---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---

FORM 10-Q



---



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2006
|- | ----------------------------------------------------------------------------------------------------------------------------------------

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transaction period from  to

Commission File Number 0-28414



---

UROLOGIX, INC.

(Exact name of registrant as specified in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Minnesota                                                      |  | 41-1697237                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

14405 21st Avenue North, Minneapolis, MN 55447

(Address of principal executive offices)

Registrants telephone number, including area code: (763) 475-1400



---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ̈Accelerated Filer  x    Non-Accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

As of February 1, 2007, the Company had outstanding 14,333,350 shares of common stock, $.01 par value.



---



---

PART I  FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

Urologix, Inc.

Condensed Balance Sheets

(In
thousands, except per share data)



|                                                                                                        |  |                  |         |   |               |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ------------- | - | ------- | -
|                                                                                                        |  | December 31,2006 |         |   | June 30, 2006 |  
|                                                                                                        |  | (unaudited)      |         |   | (*)           |  
|ASSETS                                                                                                  |  |                  |         |   |               |   |         |  
|Current assets:                                                                                         |  |                  |         |   |               |   |         |  
|Cash and cash equivalents                                                                               |  | $                | 12,047  |   |               | $ | 11,054  |  
|Accounts receivable, net of allowances of $213 and $238                                                 |  |                  | 4,227   |   |               |   | 5,234   |  
|Inventories                                                                                             |  |                  | 2,842   |   |               |   | 2,634   |  
|Deferred tax asset                                                                                      |  |                  | 943     |   |               |   | 992     |  
|Prepaids and other current assets                                                                       |  |                  | 317     |   |               |   | 184     |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total current assets                                                                                    |  |                  | 20,376  |   |               |   | 20,098  |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Property and equipment:                                                                                 |  |                  |         |   |               |   |         |  
|Property and equipment                                                                                  |  |                  | 12,072  |   |               |   | 11,562  |  
|Less accumulated depreciation                                                                           |  |                  | (9,334  | ) |               |   | (8,665  | )
|                                                                                                        |  |                  |         |   |               |   |         |  
|Property and equipment, net                                                                             |  |                  | 2,738   |   |               |   | 2,897   |  
|Other assets                                                                                            |  |                  | 1,119   |   |               |   | 1,288   |  
|Goodwill                                                                                                |  |                  | 10,193  |   |               |   | 10,193  |  
|Other intangible assets, net                                                                            |  |                  | 6,698   |   |               |   | 7,090   |  
|Deferred tax asset, net                                                                                 |  |                  | 2,332   |   |               |   | 2,332   |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total assets                                                                                            |  | $                | 43,456  |   |               | $ | 43,898  |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                    |  |                  |         |   |               |   |         |  
|Current liabilities:                                                                                    |  |                  |         |   |               |   |         |  
|Accounts payable                                                                                        |  | $                | 1,033   |   |               | $ | 1,375   |  
|Accrued compensation                                                                                    |  |                  | 655     |   |               |   | 826     |  
|Deferred income                                                                                         |  |                  | 237     |   |               |   | 242     |  
|Other accrued expenses                                                                                  |  |                  | 694     |   |               |   | 729     |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total current liabilities                                                                               |  |                  | 2,619   |   |               |   | 3,172   |  
|Deferred income                                                                                         |  |                  | 616     |   |               |   | 712     |  
|Other accrued expenses                                                                                  |  |                  | 11      |   |               |   | 34      |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total liabilities                                                                                       |  |                  | 3,246   |   |               |   | 3,918   |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|COMMITMENTS AND CONTINGENCIES (Notes 9 and 10)                                                          |  |                  |         |   |               |   |         |  
|Shareholders equity:                                                                                   |  |                  |         |   |               |   |         |  
|Common stock, $.01 par value, 25,000 shares authorized; 14,333 and 14,328 shares issued and outstanding |  |                  | 143     |   |               |   | 143     |  
|Additional paid-in capital                                                                              |  |                  | 112,059 |   |               |   | 111,450 |  
|Accumulated deficit                                                                                     |  |                  | (71,992 | ) |               |   | (71,613 | )
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total shareholders equity                                                                              |  |                  | 40,210  |   |               |   | 39,980  |  
|                                                                                                        |  |                  |         |   |               |   |         |  
|Total liabilities and shareholders equity                                                              |  | $                | 43,456  |   |               | $ | 43,898  |  
|                                                                                                        |  |                  |         |   |               |   |         |  

---

|(*) | The Balance Sheet at June 30, 2006 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes to financial statements
are an integral part of these statements.



2



---

Urologix, Inc.

Condensed Statements of Operations

(In thousands, except per share data)

(Unaudited)



