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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM      10-QSB**

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

**THE      SECURITIES EXCHANGE ACT OF 1934**

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

**THE      SECURITIES EXCHANGE ACT OF 1934**

**Commission      File Number:**

**OSTEOLOGIX,      INC.**

| **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) |

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**TABLE      OF CONTENTS**

|                                                | **Page**                                                                         |
|-----------------------------------------------------|----------------------------------------------------------------------------------|
| **PART                  I - FINANCIAL INFORMATION** | 3                                                                                |
| ITEM                  1.                            | FINANCIAL                  STATEMENTS                                            | 3 |
| ITEM                  2.                            | MANAGEMENT’S                  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION | 10 |
| ITEM                  3.                            | CONTROLS                  AND PROCEDURES                                         | 16 |
|                                                |                                                                             |
| **PART                  II - OTHER INFORMATION**    | 17                                                                               |
| ITEM                  1.                            | LEGAL                  PROCEEDINGS.                                              | 17 |
| ITEM                  2.                            | UNREGISTERED                  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.    | 17 |
| ITEM                  3.                            | DEFAULTS                  UPON SENIOR SECURITIES.                                | 17 |
| ITEM                  4.                            | SUBMISSION                  OF MATTERS TO A VOTE OF SECURITY HOLDERS.            | 17 |
| ITEM                  5.                            | OTHER                  INFORMATION.                                              | 17 |
| ITEM                  6.                            | EXHIBITS.                                                                        | 17 |

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**PART      I - FINANCIAL INFORMATION**

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

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

|                                                                                                                                                                                                                                                  |   | **June                  30,** |    | **December                  31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|-----------------------------------|--------|
|                                                                                                                                                                                                                                                  |   | **2007**                      |    | **2006**                          |   |
|                                                                                                                                                                                                                                                  |   | **(Unaudited)**               |    |                              |   |
| Assets                                                                                                                                                                                                                                                |   |                          |    |                              |   |
| Current                  assets:                                                                                                                                                                                                                      |   |                          |    |                              |   |
| Cash                  and cash equivalents                                                                                                                                                                                                            |   | $                             | 2,610   |                              | $      | 481 |   |
| Short-term                  investments                                                                                                                                                                                                               |   |                          | 5,560   |                              |   | 5,719 |   |
| Prepaid                  expenses and other assets                                                                                                                                                                                                    |   |                          | 209     |                              |   | 333 |   |
| Total                  current assets                                                                                                                                                                                                                 |   |                          | 8,379   |                              |   | 6,533 |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Equipment,                  net                                                                                                                                                                                                                       |   |                          | 5       |                              |   | 9 |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Total                  assets                                                                                                                                                                                                                         |   | $                             | 8,384   |                              | $      | 6,542 |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Liabilities                  and Stockholders' Equity                                                                                                                                                                                                 |   |                          |    |                              |   |   |   |
| Current                  liabilities:                                                                                                                                                                                                                 |   |                          |    |                              |   |   |   |
| Clinical                  trial accounts payable                                                                                                                                                                                                      |   | $                             | 1,526   |                              | $      | 347 |   |
| Other                  accounts payable                                                                                                                                                                                                               |   |                          | 422     |                              |   | 253 |   |
| Accrued                  liabilities                                                                                                                                                                                                                  |   |                          | 567     |                              |   | 145 |   |
| Total                  current liabilities                                                                                                                                                                                                            |   |                          | 2,515   |                              |   | 745 |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Commitments                  and Contingencies                                                                                                                                                                                                        |   |                          |    |                              |   |   |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Stockholders'                  Equity                                                                                                                                                                                                                 |   |                          |    |                              |   |   |   |
| Preferred                  stock, $0.0001 par value, 1,000 shares authorized, none issued                  or                  outstanding                                                                                                            |   |                          | -       |                              |   | - |   |
| Common                  stock, $0.0001 par value, 100,000 shares authorized, 24,909 and                  21,021                  shares issued and outstanding at June 30, 2007 and December 31,                  2006,                  respectively |   |                          | 2       |                              |   | 2 |   |
| Additional                  paid-in-capital                                                                                                                                                                                                           |   |                          | 20,750  |                              |   | 15,622 |   |
| Accumulated                  other comprehensive loss                                                                                                                                                                                                 |   |                          | (82     | )                                 |   | (56 | ) |
| Deficit                  accumulated during development stage                                                                                                                                                                                         |   |                          | (14,801 | )                                 |   | (9,771 | ) |
| Total                  stockholders' equity                                                                                                                                                                                                           |   |                          | 5,869   |                              |   | 5,797 |   |
|                                                                                                                                                                                                                                                  |   |                          |    |                              |   |   |   |
| Total                  liabilities and stockholders' equity                                                                                                                                                                                           |   | $                             | 8,384   |                              | $      | 6,542 |   |

