sales organization that includes direct sales representatives, contract sales representatives, internationally through an extensive distributor network, and to several significant OEM partners.

We manufacture products for inventory based upon expected sales demand, shipping products to customers, usually within 24 hours of receipt of orders if in stock. Accordingly, we do not operate with a significant customer order backlog.

Except for the fiscal years ending June 30, 1997, 2009, and 2011 we have experienced revenue growth since our inception, primarily from sales of products and contract revenues from strategic partners. Contract revenues consist of service fees from research and development agreements with strategic partners.

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

Although, as previously stated, we have experienced growth in revenues every year since 1990, except for 1997, 2009, and 2011, there can be no assurance that, in the future, we will sustain revenue growth, current revenue levels, or achieve or maintain profitability. Our results of operations may fluctuate significantly from period-to-period as the result of several factors, including:
(i) whether and when new products are successfully developed and introduced,
(ii) market acceptance of current or new products, (iii) seasonal customer demand, (iv) whether and when we receive research and development payments from strategic partners, (v) changes in reimbursement policies for the products that we sell, (vi) competitive pressures on average selling prices for the products that we sell, and (vii) changes in the mix of products that we sell.

(c) Results of Operations

Three months ended December 31, 2011 compared to three months ended December 31, 2010

Total revenues. The following two tables provide the reader with further insight as to the changes of the various components of our total revenues for the comparable quarters ended December 31, 2011.

                               Quarter ended
                               December 31,          % Incr.
                            2011          2010       (Decr.)
Total Revenues:
Geographical Breakdown
North America            $ 1,733,908   $ 1,419,234      22.2 %
International            $   331,732   $   366,715      (9.5 )%
Total Revenues           $ 2,065,640   $ 1,785,949      15.7 %

                               Quarter Ended
                               December 31,          % Incr.
                            2011          2010       (Decr.)
Total Revenues:
By Category
Phospholipid Sales*      $   759,194   $   742,283       2.3 %
Coagulation Sales*       $   368,232   $   343,539       7.2 %
Aspirin Works Sales      $   165,661   $   108,588      52.6 %
Hyaluronic Acid Sales    $   207,867   $   168,620      23.3 %
Autoimmune Sales         $    10,750   $    40,647     (73.6 )%
Contract Manufacturing   $   103,352   $    31,900     224.0 %
R & D Contract           $   339,688   $   217,756      56.0 %
Shipping and Other       $   110,896   $   132,616      16.4 %
Total Revenues           $ 2,065,640   $ 1,785,949      15.7 %

Cost of revenues. Total cost of revenues, as a percentage of sales, were 54.6% for the quarter ended December 31, 2011 versus 50.6% for the prior fiscal year. The primary reason for the increase for the quarter was the increased revenue generated from contract R & D and grants, which carries a much higher cost of revenues than do our core products. The following table shows, for the quarter ended December 31, 2011, the composition of the cost of revenues, between the cost of sales related to our core business and that the cost of revenues related to our contract research and development and grant revenues, and their relative percentage of related revenues.

                        Quarter Ended December 31, 2011



                                             CORE       R & D AND
                                           BUSINESS       GRANT
REVENUES                                  $ 1,725,952   $  339,688
DIRECTLY RELATED COST OF REVENUES         $   860,879   $  267,250
COST OF REVENUES AS % OF TOTAL REVENUES          49.9 %       78.7 %

Selling and marketing expenses. For the quarter ended December 31, 2011, selling and marketing expenses increased $107,058 or 31.4% to $448,399 from $341,341 for the quarter ended December 31, 2010. The $107,058 increase versus the prior year resulted primarily from increases of $71,577 in labor-related expenses, $18,373 in consulting expenses, and $7,719 in trade show and travel related expenses, plus a net increase of $9,389 in other selling and marketing expenses.

Research and development Expenses. Gross Research and development expenses, prior to the reclassification of a portion of said expenses to cost of sales, increased $89,884 or 41.9% to $304,627 for the quarter ended December 31, 2011, from $214,743 for the quarter ended December 31, 2010. The $89,884 increase versus the prior year resulted primarily from increases of $117,008 in labor-related expenses and $29,313 in laboratory supplies partially offset by a net decrease of $56,437 in other research and development expenses, primarily outside services expense.