|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------ |  | ------------------------------ | ------ | - | ---------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                         |  | Three Months EndedDecember 31, |        |   | Six Months EndedDecember 31, |  
|                                                                         |  | 2006                           |        |   | 2005                         |   |        | 2006 |  |   | 2005   |  
|Sales                                                                    |  | $                              | 6,011  |   |                              | $ | 6,535  |      |  | $ | 11,426 |   |  | $ | 12,692 |  
|Cost of goods sold                                                       |  |                                | 2,445  |   |                              |   | 2,182  |      |  |   | 4,856  |   |  |   | 4,214  |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Gross profit                                                             |  |                                | 3,566  |   |                              |   | 4,353  |      |  |   | 6,570  |   |  |   | 8,478  |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Costs and expenses:                                                      |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Selling, general and administrative                                      |  |                                | 2,792  |   |                              |   | 3,222  |      |  |   | 5,764  |   |  |   | 6,393  |  
|Research and development                                                 |  |                                | 639    |   |                              |   | 785    |      |  |   | 1,255  |   |  |   | 1,581  |  
|Amortization of intangible assets                                        |  |                                | 71     |   |                              |   | 41     |      |  |   | 142    |   |  |   | 82     |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Total costs and expenses                                                 |  |                                | 3,502  |   |                              |   | 4,048  |      |  |   | 7,161  |   |  |   | 8,056  |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Operating earnings (loss)                                                |  |                                | 64     |   |                              |   | 305    |      |  |   | (591   | ) |  |   | 422    |  
|Interest income, net                                                     |  |                                | 140    |   |                              |   | 88     |      |  |   | 269    |   |  |   | 145    |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Earnings (loss) before taxes                                             |  |                                | 204    |   |                              |   | 393    |      |  |   | (322   | ) |  |   | 567    |  
|Provision for income taxes                                               |  |                                | (57    | ) |                              |   | (74    | )    |  |   | (57    | ) |  |   | (102   | )
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Net earnings (loss)                                                      |  | $                              | 147    |   |                              | $ | 319    |      |  | $ | (379   | ) |  | $ | 465    |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Net earnings (loss) per common share - basic                             |  | $                              | 0.01   |   |                              | $ | 0.02   |      |  | $ | (0.03  | ) |  | $ | 0.03   |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Net earnings (loss) per common share - diluted                           |  | $                              | 0.01   |   |                              | $ | 0.02   |      |  | $ | (0.03  | ) |  | $ | 0.03   |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Weighted average number of shares used in basic per share calculations   |  |                                | 14,333 |   |                              |   | 14,314 |      |  |   | 14,332 |   |  |   | 14,312 |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  
|Weighted average number of shares used in diluted per share calculations |  |                                | 14,335 |   |                              |   | 14,356 |      |  |   | 14,332 |   |  |   | 14,376 |  
|                                                                         |  |                                |        |   |                              |   |        |      |  |   |        |   |  |   |        |  

The accompanying notes to financial statements are an integral part of these statements.



3



---

Urologix, Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                                           |  |                               |        |   |      |   |        |  
|------------------------------------------------------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                           |  | Six Months Ended December 31, |       
|                                                                                           |  | 2006                          |        |   | 2005 |  
|Operating Activities:                                                                      |  |                               |        |   |      |   |        |  
|Net earnings (loss)                                                                        |  | $                             | (379   | ) |      | $ | 465    |  
|Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |  |                               |        |   |      |   |        |  
|Depreciation and amortization                                                              |  |                               | 991    |   |      |   | 980    |  
|Provision for bad debts                                                                    |  |                               | 27     |   |      |   | 15     |  
|Employee stock-based compensation expense                                                  |  |                               | 596    |   |      |   | 701    |  
|Deferred income taxes                                                                      |  |                               | 49     |   |      |   | 116    |  
|Change in operating items:                                                                 |  |                               |        |   |      |   |        |  
|Accounts receivable                                                                        |  |                               | 980    |   |      |   | 263    |  
|Inventories                                                                                |  |                               | (402   | ) |      |   | (1,394 | )
|Prepaids and other assets                                                                  |  |                               | 36     |   |      |   | 106    |  
|Accounts payable                                                                           |  |                               | (342   | ) |      |   | 65     |  
|Accrued expenses and deferred income                                                       |  |                               | (330   | ) |      |   | (727   | )
|                                                                                           |  |                               |        |   |      |   |        |  
|Net cash provided by operating activities                                                  |  |                               | 1,226  |   |      |   | 590    |  
|                                                                                           |  |                               |        |   |      |   |        |  
|Investing Activities:                                                                      |  |                               |        |   |      |   |        |  
|Purchase of property and equipment                                                         |  |                               | (246   | ) |      |   | (631   | )
|Proceeds from sale/maturity of available-for-sale investments                              |  |                               |       |   |      |   | 171    |  
|                                                                                           |  |                               |        |   |      |   |        |  
|Net cash used for investing activities                                                     |  |                               | (246   | ) |      |   | (460   | )
|                                                                                           |  |                               |        |   |      |   |        |  
|Financing Activities:                                                                      |  |                               |        |   |      |   |        |  
|Proceeds from exercise of stock options                                                    |  |                               | 13     |   |      |   | 24     |  
|                                                                                           |  |                               |        |   |      |   |        |  
|Net cash provided by financing activities                                                  |  |                               | 13     |   |      |   | 24     |  
|                                                                                           |  |                               |        |   |      |   |        |  
|Net increase in cash and cash equivalents                                                  |  |                               | 993    |   |      |   | 154    |  
|Cash and cash equivalents:                                                                 |  |                               |        |   |      |   |        |  
|Beginning of period                                                                        |  |                               | 11,054 |   |      |   | 10,599 |  
|                                                                                           |  |                               |        |   |      |   |        |  
|End of period                                                                              |  | $                             | 12,047 |   |      | $ | 10,753 |  
|                                                                                           |  |                               |        |   |      |   |        |  
|                                                                                           |  |                              
|Supplemental cash-flow information                                                         |  |                               |        |   |      |   |        |  
|                                                                                           |  |                              
|Net value of inventory transferred to property and equipment                               |  | $                             | 194    |   |      | $ | 350    |  

The accompanying notes to financial statements are an integral part of these statements.



4



---

Urologix, Inc.

Notes to Condensed Financial Statements

December 31, 2006

(Unaudited)



|1. | Basis of Presentation
|-- | ---------------------

The accompanying unaudited
condensed financial statements of Urologix, Inc. (the Company, Urologix, we) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the
instructions for Form 10-Q and Article 10 of Regulation S-X. The balance sheet as of December 31, 2006 and the statements of operations and cash flows for the three and six month periods ended December 31, 2006 and 2005 are unaudited but
include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. Certain information normally included in
financial statements and related footnotes prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial
statements should be read in conjunction with the financial statements and notes included in Urologix Annual Report on Form 10-K for the year ended June 30, 2006.