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

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

|                                                                             |   | **Three                  Months Ended****June                  30,** |    | **Six                  Months Ended****June                  30,** |   | **For                  the Period from June 16, 2003 (Inception) to** |   |
|----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|--------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                                             |   | **2007**                                                             |    | **2006**                                                           |   | **2007**                                                              |   | **2006** |   | **June                  30, 2007** |   |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |
| Revenues                                                                         |   | $                                                                    | — |                                                               | $      | —                                                               |   | $ | — |   | $ | — |   | $ | 750 |   |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses:                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Research                  and development                                        |   |                                                                 | 1,845   |                                                               |   | 392                                                                   |   |   | 3,039 |   |   | 609 |   |   | 8,123 |   |
| General                  and administrative                                      |   |                                                                 | 1,286   |                                                               |   | 813                                                                   |   |   | 2,135 |   |   | 1,217 |   |   | 7,832 |   |
| Total                  operating expenses                                        |   |                                                                 | 3,131   |                                                               |   | 1,205                                                                 |   |   | 5,174 |   |   | 1,826 |   |   | 15,955 |   |
| Loss                  from operations                                            |   |                                                                 | (3,131  | )                                                                  |   | (1,205                                                                | )      |   | (5,174 | ) |   | (1,826 | ) |   | (15,205 | ) |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Interest                  income, net                                            |   |                                                                 | 70      |                                                               |   | 38                                                                    |   |   | 144 |   |   | 38 |   |   | 404 |   |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                        |   | $                                                                    | (3,061  | )                                                                  | $      | (1,167                                                                | )      | $ | (5,030 | ) | $ | (1,788 | ) | $ | (14,801 | ) |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Net                  loss per share, basic and diluted                           |   | $                                                                    | (0.14   | )                                                                  | $      | (0.08                                                                 | )      | $ | (0.23 | ) | $ | (0.14 | ) |   |   |   |
|                                                                             |   |                                                                 |    |                                                               |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of shares outstanding basic and diluted |   |                                                                 | 22,091  |                                                               |   | 14,780                                                                |   |   | 21,574 |   |   | 12,654 |   |   |   |   |

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

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

|                                                                                                                                                                               |   | **Common                  Stock**  |               | **Additional****Paid-In** |   | ****Accumulated                  Other Comprehensive******Income**  |   | **Deficit                  Accumulated During the Development** |         | **Total                  Stockholders'** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------------------|---------------------------|--------|--------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------------|------------------------------------------|--------|
|                                                                                                                                                                          |   | **Shares**                              |               | **Amount**                |   | **Capital**                                                              |   | ** (Loss)**                                                |         | **Stage**                                |   | **Equity** |   |
| Issuance                  of common stock for cash of $0.02 per share in June 2003                                                                                            |   |                                    | 4,897              |                      | $      | 1                                                                        |   | $                                                               | 84           |                                     | $      | - |   | $ | - |   | $ | 85 |   |
| Issuance                  of common stock for cash of $0.95 per share in October                  2003                                                                        |   |                                    | 979                |                      |   | -                                                                        |   |                                                            | 930          |                                     |   | - |   |   | - |   |   | 930 |   |
| Comprehensive                  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          |                                     |   | - |   |   | - |   |   | 988 |   |
| Comprehensive                  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        |                                     |   | - |   |   | - |   |   | 1,158 |   |
| Issuance                  of common stock for cash of $1.24 per share in June 2005, net of                  issuance                  costs                                   |   |                                    | 2,220              |                      |   | -                                                                        |   |                                                            | 2,699        |                                     |   | - |   |   | - |   |   | 2,699 |   |
| Comprehensive                  loss:                                                                                                                                          |   |                                    |               |                      |   |                                                                     |   |                                                            |         |                                     |   |   |   |   |   |   |   |   |   |
| Net                  loss for the period                                                                                                                                      |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | - |   |   | (3,196 | ) |   | (3,196 | ) |
| Foreign                  currency translations                                                                                                                                |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | 165 |   |   | - |   |   | 165 |   |
| Total                  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        |                                     |   | - |   |   | - |   |   | 9,256 |   |
| Stock                  based compensation expense                                                                                                                             |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | 508          |                                     |   | - |   |   | - |   |   | 508 |   |
| Comprehensive                  loss:                                                                                                                                          |   |                                    |               |                      |   |                                                                     |   |                                                            |         |                                     |   |   |   |   |   |   |   |   |   |
| Net                  loss for the period                                                                                                                                      |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | - |   |   | (4,858 | ) |   | (4,858 | ) |
| Unrealized                  gain on short-term investments                                                                                                                    |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | 2 |   |   | - |   |   | 2 |   |
| Foreign                  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        |                                     |   | - |   |   | - |   |   | 4,970 |   |
| Stock                  issued in lieu of cash for services                                                                                                                    |   |                                    | 62                 |                      |   | -                                                                        |   |                                                            | 69           |                                     |   | - |   |   | - |   |   | 69 |   |
| Stock                  based compensation expense                                                                                                                             |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | 89           |                                     |   | - |   |   | - |   |   | 89 |   |
| Comprehensive                  loss:                                                                                                                                          |   |                                    |               |                      |   |                                                                     |   |                                                            |         |                                     |   |   |   |   |   |   |   |   |   |
| Net                  loss for the period                                                                                                                                      |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | - |   |   | (5,030 | ) |   | (5,030 | ) |
| Unrealized                  gain on short-term investments                                                                                                                    |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | 3 |   |   | - |   |   | 3 |   |
| Foreign                  currency translations                                                                                                                                |   |                                    | -                  |                      |   | -                                                                        |   |                                                            | -            |                                     |   | (29 | ) |   | - |   |   | (29 | ) |
| Total                  comprehensive loss                                                                                                                                     |   |                                    |               |                      |   |                                                                     |   |                                                            |         |                                     |   |   |   |   |   |   |   | (5,056 | ) |
| **Balance                  at June 30, 2007 (Unaudited)**                                                                                                                     |   |                                    | **24,909**         |                      | **$**  | **2**                                                                    |   | **$**                                                           | **20,750**   |                                     | **$**  | **(82** | ) | **$** | **(14,801** | **)** | **$** | **5,869** |   |

