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

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 products covering autoimmune disorders, vascular diseases and liver disease. Our products are sold in the U.S., the UK and other countries through our marketing and sales organization that includes employee and 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, usually shipping products to customers within 24 hours of receipt of orders if in stock. Accordingly, we do not operate with a customer order backlog.

Beginning in fiscal year 1996, we began adding third-party OM licensed products to our diagnostic product line. We expect to expand our relationships with other companies in the future to gain access to additional products. This category comprises approximately 30-40 products, with an annual growth rate in excess of 10% annually. All of the third-party OM licensed products support our own manufactured products, adding to our competitive capabilities, especially in many international markets.

We have generated revenues over the past 22 years 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. 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.

In June 2011, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2011-05, "Comprehensive Income (Topic 820)." This ASU seeks to improve comparability, consistency, and transparency of financial reporting with respect to comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholder's equity, among other amendments. The amendments of this ASU require all non-owner changes in stockholder's equity to be presented either in single continuous statement of comprehensive income or two separate but consecutive statements. This ASU is effective for fiscal years and interim periods beginning after December 15, 2011 and early adoption is permitted. The adoption of ASU 2011-05 is not expected to have any effect for the Company.

In December 2011, the FASB issued ASU 2011-11, "Disclosures about Offsetting Assets and Liabilities (Topic 210). This ASU seeks to enhance current disclosures and increase the comparability of Balance Sheets prepared on the basis of U.S. generally accepted accounting principles and those prepared on the basis of International Financial Reporting Standards, by requiring all entities to

disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements, and reverse sale and repurchase agreements and securities borrowing and securities lending arrangements. This ASU is effective for fiscal years and interim periods beginning after January 1, 2013. The adoption of ASU 2011-11 is not expected to have any effect for the Company.

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") and our significant accounting policies are summarized in Note 1 to the accompanying consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

We maintain an allowance for doubtful accounts based on our historical experience and provide for any specific collection issues that are identified. Such allowances have historically been adequate to provide for our doubtful accounts but involve a significant degree of management judgment and estimation. Worse than expected future economic conditions, unknown customer credit problems and other factors may require additional allowances for doubtful accounts to be provided for in future periods.

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

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

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

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

The Company serves as a sub-contractor to Tulane University for several NIH funded grants and contracts related to development of diagnostics, vaccines and therapeutics for hemorrhagic fever viruses. Under the terms of the subcontracts, the Company invoices Tulane monthly for all allocable expenses incurred in support of the grants and contracts. This includes fully burdened salaries, supplies, production kits, travel and equipment. The Company serves as the principal investigator for an NIH funded two-year contract to develop recombinant diagnostic tests for the filoviruses (Ebola and Marburg), and has engaged three subcontractors (Tulane University, Autoimmune Technologies and the Scripps Research Institute) to assist in the development. Each month the subcontractors invoice the Company for allocable monthly expenses including fully burdened salaries, supplies and travel; the Company consolidates these expenses with its own allocable expense and invoices the NIH.

R & D expense consists primarily of the labor related costs, the cost of clinical studies and travel expenses, laboratory supplies and product testing expenses related to the research and development of

new and existing diagnostic products. During the current fiscal year, since contract R & D and Grant related revenue has become a more meaningful aspect of our business, the R & D expenses which are directly related to the generation of specific contract R & D and Grant revenue, have been reclassified out of R & D expense to cost of sales. Research and development costs and any costs associated with internally developed patents, formulas or other proprietary technology are expensed as incurred. Revenue from research and development contracts, as noted above, represents amounts earned pursuant to agreements to perform research and development activities for third parties and is recognized as earned under the respective agreement. Because research and development services are provided evenly over the contract period, revenue is recognized ratably over the contract period. Research and development agreements in effect in 2012 and 2011 provided for fees to the Company based on time and materials in exchange for performing specified research and development functions. Research and development contracts are generally short and intermediate term with options to extend, and can be cancelled under specific circumstances.

