UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the quarterly period ended June 30, 2000

                                       or

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

    For the transition period from _____________ to _____________

    Commission File Number: 0-21214


                                ORTHOLOGIC CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                     86-0585310
-------------------------------             ------------------------------------
(State of other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

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

                                 (602) 286-5520
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

        30,163,224 shares of common stock outstanding as of July 31, 2000
<PAGE>
                                ORTHOLOGIC CORP.

                                      INDEX

                                                                        Page No.
                                                                        --------
Part I Financial Information

     Item 1. Financial Statements

          Condensed Consolidated Balance Sheets
          June 30, 2000 and December 31, 1999 ............................    3

          Condensed Consolidated Statements of Operations and of
          Comprehensive Income Three months and six months ended
          June 30, 2000 and 1999 .........................................    4

          Condensed Consolidated Statements of Cash Flows
          Six months ended June 30, 2000 and 1999 ........................    5

          Notes to Consolidated Financial Statements .....................    6

     Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations .........................   10


Part II   Other Information

     Item 1. Legal Proceedings ...........................................   13

     Item 3. Quantitative and Qualitative Disclosures About Market
             Risks .......................................................   13

     Item 4. Submission of Matters to Vote of Security Holders ...........   13

     Item 6. Exhibits and Reports on Form 8-K ............................   13

                                                                          Page 2
<PAGE>
PART I - Financial Information

ITEM 1. FINANCIAL STATEMENTS

                                OrthoLogic, Corp.
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                    Unaudited

                                                       June 30,     December 31,
                                                         2000          1999
                                                      ---------     -----------
ASSETS

Cash and cash equivalents                            $   8,242       $   6,023
Short term investments                                      --             250
Accounts receivable                                     30,847          30,429
Inventory                                                9,494           9,306
Prepaids and other current assets                        1,240             987
Deferred income tax                                      2,625           2,631
                                                     ---------       ---------
       Total current assets                             52,448          49,626

Rental fleet, furniture and equipment                   28,145          26,361
Accumulated depreciation                               (15,725)        (13,300)
                                                     ---------       ---------
       Fleet, furniture and equipment, net              12,420          13,061

Intangibles, net                                        27,752          28,749
Deposits and other assets                                  663             767
                                                     ---------       ---------

       Total assets                                  $  93,283       $  92,203
                                                     =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Accounts payable                                     $   2,644       $   2,569
Accrued liabilities                                      5,865           6,192
                                                     ---------       ---------
       Total current liabilities                         8,509           8,761

Deferred rent and capital lease obligations                185             209
                                                     ---------       ---------

       Total liabilities                                 8,694           8,970
                                                     ---------       ---------

Series B Convertible Preferred Stock                     3,690          10,180
                                                     ---------       ---------

Stockholders' Equity

Common stock                                                15              14
Additional paid-in capital                             131,880         125,206
Accumulated deficit                                    (50,747)        (51,992)
Comprehensive loss                                        (249)           (175)
                                                     ---------       ---------
       Total stockholders' equity                       80,899          73,053
                                                     ---------       ---------
       Total liabilities and stockholders' equity    $  93,283       $  92,203
                                                     =========       =========

See notes to condensed consolidated financial statements

                                                                          Page 3
<PAGE>
                                OrthoLogic, Corp.
   Condensed Consolidated Statements of Operations and of Comprehensive Income
                      (in thousands, except per share data)
                                    Unaudited

<TABLE>
<CAPTION>
                                                         Three months ended      Six months ended
                                                              June 30,               June 30,
                                                       --------------------    --------------------
                                                           2000        1999        2000        1999
                                                       --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>
Revenues                                               $ 22,540    $ 20,728    $ 45,031    $ 41,796
Cost of revenues                                          4,295       4,609       9,104       9,327
                                                       --------    --------    --------    --------
Gross profit                                             18,245      16,119      35,927      32,469

Operating expenses
   Selling, general and administrative                   17,188      15,777      33,503      31,515
   Research and development                                 548         556       1,214       1,076
                                                       --------    --------    --------    --------

Total operating expenses                                 17,736      16,333      34,717      32,591