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

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

|                                                                   |   | **For                  the Six Months Ended****June                  30,** |   | **For                  the Period From June 16, 2003 (Inception) to** |   |
|------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                                   |   | **2007**                                                                   |   | **2006**                                                              |   | **June                  30, 2007** |   |
| **Operating                  activities**                              |   |                                                                       |   |                                                                  |   |   |   |
| Net                  loss                                              |   | $                                                                          | (5,030 | )                                                                     | $      | (1,788 | ) | $ | (14,801 | ) |
| Adjustments                  to reconcile net loss to net cash         |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| used                  in operating activities:                         |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Depreciation                                                           |   |                                                                       | 2      |                                                                  |   | 3 |   |   | 13 |   |
| Loss                  on disposal of equipment                         |   |                                                                       | 2      |                                                                  |   | - |   |   | 2 |   |
| Issuance                  of stock in lieu of cash for services        |   |                                                                       | 69     |                                                                  |   | - |   |   | 69 |   |
| Stock                  based compensation                              |   |                                                                       | 89     |                                                                  |   | 303 |   |   | 597 |   |
| Changes                  in operating assets and liabilities:          |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Accounts                  receivable                                   |   |                                                                       | -      |                                                                  |   | 750 |   |   | - |   |
| Prepaid                  expenses and other current assets             |   |                                                                       | 124    |                                                                  |   | 42 |   |   | (209 | ) |
| Clinical                  trial accounts payable                       |   |                                                                       | 1,179  |                                                                  |   | (242 | ) |   | 1,526 |   |
| Other                  accounts payable                                |   |                                                                       | 169    |                                                                  |   | - |   |   | 422 |   |
| Accrued                  liabilities                                   |   |                                                                       | 422    |                                                                  |   | (74 | ) |   | 567 |   |
| Net                  cash used in operating activities                 |   |                                                                       | (2,974 | )                                                                     |   | (1,006 | ) |   | (11,814 | ) |
|                                                                   |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| **Investing                  activities**                              |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Purchase                  of short-term investments                    |   |                                                                       | (4,273 | )                                                                     |   | - |   |   | (10,820 | ) |
| Sales                  and maturities of short-term investments        |   |                                                                       | 4,435  |                                                                  |   | - |   |   | 5,265 |   |
| Purchase                  of equipment                                 |   |                                                                       | -      |                                                                  |   | (1 | ) |   | (20 | ) |
| Net                  cash provided by (used in) investing activities   |   |                                                                       | 162    |                                                                  |   | (1 | ) |   | (5,575 | ) |
|                                                                   |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| **Financing                  activities -**                            |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Net                  proceeds from issuance of common stock            |   |                                                                       | 4,970  |                                                                  |   | 9,256 |   |   | 20,086 |   |
|                                                                   |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Effect                  of exchange rates on cash and cash equivalents |   |                                                                       | (29    | )                                                                     |   | (23 | ) |   | (87 | ) |
|                                                                   |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Net                  increase in cash and cash equivalents             |   |                                                                       | 2,129  |                                                                  |   | 8,226 |   |   | 2,610 |   |
|                                                                   |   |                                                                       |   |                                                                  |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period      |   |                                                                       | 481    |                                                                  |   | 571 |   |   | - |   |
| Cash                  and cash equivalents at end of period            |   | $                                                                          | 2,610  |                                                                  | $      | 8,797 |   | $ | 2,610 |   |

