**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


___________


**FORM
      10-QSB**





**x**  **QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





FOR
      THE
      QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007





** ̈**  **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF**


**THE
      SECURITIES EXCHANGE ACT OF 1934**





FOR
      THE
      TRANSITION PERIOD FROM _____ TO_____





**Commission
      File Number:** 333-112754




**OSTEOLOGIX,
      INC.**


(Exact
      name of small business issuer in its charter)





**Delaware**
              (State
                or Other Jurisdiction of Incorporation or Organization)
            **32-0104570**
              (I.R.S.
                Employer Identification No.)**425
                Market Street**
              **Suite
                2230**
              **San
                Francisco, CA 94105**
              (Address
                of Principal Executive Offices)
              
              **(415)
                955-2700**
              (Issuer’s
                Telephone Number)
              
              (Former
                Name and Address and Former Fiscal Year, if Changed Since Last
                Report)






Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act during the past 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 shell company (as defined in Rule
      12b-2 of the Exchange Act). YES  ̈ NO x




There
      were 24,961,455 shares outstanding of the issuer’s common stock outstanding on
      October 31, 2007.




Transitional
      Small Business Disclosure Format (check one): YES  ̈ NO x












**TABLE
      OF CONTENTS**




**Page**
 PART
                      I - FINANCIAL INFORMATIONITEM
                      1.
                  FINANCIAL
                      STATEMENTSITEM
                      2.
                  MANAGEMENT’S
                      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONITEM
                      3.
                  CONTROLS
                      AND PROCEDURESPART
                      II - OTHER INFORMATIONITEM
                      1.
                  LEGAL
                      PROCEEDINGS.ITEM
                      2.
                  UNREGISTERED
                      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.ITEM
                      3.
                  DEFAULTS
                      UPON SENIOR SECURITIES.ITEM
                      4.
                  SUBMISSION
                      OF MATTERS TO A VOTE OF SECURITY HOLDERS.ITEM
                      5.
                  OTHER
                      INFORMATION.ITEM
                      6.
                  EXHIBITS.







Page
      2










**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1.****FINANCIAL
      STATEMENTS**


**Osteologix,
                Inc.****(a
                development stage company)****Condensed
                Consolidated Balance Sheets****(in
                thousands, except per share
                amounts)**




**September
                30,**
            
            **December
                31,****2007**
            
            **2006****(Unaudited)**AssetsCurrent
                assets:Cash
                and cash equivalents
            
            $
            1,656
            
            $
            481Short-term
                investments
            
            
            4,607
            
            
            5,719Prepaid
                expenses and other assets
            
            
            209
            
            
            333Total
                current assets
            
            
            6,472
            
            
            6,533Equipment,
                net
            
            
            12
            
            
            9Total
                assets
            
            $
            6,484
            
            $
            6,542Liabilities
                and stockholders' equityCurrent
                liabilities:Clinical
                trial accounts payable
            
            $
            1,813
            
            $
            347Other
                accounts payable
            
            
            155
            
            
            253Accrued
                liabilities
            
            
            308
            
            
            145Total
                current liabilities
            
            
            2,276
            
            
            745Commitments
                and ContingenciesStockholders'
                equityPreferred
                stock, $0.0001 par value, 1,000 shares authorized, none issued or
                outstanding
            
            
            -
            
            
            -Common
                stock, $0.0001 par value, 100,000 shares authorized, 24,935 and 21,021
                shares issued and outstanding at September 30, 2007 and December
                31, 2006,
                respectively
            
            
            2
            
            
            2Additional
                paid-in-capital
            
            
            20,846
            
            
            15,622Accumulated
                other comprehensive loss
            
            
            (139
            )
            
            (56
            )Deficit
                accumulated during development stage
            
            
            (16,501
            )
            
            (9,771
            )Total
                stockholders' equity
            
            
            4,208
            
            
            5,797Total
                liabilities and stockholders' equity
            
            $
            6,484
            
            $
            6,542


*See
      accompanying notes to the condensed consolidated financial
      statements.*





Page
      3










**Osteologix,
                Inc.****(a
                development stage company)****Condensed
                Consolidated Statements of Operations****(in
                thousands, except per share amounts)****(Unaudited)**




**Three
                Months Ended**
              **September
                30,**
            
            **Nine
                Months Ended**
              **September
                30,**
            
            **For
                the Period from**
              **June
                16, 2003 (Inception) to**
              **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007**Revenues
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            750Operating
                expenses:Research
                and development
            
            
            1,013
            
            
            648
            
            
            4,052
            
            
            1,257
            
            
            9,136General
                and administrative
            
            
            779
            
            
            835
            
            
            2,914
            
            
            2,052
            
            
            8,611Total
                operating expenses
            
            
            1,792
            
            
            1,483
            
            
            6,966
            
            
            3,309
            
            
            17,747Loss
                from operations
            
            
            (1,792
            )
            
            (1,483
            )
            
            (6,966
            )
            
            (3,309
            )
            
            (16,997
            )Interest
                income, net
            
            
            92
            
            
            95
            
            
            236
            
            
            133
            
            
            496Net
                loss
            
            $
            (1,700
            )
            $
            (1,388
            )
            $
            (6,730
            )
            $
            (3,176
            )
            $
            (16,501
            )Net
                loss per share, basic and diluted
            
            $
            (0.07
            )
            $
            (0.07
            )
            $
            (0.30
            )
            $
            (0.21
            )Weighted
                average number of shares outstanding basic and diluted
            
            
            24,935
            
            
            21,021
            
            
            22,706
            
            
            15,474





*See
      accompanying notes to the condensed consolidated financial
      statements.*





Page
      4










**Osteologix,
                Inc.****(a
                development stage company)****Condensed
                Consolidated Statement of Stockholders' Equity and Comprehensive
                Loss****For
                the Period From June 16, 2003 (Inception) to September 30,
                2007****(in
                thousands, except per share
                amounts)**




**Common
                  Stock**
              
              **Additional**
                **Paid-In**
              
              **Accumulated
                  Other Comprehensive**
              
              **Deficit
                  Accumulated During the Development**
              
              **Total
                  Stockholders****Shares**
              
              **Amount**
              
              **Capital**
              
              **Income
                  (Loss)**
              
              **Stage**
              
              **Equity**Issuance
                  of common stock for cash of $0.02 per share in June 2003
              
              
              4,897
              
              $
              1
              
              $
              84
              
              $
              -
              
              $
              -
              
              $
              85Issuance
                  of common stock for cash of $0.95 per share in October
                  2003
              