Results for any interim period shown in this report are not necessarily indicative of results to be expected for any other interim period or for the
entire year. Certain prior year amounts have been reclassified to conform to current year presentation.



|2. | Significant Accounting Policies
|-- | -------------------------------

Revenue Recognition

We recognize revenue from the sale of Cooled ThermoTherapy system control units upon delivery to the customer. In addition to
our sales of Cooled ThermoTherapy system control units, we place our Cooled ThermoTherapy system control units with customers under a variety of programs for both evaluation and long-term use, and also provide access to Cooled ThermoTherapy
treatments via our Cooled ThermoTherapy mobile service. We retain title to the control units placed with our customers for evaluation and longer-term use and do not recognize any revenue on these control units until title has transferred. These
programs, as well as our Cooled ThermoTherapy mobile service, are designed to expand access to our technology, and thus expand the market for our single-use treatment catheters. Revenue from our mobile service is recognized upon treatment of the
patient. Revenue from the sale of single-use treatment catheters is recognized at the time of shipment. Revenue for warranty service contracts is deferred and recognized over the contract period and revenue subject to certain sales incentives is
deferred based upon known factors. We record a provision for estimated sales returns on product sales in the same period as the related revenue is recorded. The provision for estimated sales returns is based on historical sales returns, analysis of
credit memo data and other known factors.



|3. | Use of Estimates
|-- | ----------------

The preparation of financial
statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



5



---

Urologix, Inc.

Notes to Condensed Financial Statements

December 31, 2006

(Unaudited)



|4. | Stock-Based Compensation
|-- | ------------------------

We have a stock option plan that provides for the granting of incentive stock options to employees and nonqualified stock options to employees, directors and consultants. As of December 31, 2006, we had reserved
4,450,910 shares of common stock under this plan, and 1,261,833 shares were available for future grants. Options expire ten years from the date of grant and typically vest 25 percent after the first year of service with the remaining vesting
1/36theach month thereafter. Under the current terms of our stock option plan, persons serving as non-employee
directors at the date of the annual shareholder meeting automatically receive a grant to purchase 10,000 shares of common stock at a price equal to fair market value on the date of grant. Such options are immediately exercisable on the date of
grant, and expire 10 years from the date of grant, subject to earlier termination one year after the person ceases to be a director of the Company.

In addition to the stock option plan described above, Fred B. Parks, our Chairman and Chief Executive Officer, received an option to purchase 225,000 shares in connection with his original employment agreement dated May 21, 2003. The
option is a non-qualified option exercisable at a price of $2.75. The 225,000 share grant began vesting over the period commencing on May 27, 2003 and ends on May 27, 2007, with 56,268 shares vesting on May 27, 2004, and 1/36th of the
remaining 168,732 shares vesting on the 27th of each of the 36 months following May 27, 2004.

On July 1, 2005, we adopted the
fair value recognition provisions of SFAS No. 123R Share-Based Payment using the modified prospective method. As a result, our results of operations for the three and six month periods ended December 31, 2006 and 2005 reflect
compensation expense recognized over the requisite service period for new stock options granted since July 1, 2005, and the unvested portion of stock option grants made prior to July 1, 2005 which vested during those periods. Amounts
recognized in the financial statements related to stock-based compensation were as follows (in thousands, except per share amounts):



|                                           |  |                                 |     |                               |   |      |  |      |     |  |   |    
|------------------------------------------ |  | ------------------------------- | --- | ----------------------------- | - | ---- |  | ---- | --- |  | - | ---
|                                           |  | Three months ended December 31, |     | Six months ended December 31,
|                                           |  | 2006                            |     | 2005                          |   | 2006 |  | 2005
|Cost of goods sold                         |  | $                               | 28  |                               | $ | 11   |  | $    | 65  |  | $ | 25 
|Selling, general and administrative        |  |                                 | 178 |                               |   | 314  |  |      | 443 |  |   | 586
|Research and development                   |  |                                 | 37  |                               |   | 39   |  |      | 88  |  |   | 90 
|                                           |  |                                 |     |                               |   |      |  |      |     |  |   |    
|Total cost of stock-based compensation     |  |                                 | 243 |                               |   | 364  |  |      | 596 |  |   | 701
|Tax benefit of options issued              |  |                                 |    |                               |   |     |  |      |    |  |   |   
|                                           |  |                                 |     |                               |   |      |  |      |     |  |   |    
|Total stock-based compensation, net of tax |  | $                               | 243 |                               | $ | 364  |  | $    | 596 |  | $ | 701
|                                           |  |                                 |     |                               |   |      |  |      |     |  |   |    



6



---

Urologix, Inc.

Notes to Condensed Financial Statements

December 31, 2006

(Unaudited)

The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option-pricing model. We use historical data to estimate expected volatility, the period of time that option grants are expected to be outstanding, as well as employee
termination behavior. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted during the
six-month periods ended December 31, 2006 and 2005 using the Black-Scholes option-pricing model:



|                        |  |           |  |          
|----------------------- |  | --------- |  | ---------
|                        |  | 2006      |  | 2005     
|Volatility              |  | 70.2%     |  | 86.8%    
|Risk-free interest rate |  | 4.9%      |  | 4.0%     
|Expected option life    |  | 3.2 years |  | 3.6 years
|Stock dividend yield    |  |          |  |         

As of December 31, 2006, there was $1.7 million of total unrecognized compensation cost
related to unvested share-based compensation expense granted under our stock option plan. That cost is expected to be recognized over a weighted-average period of 2.1 years.



