As filed with the Securities and Exchange Commission on __________, 2004

Registration No. 333-_______

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM S-4

REGISTRATION STATEMENT
Under the Securities Act of 1933

ORTHOLOGIC CORP.

OrthoLogic Corp.
1275 West Washington Street
Tempe, Arizona 85281
(602) 286-5520
(Address, including ZIP Code, and telephone number,
including area code, of Registrant’s principal executive offices)

Thomas R. Trotter
Chief Executive Officer
1275 West Washington Street
Tempe, Arizona 85281
(602) 286-5520
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)

     Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and the completion of the transactions described herein.

     If any of the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                   

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o                   

CALCULATION OF REGISTRATION FEE

     The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

[Chrysalis Letterhead]

Dear Stockholder of Chrysalis Biotechnology, Inc.:

     On behalf of the Board of Directors of Chrysalis, I am pleased to inform you that the Board of Directors has approved the sale of substantially all of Chrysalis’ assets (except cash, but including all intellectual property) to OrthoLogic Corp., Chrysalis’ long-time strategic partner, pursuant to the Asset Purchase Agreement and Plan of Reorganization by and between Chrysalis and OrthoLogic dated April 28, 2004 (the “Asset Purchase Agreement”) and attached as Annex A. Through this consent solicitation/prospectus, Chrysalis is seeking your written consent as a Chrysalis stockholder to (i) the Asset Purchase Agreement and the transfer of Chrysalis’ assets in connection with the Asset Purchase Agreement, and (ii) its plan of complete liquidation and dissolution, which is attached as Annex B. Chrysalis is required to obtain written consents from holders of at least a majority of the outstanding shares of Chrysalis’ common stock, on an as-converted basis, to approve both of the proposals described above. Chrysalis intends to consummate the asset sale on or about 10 business days following the date of this consent solicitation/prospectus, assuming Chrysalis receives written consents from holders of the requisite number of shares of its voting stock. Chrysalis, however, reserves the right to close the asset sale as soon as it receives a sufficient number of consents.

     This consent solicitation/prospectus and the registration statement on Form S-4 in which it is contained is also intended to register under the Securities Act of 1933, as amended, the shares of OrthoLogic’s common stock to be issued pursuant to the Asset Purchase Agreement.

     Pursuant to the Asset Purchase Agreement, at closing Chrysalis will receive cash of $2.5 million and a number of shares of OrthoLogic common stock that is equal to $25.0 million as of closing based on the 10-day average closing price of OrthoLogic common stock ending immediately prior to closing (the “Closing Date Stock Price”) if the Closing Date Stock Price is no greater than $8.239 and no less than $6.741 per share. In the event that the Closing Date Stock Price is greater than $8.239, Chrysalis will receive 3,034,349 shares of OrthoLogic common stock and in the event that the Closing Date Stock Price is less than $6.741, Chrysalis will receive 3,708,649 shares of OrthoLogic common stock. This means that Chrysalis could receive a number of shares of OrthoLogic common stock worth more or less than $25.0 million at closing. For example, the closing price of OrthoLogic common stock as of June 1, 2004 was $8.47. Assuming this is the Closing Date Stock Price, Chrysalis would receive $25,800,936 worth of OrthoLogic common stock (based on multiplying $8.47 per share and 3,034,349 shares).

     Pursuant to the Asset Purchase Agreement and an escrow agreement among Chrysalis, OrthoLogic and the escrow agent, attached as Annex C, 15% of the shares that Chrysalis receives at the closing of the Asset Purchase Agreement (the “General Escrow Shares”) will be placed in escrow for 18 months from the closing date to cover indemnification of OrthoLogic by Chrysalis for the representations and warranties made by Chrysalis in the Asset Purchase Agreement. Because of my role as Chrysalis’ founder, I have agreed to place an additional number of shares issuable to me individually in escrow to be available for indemnification after and in the event the General Escrow Shares are fully used. As a result, Chrysalis intends to withhold (i) a pro rata portion (15%) from the distribution it makes to each stockholder of the shares Chrysalis receives at closing and (ii) an additional amount from the shares issuable to me. In addition, holders of 5% or more of Chrysalis common stock on an as-converted basis will be subject to a 60-day lockup agreement.

     In addition, Chrysalis may receive an additional number of shares of OrthoLogic common stock valued at $7.0 million (but not in excess of the number of shares issued at closing) upon the occurrence of certain trigger events, which include the sale or other disposition of OrthoLogic or the acceptance by the U.S. Food and Drug Administration of a new drug application for a product based on Chrysalin, if either such trigger event occurs within five years of closing. A portion of the $7.0 million payment may be paid in cash under certain limited circumstances.

     Chrysalis intends to distribute the shares of OrthoLogic common stock received at closing to its stockholders pursuant to its plan of complete liquidation and dissolution as soon as practicable following the closing of the Asset Purchase Agreement. Chrysalis also intends to distribute any of the $2.5 million in cash consideration

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remaining after the payment of or retention for expenses associated with this transaction, winding down and dissolution, including the payment of a finder’s fee incurred in connection with this transaction. Chrysalis expects the majority of the $2.5 million cash portion of the purchase price will be allocated toward these expenses. Any cash distribution will occur following completion of the transition services agreement between Chrysalis and OrthoLogic pursuant to which Chrysalis agreed to retain its employees and conduct certain operations for a 90-day period following closing of the asset sale. A copy of the transition services agreement is attached as Annex D.

     Chrysalis urges you to read the consent solicitation/prospectus in its entirety and all of the Annexes as well. Chrysalis asks that you consent to both the Asset Purchase Agreement and related asset sale and the plan of complete liquidation and dissolution by signing the written consent of stockholders attached as Annex E and returning it in the enclosed self-addressed envelope as soon as possible. As I stated earlier, the parties intend to close on the asset sale on or before the 10th business day following the date of this consent solicitation/prospectus assuming Chrysalis has received written consents representing a sufficient number of votes to approve the transaction. Please feel free to call me or Dennis McWilliams, Chrysalis’ Chief Operating Officer, at (409) 750-9251 if you have any questions.

Galveston, Texas
                   , 2004

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THIS CONSENT SOLICITATION/PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE CONSENT SOLICITATION/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS CONSENT SOLICITATION/PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION
Dated June     , 2004

CONSENT SOLICITATION/PROSPECTUS

[Chrysalis Logo/Ortho Logo]

     This consent solicitation/prospectus relates to the issuance of shares of OrthoLogic Corp. (“OrthoLogic”) common stock to Chrysalis Biotechnology, Inc. (“Chrysalis”) in connection with the purchase of substantially all of Chrysalis’ assets. On April 28, 2004, OrthoLogic and Chrysalis signed an Asset Purchase Agreement and Plan of Reorganization (the “Asset Purchase Agreement”) pursuant to which OrthoLogic agreed to purchase substantially all the assets of Chrysalis in exchange for the payment described below:

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     This consent solicitation/prospectus is dated    , 2004 and is first being mailed to Chrysalis stockholders on or about    , 2004. Chrysalis’ offices are located at 2200 Market, Suite 600, Galveston, Texas 77550. Chrysalis’ website address is www.chrysalisbio.com. Chrysalis can be reached by telephone at 409-750-9251. You should carefully read the discussion in the section entitled “Risk Factors” beginning on page 16.

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TABLE OF CONTENTS

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Questions and Answers

What am I being asked to do as a stockholder of Chrysalis?

     You are being asked to provide your written consent to approve (i) the sale of substantially all of the Chrysalis assets (except cash) to OrthoLogic pursuant to the Asset Purchase Agreement and Plan of Reorganization and the related transactions described in that agreement, and (ii) the plan of complete liquidation and dissolution pursuant to which Chrysalis will wind down its operations and dissolve. To consummate such proposals, Chrysalis is soliciting written consent from holders of at least a majority of its outstanding common stock on an as-converted basis.