              
              979
              
              
              -
              
              
              930
              
              
              -
              
              
              -
              
              
              930Comprehensive
                  loss:Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (246
              )
              
              (246
              )Foreign
                  currency translations
              
              
              -
              
              
              -
              
              
              -
              
              
              (21
              )
              
              -
              
              
              (21
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (267
              )**Balance
                  at December 31, 2003**
              
              
              **5,876**
              
              
              **1**
              
              
              **1,014**
              
              
              (21
              )
              
              (246
              )
              
              **748**Issuance
                  of common stock for cash of $1.01 per share in May 2004
              
              
              979
              
              
              -
              
              
              988
              
              
              -
              
              
              -
              
              
              988Comprehensive
                  loss:Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,471
              )
              
              (1,471
              )Foreign
                  currency translations
              
              
              -
              
              
              -
              
              
              -
              
              
              (148
              )
              
              -
              
              
              (148
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,619
              )**Balance
                  at December 31, 2004**
              
              
              **6,855**
              
              
              **1**
              
              
              **2,002**
              
              
              (169
              )
              
              (1,717
              )
              
              **117**Issuance
                  of common stock for cash of $0.83 per share in January 2005, net
                  of
                  issuance costs
              
              
              1,430
              
              
              -
              
              
              1,158
              
              
              -
              
              
              -
              
              
              1,158Issuance
                  of common stock for cash of $1.24 per share in June 2005, net of
                  issuance
                  costs
              
              
              2,220
              
              
              -
              
              
              2,699
              
              
              -
              
              
              -
              
              
              2,699Comprehensive
                  loss:Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,196
              )
              
              (3,196
              )Foreign
                  currency translations
              
              
              -
              
              
              -
              
              
              -
              
              
              165
              
              
              -
              
              
              165Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,031
              )**Balance
                  at December 31, 2005**
              
              
              **10,505**
              
              
              **1**
              
              
              **5,859**
              
              
              (4
              )
              
              (4,913
              )
              
              **943**Common
                  stock transferred in merger with Castle & Morgan Holdings,
                  Inc.
              
              
              2,860
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Issuance
                  of common stock for cash of $1.31 per share in private placement
                  in May
                  2006, net of issuance costs
              
              
              7,656
              
              
              1
              
              
              9,255
              
              
              -
              
              
              -
              
              
              9,256Stock
                  based compensation expense
              
              
              -
              
              
              -
              
              
              508
              
              
              -
              
              
              -
              
              
              508Comprehensive
                  loss:Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (4,858
              )
              
              (4,858
              )Unrealized
                  gain on short-term investments
              
              
              -
              
              
              -
              
              
              -
              
              
              2
              
              
              -
              
              
              2Foreign
                  currency translations
              
              
              -
              
              
              -
              
              
              -
              
              
              (54
              )
              
              -
              
              
              (54
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4,910
              )**Balance
                  at December 31, 2006**
              
              
              **21,021**
              
              
              **2**
              
              
              **15,622**
              
              
              (56
              )
              
              (9,771
              )
              
              **5,797**Issuance
                  of common stock and warrants for cash
                of
                  $1.32 per share in private placement in June
                2007,
                  net of issuance costs
              
              
              3,826
              
              
              -
              
              
              4,970
              
              
              -
              
              
              -
              
              
              4,970Stock
                  issued in lieu of cash for services
              
              
              88
              
              
              -
              
              
              99
              
              
              -
              
              
              -
              
              
              99Stock
                  based compensation expense
              
              
              -
              
              
              -
              
              
              155
              
              
              -
              
              
              -
              
              
              155Comprehensive
                  loss:Net
                  loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (6,730
              )
              
              (6,730
              )Unrealized
                  loss on short-term investments
              
              
              -
              
              
              -
              
              
              -
              
              
              (2
              )
              
              -
              
              
              (2
              )Foreign
                  currency translations
              
              
              -
              
              
              -
              
              
              -
              
              
              (81
              )
              
              -
              
              
              (81
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (6,813
              )**Balance
                  at September 30, 2007 (Unaudited)**
              
              
              **24,935**
              
              **$**
              **2**
              
              **$**
              **20,846**
              
              **$**
              (139
              )
              **$**
              (16,501
              )
              **$**
              **4,208**


*See
      accompanying notes to the condensed consolidated financial
      statements.*





Page
      5












**Osteologix,
                Inc.****(a
                development stage company)****Condensed
                Consolidated Statements of Cash Flow****(in
                thousands, except per share amounts)****(Unaudited)**




**For
                the Nine Months Ended**
              **September
                30,**
            
            **For
                the Period From June 16, 2003 (Inception) to**
              **September
                30,****2007**
            
            **2006**
            
            **2007****Operating
                activities**Net
                loss
            
            $
            (6,730
            )
            $
            (3,176
            )
            $
            (16,501
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Depreciation
            
            
            4
            
            
            4
            
            
            15Loss
                on disposal of equipment
            
            
            2
            
            
            -
            
            
            2Issuance
                of stock in lieu of cash for services
            
            
            99
            
            
            -
            
            
            99Stock
                based compensation
            
            
            155
            
            
            329
            
            
            663Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            -
            
            
            750
            
            
            -Prepaid
                expenses and other current assets
            
            
            124
            
            
            107
            
            
            (209
            )Clinical
                trial accounts payable
            
            
            1,466
            
            
            -
            
            
            1,813Other
                accounts payable
            
            
            (98
            )
            
            (211
            )
            
            155Accrued
                liabilities
            
            
            163
            
            
            (94
            )
            
            308Net
                cash used in operating activities
            
            
            (4,815
            )
            
            (2,291
            )
            
            (13,655
            )**Investing
                activities**Purchase
                of short-term investments
            
            
            (5,753
            )
            
            (5,642
            )
            
            (12,300
            )Sales
                and maturities of short-term investments
            
            
            6,863
            
            
            -
            
            
            7,693Purchase
                of equipment
            
            
            (9
            )
            
            (7
            )
            
            (29
            )Net
                cash provided by (used in) investing activities
            
            
            1,101
            
            
            (5,649
            )
            
            (4,636
            )**Financing
                activities -**Net
                proceeds from issuance of common stock
            
            
            4,970
            
            
            9,256
            
            
            20,086Effect
                of exchange rates on cash and cash equivalents
            
            
            (81
            )
            
            (27
            )
            