|5. | Basic and Diluted Earnings (Loss) Per Share
|-- | -------------------------------------------

Basic
earnings (loss) per share is computed by dividing the net earnings (loss) by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings (loss) per share is computed by dividing the net earnings
(loss) by the weighted average number of shares of common stock outstanding plus all dilutive potential common shares that result from stock options. The number of shares used in earnings (loss) per share computations are as follows (in thousands):



|                                                     |  |                                |  |                              |  |        |  |       
|---------------------------------------------------- |  | ------------------------------ |  | ---------------------------- |  | ------ |  | ------
|                                                     |  | Three months endedDecember 31, |  | Six months endedDecember 31,
|                                                     |  | 2006                           |  | 2005                         |  | 2006   |  | 2005  
|Weighted average common shares outstanding - basic   |  | 14,333                         |  | 14,314                       |  | 14,332 |  | 14,312
|Dilutive effect of stock options                     |  | 2                              |  | 42                           |  |       |  | 64    
|                                                     |  |                                |  |                              |  |        |  |       
|Weighted average common shares outstanding - diluted |  | 14,335                         |  | 14,356                       |  | 14,332 |  | 14,376
|                                                     |  |                                |  |                              |  |        |  |       

The dilutive effect of stock options in the above table excludes approximately 1,506,087 and
1,342,755, respectively, for the three month periods ended December 31, 2006 and 2005, and 1,512,824 and 1,285,155, respectively, for the six month periods ended December 31, 2006 and 2005 of options for which the exercise price was higher
than the average market price. In addition, dilutive potential common shares of 4,042 were excluded from diluted weighted average common shares outstanding for the six month period ended December 31, 2006 as they would be anti-dilutive due to
our net loss for the period.



7



---

Urologix, Inc.

Notes to Condensed Financial Statements

December 31, 2006

(Unaudited)



|6. | Inventories
|-- | -----------

Inventories consisted of the following as of (in
thousands):



|                  |  |                   |       |               |   |      
|----------------- |  | ----------------- | ----- | ------------- | - | -----
|                  |  | December 31, 2006 |       | June 30, 2006
|Raw materials     |  | $                 | 1,728 |               | $ | 1,511
|Work in process   |  |                   | 303   |               |   | 498  
|Finished goods    |  |                   | 811   |               |   | 625  
|                  |  |                   |       |               |   |      
|Total inventories |  | $                 | 2,842 |               | $ | 2,634
|                  |  |                   |       |               |   |      



|7. | Other Intangible Assets, Net
|-- | ----------------------------



|                                          |  |                         |        |                         |   |       |  |                |       |                         |   |        |  |   |       |  |   |      
|----------------------------------------- |  | ----------------------- | ------ | ----------------------- | - | ----- |  | -------------- | ----- | ----------------------- | - | ------ |  | - | ----- |  | - | -----
|                                          |  | As of December 31, 2006 |        | As of June 30, 2006    
|                                          |  | CarryingAmount          |        | AccumulatedAmortization |   | Net   |  | CarryingAmount |       | AccumulatedAmortization |   | Net   
|Developed technologies                    |  | $                       | 7,500  |                         | $ | 3,125 |  | $              | 4,375 |                         | $ | 7,500  |  | $ | 2,875 |  | $ | 4,625
|Customer base                             |  |                         | 2,300  |                         |   | 1,027 |  |                | 1,273 |                         |   | 2,300  |  |   | 945   |  |   | 1,355
|Trademarks                                |  |                         | 1,140  |                         |   | 90    |  |                | 1,050 |                         |   | 1,140  |  |   | 30    |  |   | 1,110
|                                          |  |                         |        |                         |   |       |  |                |       |                         |   |        |  |   |       |  |   |      
|Total identifiable intangible assets, net |  | $                       | 10,940 |                         | $ | 4,242 |  | $              | 6,698 |                         | $ | 10,940 |  | $ | 3,850 |  | $ | 7,090
|                                          |  |                         |        |                         |   |       |  |                |       |                         |   |        |  |   |       |  |   |      

During the three and six month periods ended December 31, 2006 and 2005, $125,000 and $250,000 of
amortization related to developed technologies was included in cost of goods sold. Amortization of customer base and trademarks is classified with total costs and expenses on the statement of operations.

Prior to fiscal 2006, the trademark asset, which represents the Prostatron® and TUMT® trademarks acquired from EDAP on October 1, 2000, was considered to be an intangible asset with an indefinite useful life. During the fourth
quarter of fiscal 2006, due to the approval of the CoolWave control unit and our intent to focus marketing on this control unit and trademark and due to the fact that we are not currently planning to manufacture additional Prostatron® control units, it was determined that the trademark
intangible no longer had an indefinite life and that amortization of the asset should begin. As a result, we began amortizing the trademark, using the straight-line method, at the beginning of the fourth quarter of fiscal 2006 over its remaining
estimated useful life of 9.5 years.



8



---

Urologix, Inc.

Notes to Condensed Financial Statements

December 31, 2006

(Unaudited)



|8. | Comprehensive Earnings (Loss)
|-- | -----------------------------

Comprehensive
earnings (loss) includes all changes in equity during a period except those resulting from investments by and distributions to shareholders. Our comprehensive earnings (loss) are as follows (in thousands):



|                                              |  |                                |     |                              |   |      |  |   |      |   |  |   |    
|--------------------------------------------- |  | ------------------------------ | --- | ---------------------------- | - | ---- |  | - | ---- | - |  | - | ---
|                                              |  | Three months endedDecember 31, |     | Six months endedDecember 31,
|                                              |  | 2006                           |     | 2005                         |   | 2006 |  |   | 2005
|Net earnings (loss)                           |  | $                              | 147 |                              | $ | 319  |  | $ | (379 | ) |  | $ | 465
|Change in net unrealized gains on investments |  |                                |    |                              |   | 2    |  |   |     |   |  |   | 9  
|                                              |  |                                |     |                              |   |      |  |   |      |   |  |   |    
|Comprehensive earnings (loss)                 |  | $                              | 147 |                              | $ | 321  |  | $ | (379 | ) |  | $ | 474
|                                              |  |                                |     |                              |   |      |  |   |      |   |  |   |    



|9. | Warranty
|-- | --------

Some of our products are covered by
warranties against defects in material and workmanship for periods of up to twenty-four months. We record a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of product
failure rates, material usage and service delivery costs to sales, the historical length of time between the sale and resulting warranty claim, and other factors.