     On an as-converted basis as of    , the date of this consent solicitation/prospectus, 2,048,310 shares of Chrysalis common stock are eligible to vote on the asset sale and on the plan of liquidation and dissolution. As of such date, Chrysalis had 1,201,940 shares of common stock outstanding, 89,850 Series A preferred shares convertible into 205,371 shares of common stock, Series B preferred shares convertible into 346,467 shares of common stock, Series C preferred shares convertible into 190,476 shares of common stock and convertible notes, which, upon the closing of this transaction, convert into 104,056 shares of Series D preferred stock, which are convertible into 104,056 shares of common stock (assuming a June 30, 2004 closing date).

     Chrysalis is asking you to execute and return the written consent attached as Annex E to this consent solicitation to Chrysalis’ Secretary as soon as possible by returning the executed written consent in the enclosed self-addressed stamped envelope. If you do not respond and Chrysalis receives the requisite number of consents voting in favor of the asset purchase, you will receive a written notice from the Chrysalis Board of Directors of the approval of the consent promptly thereafter.

If I change my mind after I have submitted an executed consent, can I revoke my consent?

     If you submit your written consent to us and subsequently wish to revoke your consent, please call Dennis McWilliams at (409) 750-9251 and notify him of your decision, and Chrysalis will disregard your signed consent provided that the closing has not already occurred.

Why has Chrysalis Board of Directors decided to sell Chrysalis’ assets?

     Chrysalis’ Board of Directors considered a number of factors in determining that the asset sale is in the best interests of Chrysalis and its stockholders, including but not limited to the following:

     The Board also considered a number of factors that might have a negative impact on Chrysalis and its stockholders. Please see “Reasons for Engaging in Asset Sale” on page 31 for a complete list of the positive and negative factors that were considered by the Board.

What was the process by which Chrysalis chose to sell its assets to OrthoLogic?

     Since inception, Chrysalis has sought ways to increase stockholder value through a variety of financing and corporate partnering activity. More recently, since the termination of the Abbott license agreement, Chrysalis has

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been exploring opportunities through venture capital sources and strategic partnering in order to fund the development of Chrysalin-based products that had not already been exclusively licensed to OrthoLogic. In the fall of 2003, OrthoLogic and Chrysalis began discussing the potential advantages of combining the efforts of the two companies. Chrysalis’ Board then began considering the benefits of a sale to OrthoLogic in relation to the other strategic options available to Chrysalis at the time. Based on this assessment, Chrysalis’ Board felt that for the right valuation, the sale to OrthoLogic provided the most strategic benefit to Chrysalis’ stockholders while providing an improved commercialization environment for the Chrysalin technology. To evaluate the proposed negotiated value, Chrysalis considered the proposed price in the context of the other strategic options available to it, including raising additional capital through the venture capital market, or licensing other applications of Chrysalin to other strategic partners for additional cash. This included using industry standard financial models to consider the impact on stockholder value of the different options. After weighing all the information gathered during this process, the Board concluded that the offer made by OrthoLogic represented the best option for Chrysalis’ stockholders, and authorized Chrysalis’ management to execute the Asset Purchase Agreement as well as recommend approval of the sale to the Chrysalis stockholders.

What will the Chrysalis stockholders receive if the asset sale closes?

     Chrysalis’ stockholders will not immediately receive anything upon the consummation of the sale. However, the Chrysalis Board of Directors plans to pay all Chrysalis’ creditors (including those to whom Chrysalis owes payment for services related to the sale of the assets), fulfill its post-sale obligations under the transition services agreement and then liquidate as soon as practicable and, in doing so, distribute the remaining cash and shares of OrthoLogic common stock to Chrysalis stockholders. Chrysalis has common stock and will have four series of preferred stock outstanding by the closing. Chrysalis preferred stockholders have certain liquidation preferences as well as participation rights in the distributions. The holders of the Chrysalis preferred stock are entitled to liquidation preferences totaling approximately $5.9 million in the aggregate, divided among the series of preferred stockholders approximately as follows:

     Following such distributions, the holders of all such series of preferred stock shall convert into common stock and share in the distributions of all remaining assets. Assuming all of Chrysalis’ outstanding options are exercised prior to closing, and that no warrants are exercised, Chrysalis will have 2,336,154 shares of common stock outstanding to share in the remaining assets, prior to conversion of the convertible notes. Assuming that closing of this transaction occurs on June 30, 2004, an additional 104,056 shares of common stock will be issuable as a result of the conversion of such notes. Please see “Liquidation and Dissolution of Chrysalis” on page 44.

     Chrysalis will withhold a 15% portion of each of its stockholder’s distributions and place it into an escrow account for an 18 month period following the closing which will be used to fund indemnification claims made by OrthoLogic.

What will the Chrysalis option holders and warrant holders receive if the asset sale closes?

     If the option holders exercise their options, which are currently exercisable at prices ranging from $0.55 to $1.05 per share, they will receive the same distribution per share as the holders of common stock. Such options must be exercised as of the closing to be valid. There are currently outstanding options exercisable for a total of 391,900 shares.

     The warrant holders must exercise their warrants prior to or within 30 days after the closing of the asset sale. They would also receive the same distribution per share as the holders of common stock. Because the exercise price of Chrysalis’ outstanding warrants is $10.50 per share and the projected value of the OrthoLogic common stock distributable to Chrysalis’ common stockholders is less than $10.50 per share unless the contingent $7.0 million shares are issued, it is unlikely that any of the warrants will be exercised.

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What will happen to Chrysalis after the sale is consummated?

     The Chrysalis Board of Directors plans to liquidate Chrysalis, distributing all Chrysalis’ then remaining assets, after all creditors have been paid, to Chrysalis stockholders, and dissolve Chrysalis as soon as practicable after the closing. Chrysalis has agreed to continue employing all of Chrysalis’ employees who are not hired by OrthoLogic and to make them available to OrthoLogic for up to 90 days following the closing pursuant to a transition services agreement. Consequently, Chrysalis will not commence formal liquidation of the company until after the end of the transition services agreement.

When will I be able to sell my shares of OrthoLogic?

     You will be able to sell shares in the public market as soon the shares of OrthoLogic common stock are distributed to you, unless you are entering into a lockup agreement with OrthoLogic. In addition, you may be subject to resale volume, time and manner of sale restrictions if you are considered an affiliate of Chrysalis or OrthoLogic and become subject to Rule 145 under the Securities Act of 1933, as amended. See “The Asset Purchase Agreement and Plan of Reorganization – Other Related Material Contracts” for more information about the lockup agreements.

What are the federal tax consequences of the asset sale and liquidation to Chrysalis and its Stockholders?

     The parties intend for this transaction to qualify as a tax-free reorganization under federal tax law. If this transaction qualifies as a tax-free reorganization, Chrysalis will not recognize gain or loss as a result of the sale and, except to the extent that cash is received in the liquidation, Chrysalis’ stockholders will not recognize gain or loss on the shares of OrthoLogic common stock received by them until the sale of such shares, however, certain option holders may recognize income upon the exercise of their options to acquire Chrysalis capital stock in anticipation of the asset sale and liquidation. The federal income tax consequences described may not apply to all stockholders of Chrysalis. Your tax consequences will depend on your own situation. You are urged to consult your tax advisor so as to fully understand the tax consequences of the sale and liquidation to you. See “Material Federal Income Tax Consequences to Chrysalis Stockholders” on page 37 for more information.

Are there any conditions to the closing of the sale?

     Chrysalis and OrthoLogic are not obligated to consummate the asset sale until specific conditions are satisfied or waived. Some of the conditions are as follows:

Am I entitled to appraisal or dissenter’s rights?

     No. Chrysalis’ stockholders are not entitled to any dissenter’s or appraisal rights with respect to the sale of Chrysalis’ assets under Delaware law or Chrysalis’ Certificate of Incorporation.

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Can Chrysalis decide not to proceed with the sale to OrthoLogic?

     Chrysalis’ Board of Directors may terminate the asset sale to OrthoLogic under certain circumstances. However, the termination may make Chrysalis responsible to pay OrthoLogic certain breakup fees or reimburse OrthoLogic for its out-of-pocket expenses incurred in pursuing the Chrysalis sale of assets. See “The Asset Purchase Agreement and Plan of Reorganization – Termination and Breakup Fees.”

