x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended
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September
30, 2009
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or
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o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ________________
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to ____________________
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Commission
File Number: 0-21214
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ORTHOLOGIC
CORP.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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86-0585310
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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1275
W. Washington Street, Suite 101, Tempe, Arizona
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85281
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(Address
of principal executive offices)
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(Zip
Code)
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(602)
286-5520
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(Registrant's
telephone number, including area code)
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Page
No.
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Part
I
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Financial
Information
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Item
1.
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|||
3
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4
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5
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6
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|||
Item
2.
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11
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Item
4.
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14
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Part
II
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Other
Information
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Item
1.
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14
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||
Item
1A.
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15
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Item
6.
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15
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EXHIBIT
31.1
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EXHIBIT
31.2
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EXHIBIT
32
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Item
1.
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Financial
Statements
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September
30,
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December
31,
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|||||||
2009
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2008
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
assets
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||||||||
Cash
and cash equivalents
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$ | 15,047 | $ | 23,088 | ||||
Short-term
investments
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23,647 | 22,675 | ||||||
Interest
receivable and other current assets
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630 | 1,094 | ||||||
Total
current assets
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39,324 | 46,857 | ||||||
Furniture
and equipment, net
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347 | 436 | ||||||
Long-term
investments
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- | 2,221 | ||||||
Total
assets
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$ | 39,671 | $ | 49,514 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
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||||||||
Current
liabilities
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||||||||
Accounts
payable
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$ | 727 | $ | 1,063 | ||||
Accrued
compensation
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599 | 648 | ||||||
Other
accrued liabilities
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1,123 | 281 | ||||||
Total
current liabilities
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2,449 | 1,992 | ||||||
Stockholders'
Equity
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||||||||
Common
Stock $.0005 par value; 100,000,000 shares authorized;
40,775,411 in 2009 and 40,775,411 in 2008 shares issued and
outstanding
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20 | 20 | ||||||
Additional
paid-in capital
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188,575 | 188,314 | ||||||
Accumulated
deficit
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(151,373 | ) | (140,812 | ) | ||||
Total
stockholders' equity
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37,222 | 47,522 | ||||||
Total
liabilities and stockholders' equity
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$ | 39,671 | $ | 49,514 |
Three months ended | Nine months ended |
As
a Development
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||||||||||||||||||
September 30,
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September 30,
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Stage
Company
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||||||||||||||||||
August
5, 2004 -
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||||||||||||||||||||
2009
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2008
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2009
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2008
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September 30, 2009
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||||||||||||||||
OPERATING
EXPENSES
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||||||||||||||||||||
General
and administrative
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$ | 604 | $ | 815 | $ | 2,172 | $ | 2,378 | $ | 22,247 | ||||||||||
Research
and development
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2,843 | 2,817 | 9,030 | 7,845 | 82,549 | |||||||||||||||
Purchased
in-process research and development
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- | - | - | - | 34,311 | |||||||||||||||
Other
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- | - | - | - | (375 | ) | ||||||||||||||
Total
operating expenses