Warranty provisions and claims for the six month periods ended December 31, 2006 and 2005 were as follows (in thousands):



|            |  |                              |  |                     |  |                 |  |                               
|----------- |  | ---------------------------- |  | ------------------- |  | --------------- |  | ------------------------------
|Fiscal Year |  | Beginning Balance at July 1, |  | Warranty Provisions |  | Warranty Claims |  | Ending Balance at December 31,
|2007        |  | $94                          |  | $145                |  | ($126)          |  | $113                          
|            |  |                              |  |                    
|2006        |  | $141                         |  | $168                |  | ($193)          |  | $116                          



|10. | Legal Proceedings
|--- | -----------------

We have been and are involved in
various legal proceedings and other matters that arise in the normal course of our business, including product liability claims that are inherent in the testing, production, marketing and sale of medical devices. Based upon currently available
information, we believe that the ultimate resolution of these matters will not have a material effect on the financial position, liquidity or results of operations of the Company.



9



---

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This Managements Discussion and Analysis of Financial Condition and Results of Operations contains, in addition to historical information,
forward-looking statements that are based on our current expectations, beliefs, intentions or future strategies. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements as a
result of certain factors, including those set forth under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended June 30, 2006, as well as in other filings we make with the Securities and Exchange
Commission and include factors such as: the impact of competitive treatments, products and pricing; our dependence upon third-party reimbursement for our products and reimbursement rates for Cooled ThermoTherapy; our dependence on Cooled
ThermoTherapy for all of our revenues; our ability to develop and market new products, including the Urologix-owned Cooled ThermoTherapy mobile service and the CoolWave control unit, and our ability to generate revenue from new products; the
rate of adoption by the medical community of Cooled ThermoTherapy products and the effectiveness of our sales organization and marketing efforts to the medical and patient community; our limited experience in manufacturing some of our products and
our dependence upon third-party suppliers to produce and supply products; our ability to successfully defend our intellectual property against infringement and the expense associated with that effort; product liability claims inherent in the
testing, production, marketing and sale of medical devices; approval by the FDA of our products and compliance with FDA requirements for the manufacture, labeling, marketing and sale of our products. All forward-looking statements included herein
are based on information available to us as of the date hereof, and we undertake no obligation to update any such forward-looking statements.

The following is a discussion and analysis of Urologix financial condition and results of operations as of and for the three and six month periods ended December 31, 2006 and 2005. This section should be read in conjunction with
the condensed financial statements and related notes in Item 1 of this report and Urologix Annual Report on Form 10-K for the year ended June 30, 2006.

OVERVIEW

We are based in Minneapolis, Minnesota and develop, manufacture and market minimally
invasive medical products for the treatment of urological disorders.

We have developed and offer non-surgical, catheter-based therapies
that use a proprietary cooled microwave technology for the treatment of benign prostatic hyperplasia (BPH), a disease that dramatically affects more than 23 million men worldwide by causing adverse changes in urinary voiding patterns. We market
our control units under the CoolWave, Targis®, and
Prostatron® names, and our catheter product
families under the Cooled ThermoCath®, Targis®, and Prostaprobe® names. Our systems utilize Cooled ThermoTherapy, a targeted microwave energy combined
with a unique cooling mechanism that protects healthy tissue and enhances patient comfort while providing safe, effective, lasting relief from the symptoms of BPH. Cooled ThermoTherapy can be performed without anesthesia or intravenous sedation and,
as a result, can be performed in a physicians office or an outpatient clinic. We believe Cooled ThermoTherapy provides an efficacious, safe and cost-effective solution for BPH that is clinically superior to medication and is without the
complications and side effects inherent in surgical procedures.

We believe that third-party reimbursement is essential to the adoption of
Cooled ThermoTherapy, and that clinical efficacy, overall cost effectiveness and physician advocacy is key to obtaining this reimbursement. We estimate that 60% to 80% of patients who receive treatment in the United States will be eligible for
Medicare coverage. The remaining patients will either be covered by private insurers, including traditional indemnity health insurers and managed care organizations, or they will be private-paying patients. As a result, Medicare reimbursement is
particularly critical for widespread market adoption of Cooled ThermoTherapy in the United States.

The level of Medicare reimbursement for
Cooled ThermoTherapy is dependent on the site of service. Beginning on August 1, 2000, the Centers for Medicare and Medicaid Services (CMS) replaced the reasonable cost basis of



10



---

reimbursement for outpatient hospital-based procedures, including Cooled ThermoTherapy, with a new fixed rate or prospective payment system. Under this
method of reimbursement, a hospital receives a fixed reimbursement for each Cooled ThermoTherapy treatment performed in its facility, approximately $2,600 in calendar year 2006, and projected to be approximately $2,500 in calendar year 2007,
although the rate varies depending on a wage index and other factors for each hospital. The urologist performing the Cooled ThermoTherapy treatment receives reimbursement of approximately $500 per procedure.