Operating income (loss)                                     509        (214)      1,210        (122)
                                                       --------    --------    --------    --------
Other income
   Grant/other revenue                                                                            1
   Interest income                                          101          46         186         102
                                                       --------    --------    --------    --------
Total other income                                          101          46         186         103
                                                       --------    --------    --------    --------
Income (loss) before income taxes                           610        (168)      1,396         (19)
                                                       --------    --------    --------    --------
Provision for income taxes                                   61          --         151          16
                                                       --------    --------    --------    --------
Net income (loss)                                      $    549    $   (168)   $  1,245    $    (35)
                                                       ========    ========    ========    ========

Accretion of non-cash preferred stock dividend               --        (206)         --        (824)
                                                       --------    --------    --------    --------
Net income (loss) applicable to common shareholder     $    549    $   (374)   $  1,245    $   (859)
                                                       ========    ========    ========    ========

BASIC EARNINGS PER SHARE
Net income (loss) per common share                     $   0.02    $  (0.01)   $   0.04    $  (0.03)
                                                       --------    --------    --------    --------
Weighted average number of common shares outstanding     29,962      25,492      29,511      25,436
                                                       --------    --------    --------    --------

DILUTED EARNINGS PER SHARE
Net income (loss) per common and equivalent shares     $   0.02    $  (0.01)   $   0.04    $  (0.03)
                                                       --------    --------    --------    --------
Weighted shares outstanding                              31,057      25,492      30,849      25,436
                                                       --------    --------    --------    --------
Consolidated Statement of Comprehensive Income

Net income (loss) applicable to common shareholders    $    549    $   (374)   $  1,245    $   (859)
Foreign translation adjustment                              (61)        (45)        (74)       (209)
                                                       --------    --------    --------    --------
Comprehensive income (loss) applicable to common
  shareholders                                         $    488    $   (419)   $  1,171    $ (1,068)
                                                       ========    ========    ========    ========
</TABLE>

See notes to condensed consolidated financial statements

                                                                          Page 4
<PAGE>
                                Orthologic, Corp.
                      Consolidated Statements of Cash Flows
                                 (In Thousands)
                                    Unaudited

                                                       Six months ended June 30,
                                                       -------------------------
                                                         2000              1999
                                                       -------           -------

OPERATING ACTIVITIES
Net income (loss)                                      $ 1,245          $   (35)

Noncash items:
 Depreciation and amortization                           2,741            3,062

Net change on other operating items:
 Accounts receivable                                      (418)          (2,319)
 Inventory                                                (188)           1,988
 Prepaids and other current assets                        (247)            (577)
 Deposits and other assets                                 104             (274)
 Accounts payable                                           75           (1,102)
 Accrued liabilities                                      (327)            (646)
                                                       -------          -------
       Cash flows provided by operating activities       2,985               97
                                                       -------          -------
INVESTING ACTIVITIES
 Purchase of fixed assets, net                          (1,103)          (2,833)
 Cash paid for acquisition, net                             --             (171)
 Sales (Purchases) of short-term investments               250            5,552
                                                       -------          -------
       Cash flows provided by (used in) investing
         activities                                       (853)           2,548
                                                       -------          -------
FINANCING ACTIVITIES
 Payments on capital leases                                (24)              30
 Payment on loan payable                                    --             (375)
 Payments under co-promotion agreement                      --           (1,000)
 Foreign exchange                                          (74)            (209)
 Net proceeds from stock option exercises                  185              586
                                                       -------          -------
       Cash flows provided by (used in) financing
         activities                                         87             (968)
                                                       -------          -------

NET INCREASE IN CASH AND CASH EQUIVALENTS                2,219            1,677
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           6,023            1,714
                                                       -------          -------
CASH AND CASH EQUIVALENTS, END OF PERIOD               $ 8,242          $ 3,391
                                                       =======          =======
Supplemental disclosure of cash flow information
 Accretion of non-cash preferred stock dividend        $    --          $   824

 Cash paid during the period for interest                   77               56
 Cash paid during the period for income taxes                1               --

See notes to condensed consolidated financial statements

                                                                          Page 5
<PAGE>
                                ORTHOLOGIC CORP.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   FINANCIAL STATEMENT PRESENTATION

     The  condensed  consolidated  balance  sheet as of June 30,  2000,  and the
     condensed  consolidated  statements of operations and comprehensive  income
     for the three months ended June 30, 2000 and 1999 and six months ended June
     30, 2000 and 1999 and the condensed  consolidated  statements of cash flows
     for the six months ended June 30, 2000 and 1999 are unaudited,  however, in
     the opinion of  management,  include all  adjustments  (consisting  only of
     normal recurring  adjustments)  necessary for the fair  presentation of the
     financial  position,  results of operations and cash flows.  The results of
     operations for the interim  periods are not  necessarily  indicative of the
     results to be expected for the complete  fiscal year.  The Balance Sheet as
     of  December  31,  1999 is derived  from the  Company's  audited  financial
     statements  included in the 1999 Annual Report.  It is suggested that these
     financial  statements be read in conjunction with the financial  statements
     and notes thereto included in the Company's 1999 Annual Report.