            (139
            )Net
                increase in cash and cash equivalents
            
            
            1,175
            
            
            1,289
            
            
            1,656Cash
                and cash equivalents at beginning of period
            
            
            481
            
            
            571
            
            
            -Cash
                and cash equivalents at end of period
            
            $
            1,656
            
            $
            1,860
            
            $
            1,656







*See
      accompanying notes to the condensed consolidated financial
      statements.*





Page
      6










**Osteologix,
      Inc.**


**(a
      development stage company)**


**Notes
      to Condensed Consolidated Financial Statements**


**September
      30, 2007 (Unaudited)**


**(Tabular
      amounts in thousands, except per share amounts)**







**1.**
            **Basis
                of Presentation and Summary of Significant Accounting
                Policies**




*Business
      Description*





Osteologix,
      Inc. (“Osteologix” or the “Company”) is in the business of developing
      pharmaceuticals for the treatment and prevention of diseases of bone and joint
      tissues. The Company’s lead product candidate, NB S101, is in clinical
      development for treatment of osteoporosis. Osteologix has not yet generated
      substantial revenues from its operations and, accordingly, the Company is in
      the
      development stage.




*Basis
      of Presentation*





The
      unaudited condensed consolidated financial statements include the accounts
      of
      the Company and its wholly-owned Danish subsidiary, Osteologix ApS. All
      intercompany accounts and transactions have been eliminated. Osteologix operates
      in one business segment, the development of pharmaceutical
      products.





The
      preparation of financial statements in conformity with U.S. generally accepted
      accounting principles (“GAAP”) requires management to make estimates and
      assumptions that affect the amounts reported in the financial statements and
      accompanying notes. Actual amounts may differ from those estimates. These
      condensed consolidated financial statements have been prepared in accordance
      with GAAP for interim financial information and with the instructions to Form
      10-QSB and Item 310(b) of Regulation S-B. Accordingly, they are unaudited and
      they do not include all of the information and footnotes required for complete
      financial statements. In the opinion of management, all adjustments (consisting
      of normal recurring adjustments) considered necessary for a fair presentation
      have been included. Operating results for the three and nine month periods
      ended
      September 30, 2007 are not necessarily indicative of results that may be
      expected for the year ending December 31, 2007. The condensed consolidated
      balance sheet information as of December 31, 2006 was derived from the audited
      consolidated financial statements included in the Company’s Annual Report on
      Form 10-KSB. These interim financial statements should be read in conjunction
      with that report.





The
      audited consolidated financial statements as of December 31, 2006 included
      a
“going concern” audit opinion from the Company’s independent registered public
      accounting firm. Although the Company has raised additional capital since these
      audited financial statements were issued and management believes Osteologix
      has
      sufficient cash and short-term investments to last to the end of the third
      quarter of 2008, the Company has experienced net losses since its inception
      expects losses to continue as Osteologix furthers its research and development
      programs. The condensed consolidated financial statements have been prepared
      assuming that Osteologix will continue as a going concern, which management
      believes is appropriate due to the additional capital raised. Therefore, the
      condensed consolidated financial statements do not contain any adjustments
      that
      may be required if the Company is unable to continue as a going
      concern.





The
      Company has been in the development stage since its formation. All losses
      accumulated since the inception of Osteologix have been considered as part
      of
      the Company’s development stage activities.




*Fair
      Value of Financial Instruments*





For
      financial instruments consisting of cash and cash equivalents, short-term
      investments, prepaid expenses and other assets, accounts payable and accrued
      liabilities included in the condensed consolidated financial statements, the
      carrying amounts are reasonable estimates of the fair value due to their short
      maturities. The fair value of other short-term and long-term obligations is
      estimated based on current interest rates available for debt instruments with
      similar terms, degrees of risk and remaining maturities. The carrying values
      of
      these obligations approximate their fair values.


Page
          7





**2.**
            **Cash
                Equivalents and Short-Term
                Investments**




The
      Company considers all highly liquid investments with a maturity period of three
      months or less at the time of acquisition to be cash equivalents.





The
      Company generally invests funds that are not required for immediate operating
      needs in a diversified portfolio of debt securities. Based on the term and
      liquidity of the investments, these securities are classified as either cash
      equivalents or short-term investments on the condensed consolidated balance
      sheets. Management determines the appropriate classification of these marketable
      securities at the time of purchase and reevaluates such designation as of each
      balance sheet date. As of September 30, 2007, the Company considers all
      marketable securities as available-for-sale and they are stated at their
      estimated fair value based upon market quotes.





As
      of
      September 30, 2007, all of the Company’s short-term investments had maturity
      dates of less than one year. The fair value of U.S. government securities was
      $509,000, the fair value of corporate securities was $1,461,000, the fair value
      of municipal securities was $2,299,000, and the fair value of asset-backed
      securities was $338,000. The Company has not experienced any significant losses
      on its investments. There were no material unrealized gains or losses in the
      Company’s short-term investments. Realized gains and losses on the Company’s
      short-term investments have not been material.





**3.**
            **Stock-Based
                Compensation**




The
      Company uses the Black-Scholes option-pricing model as its method for valuing
      stock-based compensation, which consists of options and warrants to purchase
      common stock at or above its fair value at the time of grant.





No
      options were granted during the three month period ended September 30, 2007.
      During the nine month period ended September 30, 2007, the Company granted
      to
      its officers and employees options to purchase a total of 1,150,000 shares
      of
      common stock. Of these options granted in 2007, 1,000,000 were to an officer.
      All options granted during the nine month period ended September 30, 2007 have
      an exercise price of $1.20 per share, vest over four to approximately four
      and
      one-half years and expire 10 years from the date of grant. The grant to the
      officer was awarded at a time when the stock price was $0.98 per share, and
      the
      Company has estimated the fair value of this option at $0.61 per share. The
      options to purchase the remaining 150,000 shares were granted at a time when
      the
      stock price was $1.17 per share, and the Company has estimated the fair value
      of
      these options at $0.79 per share. The weighted average fair value for the
      options granted during the 2007 periods was $0.63 per share. For the options
      granted during the nine month period ended September 30, 2007, the Company
      used
      an expected volatility factor of 70%, an expected forfeiture rate of 11%, an
      expected term of 6 years, a dividend yield of 0% and annualized risk-free
      interest rates ranging from 4.6% to 5.1%.