In January 2001, CMS began to reimburse for Cooled ThermoTherapy treatments performed in the urologists office. The reimbursement rate (inclusive
of the physicians fee) in calendar year 2006 for Cooled ThermoTherapy procedures performed in the urologists office was approximately $4,000. Preliminary reimbursement rates for calendar year 2007 were recently released and the projected
reimbursement for Cooled ThermoTherapy procedures preformed in the urologists office is expected to be approximately $3,550, subject to geographic adjustment.

In July 2003, CMS added the CPT Code covering Cooled ThermoTherapy to the ASC list of Medicare approved procedures providing a reimbursement rate for ambulatory surgical centers (ASC). As a result, procedures
performed in an ASC were reimbursed under a two-part system similar to hospitals: the ASC received a fixed fee of approximately $1,300, the highest amount allowable under this system, while the urologist performing the procedure was reimbursed the
same amount as if the treatment occurred in a hospital, approximately $500. The relatively low facility reimbursement relative to the cost of the procedure potentially limited the number of Cooled ThermoTherapy treatments done in an ASC. Effective
July 2005, the CPT code covering Cooled ThermoTherapy was deleted from the ASC list of Medicare approved procedures. As a result, effective with that change, urologists who perform Cooled ThermoTherapy procedures in an ASC are reimbursed at the
office-based reimbursement rates, approximately $4,000 in calendar year 2006 and expected to be approximately $3,550 in calendar year 2007, subject to geographic adjustment.

Our goal is to grow Cooled ThermoTherapy as a standard of care for the treatment of BPH. Our business strategy to achieve this goal is (i) educate
both patients and physicians on the benefits of CooledThermoTherapy compared to other treatment options, (ii) increase the use of Cooled ThermoTherapy by physicians who already have access to a Cooled ThermoTherapy system, (iii) increase
the number of physicians who provide Cooled ThermoTherapy to their patients, (iv) efficiently provide more physicians with access to Cooled ThermoTherapy through the expansion of our Cooled ThermoTherapy mobile service in the United States, and
(v) increase the use of Cooled ThermoTherapy for the treatment of BPH in international markets.

We expect to continue to invest in
sales and marketing programs, the expansion of our Cooled ThermoTherapy mobile service and research and development and clinical trials as we focus on growing revenues and continuing to improve our therapy. In addition, we received FDA approval for
our CoolWave control unit which we launched in July of 2006. Our future profitability will be dependent upon, among other factors, our success in achieving increased treatment volume and market adoption of the Cooled ThermoTherapy procedures in the
physicians office, including treatments delivered through our Cooled ThermoTherapy mobile service, our success in obtaining and maintaining necessary regulatory clearances, our ability to manufacture at the volumes and quantities the market
requires, the extent to which Medicare and other health care payers continue to reimburse costs of Cooled ThermoTherapy procedures performed in physicians offices, hospitals, and ambulatory surgery centers and the amount of reimbursement
provided.

Critical Accounting Policies:

A description of our critical accounting policies is provided in the Managements Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended
June 30, 2006. At December 31, 2006, our critical accounting policies and estimates continue to include revenue recognition, allowance for doubtful accounts, product warranty, inventories, valuation of identifiable intangible assets and
goodwill, income taxes and stock-based compensation.



11



---

RESULTS OF OPERATIONS

Net Sales

Net sales for the three and six month periods ended December 31, 2006 were $6.0 million and $11.4 million,
respectively, compared to $6.5 million and $12.7 million, respectively, during the same periods of the prior fiscal year. The decrease in revenue for both the three and six month periods ended December 31, 2006 is primarily due to reduced
orders from our direct accounts, which includes both direct office and third party mobile accounts, and lower average selling prices (ASPs) for our disposable treatment catheters. This decrease in revenue from direct accounts was partially
offset by an increase in revenues from our mobile services that began operations in September 2005.

The introduction of our mobile services operations in
September 2005 had a direct impact to our overall revenue mix. For example, 68 percent of sales in the first half of fiscal 2007 were derived from treatment catheters compared to 87 percent in the year ago period while mobile treatments comprised 29
percent of total revenue in the first half of fiscal 2007 compared to 8 percent in the prior year period.

Cost of Goods Sold and Gross Profit

Cost of goods sold includes raw materials, labor, overhead, and royalties incurred in connection with the production of our Cooled
ThermoTherapy system control units and single-use treatment catheters, as well as costs associated with the delivery of our Cooled ThermoTherapy mobile service. Cost of goods sold for the three and six month periods ended December 31, 2006
increased to $2.4 million and $4.9 million, respectively, from $2.2 million and $4.2 million during the same periods of the prior year.

Gross profit as a percentage of sales for the three and six month periods ended December 31, 2006 decreased to 59% and 58%, respectively, from 67% in both the three and six month periods ended December 31, 2005. The decrease in
gross profit as a percentage of sales is primarily the result of decreased sales and production volume of our treatment catheters, which provide a smaller base to absorb our fixed manufacturing overhead costs, an increase in the number of mobile
unit treatments, which have lower overall margins, decreased year-over-year ASPs of our single-use treatment catheters, as well as increased costs during the three month period ended September 30, 2006, which did not continue in the three
month period ended December 31, 2006, related to the resolution of manufacturing issues identified in the fourth quarter of fiscal 2006.

Selling, General & Administrative

Selling, general and administrative expenses decreased to $2.8 million
and $5.8 million, respectively, for the three and six month periods ended December 31, 2006 from $3.2 million and $6.4 million in the same periods of fiscal year 2006. The decrease in expense for both the three and six month periods is
primarily the result of a decrease in wages, benefits, stock-based compensation expense and travel. Much of this reduction is driven by a decrease in the size of our sales force, as well as a decrease in advertising and promotional expense
associated with the launch of the new CoolWave control unit in the first six months of fiscal 2006. These expense reductions were partially offset by increased legal, audit and consulting fees when compared to the three and six month periods ended
December 31, 2005.