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  necessarily  requires  management to make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the  financial  statements  and the  reported  amounts  of  revenue  and
     expenses  during the  reporting  period.  Actual  results could differ from
     these estimates.  Significant  estimates include the allowance for doubtful
     accounts,  which is based  primarily  on  trends in  historical  collection
     statistics,   consideration   of  current  events,   payer  mix  and  other
     considerations. The Company derives a significant amount of its revenues in
     the United  States  from  third-party  health  insurance  plans,  including
     Medicare.  Amounts paid under these plans are  generally  based on fixed or
     allowable  reimbursement  rates.  In the  opinion of  management,  adequate
     allowances  have  been  provided  for  doubtful  accounts  and  contractual
     adjustments.  However,  these  estimates are subject to  adjustments in the
     near term,  which could be  material.  Any  differences  between  estimated
     reimbursement and final determinations are reflected in the year finalized.

2.   CO-PROMOTION AGREEMENT

     The  Company  entered  into  an  exclusive   co-promotion   agreement  (the
     "Agreement") with Sanofi  Pharmaceuticals Inc. ("Sanofi") at a cost of $4.0
     million on June 23, 1997 for the purpose of marketing Hyalgan, a hyaluronic
     acid sodium  salt,  to  orthopedic  surgeons  in the United  States for the
     treatment of pain in patients with  osteoarthritis of the knee. During 1997
     and 1998 the Company paid $3.0 million of this amount.  The remaining  $1.0
     million  was paid in the first  quarter of 1999.  The  initial  term of the
     agreement  ends on December 31, 2002.  Upon the  expiration  of the initial
     term,  Sanofi may terminate the  agreement,  extend the agreement for up to
     ten additional  one-year periods or enter into a revised agreement with the
     Company. Upon termination of the agreement, Sanofi must pay the Company the
     amount equal to 50% of the gross compensation paid to the Company, pursuant
     to the Agreement,  for the immediately preceding year, provided the Company
     met all contractual  obligations  pursuant to the agreement.  The Company's
     sales force began to promote Hyalgan in the third quarter of 1997.

                                                                          Page 6
<PAGE>
3.   LICENSING AGREEMENT

     The  Company  announced  in  January  1998 that it had  acquired a minority
     equity  interest  in  a  biotech  firm,   Chrysalis   BioTechnology,   Inc.
     ("Chrysalis")  for $750,000.  As part of the  transaction,  the Company was
     awarded a nine-month  world-wide exclusive option to license the orthopedic
     applications of Chrysalin,  a patented 23-amino acid peptide that has shown
     promise in accelerating  the healing process and has completed an extensive
     pre-clinical  safety and efficacy  profile of the product.  In pre-clinical
     animal  studies,  Chrysalin  was also shown to double the rate of  fracture
     healing with a single  injection into the fresh fracture gap. The Company's
     agreement  with Chrysalis  contains  provisions for the Company to continue
     and  expand  its option to license  Chrysalin  contingent  upon  regulatory
     approvals,  successful  pre-clinical trials, and certain milestone payments
     to Chrysalis by the Company.  As part of the equity  investment  OrthoLogic
     acquired  options to license  Chrysalin  for  orthopedic  applications.  An
     additional  fee of  $750,000  for the initial  license was  expensed in the
     third  quarter of 1998 and the  Agreement  was extended to January 1999. In
     January  1999,  the  Company  exercised  its  option  to  license  the U.S.
     development,  marketing and distribution rights for Chrysalin, for fracture
     indications.  As part of the license agreement, and in conjunction with the
     U.S.  Food and Drug  Administration  (the "FDA")  clearance  to begin human
     clinical trials,  OrthoLogic made a $500,000 milestone payment to Chrysalis
     which was  expensed in the fourth  quarter of 1999.  In January  2000,  the
     Company began enrolling  patients in the combined Phase I/II clinical trial
     for  Chrysalin.  The  clinical  trial  is  ongoing  and is  expected  to be
     completed by the end of 2000.