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3,447 | 3,632 | 11,202 | 10,223 | 138,732 | |||||||||||||||
Interest
and other income, net
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(150 | ) | (488 | ) | (641 | ) | (1,659 | ) | (13,275 | ) | ||||||||||
Loss
from continuing operations
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3,297 | 3,144 | 10,561 | 8,564 | 125,457 | |||||||||||||||
Income
tax benefit
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- | - | - | - | (7 | ) | ||||||||||||||
Loss
from continuing operations
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3,297 | 3,144 | 10,561 | 8,564 | 125,450 | |||||||||||||||
Discontinued
operations - net gain on sale of the bone device business, net of taxes of
$267
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- | - | - | - | (2,202 | ) | ||||||||||||||
NET
LOSS
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$ | 3,297 | $ | 3,144 | $ | 10,561 | $ | 8,564 | $ | 123,248 | ||||||||||
Per
share information:
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||||||||||||||||||||
Net
loss, basic and diluted
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$ | 0.08 | $ | 0.08 | $ | 0.26 | $ | 0.21 | ||||||||||||
Basic
and diluted shares outstanding
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40,775 | 40,775 | 40,775 | 41,200 |
As
a Development
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||||||||||||
Nine
months ended
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Stage
Company
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|||||||||||
September 30,
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August
5th 2004 -
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|||||||||||
2009
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2008
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September 30, 2009
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||||||||||
OPERATING
ACTIVITIES
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||||||||||||
Net
loss
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$ | (10,561 | ) | $ | (8,564 | ) | $ | (123,248 | ) | |||
Non-cash
items:
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||||||||||||
Deferred
tax expense
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- | - | 770 | |||||||||
Depreciation
and amortization
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94 | 99 | 3,659 | |||||||||
Non-cash
stock compensation
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261 | 246 | 4,322 | |||||||||
Gain
on sale of bone device business
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- | - | (2,298 | ) | ||||||||
In-process
research and development
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- | - | 34,311 | |||||||||
Change
in other operating items:
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||||||||||||
Interest
receivable and other current assets
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464 | (237 | ) | 1,078 | ||||||||
Accounts
payable
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(336 | ) | 203 | (244 | ) | |||||||
Accrued
liabilities
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793 | (229 | ) | (1,292 | ) | |||||||
Cash
flows used in operating activities
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(9,285 | ) | (8,482 | ) | (82,942 | ) | ||||||
INVESTING
ACTIVITIES
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||||||||||||
Expenditures
for furniture and equipment, net
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(5 | ) | (148 | ) | (948 | ) | ||||||
Proceeds
from sale of assets
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- | - | 7,000 | |||||||||
Cash
paid for assets of AzERx/CBI
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- | - | (4,058 | ) | ||||||||
Cash
paid for patent assignment rights
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- | - | (650 | ) | ||||||||
Purchases
of investments
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(24,707 | ) | (28,845 | ) | (251,753 | ) | ||||||
Maturities
of investments
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25,956 | 24,711 | 286,044 | |||||||||
Cash
flows provided by (used in) investing activities
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1,244 | (4,282 | ) | 35,635 | ||||||||
FINANCING
ACTIVITIES
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||||||||||||
Net
proceeds from stock option exercises
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- | - | 4,612 | |||||||||
Net
proceeds from sale of stock
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- | - | 3,376 | |||||||||
Common
stock repurchases
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- | (1,017 | ) | (1,041 | ) | |||||||
Cash
flows (used in) provided by financing activities
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- | (1,017 | ) | 6,947 | ||||||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
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(8,041 | ) | (13,781 | ) | (40,360 | ) | ||||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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23,088 | 20,943 | 55,407 | |||||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
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$ | 15,047 | $ | 7,162 | $ | 15,047 | ||||||
Supplemental
Disclosure of Non-Cash Investing Activities
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AzERx and CBI
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|||||||||||
AzERx/CBI
Acquisitions
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||||||||||||
Current
assets acquired
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$ | 29 | ||||||||||
Patents
acquired
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2,142 | |||||||||||
Liabilities
acquired, and accrued acquisition costs
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(457 | ) | ||||||||||
Original
investment reversal
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(750 | ) | ||||||||||
In-process
research and development acquired
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34,311 | |||||||||||
Common
stock issued for acquisition
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(31,217 | ) | ||||||||||
Cash
paid for acquisition
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$ | 4,058 |
September
30, 2009
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Amortized |
Gross
unrealized
|
Gross
unrealized
|
|||||||||||||
Short-term investments
|
cost
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Gain
|
Loss
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Fair value