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

Year Ended June 30, 2012 compared to 2011

Net sales. The following two tables provide the reader with further insight as to the changes of the various components of our sales for the comparable fiscal years ended June 30, 2012 and June 30, 2011.

                                          Fiscal Year Ended
                                              June 30,            % Incr.
                                         2012          2011       (Decr.)
             Sales:
             Geographical Breakdown
             North America            $ 8,113,535   $ 6,483,193       25.2 %
             International**          $ 1,175,823   $ 1,458,383      (19.4 )%

             Total Sales              $ 9,289,358   $ 7,941,576       17.0 %

                                          Fiscal Year Ended
                                              June 30,            % Incr.
                                         2012          2011       (Decr.)
             Sales:
             By Category
             Phospholipid Sales*      $ 3,279,274   $ 3,385,193       (3.1 )%
             Coagulation Sales*       $ 1,334,404   $ 1,321,289        1.0 %
             Aspirin Works Sales      $   905,221   $   412,126      119.7 %
             Hyaluronic Acid Sales    $   834,342   $   782,783        6.6 %
             Autoimmune Sales         $    93,675   $   126,638      (26.0 )%
             Contract Manufacturing   $ 1,011,640   $   355,459      184.6 %
             R & D Contract           $ 1,380,311   $ 1,150,295       20.0 %
             Shipping and Other       $   450,491   $   407,793       10.5 %

             Total Sales              $ 9,289,358   $ 7,941,576       17.0 %

º **
º Partially due to the transfer of the international business to ELITech in October 2010.

Cost of revenues. Total cost of revenues, as a percentage of sales, were 57.6% for the fiscal year ended June 30, 2012 versus 50.5% for the prior fiscal year. The primary reason for the increased percentage of cost of revenues for the current fiscal year was the change in product mix. Compared to fiscal 2011, fiscal 2012 revenues were more heavily weighted towards lower margin sales areas such as contract manufacturing, OEM sales and international product sales. In addition, revenue generated from contract R & D and grants increased in fiscal 2012, and also carry a much higher cost of revenues than do our core products. The following table shows, for the fiscal year ended June 30, 2012, the composition of the cost of revenues, between the cost of revenues related to our core business and that related to our contract research and development and grant revenues, and their relative percentage of related revenues.

                        Fiscal Year Ended June 30, 2012

                                             CORE        R & D AND
                                           BUSINESS        GRANT         TOTAL
      SALES/REVENUES                      $ 7,909,047   $ 1,380,311   $ 9,289,358
      DIRECTLY RELATED COST OF REVENUES   $ 4,310,071   $ 1,044,924   $ 5,354,995
      COST OF REVENUES AS % OF REVENUES          54.5 %        75.7 %        57.6 %

                        Fiscal Year Ended June 30, 2011

                                             CORE        R & D AND
                                           BUSINESS        GRANT         TOTAL
      SALES/REVENUES                      $ 6,791,281   $ 1,150,295   $ 7,941,576
      DIRECTLY RELATED COST OF REVENUES   $ 3,230,475   $   781,909   $ 4,012,384
      COST OF REVENUES AS % OF REVENUES          47.6 %        68.0 %        50.5 %

Selling and marketing expenses. For the fiscal year ended June 30, 2012, selling and marketing expenses increased $460,106 or 29.9% to $1,996,989 from $1,536,883 in fiscal 2011. The $460,106 increase versus the prior year resulted primarily from increases of $331,668 in labor-related expenses, $81,142 in travel and trade show-related expenses, $42,738 in royalty expenses, and $4,558 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 $608,404 or 77.6% to $1,392,808 for the fiscal year ended June 30, 2012, from $784,404 for the fiscal year ended June 30, 2011. The $608,404 increase versus the prior year resulted primarily from the ELITech joint product development initiatives which generated increases of $287,366 in labor-related expenses, $198,945 in laboratory supplies, $69,368 in consulting and outside service expenses, $36,785 in travel-related expenses, and $15,940 in other research and development expenses.