During
      the three and nine months periods ended September 30, 2006, the Company issued
      options to purchase 400,000 shares of common stock to an officer. The options
      were granted with an exercise price of $1.50 per share; at the time of grant
      the
      stock price was $1.30 per share. The options vest over four years and expire
      10
      years from the date of grant. The estimated fair value for the options granted
      during the 2006 periods was $0.83 per share. To determine this estimated fair
      value the Company used an expected volatility factor of 70%, an expected term
      of
      6.1 years, a dividend yield of 0% and an annualized risk-free interest rate
      of
      4.7%. During the nine month period ended September 30, 2006, the Company also
      issued warrants to purchase 979,000 shares of common stock, primarily to the
      Company’s directors and officers. The warrants were issued concurrently with a
      merger transaction in replacement of warrants in a predecessor company which
      were then cancelled. The warrants were issued at the same share exchange ratio
      as that received by the stockholder of the merged company. The warrants all
      have
      an exercise price of $1.03 per share and vest within two years of the date
      of
      grant; the estimated fair value as of the date of the merger transaction was
      $0.73 per share. For the warrants granted during the nine month period ended
      September 30, 2006, the Company used an expected volatility factor of 70%,
      an
      expected term of 3 years, a dividend yield of 0% and an annualized risk-free
      interest rate of 5.0%.





Total
      expense for stock-based compensation was $66,000 and $26,000 for the three
      months ended September 30, 2007 and 2006, respectively, and $155,000 and
      $329,000 for the nine months ended September 30, 2007 and 2006, respectively.
      The costs recorded for the 2006 periods included expenses recognized upon the
      modification of previously outstanding awards concurrent with the merger
      transaction. As of September 30, 2007, the total unrecognized expense for
      unvested stock warrants and options was $1,064,000, which will be expensed
      over
      the remaining vesting period of 4.1 years. The aggregate intrinsic value of
      the
      options and warrants outstanding and exercisable as of September 30, 2007 was
      $126,000 and $121,000, respectively, based on the closing stock price of $1.17
      for the period ending September 30, 2007.


Page
          8





**4.**
            **Net
                Loss Per Share**





The
      net
      loss per share has been computed using the weighted-average number common shares
      outstanding during the periods. During the nine months ended September 30,
      2007
      and 2006, potentially dilutive options and warrants to purchase common stock
      aggregating 4,821,000 and 979,000 shares, respectively, were outstanding and
      not
      considered because their effect would have been antidilutive.





**5.**
            **Recently
                Issued Accounting
                Pronouncements**





*Pronouncements
      Issued and Recently Adopted by the Company*





In
      June
      2006, the Financial Accounting Standards Board (“FASB”) issued FIN 48,
“ *Accounting
      for Uncertainty in Income Taxes--an interpretation of FASB Statement No.
      109* ”
(“FIN
      48”), which seeks to reduce the diversity in practice associated with the
      accounting and reporting for uncertainty in income tax positions. FIN 48
      prescribes a model for the financial statement recognition, measurement,
      presentation and disclosure of uncertain tax positions taken or expected to
      be
      taken in an income tax return and is effective for fiscal years beginning after
      December 15, 2006. Accordingly, the Company adopted the provisions of FIN 48
      on
      January 1, 2007. Under FIN 48, Osteologix may recognize the tax benefit from
      an
      uncertain tax position only if it is more-likely-than-not (greater than 50%
      likely) that the tax position will be upheld on examination by the taxing
      authority, based on the technical merits of the tax position. FIN 48 also
      provides guidance on income tax recognition and classification, and requires
      additional financial statement disclosures, including information about interest
      and penalties on income taxes and accounting for income taxes in interim
      periods.





The
      Company believes that it has not taken any uncertain income tax positions that
      would impact its condensed consolidated financial statements as of September
      30,
      2007. As of January 1, 2007, the date Osteologix adopted FIN 48, the Company
      had
      deferred tax assets of $2,869,000, which were not recognized in the financial
      statements because they were fully reserved by a valuation allowance of the
      same
      amount. Also as of the date of adoption, and as of September 30, 2007,
      Osteologix does not have a liability for unrecognized tax benefits. The
      Company’s policy is to record interest and penalties on uncertain tax positions
      as income tax expense. As of September 30, 2007, the company has no accrued
      interest or penalties related to uncertain income tax positions.





The
      Company files Danish, U.S. federal and state (California) income tax returns,
      The Company is subject to Danish income tax examinations by tax authorities
      for
      years beginning in 2003. The Company is subject to U.S. federal and state income
      tax examinations by tax authorities for years beginning in 2004.





*Pronouncement
      Issued, but Not Adopted by the Company*





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, “ *Fair
      Value Measurements* ”
(“SFAS
      157”), which clarifies and prioritizes methods for measuring fair value under
      generally accepted accounting principles. SFAS 157 generally increases the
      level
      of disclosure required for fair value measurements, although it does not impact
      the valuations or disclosures required under Statement of Financial Accounting
      Standards No. 123R, “ *Share-based
      Payment* .”
For
      Osteologix, implementation of SFAS 157 will be required on January 1, 2008.
      The
      Company is evaluating the impact of SFAS 157 on its consolidated financial
      statements and disclosures.





**6.**
            **Common
                Stock**





On
      January 2, April 2 and July 2, 2007, the Company issued a total of 88,734 shares
      of its common stock to members of its board of directors for their services
      on
      the board during the preceding quarters. The common stock was issued in place
      of
      cash payments, and was valued at the closing price on the final business day
      of
      the quarter immediately before its issuance.





On
      June
      6, 2007, the Company sold 3,825,754 shares of its common stock to certain
      accredited institutional investors, along with warrants to purchase 1,912,877
      shares of common stock, for gross proceeds of $5,050,000. The common stock
      was
      sold for $1.32 per share, and the warrants have an exercise price of $1.20
      per
      share with an expiration date of August 31, 2008. Osteologix filed a
      registration statement covering the resale of these shares which was declared
      effective on August 13, 2007.


Page
          9





**ITEM
      2.****MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




THE
      FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH:


1.
            THE
                INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS OF THE COMPANY
                APPEARING
                ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-QSB;
                AND


2.
            RISK
                FACTORS AND MANAGEMENT’S DISCUSSION AND ANALYSIS CONTAINED IN THE
                COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31,
                2006.




**PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




The
      statements contained in this Form 10-QSB that are not purely historical are
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
      1934,
      as amended. These include statements about the Company’s expectations, beliefs,
      intentions or strategies for the future, which are indicated by words or phrases
      such as “anticipate,” “believe,” “design,” “expect,” “intend,” “may,” “plan,”
“will,” and similar words or phrases. The forward-looking statements are based
      on our current expectations and are subject to certain risks, uncertainties
      and
      assumptions. Our actual results could differ materially from results anticipated
      in these forward-looking statements. All forward-looking statements included
      in
      this document are based on information available to us on the date hereof,
      and
      we do not assume any obligation to update any forward-looking statements.
      References in this filing to the “Company,” “we,” “us,” and “our” refer to
      Osteologix, Inc. and its subsidiary.




Except
      for the historical information contained herein, the matters discussed in this
      “Management’s Discussion and Analysis or Plan of Operation,” and elsewhere in
      this report are forward-looking statements that involve risks and uncertainties.
      The factors listed in the section captioned “Risk Factors” in our Annual Report
      on Form 10-KSB for the year ended December 31, 2006, which was filed with the
      Securities and Exchange Commission, or the SEC, on March 27, 2007, and all
      cautionary language in this report provide examples of risks, uncertainties
      and
      events that may cause our actual results to differ materially from those
      projected. Except as may be required by law, we undertake no obligation to
      update any forward-looking statement to reflect events after the date of this
      report.





Company
      Information and Background




We
      are a
      development stage pharmaceutical company engaged in the business of developing
      pharmaceutical products for the treatment and prevention of diseases of bone
      and
      joint tissues. The lead product candidate, NB S101, is in clinical development
      for treatment of osteoporosis.





We
      were
      initially formed on June 16, 2003 in Denmark as Nordic Bone A/S, based on
      intellectual property rights for a product to treat osteoporosis. In October
      2004, Nordic Bone A/S incorporated a wholly-owned subsidiary in the United
      States, and in November 2004 Nordic Bone A/S changed its name to Osteologix
      A/S.
      From the formation of Osteologix until May 24, 2006, we were 100%-owned by
      Nordic Biotech K/S, a Copenhagen, Denmark based venture capital firm. On May
      24,
      2006, Osteologix A/S completed a “reverse merger” transaction with Castle &
Morgan Holdings, Inc., a U.S. public company incorporated in Delaware and traded
      on the Over-the-Counter Bulletin Board. In the merger, Castle and Morgan
      Holdings, Inc. issued new shares of common stock in exchange for 100% of the
      issued common stock of Osteologix A/S. Also on May 24, 2006, a subsidiary of
      Osteologix A/S completed a private placement transaction, raising $10 million
      in
      gross proceeds by issuing new shares of its common stock. Immediately following
      the merger, Castle & Morgan Holdings, Inc. changed its name to Osteologix,
      Inc. and the newly issued shares in the subsidiary of Osteologix A/S were
      exchanged for Osteologix, Inc. shares. As a result of these transactions, the
      stock in Osteologix A/S previously held by Nordic Biotech K/S exchanged into
      a
      50.0% ownership of Osteologix, Inc., the investors buying stock in the private
      placement exchanged their shares for 36.4% of Osteologix, Inc., and the previous
      stockholders of Castle & Morgan Holdings, Inc. owned 13.6% of Osteologix,
      Inc. Because Nordic Biotech K/S participated in the private placement financing,
      immediately following the transactions of May 24, 2006 Nordic Biotech K/S owned
      60.1% of Osteologix, Inc.





We
      began
      operations in 2003, and during 2003 and early 2004 we conducted chemistry and
      in
      vitro studies for the selection and development of NB S101, our lead product
      candidate for the treatment of osteoporosis. Later in 2004 we established a
      presence in the United States. In 2005 we expanded our operational capabilities
      to enter human clinical studies and completed our first phase I clinical trial
      of NB S101. In 2006 we completed a merger transaction which provided us with
      a
      public stock listing and began a phase II clinical trial of NB S101, which
      was
      completed during the third quarter of 2007. On November 5, 2007 we announced
      that the results of this study were positive and that the study met its primary
      endpoint by showing a statistically significant reduction in a validated
      biomarker for bone resorption, CTX-1.


Page
          10





Our
      primary current goal is to obtain FDA and European approval for NB S101 for
      the
      treatment of osteoporosis. NB S101 contains strontium malonate as its active
      ingredient and is a once-daily oral tablet. A European company has received
      approval in Europe for a different form of strontium as a treatment for
      osteoporosis, and has published the results of studies it conducted on its
      form
      of strontium that demonstrated its ability to increase formation of new bone
      while simultaneously decreasing resorption, or loss, of existing bone. In
      preclinical studies with NB S101 we have also demonstrated this positive impact
      on bone activity, which was confirmed for the first time in the phase II
      clinical trial of NB S101 that we recently completed. No product currently
      approved (or, to our knowledge, under investigation) for the treatment of
      osteoporosis in the U.S. has demonstrated the ability to increase bone formation
      and decrease resorption. Our phase I study of the pharmacokinetic, or PK,
      properties of NB S101 revealed that a one gram tablet dose of NB S101 resulted
      in approximately the same level of strontium in human serum as the European
      company’s approved product containing two grams of strontium ranelate in sachet
      formulation, which must be mixed with water before ingestion. Thus, at a
      significantly lower dose our tablet formulation of strontium has shown
      bioequivalent levels of strontium to a marketed sachet product that has been
      proven safe and effective in osteoporotic patients in Europe. More importantly,
      the recent results of our phase II study demonstrated that NB S101 decreased
      an
      established biomarker of bone resorption, CTX-1, in a dose-dependent manner
      by
      an amount statistically equivalent to or superior to the product approved in
      Europe. The phase II results also showed that NB S101 significantly increased
      bone mineral density at the lumbar spine and hip with only 12 weeks of
      treatment.





We
      seek
      broad intellectual property protection for our product candidates, proprietary
      information and proprietary technology through a combination of contractual
      arrangements and patents. We have filed more than 25 individual patent
      applications that are pending worldwide. Our first patent was issued in October
      2006, claiming the treatment of cartilage and bone conditions with water soluble
      strontium salts, and a divisional application with broader claims than the
      issued patent is still pending. In July 2007, Intellectual Property Services
      filed an objection to the issued patent with the European Patent Office. We
      are
      in the process of drafting a response which will be due to the European Patent
      Office in January 2008. We cannot predict the outcome of this opposition, which
      is likely to take several years to complete. However, regardless of the outcome
      of this matter, we believe our lead product candidate NB S101 will be protected
      by other intellectual property rights, and preclinical, clinical and
      manufacturing data relating to our new chemical entity will remain proprietary
      to the Company for a number of years following U.S. and European approval,
      if
      received.