What are the interests of Chrysalis’ directors and officers in the asset sale?

     In connection with the closing of the Asset Purchase Agreement, Chrysalis’ management team and directors will receive consideration in the form of stockholder distributions upon Chrysalis’ liquidation and, in some cases, severance payments, bonuses and employment contracts with OrthoLogic which may make their interests contrary to those of Chrysalis’ stockholders. Please see “Interests of Certain Chrysalis Related Persons in the Asset Sale” on page 35 for a complete description of such interests.

Who is paying the expenses related to the asset sale?

     Both Chrysalis and OrthoLogic have agreed to each pay their own out-of-pocket expenses incurred in pursing the asset sale. However, if Chrysalis’ stockholders do not approve the asset sale, Chrysalis will need to pay OrthoLogic a sum equal to OrthoLogic’s out-of-pocket expenses incurred in pursuing this asset sale if OrthoLogic terminates this sale.

How is this transaction expected to be treated for accounting purposes?

     The asset sale is expected to be treated as a “purchase” by OrthoLogic for financial accounting purposes.

Where can I find more information about OrthoLogic?

     Information about OrthoLogic can be obtained in reading the Annexes F-J included herein. Additionally, you can get more information about OrthoLogic by inspecting its annual, quarterly and other reports, which it files with the U.S. Securities and Exchange Commission, by copying them at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington D.C. 20549, or by calling the SEC at 1-800-SEC-0330 (the “SEC”). You can obtain these reports from the SEC website at www.sec.gov through the EDGAR system or by contacting OrthoLogic directly at the address and telephone number below.

OrthoLogic Corp.
Attn: Investor Relations
1275 West Washington
Tempe, Arizona 85281
(602) 286-5220

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Summary

     This summary highlights information more fully described elsewhere in this consent solicitation/prospectus and may not contain all of the information that may be important to you. You should read the entire consent solicitation/prospectus, including the consolidated financial statements and related notes and other financial data included in this consent solicitation/prospectus and its Annexes. This summary is qualified in its entirety by the more detailed information appearing elsewhere in this document. This summary includes page references in parentheses to direct you to a more complete description of the topics presented in this summary. You should also carefully consider the information set forth under “Risk Factors” beginning on page 16.

     OrthoLogic has supplied all information contained in this consent solicitation/prospectus relating to OrthoLogic and Chrysalis has supplied all information contained in this consent solicitation/prospectus relating to Chrysalis. Neither OrthoLogic on the one hand, nor Chrysalis on the other, is responsible for the information supplied by the other.

     Unless the context suggests otherwise, references to “Chrysalis” refer to Chrysalis Biotechnology, Inc. and references to “OrthoLogic” refer to OrthoLogic Corp. and its subsidiaries.

The Companies

     OrthoLogic Corp. is a Nasdaq listed public company which has been a minority stockholder of Chrysalis since 1997. It is a Delaware corporation involved in the research and development of biopharmaceutical solutions for hard and soft tissue repair. Its research program is focused exclusively on the development of Chrysalin, a patented peptide licensed to it by Chrysalis. Its primary offices are located at 1275 West Washington, Tempe, Arizona 85281 and its telephone number is (602) 286-5520. OrthoLogic’s website is www.orthologic.com.

     Chrysalis is a privately held biopharmaceutical company developing synthetic peptide compounds targeted at tissue repair and regeneration. Chrysalis has operated as a development stage company since its inception. Its primary offices are located at 2200 Market, Suite 600, Galveston, Texas 77550 and its telephone number is (409) 750-9251. Chrysalis’ website is www.chrysalisbio.com.

     Please see Annexes F-J for more information about OrthoLogic’s business and page 24, for more information about Chrysalis’ business.

The Asset Purchase Agreement and Plan of Reorganization (p. 27)

     OrthoLogic has agreed to purchase and Chrysalis has agreed to sell substantially all of Chrysalis’ assets (except cash), including Chrysalis’ tangible assets, license rights to Chrysalin and all other intellectual property, in exchange for approximately $27.5 million in cash and shares of OrthoLogic common stock and an additional $7.0 million in OrthoLogic common stock if certain triggers are met. OrthoLogic owns approximately 7.0% of the outstanding capital stock of Chrysalis and as a result, OrthoLogic will receive a portion of the purchase price as a stockholder. The purchase price will be paid to Chrysalis, or, following Chrysalis’ liquidation, to Chrysalis stockholders as follows:

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     Chrysalis has agreed to place      shares (   percent of the shares issued at closing) of OrthoLogic common stock into an escrow account to pay for indemnification claims made by OrthoLogic within the 18 months following the closing. Except for shares for which OrthoLogic has made an unresolved claim within the 18 months following the closing, all remaining shares in the escrow account will be released to Chrysalis or its stockholders 18 months following the closing.

     Chrysalis has agreed to continue to employ all its current employees not immediately hired by OrthoLogic for a period of up to 90 days following the closing. Pursuant to a transition services agreement, Chrysalis has agreed to make these employees available to OrthoLogic for a fee during the 90-day transition period.

     Chrysalis has agreed not to engage in discussions regarding a business combination or other similar transaction with another party while the asset sale with OrthoLogic is pending and to notify OrthoLogic of any inquiries or proposals it receives. The Chrysalis Board of Directors will provide the identity of the other party and a summary of the material terms of the competing offer to OrthoLogic and provide OrthoLogic the opportunity to amend the Asset Purchase Agreement and Plan of Reorganization so that the competing proposal is no longer more favorable to Chrysalis. If Chrysalis’ Board of Directors still believes in good faith that it is in the best interests of Chrysalis to terminate the asset sale to OrthoLogic, it may do so with the payment of certain termination fees described below.

     Chrysalis may terminate the Asset Purchase Agreement and Plan of Reorganization in some circumstances without a penalty. However, Chrysalis is required to pay OrthoLogic termination fees if Chrysalis terminates the asset sale under the following circumstances. If Chrysalis terminates this agreement because Chrysalis’ Board of Directors has concluded in good faith that the Board of Directors believes it must terminate the asset sale in order to fulfill its fiduciary duties to Chrysalis and its stockholders, Chrysalis must pay OrthoLogic a termination fee of $1.5 million in cash. OrthoLogic may terminate the sale and receive the $1.5 million termination fee from Chrysalis if the Chrysalis Board of Directors changes its recommendation that the Chrysalis stockholders approve the sale. Finally, if the stockholders of Chrysalis do not approve the sale, Chrysalis will be obligated to pay OrthoLogic a sum equal to all of OrthoLogic’s out-of-pocket expenses related to the proposed asset sale.

     Chrysalis’ plan of liquidation provides for the liquidation, winding up and dissolution of Chrysalis. Following closing of the asset sale and fulfillment of its post closing obligations, including the transition services

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agreement, Chrysalis will wind up its business, pay any remaining creditors and distribute its remaining assets to its stockholders. The actual amounts of, timing of, and record dates for, any distributions to Chrysalis stockholders are not known at this time. These matters will be determined in the sole discretion of the Chrysalis Board of Directors.

     OrthoLogic has registered the issuance of its stock to Chrysalis with the U.S. Securities and Exchange Commission (“SEC”) on a Form S-4. Thus, upon Chrysalis’ distribution of the OrthoLogic common stock to the Chrysalis stockholders, Chrysalis’ non-affiliate stockholders who are not subject to a lockup agreement will have freely tradeable OrthoLogic common stock. Chrysalis will require all stockholders who own 5 percent or more of the outstanding stock of Chrysalis to agree to a 60-day lockup agreement that prohibits them for a period of 60 days from the closing from selling, on any single day during such 60-day period, more than 5 percent of their portion of the OrthoLogic common stock distributed to them. OrthoLogic common stock is listed on the Nasdaq National Market under the symbol “OLGC.” You are encouraged to obtain current market quotations of OrthoLogic common stock.