General and administrative expenses. For the quarter ended December 31, 2011, general and administrative expenses increased $30,079 or 6.8% to $470,667 from $440,588 for the quarter ended December 31, 2010. This increase was primarily as a result of the $35,500 increase to bad debt expense for the period.

Interest expense. Interest expense decreased $17,227, or 37.4% to $28,886 for the quarter ended December 31, 2011, from $46,113 for the quarter ended December 31, 2010. This substantial decrease in interest expense was due primarily to the considerably lower borrowings for the current period plus additional interest expense in the prior year brought about by the FGI borrowings.

Six months ended December 31, 2011 compared to six months ended December 31, 2010

Total revenues. The following two tables provide the reader with further insight as to the changes of the various components of our total revenues for the comparable six month periods ended December 31, 2011 and December 31, 2010.

                             Six months ended
                               December 31,          % Incr.
                            2011          2010       (Decr.)
Total Revenues:
Geographical Breakdown
North America            $ 3,609,806   $ 2,883,964      25.2 %
International            $   634,042   $   880,209     (28.0 )%
Total Revenues           $ 4,243,848   $ 3,764,173      12.7 %

                             Six months Ended
                               December 31,          % Incr.
                            2011          2010       (Decr.)
Total Revenues:
By Category
Phospholipid Sales*      $ 1,583,898   $ 1,669,848      (5.2 )%
Coagulation Sales*       $   691,208   $   715,758      (3.4 )%
Aspirin Works Sales      $   320,995   $   180,409      77.9 %
Hyaluronic Acid Sales    $   411,401   $   400,590       2.7 %
Autoimmune Sales         $    46,267   $    81,478     (43.2 )%
Contract Manufacturing   $   281,236   $    55,900     403.1 %
R & D Contract           $   638,826   $   420,281      52.0 %
Shipping and Other       $   270,017   $   239,909      44.8 %
Total Revenues           $ 4,243,848   $ 3,764,173      12.7 %

Cost of revenues. Total cost of revenues, as a percentage of sales, were 53.2% for the six months ended December 31, 2011 versus 45.3% for the prior fiscal year. The primary reasons for the increase for the six month period were the increased revenue generated from contract R & D and grants, which carries a much higher cost of revenues than do our core products, and the fact that the current period entailed six months of international sales to ELITech-UK as our Master Distributor as opposed to the prior year, wherein we only generated sales to ELITech-UK for the second quarter.The following table shows, for the six months ended December 31, 2011, the composition of the cost of revenues, between the cost of sales related to our core business and that the cost of revenues related to our contract research and development and grant revenues, and their relative percentage of related revenues.

                       Six Months Ended December 31, 2011



                                             CORE       R & D AND
                                           BUSINESS       GRANT
REVENUES                                  $ 3,605,022   $  638,826
DIRECTLY RELATED COST OF REVENUES         $ 1,788,855   $  470,261
COST OF REVENUES AS % OF TOTAL REVENUES          49.6 %       73.6 %

Selling and marketing expenses. For the six months ended December 31, 2011, selling and marketing expenses increased $247,021 or 34.8% to $957,725 from $710,704 for the six months ended December 31, 2010. The $247,021 increase versus the prior year resulted primarily from increases of, $196,875 in labor-related expenses, $18,861 in consulting and outside services expenses, and $51,345 in trade show and travel related expenses, partially offset by a net decrease of $20,061 in other selling and marketing expenses.

Research and development Expenses. Gross Research and development expenses, prior to the reclassification of a portion of said expenses to cost of sales, increased $238,633 or 69.1% to $584,081 for the six months ended December 31, 2011, from $345,448 for the six months ended December 31, 2010. The $238,633 increase versus the prior year resulted primarily from increases of $212,232 in labor-related expenses, $16,820 in travel-related expenses and $62,310 in laboratory supplies, partially offset by a net decrease of $52,729 in other research and development expenses.