     In July 2000, the Company  announced it was extending its license agreement
     with Chrysalis to include all Chrysalin orthopedic  indications  worldwide.
     Under the terms of the agreement,  OrthoLogic  paid Chrysalis a license fee
     of $2  million  subsequent  to June 30,  2000.  This fee will  result  in a
     one-time charge to earnings  during the third quarter ending  September 30,
     2000.  In  addition,  the  agreement  calls for the  Company to pay certain
     milestone  payments and royalty  fees,  based upon  products  developed and
     achievement of commercial success.

4.   Litigation

     During 1996,  certain  lawsuits  were filed in the United  States  District
     Court for the District of Arizona against the Company and certain  officers
     and  directors,  alleging  violations  of Section  10(b) of the  Securities
     Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder.

     Plaintiffs in these  actions  alleged that  correspondence  received by the
     Company  from  the  FDA  pertaining  principally  to the  promotion  of the
     Company's   OrthoLogic  1000  Bone  Growth   Stimulator  was  material  and
     undisclosed,  leading to an artificially  inflated stock price.  Plaintiffs
     further alleged that practices referenced in the correspondence operated as
     a fraud against  plaintiffs.  Plaintiffs  further alleged that once the FDA
     letter became known,  a material  decline in the stock price of the Company
     occurred, causing damage to the plaintiffs. On March 31, 1999, the judge in
     the  consolidated  case before the United States District Court granted the
     Company's  Motion to Dismiss and entered an order  dismissing all claims in
     the suit  against the Company and two  individual  officers/directors.  The
     judge allowed  certain narrow claims based on insider  trading  theories to
     proceed against certain  individual  defendants.  On December 22, 1999, the
     District  Court  granted  plaintiff's  motion  for class  certification  to
     include  purchasers  of common stock  between June 4 through June 18, 1996,
     inclusive. Discovery is proceeding in the case.

     In  addition,  the Company had been  served  with a  substantially  similar
     action  filed in Arizona  State Court  alleging  state law causes of action
     grounded in the same set of facts.  The  Company  filed a Motion to Dismiss
     the  Complaint  in Arizona  State Court in May 1999.  The Court  denied the

                                                                          Page 7
<PAGE>
     motion  in July  1999 and  granted  the  plaintiff's  motion  for the class
     certification on November 24, 1999. Discovery is proceeding in the case.

     In addition,  a  shareholder  derivative  complaint  alleging,  among other
     things,  breach of fiduciary duty in connection with the conduct alleged in
     the aforesaid federal and state court class actions have also been filed in
     Arizona state court.  The Company filed a Motion to Dismiss the  Complaint,
     which was granted December 13, 1999.

     Management  believes  that the remaining  allegations  in the federal court
     case and the state court case are without merit and will vigorously  defend
     against them.

     At June 30, 2000, in addition to the matters  disclosed  above, the Company
     is involved in various other legal  proceedings  that arose in the ordinary
     course of business.

     The costs associated with defending the above allegations and the potential
     outcome cannot be determined at this time and accordingly,  no estimate for
     such costs have been included in the accompanying Financial Statements.  In
     management's   opinion,   the  ultimate   resolution  of  the  above  legal
     proceedings  will not have a material  effect on the financial  position of
     the Company.

5.   COMMITMENTS

     The Company has a $10 million accounts receivable  revolving line of credit
     with a bank. The Company may borrow up to 75% of the eligible accounts. The
     interest rate is at prime for the revolving note.  Interest accruing on the
     note and a monthly administration fee is due in arrears on the first day of
     each month. The revolving note matures February 28, 2003. There are certain
     financial  covenants and reporting  requirements  associated with the loan.
     Included in the financial  covenants are (1) tangible net worth of not less
     that $43 million, (2) a quick ratio of not less than 2.0 to 1.0, (3) a debt
     to tangible  net worth  ratio of not less that .50 to 1.0,  and (4) capital
     expenditures will not exceed more than $7.0 million during any fiscal year.