Research and Development

Research and development expenses, which include expenditures for product development, regulatory compliance and clinical studies, decreased to $639,000 and $1.3 million, respectively, for the three and six month
periods ended December 31, 2006 from $785,000 and $1.6 million in the same periods of fiscal year 2006. The decrease in expenses for both the three and six month periods is primarily the result of decreased contract labor costs as well as
decreased expenditures on product development activities related to our next generation CoolWave control unit.

Amortization of Intangible Assets

Amortization of intangible assets increased to $71,000 and $142,000, respectively, for the three and six month periods ended
December 31, 2006 from $41,000 and $82,000 in the same periods of fiscal year 2006. The increase in amortization expense is the result of the determination in the fourth quarter of fiscal 2006 to begin amortizing our indefinite-lived trademark
on a straight-line basis over its estimated remaining life of 9.5 years at April 1, 2006. The decision to begin amortizing our trademark, which represents the Prostatron and TUMT trademarks acquired from EDAP



12



---

on October 1, 2000, was due to the approval of the CoolWave control unit and our intent to focus marketing on this control unit and trademark, and due
to the fact that we are not currently planning to manufacture additional Prostatron control units.

Net Interest Income

Net interest income for the three and six month periods ended December 31, 2006 increased to $140,000 and $269,000, respectively, from $88,000 and
$145,000 in the same periods of the prior fiscal year. The increase is primarily due to the combination of higher cash and investment balances and higher interest rates.

Provision for Income Taxes

Income tax expense decreased to $57,000 for the three and six
month periods ended December 31, 2006 from $74,000 and $102,000 in the same periods of fiscal 2006. The decrease is primarily the result of our operating loss in the first half of fiscal 2007. We did not recognize an income tax benefit related
to our first half loss as we believe our existing net deferred tax asset of $3.3 million represents our current estimate of the maximum future benefit that will be realized from our net operating loss carryforwards. We are not offsetting regular
federal income tax expense with the release of valuation allowances in fiscal year 2007 as we did in the prior year. The release of valuation allowance in the fourth quarter of fiscal 2006 resulted in a tax benefit for the recording of the deferred
tax asset, and therefore, for fiscal 2007, and future years, tax expense will be recorded as this deferred tax asset is utilized. Because of our tax situation, our future tax rate will be very sensitive to the amount of pre-tax income or loss and
our fiscal year 2007 tax rate is likely to significantly exceed the statutory rate. We will continue to assess the potential realization of our deferred tax assets on an annual basis, or on an interim basis if circumstances warrant. If our actual
results and updated projections vary significantly from our projections, we would need to increase or decrease our valuation allowance against our gross deferred tax assets. We would adjust our earnings for the deferred tax in the period we make the
determination. At December 31, 2006, we carried a valuation allowance of $26.8 million against our remaining deferred tax assets that will not reverse against deferred tax liabilities within the scheduled reversal period. Our tax expense will
continue to be primarily non-cash.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations since inception through sales of equity securities and, to a lesser extent, sales of our Cooled ThermoTherapy system control units and single-use treatment catheters. As of
December 31, 2006, we had total cash and cash equivalents of $12.0 million compared to $11.1 million as of June 30, 2006. Working capital increased to $17.8 million at December 31, 2006 from $16.9 million at June 30, 2006.

During the six months ended December 31, 2006, we generated $1.2 million of cash from operating activities primarily as a result of
decreases in accounts receivable of $1.0 million due to improved collections in the second quarter of fiscal 2007, depreciation and amortization of $1.0 million and stock-based compensation of $596,000. These increases in cash were partially offset
by our net loss of $379,000, increases in inventories of $402,000, decreases in our accounts payable of $342,000 and decreases in our accrued expenses and deferred income of $330,000. The increase in inventory is primarily the result of increased
raw material purchased and production of our disposable catheters in anticipation of greater sales levels than were achieved in the six months ended December 31, 2006, and decreased accounts payable is due to the timing of purchases versus
payments. The decrease in accrued expenses and deferred income resulted primarily from the payment of fiscal 2006 year-end sales commissions and sales taxes during fiscal 2007, which were based primarily on higher sales volumes in the three month
period ended June 30, 2006 compared to the three month period ended December 31, 2006.

During the first six months ended
December 31, 2006, we used $246,000 in investing activities resulting from the purchase of $246,000 of property and equipment largely related to equipment purchased to support the growth of our mobile initiative.

During the six months ended December 31, 2006, we generated $13,000 in financing activities as a result of proceeds from the exercise of stock
options.



13



---

We plan to continue offering customers a variety of programs for both evaluation and long-term use of our
Cooled ThermoTherapy system control units in addition to purchase options, as well as grow our mobile service which provides physicians and patients with efficient access to our Cooled ThermoTherapy system control units on a pre-scheduled basis. As
of December 31, 2006, our property and equipment, net, included approximately $1.8 million of control units used in evaluation or long-term use programs and units used in our Company-owned mobile service. Depending on the growth of these
programs, we may use additional capital to finance these programs.

We believe our $12.0 million in cash and cash equivalents at
December 31, 2006, will be sufficient to fund our working capital and capital resources needs for the next 12 months. There can be no assurance, however, that we will not require additional financing in the future or that any additional
financing will be available to us on satisfactory terms, if at all.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Recently Issued Accounting Standards

In June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises
financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for us
beginning on July 1, 2007. We are still evaluating the impact the adoption of this pronouncement will have on our financial statements.