General and administrative expenses. For the six months ended December 31, 2011, general and administrative expenses decreased $48,296 or 5.1% to $895,576 from $943,872 for the six months ended December 31, 2010. The $48,296 decrease versus the prior year resulted primarily from decreases of $87,134 in Corgenix-UK general and administrative expenses, partially offset by a net increase of $38,838 in other general and administrative expenses.

Interest expense. Interest expense decreased $65,667, or 42.4% to $89,108 for the six months ended December 31, 2011, from $154,775 for the six months ended December 31, 2010. This substantial decrease in interest expense was due primarily to the considerably lower borrowings for the current period plus additional interest expense in the prior year brought about by the FGI borrowings.

(d) ADJUSTED EBITDA

Our adjusted earnings before interest, taxes, depreciation, amortization, non cash expense associated with stock-based compensation and the one-time costs associated with exit or disposal activities ("Adjusted EBITDA") decreased $62,869 or 65.1% to

$33,697 for the quarter ended December 31, 2011 compared with $96,566 for the corresponding three month period in fiscal 2011. For the six month period ended December 31, 2011, adjusted EBITDA decreased $180,418 or 53.4% to $157,200 compared with $337,618 for the corresponding six month period in fiscal 2011. Although Adjusted EBITDA is not a GAAP measure of performance or liquidity, we believe that it may be useful to an investor in evaluating our ability to meet future debt service, capital expenditures and working capital guidance. However, investors should not consider these measures in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with GAAP. In addition, because Adjusted EBITDA is not calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Adjusted EBITDA to net earnings (loss) can be made by adding depreciation and amortization expense, corporate stock-based compensation expense, interest expense, and income tax expense to net income (loss) as in the following table:

                                             3 Months ended      3 Months ended      6 Months ended      6 Months ended
                                              December 31,        December 31,        December 31,        December 31,
                                                  2011                2010                2011                2010
RECONCILIATION OF ADJUSTED EBITDA:
Net loss                                    $        (85,358 )  $        (61,955 )  $       (135,591 )  $       (410,185 )

Add back:
Depreciation and amortization                         72,065             107,001             142,203             215,568
Stock-based compensation expense                      18,354               5,646              44,727              11,283
Interest expense, net of interest income              28,636              45,874              88,659             154,313
Costs associated with exit or disposal
activities                                                 -                   -              17,202             366,639
Adjusted EBITDA                             $         33,697    $         96,566    $        157,200    $        337,618

(e) Financing Agreements

On September 16, 2011 we received the $500,000 from Wescor, pursuant to the Third Tranche under the Common Stock Purchase Agreement. Pursuant to the Common Stock Purchase Agreement, Wescor invested an additional $500,000 and is in turn to be issued 3,333,333 shares of our common stock valued at $0.15 per share. For no additional consideration we will issue a warrant to Wescor to purchase 1,666,667 shares at $0.15 per share. As a condition to the closing of the Third Tranche, the Executive Committee established under the Joint Product Development Agreement has determined the feasibility of creating not less than two (2) new Corgenix assays as further described in the Joint Product Development Agreement.

On July 28, 2011, we entered into a First Amended Joint Product Development Agreement (the "2011 Development Agreement") with ELITech and Wescor.

The term of the 2011 Development Agreement will be for a period of thirty-six
(36) months from the effective date and renewable for an additional twelve
(12) months upon such terms and conditions as may be agreed upon by the parties for the extended term. The Agreement may be terminated earlier by either party upon any material breach by the other party which is not cured within thirty
(30) days from receipt of notice thereof by the breaching party, termination of the Common Stock Purchase Agreement entered into by the parties on July 16, 2010, failure to reach agreement with respect to any development plan, or upon a challenge by any party to the validity of the proprietary property or intellectual property of another party. In the event of termination, all licenses to intellectual property (except licenses to patents solely owned by a party not related to any development program) will survive and continue on a royalty free basis.