6.   SERIES B CONVERTIBLE PREFERRED STOCK

     In July 1998, the Company completed a private placement with two investors,
     an affiliate of Credit  Suisse  First  Boston  Corp.  and Capital  Ventures
     International.  Under the terms of the Purchase Agreement,  OrthoLogic sold
     15,000  shares  of Series B  Convertible  Preferred  Stock for $15  million
     (prior  to  costs).   The  Series  B  Convertible   Preferred   Stock  will
     automatically convert, to the extent not previously converted,  into Common
     Stock four years  following  the date of  issuance.  Each share of Series B
     Convertible Preferred Stock is convertible into Common Stock at a per share
     price  equal to the  lesser of the  average of the 10 lowest  closing  bids
     during  the 30 days  prior to  conversion  or, $  3.0353.  In the  event of
     certain  Mandatory  Redemption  Events,  each  holder of Series B Preferred
     Shares will have the right to require the  Company to redeem  those  shares
     for cash at the Mandatory  Redemption  Price.  Mandatory  Redemption Events
     include,  but are not  limited  to: the  failure  of the  Company to timely
     deliver Common Shares as required under the terms of the Series B Preferred
     Shares  or  Warrants;   the  Company's  failure  to  satisfy   registration
     requirements  applicable to such securities;  the failure by the Company to
     maintain  the  listing  of its Common  Stock on NASDAQ or another  national
     securities exchange;  and certain transactions involving the sale of assets
     or  business  combinations  involving  the  Company.  In the  event  of any
     liquidation,  dissolution  or  winding  up of the  Company,  holders of the

                                                                          Page 8
<PAGE>
     Series B Preferred Shares are entitled to receive,  prior and in preference
     to any  distribution  of any assets of the Company to the holders of Common
     Stock,  the Stated Value for each Series B Preferred  Share  outstanding at
     that time. The Purchase  Agreement  contains strict  covenants that protect
     against  hedging and  short-selling  of  OrthoLogic  Common Stock while the
     purchasers hold shares of the Series B Convertible Preferred Stock.

     In  connection  with the  private  placement  of the  Series B  Convertible
     Preferred Stock,  OrthoLogic issued to the purchasers  warrants to purchase
     40 shares of Common Stock for each share of Series B Convertible  Preferred
     Stock,  exercisable at $5.50 per share.  These warrants expire in 2008. The
     warrants  were  valued  at  $1,093,980.  Additional  costs  of the  private
     placement were approximately  $966,000.  Both the value of the warrants and
     the  cost of the  private  placement  were  recognized  over  the 10  month
     conversion  period ended April 1999 as an "accretion of non-cash  Preferred
     Stock Dividends" for the amount of $617,994 per quarter.  The Company filed
     a registration statement covering the underlying Common Stock.

     Proceeds  from the  private  placement  are being used to fund new  product
     opportunities,  including  SpinaLogic,  Chrysalin and Hyalgan as well as to
     complete the re-engineering of the Company's key business processes.

     As of June 30, 2000, 11,310 shares of Series B Convertible  Preferred Stock
     had been converted into 4,486,997 shares of Common Stock.

                                                                          Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
        OF OPERATIONS.

The following is  management's  discussion of significant  factors that affected
the Company's interim financial condition and results of operations. This should
be read in conjunction  with  Management's  Discussion and Analysis of Financial
Condition and Results of Operations  included in the Company's  Annual Report on
Form 10-K for the year ended December 31, 1999.

RESULTS OF OPERATIONS

REVENUES

The Company  reported  revenues of $22.5 million for the second  quarter of 2000
representing  an 8.7%  increase  over  revenues  of $20.7  million  for the same
quarter of 1999.  The Company's  revenues  increased 7.7% to $45 million for the
six months ended June 30, 2000 from $41.8  million for the six months ended June
30, 1999.  The growth in sales was primarily  driven by the launch of SpinaLogic
in December 1999 and increased sales of the OL-1000. The SpinaLogic device, used
as an adjunct to lumbar spinal fusion surgery,  has been prescribed by more than
300  physicians.  Prescriptions  for  the  OL-1000  increased  over  20% for the
six-months  ended June 30, 2000  compared to the same period in 1999.  Sales for
Continuous Passive Motion devices declined for both the second quarter and first
half of the year  compared  with  comparable  periods in 1999 as the Company has
focused attention on improving profitability of the CPM business.