**Critical
      Accounting Policies and Use of Estimates**





The
      preparation of our condensed consolidated financial statements requires us
      to
      make certain estimates and assumptions that affect the reported amounts of
      assets and liabilities, the reported amounts of revenue and expense, and the
      disclosure of contingent assets and liabilities. We evaluate our estimates
      and
      assumptions on an ongoing basis. We base our estimates on historical experience
      and various other assumptions that we believe to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions. We believe that it is important for investors to
      be
      aware that there is a particularly high degree of subjectivity involved in
      estimating the fair value of stock-based compensation, that the expenses
      recorded for stock-based compensation in the Company’s financial statements may
      differ significantly from the actual value realized by the recipients of the
      stock awards, and that the expenses recorded for stock-based compensation will
      not result in cash payments from Osteologix.





**Recently
      Adopted or Issued Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board, or FASB, issued FIN 48,
“ *Accounting
      for Uncertainty in Income Taxes--an interpretation of FASB Statement No.
      109,* ”
or
      FIN
      48, which seeks to reduce the diversity in practice associated with the
      accounting and reporting for uncertainty in income tax positions. FIN 48
      prescribes a model for the financial statement recognition, measurement,
      presentation and disclosure of uncertain tax positions taken or expected to
      be
      taken in an income tax return and is effective for fiscal years beginning after
      December 15, 2006. Accordingly, we adopted the provisions of FIN 48 on January
      1, 2007. Under FIN 48, we may recognize the tax benefit from an uncertain tax
      position only if it is more-likely-than-not (greater than 50% likely) that
      the
      tax position will be upheld on examination by the taxing authority, based on
      the
      technical merits of the tax position. FIN 48 also provides guidance on income
      tax recognition and classification, and requires additional financial statement
      disclosures, including information about interest and penalties on income taxes
      and accounting for income taxes in interim periods. We believe we have not
      taken
      any uncertain income tax positions.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, “ *Fair
      Value Measurements,* ”
or
      SFAS
      157, which clarifies and prioritizes methods for measuring fair value under
      generally accepted accounting principles. SFAS 157 generally increases the
      level
      of disclosure required for fair value measurements, although it does not impact
      the valuations or disclosures required under Statement of Financial Accounting
      Standards No. 123R, “ *Share-based
      Payment* .”
For
      Osteologix, implementation of SFAS 157 will be required on January 1, 2008.
      The
      Company is evaluating the impact of SFAS 157 on its consolidated financial
      statements and disclosures.


Page
          11





**Recent
      Developments**





On
      April
      3, we announced that Philip J. Young was appointed President and Chief Executive
      Officer, replacing Charles J. Casamento who resigned as Chief Executive Officer
      and President.





On
      April
      18, we announced that we had completed enrollment in our human phase II clinical
      trial of NB S101, our investigational new drug for osteoporosis. We expect
      to
      learn the results of this trial in late 2007.





On
      June
      7, we announced that we had sold 3,825,754 shares of common stock and warrants
      to purchase 1,912,877 shares of common stock to certain institutional investors
      for gross proceeds of $5,050,000.





On
      November 5, 2007, we announced positive top-line results of an international
      Phase II clinical trial of our lead investigational drug, NB S101. This large,
      well-controlled clinical trial of 289 postmenopausal women with low bone mineral
      density met its primary endpoint by significantly decreasing CTX-1, a
      well-validated biomarker for measuring bone resorption activity, at all dose
      levels compared with the control group. We also announced that NB S101
      significantly increased lumbar spine BMD at all doses tested.


Page
          12


**Three
      Months Ended September 30, 2007 Compared to Three Months Ended September 30,
      2006**





**Revenues**




We
      recorded no revenues in the three month periods ended September 30, 2007 and
      2006. Future product revenues will depend on our ability to successfully develop
      and commercialize our lead product candidate and any other product candidates
      we
      develop or license.




**Research
      and Development Expenses**





Expenditures
      relating to research and development are expensed as incurred. Research and
      development expenses include clinical trial costs, development and manufacturing
      costs for medicinal products under investigation, payments to contract research
      organizations, compensation expenses for research and development personnel,
      preclinical studies, supplies and consulting costs.





Research
      and development expenses, and the changes compared to the previous year, were
      as
      follows:





**Three
                Months Ended September 30,**
            
            **Increase
                from Period in Prior Year****2007**
            
            **2006**
            
            **Dollars**
            
            **Percent**


$
            1,013,000
            
            $
            648,000
            
            $
            365,000
            
            
            56
            %


Research
      and development expenses increased $365,000 for the three months ended September
      30, 2007 compared to the three months ended September 30, 2006 primarily because
      of costs incurred for our human phase II clinical trial of NB S101 which we
      started in the fourth quarter of 2006. The phase II clinical trial costs include
      expenditures incurred by the physicians treating patients being evaluated for
      and enrolled in the trial, expenditures by a contract research organization
      that
      is assisting us with the oversight of the trial, and costs to acquire,
      manufacture and package the drug products that are being used.





**General
      and Administrative Expenses**





General
      and administrative expenses include compensation expense for personnel not
      directly involved in research and development activities, management and board
      of directors costs, insurance and accounting, legal and patent
      expenses.





General
      and administrative expenses, and the changes compared the previous year, were
      as
      follows:





**Three
                Months Ended September 30,**
            
            **Decrease
                from Period in Prior Year****2007**
            
            **2006**
            
            **Dollars**
            
            **Percent**


$
            779,000
            
            $
            835,000
            
            $
            (56,000
            )
            
            -7
            %


General
      and administrative expenses were comparable in the 2007 and 2006 periods, and
      during the three months ended September 30, 2007 decreased by approximately
      7%
      primarily due to lower personnel recruiting costs.





**Interest
      Income**





Interest
      income was similar for the three months ended September 30, 2007 and September
      30, 2006 due to similar average cash balances and interest rates in each
      period.





**Nine
      Months Ended September 30, 2007 Compared to Nine Months Ended September 30,
      2006**





**Revenues**




There
      were no revenues recorded in either the first nine months of 2007 or in the
      first nine months of 2006 because we have not received approval for sale of
      any
      product candidate and we have not entered into any agreements granting others
      rights to develop or sell any product candidates. Future product revenues will
      depend on our ability to successfully develop and commercialize our lead product
      candidate, and any other product candidate we develop or license.