     There is attached to this consent solicitation/prospectus as Annex A a copy of the Asset Purchase Agreement and Plan of Reorganization and as Annex B a copy of the Plan of Complete Liquidation and Dissolution. Please read the Asset Purchase Agreement and Plan of Reorganization, the Plan of Complete Liquidation and Dissolution and also the related Escrow Agreement attached as Annex C and the Transition Services Agreement attached as Annex D because these are the legal documents that govern the asset sale and the subsequent liquidation and dissolution.

     Attached as Annex E is the written consent of stockholders, which Chrysalis is requesting that you sign and return to Chrysalis’ Secretary as soon as possible by sending it back in the enclosed self-addressed stamped envelope. Under Delaware law, Chrysalis is required to obtain stockholder approval to consummate the asset sale and to liquidate and dissolve. Chrysalis does not intend to hold a stockholder meeting to approve this transaction; you are encouraged to contact Chrysalis’ management if you have any questions or comments.

Reasons for the Purchase and Sale of Chrysalis’ Assets (p. 31)

OrthoLogic’s Reasons

     OrthoLogic’s Board of Directors believed the acquisition of exclusive rights to Chrysalin for all indications would be a key strategic acquisition for OrthoLogic as it continued its research into orthopedic indications for Chrysalin. The Board of Directors weighed the benefits of the acquisition against the costs of the acquisition and ultimately decided it was in the best interests of OrthoLogic to obtain the full licensed rights to Chrysalin which would broadened the scope of OrthoLogic’s potential Chrysalin Product Platform significantly.

Chrysalis’ Reasons

     Chrysalis’ Board of Directors considered a number of factors in determining that the asset sale is in the best interests of Chrysalis and its stockholders, including but not limited to the following:

     The Board also considered a number of factors that might have a negative impact on Chrysalis and its stockholders. Please see “Reasons for Engaging in Asset Sale” on page 31 for a description of the positive and negative factors that were considered by the Chrysalis Board.

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Conditions to Consummation of the Sale (p. 28)

     Chrysalis and OrthoLogic are not obligated to consummate the sale until specific conditions are satisfied or waived. Some of the conditions are as follows:

Chrysalis’ Stockholders Approval (p. 35)

     To consummate the asset sale and liquidate, Chrysalis is required to obtain the approval of the holders of at least a majority of the outstanding shares entitled to vote on the transaction and the plan of liquidation. Chrysalis does not intend to hold a stockholder meeting to obtain such approval but is soliciting such approval by written consent as permitted by its certificate of incorporation. While a closing could be held as soon as enough consents are received from Chrysalis’ stockholders, Chrysalis anticipates that a closing will be held on or before 10 business days following the date of this consent solicitation/prospectus.

No Regulatory Approval Required (p. 31)

     No regulatory approval is required in order to consummate the transaction.

Tax Treatment of the Asset Sale and Liquidation (p. 37)

     The parties intend for this transaction to qualify as a tax-free reorganization under federal tax law. If this asset sale and liquidation qualifies as a tax-free reorganization, Chrysalis will not recognize gain or loss as a result of the asset sale and Chrysalis’ stockholders will not recognize gain or loss upon their receipt of OrthoLogic common stock in exchange for Chrysalis capital stock upon the liquidation except to the extent of (i) OrthoLogic common stock issuable as the contingent portion of the purchase price that are recharacterized as interest income under the imputed interest rules of federal tax law; (ii) cash received in lieu of fractional shares of OrthoLogic common stock; (iii) cash or other non-stock property received in exchange for Chrysalis capital stock; (iv) cash issuable as the contingent portion of the purchase price and (v) the fair market value of shares of Chrysalis capital stock received upon the exercise of certain options held by holders of non-qualified stock options in excess of the option exercise price, which will be taxable upon exercise thereof. The federal income tax consequences described above may not apply to all stockholders of Chrysalis. Your tax consequences will depend on your own situation. You are urged to consult your tax advisor so as to fully understand the tax consequences of the sale and liquidation to you. Please see “Material Federal Income Tax Consequences to Chrysalis Stockholders” on page 37 for more information.

Accounting Treatment of the Sale (p. 31)

     The asset sale is expected to be treated as a “purchase” by OrthoLogic for financial accounting purposes.

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Appraisal Rights (p. 35)

     Chrysalis stockholders are not entitled to any dissenter’s or appraisal rights with respect to the sale of Chrysalis’ assets under Delaware law or Chrysalis’ Certificate of Incorporation.

Expenses Incurred in the Sale (p. 29)

     Both Chrysalis and OrthoLogic have agreed to each pay their own out-of-pocket expenses incurred in pursuing the asset sale. However, if OrthoLogic or Chrysalis elects to terminate the sale because the Chrysalis stockholders do not approve the asset sale, Chrysalis must reimburse OrthoLogic for its out-of-pocket expenses incurred in connection with the proposed transaction.

Interests of Certain Chrysalis Related Persons in the Asset Sale (p. 35)

     In connection with the closing of the Asset Purchase Agreement, Chrysalis’ management team and directors may receive severance payments, bonuses or employment contracts, which may make their interests contrary to those of Chrysalis’ stockholders. Please see “Interests of Certain Chrysalis Related Persons in the Asset Sale” on page 35 for a complete description of such interests.

Trading Market (p. 42)

     OrthoLogic’s common stock trades on the Nasdaq National Market under the symbol “OLGC.” See “Market Data” on page 42 for more information. Chrysalis is not listed on any trading market and there is no market for its shares.

Risk Factors (p. 16)

     You should consider carefully all of the information set forth in or attached to this consent solicitation/prospectus and, in particular, should evaluate the specific factors set forth in the section entitled “Risk Factors” on page 16 for an explanation of certain risks of any investment decision.

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OrthoLogic Corp.
Selected Historical Consolidated Financial Data

     The selected historical consolidated financial data should be read together with the consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein in Annex F and G to this consent solicitation/prospectus. The selected historical consolidated financial data presented below for each of the years in the three year period ended December 31, 2003 and the December 31 balance sheet data for 2003 and 2002 is derived from OrthoLogic Corp.’s audited financial statements included elsewhere herein in Annex F to this consent solicitation/prospectus. The statements of operations data for 2000 and 1999 and the 2001, 2000 and 1999 balance sheet data is derived from audited financial statements not included in this filing. The selected historical consolidated financial data for the three month periods ended March 31, 2004 and 2003 is derived from OrthoLogic Corp.’s unaudited financial statements included elsewhere herein in Annex G to this consent solicitation/prospectus and, in OrthoLogic’s management’s opinion, reflect all adjustments that are necessary to present fairly the financial results for such periods.

OrthoLogic Corp.
Statements of Operations Data
(in thousands, except per share amounts)

10

11

OrthoLogic Corp. Balance Sheet Data
(in thousands)

Chrysalis Biotechnology, Inc.

     The selected historical consolidated financial data should be read together with the financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in to this consent solicitation/prospectus. The selected historical consolidated financial data presented below as of and for each of the years in the two year period ended December 31, 2003 and the December 31, 2002 balance sheet data is derived from Chrysalis Biotechnology, Inc. audited consolidated financial statements included elsewhere in this consent solicitation/prospectus. The selected historical consolidated financial data for the three month periods ended March 31, 2004 and 2003 is derived from Chrysalis Biotechnology’s unaudited consolidated financial statements included elsewhere in this consent solicitation/prospectus and, in Chrysalis Biotechnology’s management’s opinion, reflect all adjustments that are necessary to present fairly the financial results for such periods.

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Chrysalis Biotechnology, Inc.
Statements of Operations Data
(in thousands)

Chrysalis Balance Sheet Data
(in thousands)

OrthoLogic Corp.
Selected Unaudited Pro Forma
Consolidated Financial Information

     The selected unaudited proforma consolidated financial data presented below is derived from unaudited proforma consolidated financial statements included elsewhere herein in the “F” pages to this consent solicitation/prospectus. The summary selected unaudited proforma consolidated financial data are based on the historical consolidated financial statements of OrthoLogic Corp. and subsidiaries included elsewhere herein, adjusted to give effect to the acquisition of substantially all of Chrysalis’ assets, pursuant to the Asset Purchase Agreement by and between Chrysalis and OrthoLogic dated April 28, 2004.