GROSS PROFIT

Gross profits  increased  from $16.1 million for the three months ended June 30,
1999 to $18.2  million for the three months ended June 30, 2000, a 13% increase.
Gross profits as a percentage of revenues was 80.9% for the quarter  compared to
77.7% for the same period  last year.  For the six months  ended June 30,  2000,
gross  profits was $35.9 million as compared to $32.5 million for the six months
ended June 30, 1999. Gross profits as a percentage of revenues was 77.7% for the
six-month  period ended June 30, 1999 and increased to 79.8% for the same period
in 2000.  Gross profits  improved due to increased sales of the Company's higher
margin products: the OL-1000 and SpinaLogic.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,  general and administrative ("SGA") expenses for the three months ended
June 30, 2000 were $17.2  million,  an increase from $15.8 million for the three
months ended June 30, 1999.  SGA expenses for the six months ended June 30, 2000
were $33.5 million, an increase from $31.5 million for the six months ended June
30, 1999.  These  increases  occurred due to higher sales volume,  and increased
advertising  associated with both the contractual  obligations to market Hyalgan
under the Co-Promotion Agreement referenced above and the launch of SpinaLogic.

RESEARCH AND DEVELOPMENT

Research and development  ("R&D") expenses  declined slightly to $548,000 in the
three-month  period ended June 30, 2000 compared to $556,000 for the same period
last year.  R&D  expenses  for the six months  ended June 30, 2000  totaled $1.2
million,  an increase  from the $1.1  million for the six months  ended June 30,

                                                                         Page 10
<PAGE>
1999. This year-to-date increase reflects expenses associated with the Chrysalis
clinical trials offset by a reduction in SpinaLogic  related  development  costs
since that product was introduced at the end of 1999.

OTHER INCOME AND EXPENSES

Other income, consisting primarily of interest income, increased from $46,000 to
$101,000 for the three-month  periods ended June 30, 2000 and 1999 respectively.
For the six-month period ended June 30, 2000, other income increased to $186,000
from $102,000 for the same period in the previous year.

LIQUIDITY AND CAPITAL RESOURCES

On June 30, 2000 the Company had cash and  investments of $8.2 million  compared
to $6.3  million as of December  31,  1999.  Cash and  investments  totaled $7.1
million at March 31, 2000. Cash provided by operations  amounted to $3.0 million
during the  six-month  period ended June 30,  2000,  compared to $97,000 for the
same period in the  previous  year.  The Company  has an  available  $10 million
accounts receivable revolving line of credit with a bank.

The Company  anticipates that its cash and short-term  investments on hand, cash
from  operations  and the  funds  available  from  the  line of  credit  will be
sufficient to meet the Company's  presently  projected cash and working  capital
requirements for the next 12 months. There can be no assurances,  however,  that
this will prove to be the case.  The timing and amounts of cash used will depend
on many  factors,  including  the  Company's  ability to  continue  to  increase
revenues,  reduce and  control  its  expenditures,  continue  profitability  and
collect amounts due from third party payers. Additional funds may be required if
the Company is not  successful in any of these areas.  The Company's  ability to
continue funding its planned  operations  beyond the next 12 months is dependent
on its ability to generate  sufficient  cash flow to meet its  obligations  on a
timely basis, or to obtain additional funds through equity or debt financing, or
from other sources of financing, as may be required.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This  report  contains  forward-looking  statements  within  the  meaning of the
Private  Securities  Litigation  Reform Act of 1995,  including  projections  of
results of operations  and financial  condition,  statements of future  economic
performance,  and  general or specific  statements  of future  expectations  and
beliefs. The matters covered by such  forward-looking  statements are subject to
known and unknown  risks,  uncertainties  and other  factors which may cause the
actual results,  performance or achievements of the Company to differ materially
from those contemplated or implied by such forward-looking statements. Important
factors which may cause actual  results to differ  include,  but are not limited
to, the following  matters,  which are discussed in more detail in the Company's
Form 10-K for the 1999 fiscal year.