General and administrative expenses. For the fiscal year ended June 30, 2012, general and administrative expenses increased $41,596 or 2.3% to $1,889,318 from $1,847,722 in fiscal 2011. The $41,596 increase versus the prior year resulted primarily from an increase of $64,998 in labor-related expenses, $66,821 in bad debt expense, and $64,935 in consulting and outside services expense, partially offset by a net decrease of $155,158 in other general and administrative expenses.

Interest expense. Interest expense decreased $135,691 or 52.6%, to $122,263 for the fiscal year ended June 30, 2012, from $257,954 in fiscal 2011. This substantial reduction in interest expense was primarily due to the considerably lower borrowings for the current fiscal year.

The Company's earnings before interest, taxes, depreciation, amortization, costs associated with exit or disposal activities, and non cash expense associated with stock-based compensation ("Adjusted EBITDA") decreased $874,945 or 111.1% to a negative $87,690 for the fiscal year ended June 30, 2012 compared with $787,255 for the prior fiscal year ended June 30, 2011. The primary reasons for the substantial decrease in Adjusted EBITDA for the current fiscal year were the significantly larger net loss for the current period along with reduced add backs such as depreciation expense and costs associated with exit and disposal activities. Although adjusted EBITDA is not a GAAP measure of performance or liquidity, the Company believes that it may be useful to an investor in evaluating the Company's ability to meet future debt service, capital expenditures and working capital requirements. 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 the Company's 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 loss as shown on the accompanying Statement of Operations can be made by eliminating depreciation and amortization expense, corporate stock-based compensation expense, interest expense, and income tax expense, if any, from the net loss and further eliminating any interest income from said net loss as in the following table:

                                                               Fiscal Year
                                                             Ended June 30,
                                                            2012         2011
     RECONCILIATION OF ADJUSTED EBITDA:
     Net income (loss)                                   $ (603,702 ) $ (393,065 )
     Add back:
     Depreciation and Amortization                          292,610      414,584
     Stock-based compensation expense                        84,611       22,573
     Interest income                                           (674 )       (853 )
     Interest expense                                       122,263      257,954
     Costs associated with exit or disposal activities       17,202      486,062

     Adjusted EBITDA                                     $  (87,690 ) $  787,255

On July 14, 2011, we entered into a Revolving Credit and Security Agreement (the "Loan Agreement") with LSQ Funding Group, L.C., a Florida limited liability company ("LSQ").

Pursuant to the terms of the Loan Agreement, LSQ is providing a line of credit (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 pay off our outstanding debt obligations to Summit Financial Resources, L.P. ("Summit"), which totaled $732,894 as of July 14, 2011, which was the date of payment. Such payment resulted in our indebtedness and obligations owing to Summit being terminated and satisfied in full.

In accordance with the July 10, 2010 Common Stock Purchase Agreement with ELITech and Wescor, Wescor purchased $2,000,000 of the Company's common stock in three installments or tranches, and received warrants to purchase additional shares. 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. Pursuant to the Second Tranche of the Common Stock Purchase Agreement, 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. Pursuant to the Third Tranche of the Common Stock Purchase Agreement, In July 2011, Wescor invested $500,000 to purchase 3,333,334 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.

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 UK assigned and/or transferred the economic benefit to ELITech UK, and ELITech UK assumed all of the obligations of the Company or Corgenix UK under all distribution agreements executed by us or Corgenix UK, as the case may be, related to any distributor whose territory is outside of North America.

At June 30, 2012, our working capital increased by $327,509 to $3,644,638 from $3,317,129 at June 30, 2011, and concurrently, our current ratio (current assets divided by current liabilities) increased from 2.54 at June 30, 2011 to 4.16 at June 30, 2012. This increase in working capital is primarily attributable to the $2,000,000 strategic investments by ELITech in 2010 and 2011 in addition to their ongoing additional R & D funding.