     The unaudited pro forma consolidated balance sheet data gives effect to the proposed transaction as if it occurred on the date of the balance sheet. The unaudited pro forma consolidated statements of operations data for the three months ended March 31, 2004 and the year ended December 31, 2003 give effect to the transaction as if it had occurred as of January 1, 2003.

     The pro forma consolidated financial information is presented for illustrative purposes only, and is not necessarily indicative of the operating results or financial position that would have occurred if all of the events as described above had occurred on the first day of the respective periods presented, nor is it necessarily indicative of our future operating results or financial position. The selected unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements for OrthoLogic and the audited financial statements of Chrysalis included elsewhere in this filing.

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OrthoLogic Corp.
Selected Pro Forma Consolidated Statement of Operations Data
(In Thousands)

14

Proforma Balance Sheet Data
(in thousands)

Forward Looking Statements

     OrthoLogic and Chrysalis may from time to time make written or oral forward-looking statements. The safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of that Act.

     This consent solicitation/prospectus and its related Annexes contain forward-looking statements made pursuant to that safe harbor. These forward-looking statements relate to future events or to future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the control of OrthoLogic and Chrysalis and which could materially affect actual results, levels of activity, performance or achievements. Factors that may cause actual results to differ materially from current expectations, which are described in more detail in the section titled “Risks Factors,” include, but are not limited to:

     If one or more of these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may vary significantly from what was projected. Any forward-looking statement you read in this consent solicitation/prospectus reflects OrthoLogic’s and/or Chrysalis’ current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to each companies’ operations, results of operations, business strategy and liquidity. Neither OrthoLogic nor Chrysalis assumes any obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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Risk Factors

Risks of OrthoLogic’s Industry

     OrthoLogic is in a highly regulated field with high investment costs and high risks.

     OrthoLogic’s Chrysalin product platform is currently in the human testing phase for two potential products and earlier preclinical testing phases for two other potential products. The U.S. Food and Drug Administration (“FDA”) and comparable agencies in many foreign countries impose substantial limitations on the introduction of new pharmaceuticals through costly and time-consuming laboratory and clinical testing and other procedures. The process of obtaining FDA and other required regulatory approvals is lengthy, expensive and uncertain. Chrysalin, as a new drug, is subject to the most stringent level of FDA review.

     There can be no guarantee that the FDA will grant approval of Chrysalin for the indicated uses or that it will do so in a timely manner.

     If OrthoLogic successfully brings one or more products to market, there is no assurance that it will be able to successfully manufacture or market the products or that potential customers will buy them if, for example, a competitive product has greater efficacy or is deemed more cost effective. In addition, the market in which OrthoLogic will sell any such products is dominated by a number of large corporations that have vastly greater resources than OrthoLogic has, which may impact OrthoLogic’s ability to successfully market its products or maintain any technological advantage OrthoLogic might develop. OrthoLogic also would be subject to changes in regulations governing the manufacture and marketing of its products, which could increase its costs, reduce any competitive advantage it may have and/or adversely affect its marketing effectiveness.

     The results of OrthoLogic’s late stage clinical trials may be insufficient to obtain FDA approval which could result in a substantial delay in OrthoLogic’s ability to generate revenue.

     Positive results from preclinical studies and early clinical trials do not ensure positive results in more advanced clinical trials. If OrthoLogic is unable to demonstrate that a product candidate will be safe and effective in advanced clinical trials involving larger numbers of patients, OrthoLogic will be unable to submit the new drug application necessary to receive approval from the FDA to commercialize that product.

     OrthoLogic is currently conducting a Phase 3 human clinical trial on Chrysalin for fracture repair indications. OrthoLogic expects to have enrollment for the trial completed by the end of 2004. If it fails to achieve the clinical benefits sought in this Phase 3 clinical trial or the results are ambiguous, OrthoLogic will have to determine whether to redesign its Chrysalin fracture repair product candidate and its protocols and continue with additional testing, or cease activities in this area. Redesigning the product could be extremely costly and time-consuming. A substantial delay in obtaining FDA approval or termination of the Chrysalin fracture repair product candidate could result in a delay in OrthoLogic’s ability to generate revenue.

     Patients may discontinue their participation in OrthoLogic’s clinical studies, which may negatively impact the results of these studies and extend the timeline for completion of OrthoLogic’s development programs.

     As with all clinical trials, OrthoLogic is subject to the risk that patients enrolled in its clinical studies may discontinue their participation at any time during the study as a result of a number of factors, including, withdrawing their consent or experiencing adverse clinical events, which may or may not be judged related to its product candidates under evaluation. OrthoLogic is subject to the risk that if a large number of patients in any one of its studies discontinue their participation in the study, the results from that study may not be positive or may not support an NDA for regulatory approval of OrthoLogic’s product candidates.

     In addition, the time required to complete clinical trials is dependent upon, among other factors, the rate of patient enrollment. Patient enrollment is a function of many factors, including:

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     Even if OrthoLogic obtains marketing approval, its products will be subject to ongoing regulatory oversight, which may affect OrthoLogic’s ability to successfully commercialize any products it may develop.

     Even if OrthoLogic receives regulatory approval of a product candidate, the approval may be subject to limitations on the indicated uses for which the product is marketed or require costly post-marketing follow-up studies. After OrthoLogic obtains marketing approval for any product, the manufacturer and the manufacturing facilities for that product will be subject to continual review and periodic inspections by the FDA and other regulatory agencies. The subsequent discovery of previously unknown problems with the product, or with the manufacturer or facility, may result in restrictions on the product or manufacturer, including withdrawal of the product from the market.

     If OrthoLogic fails to comply with applicable regulatory requirements, it may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

     OrthoLogic’s product candidates may not gain market acceptance among physicians, patients and the medical community. If OrthoLogic’s product candidates fail to achieve market acceptance, its ability to generate revenue will be limited.

     Even if OrthoLogic obtains regulatory approval for its products, market acceptance will depend on its ability to demonstrate to physicians and patients the benefits of its products in terms of safety, efficacy, convenience, ease of administration and cost effectiveness. In addition, OrthoLogic believes market acceptance depends on the effectiveness of its marketing strategy, the pricing of its products and the reimbursement policies of government and third-party payors. Physicians may not prescribe OrthoLogic’s products, and patients may determine, for any reason, that OrthoLogic’s product is not useful to them. If OrthoLogic’s product candidates fail to achieve market acceptance, its ability to generate revenue will be limited.

     OrthoLogic’s success also depends on its ability to operate and commercialize products without infringing on the patents or proprietary rights of others.

     Third parties may claim that OrthoLogic or its licensors or suppliers are infringing their patents or are misappropriating their proprietary information. In the event of a successful claim against OrthoLogic or its licensors or suppliers for infringement of the patents or proprietary rights of others, OrthoLogic may be required to, among other things:

     A license required under any such patents or proprietary rights may not be available to us, or may not be available on acceptable terms. If OrthoLogic or its licensors or suppliers are sued for infringement, OrthoLogic could encounter substantial delays in, or be prohibited from, developing, manufacturing and commercializing OrthoLogic’s product candidates.

     The pharmaceutical industry is subject to stringent regulation, and failure to obtain regulatory approval will prevent commercialization of OrthoLogic’s products.

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     OrthoLogic’s research, development, preclinical and clinical trial activities and the manufacture and marketing of any products that it may successfully develop are subject to an extensive regulatory approval process by the FDA and other regulatory agencies in the United States and abroad. The process of obtaining required regulatory approvals for drugs is lengthy, expensive and uncertain, and any such regulatory approvals may entail limitations on the indicated usage of a drug, which may reduce the drug’s market potential.

