8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report: August 9, 2006 (Date of earliest event reported)

ORTHOLOGIC CORP.

(Exact name of registrant as specified in its charter)

Delaware	000-21214	86-0585310
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1275 West Washington Street, Tempe, Arizona	85281
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(602) 286-5520

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition

     On August 9, 2006, OrthoLogic Corp. announced by press release its financial results for the three months ended June 30, 2006. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Section 9 — Financial Statements and Exhibits

Item 9.01            Financial Statements and Exhibits.

(d)   Exhibits

Exhibit No.	Description
99.1	Press release dated August 9, 2006

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 9, 2006	ORTHOLOGIC CORP.
	/s/ John M. Holliman, III
	John M. Holliman, III
	Executive Chairman

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated August 9, 2006

EX-99.1

EXHIBIT 99.1

FOR FURTHER INFORMATION:

Melanie Friedman (investors)
Stern Investor Relations, Inc.
(212) 362-1200
melanie@sternir.com 1275 W. Washington St.
Tempe, AZ 85281
(602) 286-5520
www.orthologic.com
Nasdaq: OLGC

ORTHOLOGIC ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS

TEMPE, AZ — August 9, 2006 — OrthoLogic Corp. (NASDAQ: OLGC) today announced financial results for the second quarter of 2006.

OrthoLogic reported a net loss of $6.5 million, or $0.16 per share, for the second quarter of 2006, compared to a net loss of $6.6 million or $0.17 per share for the second quarter of 2005. For the six months ended June 30, 2006 the net loss was $23.0 million, or $0.58 per share, versus a net loss of $12.1 million, or $0.32 per share, for the six months ended June 30, 2005. The increase in net loss for the six month period resulted from $8.4 million of in-process research and development costs related to the AzERx acquisition, the inclusion in 2006 of $1.7 million in non-cash stock compensation expense related to the January 1, 2006 adoption of SFAS 123(R), and $1.1 million in non-cash deferred tax expense.

The Company had $75.6 million in cash and investments as of June 30, 2006.

OrthoLogic originally issued guidance for 2006 for $35.0 million in cash burn. With careful adjustments to resource allocation and the interruption of the fracture repair clinical development program, the Company now forecasts a cash burn for 2006 of $15.0 - $17.5 million.

“The OrthoLogic management team is operating with an intense focus on value creation,” stated Jock Holliman, Executive Chairman of OrthoLogic. “We have significantly decreased the cash burn through the interruption in the fracture repair clinical trial, a reduction in headcount and stringent cost control. We are continuing to analyze Chrysalin from a scientific, clinical and regulatory standpoint in both fracture repair and diabetic foot ulcer healing to optimize its value to shareholders. We are also continuing the pre-clinical work that will support the initiation of clinical trials for AZX100 in one of several possible indications.”

Conference Call Information

Management will host a conference call and webcast on August 9, 2006 at 4:30 PM EDT (1:30 PM PDT). To access the call, participants may dial 866-825-3209 (domestic) or 617-213-8061 (international), with access code 30471562.

A replay of the call will be available beginning August 9, 2006, at 6:30 PM EDT until August 22, 2006, and may be accessed at 888-286-8010 (domestic) or 617-801-6888 (international), with access code 18532110.

Additionally, the conference call will be webcast on the Investor Relations section of the Company’s website: www.orthologic.com.

OrthoLogic Announces Second Quarter 2006 Financial Results
Page 2

About OrthoLogic
OrthoLogic is a biotechnology company committed to developing a pipeline of novel therapeutic peptides and other molecules aimed at helping patients with under-served medical conditions. The Company is focused on the development and commercialization of two product platforms: Chrysalin^® (TP508) and AZX100.

Chrysalin, the Company’s novel synthetic 23-amino acid peptide, is being studied in two lead indications, both of which represent areas of significant unmet medical need — fracture repair and diabetic foot ulcer healing. Based on the Company’s pioneering scientific research of the natural healing cascade, OrthoLogic has become a leading company focused on bone and tissue repair. The Company owns exclusive worldwide rights to Chrysalin.

