CORGENIX MEDICAL CORP/CO

Supplementing the policy and methodology of revenue recognition for grants and research and development agreements described in Note 1 to the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014, revenues from the Lilly Agreement, a fixed price contract, is recognized in accordance with the milestone method of contract accounting. This contract is structured as a milestone agreement, and revenue is recognized when a specified milestone is achieved, due to the fact that for this agreement (1) the milestone event is substantive in nature and there is substantial uncertainty about the achievement of the milestone at the inception of the agreement, (2) the milestone payment is non-refundable, and (3) there are no continuing performance obligations associated with the milestone payment. Any milestone payments received prior to satisfying these revenue recognition criteria are deferred until the respective milestones are achieved.

On July 28, 2011, we entered into a First Amended Joint Product Development Agreement (the “2011 Development Agreement”) with ELITech and Wescor. Each party was responsible for its own costs, expenses and liabilities incurred under the 2011 Development Agreement. However, ELITech and Wescor were responsible for expenses related to the development of new Corgenix Assays and systems. Pursuant to the 2011 Development Agreement, each month we notified Wescor of the amount of their stock

purchase commitment, which was equal to sixty-six and 7/10 percent (66.7%) of the amount of each monthly R & D invoice at a per share price of $0.15. Wescor was required to purchase such shares within thirty (30) days of each notification. For the quarter ended December 31, 2014 we generated no R & D revenue from Wescor and likewise, issued no shares under this agreement. For the quarter ended December 31, 2013, we generated $84,420 in R & D revenue from Wescor, and issued 540,197shares under this arrangement. For the six months ended December 31, 2014 we generated no R & D revenue from Wescor and issued 109,832 shares under this agreement. For the six months ended December 31, 2013, we generated $207,147 in R & D revenue from Wescor, and issued 823,348shares under this arrangement. The 109,832 shares issued in the current six month period were issued pursuant to R & D invoices billed to Wescor in May and June, 2014. Also, pursuant to the 2011 Development Agreement, as of December 31, 2014 and December 31, 2013 there was $0 and $56,407, respectively, in accounts receivable for ELITech/Wescor-funded research and development and $0 and $37,624 due from Wescor with respect to stock purchase commitments owing from Wescor for zero and 250,825 shares, respectively, to be issued subsequent to December 31, 2014 and December 31, 2013, respectively. The $37,624 stock purchase commitment as of December 31, 2013 was not recorded as of December 31, 2013. As of June 30, 2014, the 2011 Development Agreement had expired by its terms.

The ELITech Group, a French diagnostic company, via its wholly owned subsidiaries, ELITech-UK (our master international distributor) and Wescor (located in Logan, Utah) (the “ELITech Group”) combined, are considered to be a related party, beneficially owning 44.7% of the Company’s outstanding shares, and, as of December 31, 2014, was one of the Company’s four largest non-governmental customers.  For the three months ended December 31, 2014 and December 31, 2013, we generated $0 and $84,420, respectively, in R & D revenue from Wescor. In addition, the Company’s international product sales (including shipping) to ELITech-UK for the three month periods ended December 31, 2014 and December 31, 2013 amounted to $183,436 and $224,976, respectively. In total, for the three months ended December 31, 2014 and December 31, 2013 the ELITech Group (ELITech-UK and Wescor) represented approximately 5.1% and 8.3%, respectively, of total revenues. For the six months ended December 31, 2014 and December 31, 2013, we generated $0 and $207,147, respectively, in R & D revenue from Wescor. In addition, the Company’s international product sales (including shipping) to ELITech-UK for the six month periods ended December 31, 2014 and December 31, 2013 amounted to $358,253 and $366,832, respectively. In total, for the six months ended December 31, 2014 and December 31, 2013 the ELITech Group (ELITech-UK and Wescor) represented approximately 6.1% and 6.6%, respectively, of total revenues. As of December 31, 2014 and December 31, 2013, the accounts receivable from the ELITech Group amounted to $196,945 and $305,953, respectively, which represented approximately 8.9% and 15.5%, respectively, of total trade accounts receivable. The Joint Product Development Agreement with Wescor terminated on June 30, 2014.

On January 14, 2015, counsel for the plaintiffs in the Bradford action filed a motion to withdraw, asserting that counsel and Plaintiff Bradford reached a fundamental disagreement on what actions should be taken in the matter going forward. Plaintiff Bradford subsequently engaged new counsel, who filed an objection to the proposed settlement on her behalf, asserting that the proposed settlement is not fair. Two additional shareholders, one of whom was also named as a plaintiff in the original Bradford action and in the consolidated action, filed similar objections to the proposed settlement.

Total revenues. Total revenues for the six months ended December 31, 2014, increased $264,185 or 4.7% to $5,853,377 versus $5,589,192 in the prior year. This increase was primarily due to a 267.5% increase in our R & D and Grant revenue, mainly as a result of the Lilly Agreement and the NIH Ebola grant, an 8.1% increase in Coagulation sales, and a 5.8% increase in phospholipid sales, partially offset by decreases in sales of most of the other categories, the largest dollar decreases occurring in (i) contract manufacturing sales, (ii) the international segment of OEM sales, (iii) instrument-related sales, which are a part of the category below entitled Shipping and Other,  and (iv) Aspirin Works sales. The weakness in Aspirin Works sales and in our contract manufacturing sales resulted from a continued slow down in demand from a major customer, who is a major customer for our Aspirin Works assay in addition to being a major customer for our contract manufactured products.  Instrument-related sales decreased as a result of the phaseout of this portion of the Company’s business.