     In order to obtain FDA approval to commercialize any product candidate, an NDA must be submitted to the FDA demonstrating, among other things, that the product candidate is safe and effective for use in humans for each target indication. OrthoLogic’s regulatory submissions may be delayed, or OrthoLogic may cancel plans to make submissions for product candidates for a number of reasons, including:

     Consequently, OrthoLogic cannot assure you that it will make its submissions to the FDA in the timeframe that OrthoLogic has planned, or at all, or that its submissions will be approved by the FDA. Even if regulatory clearance is obtained, post-market evaluation of OrthoLogic’s products, if required, could result in restrictions on a product’s marketing or withdrawal of a product from the market as well as possible civil and criminal sanctions.

     Clinical trials are subject to oversight by institutional review boards and the FDA to ensure compliance with the FDA’s good clinical practice regulations, as well as other requirements for good clinical practices. OrthoLogic depends, in part, on third-party laboratories and medical institutions to conduct preclinical studies and clinical trials for its products and other third-party organizations, usually universities, to perform data collection and analysis, all of which must maintain both good laboratory and good clinical practices. If any such standards are not complied with in OrthoLogic’s clinical trials, the FDA may suspend or terminate such trials, which would severely delay OrthoLogic’s development of, and possibly end the development of, a product candidate.

     OrthoLogic also currently depends and in the future will depend upon third party manufacturers of its products, which are and will be required to comply with the applicable FDA Good Manufacturing Practices regulations. OrthoLogic cannot be certain that its present or future manufacturers and suppliers will comply with these regulations. The failure to comply with these regulations may result in restrictions on the sale of, or withdrawal of the products from the market. Compliance by third parties with these standards and practices are outside of OrthoLogic’s direct control.

     In addition, OrthoLogic is subject to regulation under state and federal laws, including requirements regarding occupational safety, laboratory practices, environmental protection and hazardous substance control, and may be subject to other local, state, federal and foreign regulation. OrthoLogic cannot predict the impact of such regulations, although they could impose significant restrictions on OrthoLogic’s business and require it to incur additional expenses to comply.

     If OrthoLogic’s competitors develop and market products that are more effective than OrthoLogic’s, or obtain marketing approval before OrthoLogic does, OrthoLogic’s commercial opportunities will be reduced or eliminated.

     Competition in the pharmaceutical and Biotechnology industries is intense and is expected to increase. Several Biotechnology and pharmaceutical companies, as well as academic laboratories, universities and other research institutions, are involved in research and/or product development for various treatments for or involving fracture repair, spine fusion surgery, cartilage defect repair and ligament and tendon repair. Many of OrthoLogic’s competitors have significantly greater research and development capabilities, experience in obtaining regulatory approvals and manufacturing, marketing, financial and managerial resources than OrthoLogic has.

     OrthoLogic’s competitors may succeed in developing products that are more effective than the ones OrthoLogic has under development or that render OrthoLogic’s proposed products or technologies noncompetitive

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or obsolete. In addition, certain of such competitors may achieve product commercialization before OrthoLogic does. If any of OrthoLogic’s competitors develops a product that is more effective than one OrthoLogic is developing or plans to develop, or is able to obtain FDA approval for commercialization before OrthoLogic does, OrthoLogic may not be able to achieve significant market acceptance for certain of its products, which would have a material adverse effect on OrthoLogic’s business.

     Healthcare reform and restrictions on reimbursements may limit OrthoLogic’s financial returns.

     OrthoLogic’s ability to successfully commercialize its products may depend in part on the extent to which government health administration authorities, private health insurers and other third party payors will reimburse consumers for the cost of these products. Third party payors are increasingly challenging both the need for, and the price of, novel therapeutic drugs and uncertainty exists as to the reimbursement status of newly approved therapeutics. Adequate third party reimbursement may not be available for OrthoLogic’s drug products to enable OrthoLogic to maintain price levels sufficient to realize an appropriate return on OrthoLogic’s investments in research and product development, which could restrict OrthoLogic’s ability to commercialize a particular drug candidate.

Risks of OrthoLogic’s Business

     OrthoLogic is a biopharmaceutical company with no revenue generating operations and high investment costs. OrthoLogic expects to incur losses for a number of years as it expands its research and development projects. There is n o assurance that OrthoLogic’s current level of funds will be sufficient to support all research expenses to achieve commercialization.

     On November 26, 2003, OrthoLogic sold all of its revenue generating operations to focus all of its resources on drug development. OrthoLogic is now focused on developing and testing product candidates in OrthoLogic’s Chrysalin product platform and has allocated most of its resources to bringing these product candidates to the market. OrthoLogic may invest in other orthobiologic or complementary technology in the future, but has no current specific plans to do so at this time. OrthoLogic currently has no pharmaceutical products being sold or ready for sale and does not expect to be able to introduce any pharmaceutical products into the market for at least several years. As a result of OrthoLogic’s significant research and development, clinical development, regulatory compliance and general and administrative expenses and the lack of any products to generate revenue, it expects to incur losses for at least the next several years and expects that its losses will increase as it expands its research and development activities and incurs significant expenses for clinical trials. OrthoLogic’s cash reserves, including the cash received from the sale of OrthoLogic’s bone growth stimulation device business in November 2003, are the primary source of OrthoLogic’s working capital. OrthoLogic does not expect to receive any revenue from product sales unless and until it receives regulatory approval and begins commercialization of its product candidates. OrthoLogic cannot predict when that will occur or if it will occur.

     OrthoLogic’s product candidates are in various stages of development and may not be successfully developed or commercialized. If it fails to commercialize its product candidates, it will not be able to generate revenue:

     OrthoLogic currently does not sell any products. OrthoLogic is subject to the risk that:

     In addition, OrthoLogic’s product development programs may be curtailed, redirected or eliminated at any time for many reasons, including:

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     OrthoLogic cannot predict whether it will successfully develop and commercialize any of its product candidates. If it fails to do so, it will not be able to generate revenue.

     OrthoLogic’s product candidates are all based on the same chemical peptide, Chrysalin. If one of OrthoLogic’s product candidates reveals safety or fundamental inefficacy issues in clinical trials, it could impact the development path for all OrthoLogic’s other current product candidates.

     The development of each of OrthoLogic’s product candidates in the Chrysalin product platform is based on OrthoLogic’s knowledge and understanding of how the human thrombin molecule contributes to the repair of soft tissue and bone. While there are important differences in each of the product candidates in terms of their purpose (fracture repair, spine fusion, cartilage repair, etc.), each product candidate is focused on accelerating the repair of soft tissue and bone and is based on the ability of Chrysalin to mimic specific attributes of the human thrombin molecule to stimulate the body’s natural healing processes.

     Since OrthoLogic is developing the product candidates in the Chrysalin product platform in parallel, OrthoLogic expects to learn from the results of each trial and apply some of OrthoLogic’s findings to the development of the other product candidates in the platform. If one of the product candidates has negative clinical trial results or is shown to be ineffective, it could impact the development path or future development of the other product candidates in the platform. If OrthoLogic finds that one of the biopharmaceutical product candidates is unsafe, it could impact the development of OrthoLogic’s other product candidates in clinical trials.

     If OrthoLogic fails to meet its obligations under its Chrysalin license agreement, or if that license agreement is terminated for any other reason, OrthoLogic may lose its rights to use the Chrysalin technology, which would ultimately prevent OrthoLogic from selling and commercializing any Chrysalin-based products.

     OrthoLogic’s rights to the development, use and marketing of all of its therapeutic products within the Chrysalin product platform are currently governed by a series of sub-licensing agreements from Chrysalis. Upon the consummation of the asset sale, the license agreements with Chrysalis will be replaced by a direct license agreement with the University of Texas, which OrthoLogic and Chrysalis negotiated in conjunction with the asset sale. Under this direct license, OrthoLogic will expand its current license for Chrysalin from a license for only orthopedic “soft tissue” indications to a license for any and all indications. In return, OrthoLogic must pay the University of Texas a royalty fee and assume other obligations regarding the protection of the licensed patents. If OrthoLogic loses its rights to Chrysalin under the license agreement, OrthoLogic would be unable to continue its product development programs and its business and prospects would be materially harmed.