Page
          13







**Research
      and Development Expenses**





Research
      and development expenses, and the changes compared to the previous year, were
      as
      follows:





**Nine
                Months Ended September 30,**
            
            **Increase
                from Period in Prior Year****2007**
            
            **2006**
            
            **Dollars**
            
            **Percent**$
            4,052,000
            
            $
            1,257,000
            
            $
            2,795,000
            
            
            222
            %


Research
      and development expenses increased $2,795,000 for the first nine months of
      2007
      compared to the first nine months of 2006 primarily because of costs incurred
      for our recently completed human phase II clinical trial of NB S101 which was
      started in late 2006. The phase II clinical trial costs include expenditures
      incurred by the physicians treating the patients being evaluated for and
      enrolled into the trial, expenditures by a contract research organization that
      is assisting us with the oversight of the trial, and costs to acquire,
      manufacture and package the drug products that are being used.





We
      expect
      research and development expenses for the balance of 2007 to continue to be
      higher than for the comparable period in 2006 because of costs for transition
      of
      product manufacturing facilities that can handle greater quantities of drug
      supply and physician consulting costs as we prepare for and begin designing
      more
      advanced clinical trials of NB S101. Partially offsetting these higher costs
      will be lower costs for the phase II clinical trial, which began during the
      fourth quarter of 2006 and is now completed.





**General
      and Administrative Expenses**





General
      and administrative expenses, and the changes compared the previous year, were
      as
      follows:





**Nine
                Months Ended September 30,**
            
            **Increase
                from Period in Prior Year****2007**
            
            **2006**
            
            **Dollars**
            
            **Percent**$
            2,914,000
            
            $
            2,052,000
            
            $
            862,000
            
            
            42
            %


General
      and administrative expenses increased by $862,000 for the nine months ended
      September 30, 2007 compared to the nine months ended September 30, 2006
      primarily because we incurred incremental costs for severance following the
      resignation of our previous Chief Executive Officer. In addition, we incurred
      increased costs of operating as a public company for the full 2007 period as
      compared to only a portion of the 2006 period, including increased staffing,
      and
      external legal and accounting costs. Partially offsetting the increased costs
      in
      the 2007 period were lower costs for stock-based compensation following a 2006
      modification to outstanding equity awards.





We
      expect
      general and administrative expenses to for the balance of 2007 to be higher
      than
      for the comparable periods in 2006 because we have build our infrastructure
      to
      support our operations as a public company and we are incurring increasing
      costs
      as we prepare to provide a management attestation regarding our internal
      controls as required by Section 404 of the Sarbanes-Oxley Act.





**Interest
      Income**





Interest
      income increased by $103,000 for the first nine months of 2007 compared to
      the
      first nine months of 2006 due to the higher average cash and short-term
      investment account balances in the 2007 period.





**LIQUIDITY
      AND CAPITAL RESOURCES**




Osteologix
      measures its liquidity primarily by the cash, cash equivalents and short-term
      investments, as well as the working capital, available to fund its operations.
      Since we were founded in 2003, we have applied the majority of our resources
      to
      research and development programs and the administrative expenses to support
      the
      operations of the Company. We have operated at a loss since inception and expect
      to continue to incur losses in the future as a result of our ongoing research
      and development efforts. To date have funded our operations primarily through
      the sale of common stock.





In
      measuring liquidity, we do not distinguish between cash and short-term
      investments because all of our short-term investments are available-for-sale
      and
      can readily be converted to cash if needed. The following table summarizes
      our
      cash, cash equivalents and short-term investments, and our working capital
      available to fund our operations:


Page
          14





**September
                30,**
              **2007**
            
            **December
                31,**
              **2006**Cash,
                cash equivalents and short-term investments
            
            $
            6,263,000
            
            $
            6,200,000Working
                capital
            
            
            4,196,000
            
            
            5,788,000




Our
      combined balance of cash, cash equivalents and short-term investments increased
      by $63,000 during the first nine months of 2007. The increase occurred as a
      result of our sale of common stock and warrants, for net proceeds of $4,970,000,
      largely offset by $4,815,000 cash used in operations to fund the continuing
      development of our investigational drug for osteoporosis, NB S101. Our cash
      used
      in operations included expenditures for the on-going phase II clinical trial
      (which began in late 2006), additional development work on NB S101 and the
      general and administrative expenses of operating a public company. Our working
      capital decreased by $1,592,000, which differs substantially from the modest
      increase in cash and short-term investments because of costs we have accrued
      that are primarily related to the on-going human phase II clinical trial of
      NB
      S101. The increase in our cash, cash equivalents and short-term investments
      of
      $63,000 during the first nine months of 2007 consisted of an increase in cash
      and cash equivalents of $1,175,000 and a decrease in short-term investments
      of
      $1,112,000.





We
      have
      experienced net losses from our inception through September 30, 2007, with
      cumulative losses from inception through September 30, 2007 of approximately
      $16.5 million. We expect losses to continue as we further our research and
      development programs, including additional larger clinical trials of NB S101.
      We
      have prepared our condensed consolidated financial statements assuming that
      we
      will continue as a going concern, which we believe is appropriate because we
      believe we have sufficient capital to fund our planned operations to at least
      the end of the third quarter of 2008. We may consume available resources more
      rapidly than currently anticipated, resulting in the need for additional funding
      at an earlier date. We believe that we could raise additional funds through
      the
      sale of equity or debt securities, by licensing rights to our lead product
      candidate or by other means. There can be no assurance that additional capital
      will be available on favorable terms, if at all. To the extent that additional
      capital is raised through the sale of equity or convertible debt securities,
      the
      issuance of such securities would result in ownership dilution to our existing
      stockholders. If adequate funds are not available, we may be required to
      significantly reduce, refocus or cease our operations, or to obtain funds
      through arrangements that may require us to relinquish rights to NB S101, which
      could have a material adverse affect on the price of our common
      stock.





**PLAN
      OF OPERATION**





Our
      business strategy is to develop drug candidates that target major medical needs
      and can be rapidly commercialized. We are currently focusing on the treatment
      and prevention of diseases of bone and joint tissues. NB S101 for the treatment
      of osteoporosis fits this strategy because the osteoporosis market is large,
      with over $10 billion in annual product sales, and preclinical, phase I and
      one
      phase II human clinical studies have been completed. In addition, a drug which
      contains a different strontium compound as its active ingredient (as compared
      to
      NB S101) has been proven safe and effective and is approved for treatment of
      osteoporosis in Europe, which we believe reduces the development risk for NB
      S101 when compared to other investigational drugs in completely unproven
      chemical classes. In executing our business strategy, our management oversees
      the human clinical trials necessary to establish preliminary evidence of
      efficacy, and we are seeking to establish collaborative agreements with
      pharmaceutical and biotechnology companies for their late-stage development
      and
      marketing of our product candidates and/or our obtaining rights to develop
      and
      market certain of their product candidates. We plan to continue to acquire
      and
      develop products, and plan to either develop the resources to market these
      products in selected world regions or out-license marketing rights to larger
      pharmaceutical companies.