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||||||||||||
US
Government Securities
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$ | 4,509 | $ | 54 | $ | - | $ | 4,563 | ||||||||
Government-Sponsored
Enterprise Securities
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1,110 | - | (15 | ) | 1,095 | |||||||||||
Corporate
Debt Securities
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18,028 | 5 | (120 | ) | 17,913 | |||||||||||
Total
short-term investments
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$ | 23,647 | $ | 59 | $ | (135 | ) | $ | 23,571 |
December
31, 2008
Short-term investments
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Amortized cost
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Gross
unrealized Gain
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Gross
unrealized Loss
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Fair value
|
||||||||||||
US
Government Securities
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$ | 19,310 | $ | 548 | $ | - | $ | 19,858 | ||||||||
Government-Sponsored
Enterprise Securities
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2,967 | - | (20 | ) | 2,947 | |||||||||||
Corporate
Debt Securities
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398 | - | - | 398 | ||||||||||||
Total
short-term investments
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$ | 22,675 | $ | 548 | $ | (20 | ) | $ | 23,203 | |||||||
December
31, 2008
Long-term investments
|
Amortized cost
|
Gross
unrealized Gain
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Gross
unrealized Loss
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Fair value
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||||||||||||
US
Government Securities
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$ | 2,221 | $ | 104 | $ | - | $ | 2,325 | ||||||||
Total
long-term investments
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$ | 2,221 | $ | 104 | $ | - | $ | 2,325 |
Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
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·
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Evaluating
AZX100 for medically and commercially significant applications, such as
prevention of hypertrophic and keloid scarring, treatment of pulmonary
disease and vascular intimal hyperplasia. We are executing a
development plan for this peptide which included filing an IND for dermal
scarring in 2007 and commencement of Phase 1 safety studies in this
indication in the first quarter of 2008. Our Phase 1a study was
completed in May 2008. The study’s Safety Committee reviewing
all safety-related aspects of the Phase 1a trial was satisfied with the
profile of AZX100. We initiated a second safety study in dermal
scarring (Phase 1b), which was completed in the fourth quarter of
2008. The study’s Safety Committee reviewing all safety-related
aspects of the Phase 1b trial was again satisfied with the profile of
AZX100. We commenced in the first quarter of 2009 AZX100 Phase
2 human clinical trials in keloid scar revision and dermal scarring
following shoulder surgery. We also continued to perform
pre-clinical studies supporting multiple indications for
AZX100.
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·
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Pre-clinical
experiments investigating the potential of Chrysalin to modulate the
health of endothelial tissue in blood vessels and other
mechanism-of-action studies to support our strategy to partner our
vascular product candidates. We did not perform additional
pre-clinical or clinical studies in fracture repair, wound healing, spine
fusion, cartilage defect repair, dental bone repair or tendon
repair. In 2009, we are continuing studies to support our
vascular partnering efforts.
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Item 4.
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Controls
and Procedures
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Item
1.
|
Legal
Proceedings
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Risk
Factors
|
|
·
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unfavorable
results of our product candidate development
efforts;
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|
·
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unfavorable
results of our pre-clinical or clinical
testing;
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·
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delays
in obtaining, or failure to obtain FDA
approvals;
|
|
·
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increased
regulation by the FDA and other
agencies;
|
|
·
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the
introduction of competitive
products;
|
|
·
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impairment
of license, patent or other proprietary
rights;
|
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·
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failure
to achieve market acceptance of our
products;
|
|
·
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the
impact of present and future collaborative
agreements;
|
|
·
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failure
to successfully implement our drug development strategy;
and
|
|
·
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failure
in the future to meet the requirements for continued listing on the NASDAQ
Markets.
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ORTHOLOGIC CORP.
(Registrant)
|
||
Signature
|
Title
|
Date
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/s/ John M. Holliman, III
John
M. Holliman, III
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Executive
Chairman
(Principal
Executive Officer)
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November
9, 2009
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/s/ Les M. Taeger
Les
M. Taeger
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Senior
Vice President and Chief
Financial
Officer
(Principal
Financial and Accounting Officer)
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November
9, 2009
|
Exhibit
No.
|
Description
|
Incorporated by
Reference To:
|
Filed
Herewith
|
Certification
of Principal Executive Officer Pursuant to Securities Exchange Act Rule
13a-14(a), as amended.
|
X
|
||
Certification
of Principal Financial and Accounting Officer Pursuant to Securities
Exchange Act Rule 13a-14(a), as amended
|
X
|
||
Certification
of Principal Executive Officer and Principal Financial and Accounting
Officer Pursuant to 18 U.S.C. Section 1350*
|