The Company  intends to pursue  sales in  international  markets.  The  Company,
however, has had little experience in such markets. Expanded efforts at pursuing
new markets necessarily involves  expenditures to develop such markets and there
can be no assurance that the results of those efforts will be profitable.  There
can be no assurance  that the  Company's  estimates of the market will not cause
the nature and extent of that market to deviate  materially  from the  Company's
expectations.  To  the  extent  that  the  Company  presently  enjoys  perceived
technological advantages over competitiors,  technological innovation by present
or future competitors may erode the Company's position in the market. To sustain
long-term growth, the Company must develop and introduce new products and expand

                                                                         Page 11
<PAGE>
applications of existing products;  however,  there can be no assurance that the
Company  will be able to do so or that  the  market  will  accept  any  such new
products or applications. The Company operates in a highly regulated environment
and  cannot  predict  the  actions  of  regulatory  authorities.  The  action or
non-action of regulatory authorities may impede the development and introduction
of new  products  and new  applications  for  existing  products,  and may  have
temporary or  permanent  effects on the  Company's  marketing of its existing or
planned  products.  There can be no assurance that the influence of managed care
will continue to grow either in the United States or abroad, or that such growth
will  result  in  greater  acceptance  or sales of the  Company's  products.  In
particular,  there can be no assurance that existing or future  decision  makers
and third party payors within the medical community will be receptive to the use
of  the  Company's  products  or  replace  or  supplement   existing  or  future
treatments.  Moreover,  the  transition  to  managed  care  and  the  increasing
consolidation  underway in the managed care  industry may  concentrate  economic
power  among  buyers  of  the  Company's  products,  which  concentration  could
foreseeable  adversely  affect  the  Company's  margins.  Although  the  company
believes that existing litigation initiated against the Company is without merit
and the Company intends to defend such litigation vigorously, an adverse outcome
of such  litigation  could  have a  material  adverse  effect  on the  Company's
business, financial condition and results of operations.

                                                                         Page 12
<PAGE>
                          PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

See "Note 4 -  Litigation"  of the Notes to  Consolidated  Financial  Statements
above.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company has exposure to foreign  exchange  rates  through its  manufacturing
subsidiary in Canada.

The  Company  does  not use  foreign  currency  exchange  forward  contracts  or
commodity  contracts  to  limit  its  exposure.  The  Company  is not  currently
vulnerable to a material  extent to fluctuations in interest rates and commodity
prices.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The annual meeting of the  stockholders  of the Company was held on May 19, 2000
to vote on: the election of Class III  Directors  (Proposal  1); an amendment to
the Company's  1997 Stock Option Plan to increase the number of shares of Common
Stock available for grant under the Plan by 1,000,000  shares  (Proposal 2); and
the  ratification  of Deloitte & Touche LLP as  independent  accountant  for the
fiscal year ending December 31, 2000 (Proposal 3). The results are as follow:

                                                                         Broker
                                  For          Against     Abstain     Non-Votes
                                  ---          -------     -------     ---------
Proposal 1
   Stuart H. Altman, Ph.D.     28,172,074       330,938      7,700         0
   Elwood D. Howse, Jr.        28,166,474       336,538      7,700         0
Proposal 2                     24,684,130     3,763,233     55,649         0
Proposal 3                     28,394,175        64,396     44,441         0

A more detailed  discussion of each proposal is included in the Company's  Proxy
Statement for the 2000 Annual Meeting of Stockholders.

The Company's  directors  continuing in office are: John Holliman III, Frederick
J. Feldman, Ph.D., Thomas R. Trotter, and Augustus A. White III, M.D.

ITEM 6. EXHIBITS AND REPORTS

     (a) Exhibit Index

         See  Exhibit Index  following the signature page which is  incorporated
         herein by reference.

     (b) Reports on Form 8-K

         None

                                                                         Page 13
<PAGE>
                                   SIGNATURES

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


                                ORTHOLOGIC CORP.
                                  (Registrant)


Signature                             Title                           Date
---------                             -----                           ----


/s/ Thomas R. Trotter        President and Chief Executive
---------------------        Officer (Principal Executive        August 10, 2000
Thomas R. Trotter            Officer)



/s/ Terry D. Meier           Sr. Vice-President and Chief
---------------------        Financial Officer (Principal
Terry D. Meier               Financial and Accounting Officer)   August 10, 2000


                                                                         Page 14
<PAGE>
                                OrthoLogic Corp.
                 Exhibit Index to Quarterly Report on Form 10-Q
                  For the Quarterly Period Ended June 30, 2000


                                              Incorporated by      Filed
Exhibit No.      Description                  Reference to:       Herewith
-----------      -----------                  -------------       --------

   10.1        Amendment to Marketing
                 Distribution Agreement                               X

   27          Financial Data Schedule                                X

                                                                         Page 15