AZX100 is a novel synthetic pre-clinical 24-amino acid peptide, one of a new class of compounds in the field of smooth muscle relaxation called Intracellular Actin Relaxing Molecules, or ICARMs™. AZX100 is currently being evaluated for commercially significant medical applications, such as the treatment of vasospasm associated with subarachnoid hemorrhage, the prevention of keloid scarring and the treatment of asthma. OrthoLogic has an exclusive worldwide license to AZX100.

OrthoLogic’s corporate headquarters are in Tempe, Arizona. For more information, please visit the Company’s website: www.orthologic.com.

Statements in this press release or otherwise attributable to OrthoLogic regarding our business that are not historical facts are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include the timing and acceptability of FDA filings and the efficacy and marketability of potential products, involve risks and uncertainties that could cause actual results to differ materially from predicted results. These risks include: delays in obtaining or inability to obtain FDA, institutional review board or other regulatory approvals of pre-clinical or clinical testing; unfavorable outcomes in our pre-clinical and clinical testing; the development by others of competing technologies and therapeutics that may have greater efficacy or lower cost; delays in obtaining or inability to obtain FDA or other necessary regulatory approval of our products; our inability to successfully and cost effectively develop or outsource manufacturing and marketing of any products we are able to bring to market; changes in FDA or other regulations that affect our ability to obtain regulatory approval of our products, increase our manufacturing costs or limit our ability to market our products; our possible need for additional capital in the future to fund the continued development of our product candidates; and other factors discussed in our Form 10-K for the fiscal year ended December 31, 2005, and other documents we file with the Securities and Exchange Commission.

###

Editors’ Note: This press release is also available under the Investors section of the Company’s Web site at: www.orthologic.com.

OrthoLogic Announces Second Quarter 2006 Financial Results
Page 3

ORTHOLOGIC CORP.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)

	June 30,			December 31,
	2006			2005
ASSETS
Current assets
Cash and cash equivalents	$	36,992		$	35,111
Short-term investments		28,425			46,437
Prepaids and other current assets		546			857
Total current assets		65,963			82,405
Furniture and equipment, net		512			525
Long-term investments		10,182			2,084
Deferred income taxes		—			1,106
Patents, net		2,170			2,223
Total assets	$	78,827		$	88,343
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	785		$	1,036
Accrued compensation		448			711
Accrued clinical		557			544
Accrued severance and restructuring costs		349			602
Other accrued liabilities		829			1,089
Total current liabilities		2,968			3,982
Deferred rent and other non-current liabilities		412			183
Total liabilities		3,380			4,165
Stockholders’ Equity
Common Stock $.0005 par value;		20			19
100,000,000 shares authorized; 40,661,039 and 38,124,742 shares issued and outstanding at
2006 and 2005, respectively
Additional paid-in capital		185,646			171,355
Accumulated deficit		(110,219	)		(87,196	)
Total stockholders’ equity		75,447			84,178
Total liabilities and stockholders’ equity	$	78,827		$	88,343

OrthoLogic Announces Second Quarter 2006 Financial Results
Page 4

ORTHOLOGIC CORP.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

													As a Development
	Three months ended June 30,						Six months ended June 30,						Stage Company
	2006			2005			2006			2005			8/5/2004 - 6/30/2006
OPERATING EXPENSES
General and administrative	$	2,061		$	1,273		$	4,153		$	2,183		$	10,941
Research and development		4,208			5,991			10,924			11,394			44,448
Other divestiture and related gains		—			—			—			(250	)		(375	)
Purchased in-process research and development		34			—			8,469			—			34,309
Total operating expenses		6,303			7,264			23,546			13,327			89,323
Interest income, net		(867	)		(654	)		(1,629	)		(1,206	)		(5,020	)
Loss from continuing operations before taxes		5,436			6,610			21,917			12,121			84,303
Income tax expense (benefit)		1,106			—			1,106			(12	)		356
Loss from continuing operations		6,542			6,610			23,023			12,109			84,659
Discontinued operations — net gain on the sale of the bone device business, net of taxes ($267)		—			—			—			—			(2,202	)
NET LOSS	$	6,542		$	6,610		$	23,023		$	12,109		$	82,457
Per Share Information:
Net loss, basic and diluted	$	0.16		$	0.17		$	0.58		$	0.32
Basic and diluted shares outstanding		40,622			38,220			39,962			38,134