At June 30, 2012, trade and other receivables were $1,414,575 versus $1,554,423 at June 30, 2011. Accounts payable, accrued payroll and other accrued expenses decreased by a combined $14,780 from June 30, 2011. At June 30, 2012, inventories were $2,118,669 versus $2,800,473 at June 30, 2011. This substantial decrease occurred as a result of a concerted effort to better manage the company's purchasing practices in addition to the streamlining of the manufacturing process related to certain products.

For the fiscal year ended June 30, 2012, cash provided by operating activities amounted to $604,536, versus $402,019 used by operating activities for the fiscal year ended June 30, 2011. The

$604,536 cash provided by operating activities was primarily attributable to the substantial reduction in inventories and accounts receivable during the current fiscal year. The $604,536 cash provided by operating activities less the $184,500 of cash used by investing activities (primarily due to the purchase of equipment, and the $266,738 net cash used by financing activities (primarily due to the payoff of the amounts due to factor, the inventory loan and the revolving line of credit in addition to the payments on notes payable and capital lease obligations), resulted in a $153,298 net increase in our cash balance as of June 30, 2012.

We have incurred operating losses and negative cash flow from operations for most of our history. Losses incurred since our inception, net of dividends on redeemable common and redeemable preferred stock, have aggregated $14,205,212, and there can be no assurance that we will be able to generate positive cash flows to fund our operations in the future or to pursue our strategic objectives. Historically, we have financed our operations primarily through long-term debt, factoring of accounts receivables, and the sales of common stock, redeemable common stock, and preferred stock. We have also financed operations through sales of diagnostic products and agreements with strategic partners. We have developed and are continuing to modify an operating plan intended to eventually achieve sustainable profitability, positive cash flow from operations, and an adequate level of financial liquidity. Key components of this plan include consistent revenue growth and the cash to be derived from such growth, as well as the expansion of our strategic alliances with other biotechnology and diagnostic companies, securing diagnostic-related government contracts and grants, improving operating efficiencies to reduce our cost of sales as a percentage of sales, thereby improving gross margins, and lowering our overall operating expenses. If our sales were to decline, are flat, or achieve very slow growth, we would undoubtedly incur operating losses and a decreasing level of liquidity for that period of time. In view of this, and in order to further improve our liquidity and operating results, we entered into the ELITech collaboration and investment, described above.

The $2,000,000 ELITech common stock investments in addition to the LSQ $1,500,000 July 14, 2011 revolving credit facility, when considered in conjunction with our current revised forecasts, should provide adequate resources to continue operations for longer than 12 months.

We do not have any off-balance sheet arrangements, other than the lease agreement described below.

     Contractual Obligations and Commitments

     We have the following contractual obligations and commitments as of
     June 30, 2012:

                                                   Payments Due by Period
                                                                                         More than
Contractual Obligations      Total       Within 1 year     2 - 3 years    4 - 5 years     5 years
Secured notes payable     $    60,825    $       41,659    $     19,166              -            -
Capital lease
obligations               $   210,613    $      123,878    $    107,760              -            -
Interest on secured
debt                      $     4,187    $        3,460    $        727              -            -
Interest on capital
lease obligations         $    21,025    $       15,372    $      5,653              -            -
Operating leases          $ 2,845,717    $      432,253    $    821,343    $ 1,262,344    $ 329,777

Total contractual cash
obligations               $ 3,142,367    $      616,622    $    954,649    $ 1,262,344    $ 329,777

On February 8, 2006, we entered into a Lease Agreement (the "Lease") with York County, LLC, a California limited liability company ("York") pursuant to which we leased approximately 32,000 rentable square feet (the "Property") of York's approximately 102,400 square foot building, commonly known as Broomfield One and located at 11575 Main Street, Broomfield, Colorado 80020. In 2008, the

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