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

----

**Osteologix,      Inc.**

**(a      development stage company)**

**Notes      to Condensed Consolidated Financial Statements**

**June      30, 2007 (Unaudited)**

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

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

*Business      Description*

*Basis      of Presentation*

*Fair      Value of Financial Instruments*

----

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

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

| **4.** | **Net                Loss Per Share** |
|--------|---------------------------------------|

----

| **5.** | **Recently                Issued Accounting                Pronouncements** |
|--------|-----------------------------------------------------------------------------|

*Pronouncements      Issued and Recently Adopted by the Company*

*Accounting      for Uncertainty in Income Taxes--an interpretation of FASB Statement No.      109*

*Pronouncement      Issued, but Not Adopted by the Company*

*Fair      Value Measurements*
*Share-based      Payment*

| **6.** | **Common                Stock** |
|--------|---------------------------------|

----

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

| 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**

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**Critical      Accounting Policies and Use of Estimates**

**Recently      Adopted or Issued Accounting Pronouncements**

*Accounting      for Uncertainty in Income Taxes--an interpretation of FASB Statement No.      109,*

*Fair      Value Measurements,*
*Share-based      Payment*

----

**Recent      Developments**

----

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

**Revenues**

**Research      and Development Expenses**

| **Three                  Months Ended June 30,** |            | **Increase                  from Period in Prior Year** |   |
|--------------------------------------------------|-----------------|---------------------------------------------------------|--------|
| **2007**                                         |            | **2006**                                                |   | **Dollars** |   | **Percent** |   |
|                                                  |            |                                                    |   |   |   |  |   |
| $                                                |  1,845,000 |                                                    | $      | 392,000 |   | $ | 1,453,000 |   |   | 371 | % |

Research      and development expenses increased $1,453,000 for the three months ended June      30, 2007 compared to the three months ended June 30, 2006 primarily because      of      costs incurred for our on-going human phase II clinical trial which we 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 in the study.

**General      and Administrative Expenses**

| **Three                Months Ended March 31,** |            | **Increase                from Period in Prior Year** |   |
|-------------------------------------------------|-----------------|-------------------------------------------------------|--------|
| **2007**                                        |            | **2006**                                              |   | **Dollars** |   | **Percent** |   |
|                                                 |            |                                                  |   |   |   |  |   |
| $                                               |  1,286,000 |                                                  | $      | 813,000 |   | $ | 473,000 |   |   | 58 | % |

General      and administrative expenses increased by $473,000 for the three months ended      June 30, 2007 compared to the three months ended June 30, 2006 primarily because      of incremental costs incurred 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, 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.

**Interest      Income**

**Six      Months Ended June 30, 2007 Compared to Six Months Ended June 30,      2006**

----

**Revenues**

**Research      and Development Expenses**

|  **Six                Months Ended June 30,** |            | **Increase                from Period in Prior Year** |   |
|----------------------------------------------------|-----------------|-------------------------------------------------------|--------|
|  **2007**                                     |            | **2006**                                              |   | **Dollars** |   |  **Percent** |   |
|                                               |            |                                                  |   |   |   |   |   |
| $                                                  |  3,039,000 |                                                  | $      | 609,000 |   | $ | 2,430,000 |   |   | 399 | % |

**General      and Administrative Expenses**

| **Six                Months Ended June 30,** |            | **Increase                from Period in Prior Year** |   |
|----------------------------------------------|-----------------|-------------------------------------------------------|--------|
| **2007**                                     |            | **2006**                                              |   | **Dollars** |   | **Percent** |   |
|                                              |            |                                                  |   |   |   |  |   |
| $                                            |  2,135,000 |                                                  | $      | 1,217,000 |   | $ | 918,000 |   |   | 75 | % |

**Interest      Income**

**LIQUIDITY      AND CAPITAL RESOURCES**

----

|                                                               |   | **June                  30,****2007** |      | **December                  31,****2006** |   |
|--------------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------------|--------|
| Cash,                  cash equivalents and short-term investments |   | $                                     | 8,170,000 |                                      | $      | 6,200,000 |   |
| Working                  capital                                   |   |                                  | 5,864,000 |                                      |   | 5,788,000 |   |

**PLAN      OF OPERATION**

----

|   | · | the                progress we make in our clinical development                programs; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | 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**

**Commitments**

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

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.