Each party will be responsible for its own costs, expenses and liabilities incurred under the Agreement; however, ELITech and Wescor will be responsible for expenses related to the development of New Corgenix Assays and systems. We will invoice Wescor monthly in an amount equal to sixty percent (60%) of our actual development costs related to the new IT assays plus budgeted development- related overhead mutually agreed upon by the parties. Concurrently therewith, we will grant Wescor the right to purchase shares of our common stock at a par value of $0.001 per share in a total amount to equal sixty-six and 7/10 percent (66.7%) of the amount of each invoice at a per share price of $0.15. Wescor must purchase such shares within thirty (30) days. We will pay ELITech a royalty of seven percent (7%) of net product sales of new IT Assays sold by us.

As mentioned above, on July 14, 2011, we entered into the Loan Agreement with
LSQ.

Pursuant to the terms of the Loan Agreement, LSQ is providing the Line to us under which LSQ agrees to make loans to us in the maximum principal amount outstanding at any time of $1,500,000. The maximum amount of the loans under the Line shall also be

governed by a borrowing base equal to 85% of Eligible Accounts Receivable plus 50% of Eligible Inventory, with certain limits and exclusions more fully set forth in the Loan Agreement.

Interest accrues on the average outstanding principal amount of the loans under the Line at a rate equal to 0.043% per day.

Loans under the Line may be repaid and such repaid amounts re-borrowed until the maturity date. Unless terminated by us or accelerated by LSQ in accordance with the terms of the Loan Agreement, the Line will terminate and all loans there under must be repaid on July 14, 2013.

The Loan Agreement contains certain representations, warranties, covenants and events of default typical in financings of this type, including, for example, limitations on additional debt and investments and limitations on the sale of additional equity by us or other changes in our ownership. Please refer to the Loan Agreement for all such representations, warranties, covenants and events of default.

In addition, pursuant to the terms of the Loan Agreement, we granted to LSQ a security interest in all of our personal property to secure the repayment of the loans under the Line and all other of our obligations to LSQ, whether under the Loan Agreement or otherwise.

We have used the money we received under the Loan Agreement and the Line to payoff our outstanding debt obligations to Summit, which totaled $732,894 as of July 14, 2011, the date of payment. Such payment resulted in our indebtedness and obligations owing to Summit being terminated and satisfied in full.

On October 8, 2010, we closed the Second Tranche of the Common Stock Purchase Agreement (the "Common Stock Purchase Agreement") with Financière Elitech SAS, a société par actions simplifiée organized under the laws of France ("Elitech"), and Wescor, Inc., a Utah corporation and subsidiary of Elitech ("Wescor"), effective as of October 1, 2010. As a condition to closing the Second Tranche, we transferred our product distribution activity outside of North America from our subsidiary, Corgenix U.K. Ltd., ("Corgenix UK") to Elitech UK Limited, ("Elitech UK"), pursuant to the Assignment and Assumption Agreement, effective as of October 1, 2010 by and among us, Corgenix U.K.and Elitech UK. As an additional condition to closing the Second Tranche, Wescor purchased 1,666,667 shares of our common stock (the "Second Tranche Shares") for $250,000, or $0.15 per share. For no additional consideration, we issued a warrant to Wescor to purchase 833,333 shares of our common stock at $0.15 per share (the "Second Tranche Warrant").

The foregoing descriptions of the Common Stock Purchase Agreement, the Assignment and Assumption Agreement and the Second Tranche Warrant are not complete descriptions of all the terms of those agreements. For a complete description of all the terms, we refer you to the full text of the Common Stock Purchase Agreement, the Assignment and Assumption Agreement and the Second Tranche Warrant, copies of which were filed as Exhibits 10.1, 10.2 and 10.3, respectively, to the Form 8-K.

On October 8, 2010, we also completed a repurchase of 200,000 shares of our Series B Convertible Preferred Stock (the "Repurchased Shares") held by CAMOFI Master LDC, a Cayman Islands company ("CAMOFI"), for a purchase price of $50,000. Pursuant to the Second Modification of Secured Convertible Term Notes dated January 29, 2009 by and between us and CAMOFI, the Repurchased Shares bore a $50,000 liquidation preference and were convertible into 800,000 shares of our common stock at the option of CAMOFI. The repurchase was funded in part by cash on hand and in part by proceeds from the sale of the Second Tranche Shares.