In June 2006, the FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) regarding EITF Issue No. 06-03, How Taxes Collected from Customers and Remitted to Government Authorities Should be Presented in the
Income Statement (That Is, Gross versus Net Presentation). This guidance requires that companies disclose their accounting policy related to sales tax and other similar taxes effective for us beginning July 1, 2007. We report these taxes on
a net basis, excluding them from revenue.

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 157, Fair Value Measurements. SFAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair-value measurements. This
Statement applies only to fair-value measurements that are already required or permitted by other accounting standards, except for measurements of share-based payments and measurements that are similar to, but not intended to be, fair value. This
statement is expected to increase the consistency of fair value measurements, but imposes no requirements for additional fair-value measures in financial statements. The provisions under SFAS No. 157 are effective for us beginning on
July 1, 2008. We are still evaluating the impact the adoption of this pronouncement will have on our financial statements.

In
September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements, (SAB 108), that provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff believes that
registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is
material. This pronouncement is effective for fiscal years ending after November 15, 2006. Registrants are permitted to initially apply the provisions of SAB 108 by either restating prior financial statements or by recording the cumulative
effect as an adjustment to the carrying value of assets and liabilities as of the beginning of the fiscal year of adoption with an offsetting adjustment to the opening balance of retained earnings. We will apply the provisions of SAB 108 using the
cumulative effect transition method in connection with the preparation of our annual financial statements for the year ending June 30, 2007. When we initially apply the provisions of SAB 108, we currently expect to record an increase in
deferred revenue of approximately $60,000 and a corresponding increase in accumulated deficit as of July 1, 2006. The accompanying financial statements do not reflect this adjustment.



14



---

|ITEM 3. | QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
|------- | ---------------------------------------------------------

Our financial instruments include cash and cash equivalents. Increases and decreases in prevailing interest rates generally translate into decreases and increases, respectively, in the fair value of these instruments. Also, fair values of
interest rate sensitive instruments may be affected by the credit worthiness of the issuer, prepayment options, relative values of alternative instruments, the liquidity of the instrument and other general market conditions.

Market risk was estimated as the potential decrease in fair value resulting from a hypothetical 1% change in interest rates and was not materially
different from the quarter-end carrying value. Due to the nature of our cash and cash equivalents, we have concluded that we do not have a material market risk exposure.

Our policy is not to enter into derivative financial instruments. We do not have any significant foreign currency exposure since we do not generally transact business in foreign currencies. Therefore, we do not have
significant overall currency exposure. In addition, we do not enter into any futures or forward commodity contracts since we do not have significant market risk exposure with respect to commodity prices.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

(a) Evaluation of Disclosure Controls
and Procedures

The Companys Chief Executive Officer, Fred B. Parks, and Chief Financial Officer, Elissa J. Lindsoe, have
evaluated the Companys disclosure controls and procedures as of the end of the period covered by this report. Based upon this review, they have concluded that these controls and procedures are effective.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting that occurred during the fiscal period covered by this report that have materially affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting.



15



---

PART II - OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

We have been and are involved in
various legal proceedings and other matters that arise in the normal course of our business, including product liability claims that are inherent in the testing, production, marketing and sale of medical devices. Based upon currently available
information, we believe that the ultimate resolution of these matters will not have a material effect on our financial position, liquidity or results of operations.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

The most significant risk factors
applicable to the Company are described in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended June 30, 2006. There have been no material changes from the risk factors previously disclosed in our
Annual Report on Form 10-K.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Not
applicable.



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

Not applicable.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

Our Annual
Meeting of Shareholders was held on November 7, 2006. Of the 14,331,650 shares of common stock outstanding and entitled to vote at the meeting as of September 15, 2006, 13,484,323 shares were present, either in person or by proxy. The
following describes the maters considered by the our shareholders at the Annual Meeting, as well as the results of the votes cast at the Annual Meeting.

Proposal 1: To elect two (2) directors to hold office for a term of three years or until their respective successors have been elected and shall qualify.



|                 |  |           |  |           
|---------------- |  | --------- |  | ----------
|Nominees         |  | Votes     |  |           
|Fred B. Parks    |  | For:      |  | 12,557,972
|                 |  | Withheld: |  | 926,351   
|Daniel J. Starks |  | For:      |  | 13,014,038
|                 |  | Withheld: |  | 470,285   

Sidney W. Emery, Jr., Guy C. Jackson, and Jerry C. Cirino continued their respective terms as
directors after the Annual Meeting.

Proposal 2: To ratify and approve the appointment of KPMG LLP as our independent auditors for the
fiscal year ending June 30, 2007.



| |  |            |  |           
| |  | ---------- |  | ----------
| |  | Votes      |  |           
| |  | For:       |  | 13,250,320
| |  | Against:   |  | 165,018   
| |  | Abstained: |  | 68,985    



16



---

|ITEM 5. | OTHER INFORMATION
|------- | -----------------

Not applicable.



|ITEM 6. | EXHIBITS
|------- | --------



|             |  |                                                                                                    
|------------ |  | ---------------------------------------------------------------------------------------------------
|Exhibit 31.1 |  | Certification of Chief Executive Officer Pursuant to Section 13a-14 and 15d-14 of the Exchange Act.
|             | 
|Exhibit 31.2 |  | Certification of Chief Financial Officer Pursuant to Section 13a-14 and 15d-14 of the Exchange Act.
|             | 
|Exhibit 32   |  | Certification pursuant to 18 U.S.C. 1350.                                                          



17



---

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 thereunto duly authorized.



Urologix, Inc.(Registrant)/s/ Fred B. Parks.Fred B. ParksChairman and Chief Executive Officer (Principal Executive Officer)




/s/ Elissa J. LindsoeElissa J. LindsoeChief Financial Officer (Principal Financial Officer)


Date February 8, 2007