We
      believe that our currently available existing resources will provide liquidity
      to fund our planned operations to the end of the third quarter of 2008. Because
      we are in the business of developing pharmaceutical products, which is
      time-consuming and expensive, and NB S101, our most advanced investigational
      drug, still must complete pivotal human clinical trials before it can be
      marketed, we will require additional financial resources to carry out our
      business strategy. We plan to follow the recent phase II clinical trial with
      a
      larger phase II and/or phase III clinical trial that we estimate will take
      at
      least two years to complete. After the next clinical trial, either one or two
      still larger phase III trials will be required. We may license the rights to
      NB
      S101 to a larger company before any of the clinical trials are complete, or
      we
      may choose to retain all rights ourselves without entering into a license or
      collaborative agreement. If the results of the clinical trials are positive,
      we
      plan to seek approval for NB S101 throughout the world, either on our own or
      in
      collaboration with a larger pharmaceutical company that has more financial
      resources than we do.





Because
      we are developing NB S101 and are also seeking to expand our line of
      investigational drugs by acquiring rights to additional drugs in development,
      we
      will require additional financial resources to carry out our plans. We are
      exploring various options to obtain additional capital, including the licensing
      of certain rights to NB S101, the sale of equity or debt securities and other
      alternatives. Our ability to successfully raise additional funds for our
      operations will be based, in part, on overall market conditions, conditions
      in
      the biotechnology and pharmaceutical industries, the status and results of
      our
      clinical trials (including interpretations of the data and the market potential,
      which can be subjective), and other parties’ opinions about NB S101 and the
      osteoporosis market, among other factors. Additional funding may not be
      available on acceptable terms, if at all. The actual amounts we needed for
      our
      future capital requirements will vary depending on a number of other factors,
      including but not limited to:


Page
          15




·
            the
                progress we make in our clinical development programs and the results
                of
                our clinical trials;




·
            our
                ability to establish collaborative relationships and the terms of
                these
                relationships;




·
            the
                cost of filing, prosecuting, defending, and enforcing patent claims
                and
                other intellectual property rights;




·
            our
                acquisition or licensing of new drug
                candidates;




·
            competing
                technological and market
                developments;




·
            the
                requirements of regulatory
                agencies;




·
            the
                time and cost involved in obtaining regulatory approvals;
                and





·
            the
                development of commercialization activities and
                arrangements.




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a material current or future effect on our financial condition, results
      of
      operations, liquidity or capital resources.





**Commitments**





If
      our
      registration statements do not remain effective as specified in our financing
      agreements, in certain circumstances we may be required to pay liquidated
      damages of 1.5% to 2.0% of the amount we received in the financings for each
      month the registration statement(s) are not effective, up to certain maximums
      as
      specified in the financing agreements.





**ITEM
      3.****CONTROLS
      AND PROCEDURES******





Under
      the
      supervision and with the participation of the Company’s management, including
      our principal executive officer and principal accounting officer, the Company
      conducted an evaluation of the effectiveness of the design and operation of
      its
      disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934, as of the end of the period covered
      by this report (the “Evaluation Date”). Based on this evaluation, the Company’s
      principal executive officer and principal accounting officer concluded as of
      the
      Evaluation Date that the Company’s disclosure controls and procedures were
      effective such that the material information required to be included in our
      SEC
      reports is recorded, processed, summarized and reported within the time periods
      specified in SEC rules and forms relating to the Company, including our
      consolidating subsidiaries, and was made known to them by others within those
      entities, particularly during the period when this report was being
      prepared.




Additionally,
      there were no changes in the Company’s internal controls or in other factors
      that could significantly affect these controls subsequent to the Evaluation
      Date. We have not identified any significant deficiencies or material weaknesses
      in our internal controls, and therefore there were no corrective actions
      taken.





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          16


**PART
      II -**  **OTHER
      INFORMATION**





**ITEM
      1.****LEGAL
      PROCEEDINGS.******




None.





**ITEM
      2.****UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**





None.





**ITEM
      3.****DEFAULTS
      UPON SENIOR SECURITIES.**




None.





**ITEM
      4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**




None.




**ITEM
      5.**  **OTHER
      INFORMATION.**




None.




**ITEM
      6.****EXHIBITS.******




**(a)**
            **EXHIBITS**




The
      following exhibits are filed as part of this report:




**Exhibit
                Number**
            **Description**10.9
            Employment
                Agreement dated as of September 14, 2007 by and between the Registrant
                and
                Matthew M. Loar, the Registrant’s Chief Financial
                Officer.10.10
            Consulting
                Agreement dated as of September 19, 2007 by and between the Registration
                and Stephan Christgau, the Registrant’s former Chief Operating
                Officer.31.1
            Certification
                of Chief Executive Officer pursuant to Rules 13A-14(A) and 15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.31.2
            Certification
                of Chief Financial Officer pursuant to Rules 13A-14(A) and 15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.32.1
            Certifications
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
                2002).





Page
          17










**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.






**OSTEOLOGIX,
                INC.**Date: November
              14,
              2007
            By:
            /s/
                Philip J. YoungName:
                Philip J. YoungTitle:
                President and Chief Executive OfficerDate: November
              14,
              2007
            By:
            /s/
                Matthew M. LoarName:
                Matthew M. LoarTitle:
                Chief Financial Officer






Page
          18


**EXHIBIT
      INDEX**





**Exhibit
                Number**
            **Description**10.9
            Employment
                Agreement dated as of September 14, 2007 by and between the Registrant
                and
                Matthew M. Loar, the Registrant’s Chief Financial
                Officer.10.10
            Consulting
                Agreement dated as of September 19, 2007 by and between the Registration
                and Stephan Christgau, the Registrant’s former Chief Operating
                Officer.31.1
            Certification
                of Chief Executive Officer pursuant to Rules 13A-14(A) and 15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.31.2
            Certification
                of Chief Financial Officer pursuant to Rules 13A-14(A) and 15D-14(A)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.32.1
            Certifications
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of
                2002).





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          19