----

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

**ITEM      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. **

| 1. |   |  The                seven nominess to the Company’s board of directors were elected with the                following votes cast for each                nominee: |
|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |   |  Affirmative                  Votes |       | WithheldVotes |   |
|----------------------------------------------|--------|------------------------------------------|------------|---------------|--------|
| Jeremy                  Curnock Cook         |   |                                     | 15,818,694 |          |   | - |   |
| Christian                  Hansen            |   |                                     | 15,761,274 |          |   | 57,420 |   |
| Klaus                  Eldrup-Jørgensen |   |                                     | 15,818,694 |          |   | - |   |
| Bobby                  W. Sandage, Jr.       |   |                                     | 15,818,694 |          |   | - |   |
| Florian                  Schönharting   |   |                                     | 15,761,274 |          |   | 57,420 |   |
| Christopher                  B. Wood         |   |                                     | 15,818,694 |          |   | - |   |
| Philip                  J. Young             |   |                                     | 15,818,694 |          |   | - |   |

| 2. |   | A                proposal to ratify the selection of Weinberg & Company, P.A. as our                independent registered public accounting firm for the fiscal year                ending                December 31, 2007 was approved with 15,801,193 affirmative votes,                17,501 negative votes, and no                abstentions. |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| **(a)** | **EXHIBITS** |
|---------|--------------|

| **Exhibit                Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 4.1                               |   | Form                of Warrant dated June 4, 2007 (incorporated herein by reference to                Exhibit                4.1 to the Registrant’s Current Report on Form 8-K filed on June 7, 2007                (the “June 2007 Form 8-K”)).                                                                                              |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.6                              |   | Separation                Agreement and Mutual General Release effective as of April 3, 2007                by and                between the Registrant and Charles Casamento (incorporated by reference                to                Exhibit 10.11 to the Registrant’s Post Effective Amendment on Form SB-2                filed on June 15, 2007). |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.7                              |   | Securities                Purchase Agreement dated June 4, 2007 by and between the Registrant                and                the subscribers identified on the signature pages thereto (incorporated                herein by reference to Exhibit 10.1 to the June 2007 Form                8-K).                                                            |

----

| 10.8   |   | Registration                Rights Agreement dated June 4, 2007 by and between the Registrant                and the                subscribers identified on the signature pages thereto (incorporated                herein                by reference to Exhibit 10.2 to the June 2007 Form 8-K). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                  |
| 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).                                                                                         |

----

**SIGNATURES**

|                  |                                                      |                                                             |
|-----------------------|-----------------------------------------------------------|------------------------------------------------------------------|
|                       | **OSTEOLOGIX, INC.**                                      |
|             |                                                 |                                                        |
| Date: August 14, 2007 | By:                                             | /S/                PHILIP                J.                YOUNG |
|                  | Name:              Philip J. Young                        |
|                  | Title: President and Chief Executive              Officer |

|                                 |                                          |                                                             |
|--------------------------------------|-----------------------------------------------|------------------------------------------------------------------|
| Date:                August 14, 2007 | By:                                 | /S/                MATTHEW                M.                LOAR |
|                                 | Name:              Matthew M. Loar            |
|                                 | Title:                Chief Financial Officer |

----

**EXHIBIT      INDEX**

| **Exhibit                Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 4.1                               |   | Form                of Warrant dated June 4, 2007 (incorporated herein by reference to                Exhibit                4.1 to the Registrant’s Current Report on Form 8-K filed on June 7, 2007                (the “June 2007 Form 8-K”)).                                                                                              |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.6                              |   | Separation                Agreement and Mutual General Release effective as of April 3, 2007                by and                between the Registrant and Charles Casamento (incorporated by reference                to                Exhibit 10.11 to the Registrant’s Post Effective Amendment on Form SB-2                filed on June 15, 2007). |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.7                              |   | Securities                Purchase Agreement dated June 4, 2007 by and between the Registrant                and                the subscribers identified on the signature pages thereto (incorporated                herein by reference to Exhibit 10.1 to the June 2007 Form                8-K).                                                            |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 10.8                              |   | Registration                Rights Agreement dated June 4, 2007 by and between the Registrant                and the                subscribers identified on the signature pages thereto (incorporated                herein                by reference to Exhibit 10.2 to the June 2007 Form 8-K).                                                            |
|                              |   |                                                                                                                                                                                                                                                                                                                                                             |
| 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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