On October 4, 2010, Corgenix UK entered into a letter agreement with Faunus Group International, Inc. ("FGI"), pursuant to which, among other things, Corgenix UK and FGI agreed to terminate that certain Receivables Finance Agreement dated March 29, 2010 by and between Corgenix UK and FGI (as amended, the "Agreement"), effective as of December 31, 2011.

Under the Agreement, Corgenix UK agreed to sell to FGI all of Corgenix UK's right, title and interest in and to specified accounts receivable and all merchandise represented by those accounts. In exchange, FGI advanced funds to the Company.

Contemporaneously with the termination of various agreements with CAMOFI and FGI referenced earlier in this report,, each of following agreements were terminated effective as of December 31, 2011: (a) Guaranty dated March 29, 2010 by and between the Company and FGI, (b) Guaranty dated March 29, 2010 by and between Corgenix Inc. and FGI, and (c) Debenture Agreement dated March 29, 2010 by and between Corgenix UK and FGI. Corgenix UK paid FGI a termination fee of $25,000.

On July 12, 2010 we entered into the Common Stock Purchase Agreement with Elitech and Wescor. In accordance with the Common Stock Purchase Agreement, Wescor will purchase up to $2,000,000 of the Company's common stock in three installments (subject to various conditions) and will receive warrants to purchase additional shares. Also, in connection with the Common Stock

Purchase Agreement, we entered into (i) a distribution agreement ("Master Distribution Agreement") with Elitech UK and (ii) a joint product development agreement ("Joint Product Development Agreement") with Elitech. The details of the Common Stock Purchase Agreement, Master Distribution Agreement, and Joint Product Development Agreement are outlined below.

The investment by Wescor took place over the maximum three tranches:

First Tranche under the Common Stock Purchase Agreement-Pursuant to the First Tranche of the Common Stock Purchase Agreement, on July 16, 2010, Wescor invested $1,250,000 to purchase 8,333,334 shares of the Company's common stock valued at $0.15 per share. For no additional consideration the Company issued a warrant to Wescor to purchase 4,166,667 shares at $0.15 per share. The Company entered into the Master Distribution Agreement with Elitech UK Limited and the Joint Product Development Agreement with Elitech, contemporaneously with the issuance of the First Tranche Shares.

Second Tranche under the Common Stock Purchase Agreement-Pursuant to the Second Tranche of the Common Stock Purchase Agreement, which took place on October 8, 2010, Wescor invested $250,000 to purchase 1,666,667 shares of our common stock valued at $0.15 per share. For no additional consideration we issued a warrant to Wescor to purchase 833,333 shares at $0.15 per share. As a condition to the closing of the Second Tranche, the Company will have effectively transferred its product distribution activity outside of North America from our subsidiary, Corgenix U.K. Ltd., to Elitech UK Limited.

Third Tranche under the Common Stock Purchase Agreement-Pursuant to the Third Tranche of the Common Stock Purchase Agreement, which took place on September 16, 2011, Wescor invested $500,000 to purchase 3,333,333 shares of our common stock valued at $0.15 per share. For no additional consideration we issued a warrant to Wescor to purchase 1,666,667 shares at $0.15 per share. As a condition to the closing of the Third Tranche, the Executive Committee established under the Joint Product Development Agreement will have determined the feasibility of creating not less than two (2) new Corgenix assays as further described in the Joint Product Development Agreement.

In connection with the Common Stock Purchase Agreement, at the initial closing, which occurred on July 16, 2010, we entered into the Master Distribution Agreement with Elitech UK, and we entered into the Joint Product Development Agreement with Elitech. Under the terms and conditions of the Master Distribution Agreement, and as a condition precedent to the closing of the Second Tranche, Elitech UK became the exclusive distributor of the Company's Products (as that term is defined therein) outside of North America. Accordingly, we along with Corgenix U.K. assigned and/or transferred the economic benefit to Elitech UK, and Elitech UK assumed all of the obligations of the Company or Corgenix U.K. under all distribution agreements executed by us or Corgenix U.K., as the case may be, related to any distributor whose territory is outside of North America.

(f) Liquidity and Capital Resources

At December 31, 2011, our working capital increased by $624,714 to $3,941,843 . . .