     If OrthoLogic cannot protect the Chrysalin patent or its intellectual property generally, OrthoLogic’s ability to develop and commercialize its products will be severely limited.

     OrthoLogic’s success will depend in part on the University of Texas’ and OrthoLogic’s ability to maintain and enforce patent protection for Chrysalin and each product resulting from Chrysalin. Without patent protection, other companies could offer substantially identical products for sale without incurring the sizable discovery, development and licensing costs that OrthoLogic has incurred. OrthoLogic’s ability to recover these expenditures and realize profits upon the sale of products would then be diminished.

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     Chrysalin is patented and there have been no successful challenges to the Chrysalin patent. However, if there were to be a challenge to the patent or any of the patents for product candidates, a court may determine that the patents are invalid or unenforceable. Even if the validity or enforceability of a patent is upheld by a court, a court may not prevent alleged infringement on the grounds that such activity is not covered by the patent claims. Any litigation, whether to enforce OrthoLogic’s rights to use its or its licensors’ patents or to defend against allegations that OrthoLogic infringes third party rights, will be costly, time consuming, and may distract management from other important tasks.

     As is commonplace in the biotechnology and pharmaceutical industry, OrthoLogic employs individuals who were previously employed at other biotechnology or pharmaceutical companies, including OrthoLogic’s competitors or potential competitors. To the extent OrthoLogic’s employees are involved in research areas which are similar to those areas in which they were involved at their former employers, OrthoLogic may be subject to claims that such employees and/or OrthoLogic have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims, which could result in substantial costs and be a distraction to management and which may have a material adverse effect on OrthoLogic, even if it is successful in defending such claims.

     OrthoLogic also relies on its business on trade secrets, know-how and other proprietary information. OrthoLogic seeks to protect this information, in part, through the use of confidentiality agreements with employees, consultants, advisors and others. Nonetheless, OrthoLogic cannot assure you that those agreements will provide adequate protection for its trade secrets, know-how or other proprietary information and prevent their unauthorized use or disclosure. To the extent that consultants, key employees or other third parties apply technical information independently developed by them or by others to OrthoLogic’s proposed products, disputes may arise as to the proprietary rights to such information, which may not be resolved in OrthoLogic’s favor. The breach by other parties of confidentiality agreements with OrthoLogic, or OrthoLogic’s trade secrets becoming known or independently discovered by competitors, could adversely affect OrthoLogic by enabling its competitors, who may have greater experience and financial resources, to copy or use its trade secrets and other proprietary information in the advancement of their products, methods or technologies.

     Some of OrthoLogic’s product candidates are in early stages of development and may never be commercialized.

     Research, development and pre-clinical testing are long, expensive and uncertain processes. Other than indications for fracture repair and spine fusions, none of OrthoLogic’s other Chrysalin product candidates have reached clinical trial testing. OrthoLogic’s development of Chrysalin for the repair of cartilage defects, ligaments and tendons is currently in pre-clinical testing or the research stage. OrthoLogic’s future success depends, in part, on its ability to complete pre-clinical development of these and other product candidates and advance them through the clinical trial process.

     If OrthoLogic is unsuccessful in advancing its early stage product candidates into and through clinical testing for any reason, its business prospects will be harmed.

     The loss of OrthoLogic’s key management and scientific personnel may hinder its ability to execute its business plan.

     As a small company with 34 employees, OrthoLogic’s success depends on the continuing contributions of OrthoLogic’s management team and scientific personnel, and maintaining relationships with the network of medical and academic centers in the United States that conduct its clinical trials. OrthoLogic is highly dependent on the services of its key scientific employees, as well as the other principal members of its management staff. OrthoLogic’s success depends in large part upon its ability to attract and retain highly qualified personnel. OrthoLogic faces intense competition in its hiring efforts with other pharmaceutical and Biotechnology companies, as well as universities and nonprofit research organizations, and it may have to pay higher salaries to attract and retain qualified personnel. The loss of one or more members of OrthoLogic’s management team or any of its scientific personnel, or its inability to attract additional qualified personnel, could substantially impair OrthoLogic’s ability to implement its business plan.

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     OrthoLogic faces an inherent risk of liability in the event that the use or misuse of its products results in personal injury or death.

     The use of OrthoLogic’s product candidates in clinical trials, and the sale of any approved products, may expose OrthoLogic to product liability claims, which could result in financial losses. OrthoLogic’s clinical liability insurance coverage may not be sufficient to cover claims that may be made against it. In addition, OrthoLogic may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect it against losses. Any claims against OrthoLogic, regardless of their merit, could severely harm OrthoLogic’s financial condition, strain its management and other resources and adversely impact or eliminate the prospects for commercialization of the product which is the subject of any such claim.

     OrthoLogic’s stock price is volatile and fluctuates due to a variety of factors.

     OrthoLogic’s stock price has varied significantly in the past and may vary in the future due to a number of factors, including:

     In addition, the stock market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of OrthoLogic’s stock.

Risks Related to the Asset Sale

     Even if Chrysalis obtains stockholder approval, the asset sale may not close. In that case, Chrysalis will need to raise additional bridge financing while it pursues other strategic options.

     There are a number of conditions the parties must meet or waive before the asset sale can close. Obtaining Chrysalis’ stockholder approval is just one of the closing conditions. Some of the conditions require the co-operation of third parties and current Chrysalis employees. If the parties do not meet all the closing conditions and those closing conditions that the parties do not achieve are not waived, the asset sale will not be consummated. In the event that the asset sale does not close, Chrysalis will be required to raise additional bridge financing to cover corporate operations while the company pursues other strategic options for the company. These strategic options would include a potential financing by venture capital, and/or licensing the rights to Chrysalin for wound healing, dental/bone, or cardiovascular applications, for which the company has already received some interest. The funds from these additional partnerships or venture financings would be used to pursue product applications of Chrysalin retained by Chrysalis. Currently, Chrysalis is not in negotiations with any venture capital groups or other strategic corporate collaborators and is prevented by the terms of the Asset Purchase Agreement from soliciting any other potential bidders or buyers. There is no assurance that such resources will become available on a timely basis or on terms Chrysalis finds favorable.

     If the asset sale is terminated under certain circumstances, Chrysalis would be required to pay OrthoLogic a termination fee of $1.5 million or reimburse OrthoLogic for its out-of-pocket fees incurred in pursuing the asset sale which would require funds it currently does not have.

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     If the asset sale is terminated because Chrysalis’ Board of Directors changes its recommendation from an approval of the asset sale to a recommendation against the proposed asset sale, or because Chrysalis’ Board of Directors believes in good faith that its fiduciary responsibilities to Chrysalis require it to terminate the Asset Purchase Agreement and Plan of Reorganization, Chrysalis will be required to pay OrthoLogic a termination fee of $1.5 million in cash. If the asset sale is terminated because the Chrysalis stockholders do not approve of the transaction, Chrysalis will be required to pay OrthoLogic a sum equal to OrthoLogic’s out of pocket expenses incurred in pursuing the asset sale. While Chrysalis does not have enough cash to pay these fees, it is anticipated that if the fees arise because of the appearance of a superior competing offer by another company, the acquiring company in such transaction would pay these fees. There is no assurance that Chrysalis will receive a superior competing offer. Chrysalis is prevented from entering into such discussions at this time pursuant to the Asset Purchase Agreement and Plan of Reorganization.

     If the asset sale and reorganization do not qualify as a tax-free reorganization, Chrysalis will recognize income on the sale of the assets and stockholders will recognize income from the distribution of the sale proceeds to them as ordinary income.

     Chrysalis and OrthoLogic believe the asset sale will qualify as a tax-free reorganization. However, certain pre-closing and post-closing conditions must be met to qualify as a tax-free reorganization. Some of those conditions include (1) OrthoLogic must intend to continue at least one significant historic business line of Chrysalis’ or use a significant portion of Chrysalis’ assets in OrthoLogic’s ongoing business; (2) Chrysalis cannot be an investment company as defined under the Internal Revenue Code; and (3) the portion of the purchase price that is paid in OrthoLogic common stock must equal at least 80 percent of the Total Consideration, as that term is defined in the Asset Purchase Agreement and Plan of Reorganization. If the asset sale does not qualify as a tax-free reorganization, Chrysalis will recognize a significant gain on the sale of its assets and will owe income tax on such gain. Further, in the liquidation, the Chrysalis stockholders will recognize the distribution of the remainder of the purchase price as ordinary income.

     Chrysalis may never receive the $7.0 million contingent portion of the purchase price.

     Even if the asset sale closes, payment of $7.0 million of the purchase price is contingent upon the occurrence of certain trigger events within five years of the closing. Those trigger events are: (1) a sale of substantially all of OrthoLogic’s assets, or a merger, consolidation, recapitalization, or other transaction, in each case after which OrthoLogic stockholders immediately before such transaction do not own a majority of the voting power of the resulting entity immediately after such transaction; or (2) OrthoLogic’s receipt of written notice from the United States Food and Drug Administration that a new drug application for a product based on Chrysalin has been accepted for filing. Both trigger events are beyond the control of Chrysalis and its stockholders and may not occur within the five-year deadline or ever. If the trigger events do not occur within the five-year deadline, Chrysalis (or, if Chrysalis no longer exists, its shareholders) will not receive the $7.0 million contingent portion of the purchase price.

Risks related to the Liquidation of Chrysalis

     Chrysalis cannot determine at this time the amount of distributions to its stockholders because there are a variety of factors that will affect that amount.

     Chrysalis cannot determine at this time the amount of its distributions to its stockholders upon a liquidation and distribution of the company because that determination depends on a variety of factors, including but not limited to the following:

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     The timing of the dissolution of Chrysalis is not known and therefore Chrysalis cannot determine the timing of any distributions to its stockholders.

     Several factors affect the timing of Chrysalis’ ability to dissolve, including the timing of the completion of the asset sale and Chrysalis’ ability to determine the amount of its known and unknown debts and liabilities. The Asset Purchase Agreement and Plan of Reorganization provides the parties with termination rights if the closing does not occur before September 26, 2004; however, Chrysalis cannot guarantee that the closing of the asset sale will occur by that date, or at all. Any delay in the dissolution of Chrysalis will result in a delay in making distributions and a decline in the value of OrthoLogic common stock during such delay would negatively affect the value of OrthoLogic common stock ultimately received by Chrysalis stockholders.

     The foregoing list of important factors is not exhaustive and will not be updated.

The Companies

OrthoLogic Corp.

     OrthoLogic is a drug-development company focused on the healing of musculoskeletal tissue through biopharmaceutical approaches. OrthoLogic’s research is focused exclusively on the potential commercialization of its Chrysalin® Product Platform. Chrysalin, or TP508, is a 23-amino acid synthetic peptide representing a receptor-binding domain of the human thrombin molecule, a naturally occurring molecule in the body responsible for both blood clotting and initiating many of the cellular events responsible for tissue repair in bone and cartilage. OrthoLogic licenses Chrysalin for orthopedic uses from Chrysalis Biotechnology, Inc. OrthoLogic is currently enrolling patients in a Phase 3 Chrysalin product human clinical trial for fracture indications, has completed the enrollment of patients in a Phase 1/2 Chrysalin product clinical trial for spine fusion indications, has a potential Chrysalin product in late-stage pre-clinical development for cartilage defect repair, and is planning the development for two additional areas of research.

     Please see Annexes F-J for more information about OrthoLogic its business, management and financial condition.

Chrysalis Biotechnology, Inc.

     Chrysalis is a privately held biopharmaceutical company founded in 1995 to commercialize the Chrysalin peptide technology invented by Dr. Darrell Carney at the University of Texas Medical Branch — Galveston (“UTMB”). Since inception, Chrysalis has operated as a development stage company and has focused its efforts on developing synthetic peptide compounds targeted at tissue repair and regeneration. Chrysalis is currently in Phase 2 testing for chronic diabetic ulcers and has completed a Phase 1/2 60-patient study for this indication. Through its collaboration with OrthoLogic, Chrysalis’ lead compound, Chrysalin®, is currently in Phase 3 clinical testing for

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bone fracture healing and Phase 1/2 testing for spine fusion.

     Chrysalis is initially targeting the following market applications for its technology: dermal wound healing, orthopedic (through its license agreement with OrthoLogic), dental bone repair and cardiovascular.

     Dermal Wound Healing Applications. Chrysalin has shown significant effects on dermal wound healing. Preclinical animal studies in normal and impaired healing models showed that the peptide could increase the rate of healing by 40-100% compared with controls. Chrysalis has generated a significant body of preclinical data in the dermal wound healing field through research collaborations with UTMB, the University of California Los Angeles, the University of Calgary, and the United States Air Force.

     In 2001, Chrysalis completed a multi-center Phase 1/2 randomized, double-blinded, placebo controlled, three-armed human trial in chronic diabetic ulcers that involved 60 patients. The results of the study showed the following:

     Orthopedic Applications. Chrysalis has licensed all orthopedic applications of Chrysalin to OrthoLogic, which is in preclinical and human clinical trials for varying uses.

     Dental Bone Repair Applications. Chrysalin has an active preclinical program in dental bone repair focused on improving dental implants and repairing jaw or maxillo-facial defects following surgical removal of bone. This project is based on positive preclinical results seen in bone gap filling and fracture healing experiments conducted by both Chrysalis and OrthoLogic. Preclinical research at Louisiana State University has shown that addition of Chrysalin to a commercially accepted bone graft substitute resulted in a four-fold increase in new bone formation between graft segments by two weeks post implant and a three-fold increase over that seen with bone graft material alone at five weeks.

     Cardiovascular Applications. The angiogenic and tissue regenerative properties of Chrysalin may also be directly applicable to treatment of myocardial and vascular disease, and is the focus of additional preclinical research by Chrysalis.

     Additional Technologies. In addition to Chrysalin, Chrysalis has proprietary rights to two new classes of peptide compounds that are in the early stage of development:

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     Chrysalis Patents. Chrysalis maintains an intellectual property portfolio that covers the Chrysalin technology and related formulations. Patents for Chrysalin are issued in North America, the major European PCT countries, and Japan. Patents are filed and pending for additional uses and formulations of Chrysalin, as well as for the NTP and aNPAR peptides.

     Chrysalis’ product portfolio is protected by several United States and international patents, which include the following:

     All TP508 patents, the basis of Chrysalin, are licensed to Chrysalis from the University of Texas pursuant to that certain Exclusive License Agreement dated November 10, 1995, which agreement has been amended and restated in its entirety in connection with this transaction. (See “Amended and Restated Patent License Agreement” starting on page 30 for a full description of such amended and restated license.) Chrysalis has received registered domestic trademark status for the Chrysalin mark, which is being planned for use as the product name of its lead compound. Chrysalis has an application pending for the Chrysalis company name trademark, which is currently in publication at the U.S. Patent and Trademark Office.

     Chrysalis’ Partnership with OrthoLogic. In December 1997, Chrysalis signed a licensing agreement with OrthoLogic for the orthopedic applications of Chrysalin, including bone and cartilage regeneration. The OrthoLogic partnership began with a $750,000 equity investment in Chrysalis in 1997, and has been maintained by continued milestone and option payments over the past five years totaling over $5.0 million. In 2001, OrthoLogic completed a Phase 2 pilot clinical study of Chrysalin in the treatment of bone fractures. Data from this trial were positive and OrthoLogic began a Phase 3 study in the fourth quarter of 2002. In addition, OrthoLogic subcontracts research and development work back to Chrysalis in the areas of formulation, toxicology, bioassay development, and some preclinical work.

     Chrysalis Intellectual Property Relationship with The University of Texas. Chrysalis has a worldwide, exclusive licensing agreement with The University of Texas System (the “University”) relating to the intellectual property surrounding Chrysalin. As part of this agreement, Chrysalis reimburses the University for all Chrysalin-related patent expenses and is required to make royalty payments based on net sales and milestone/license payments. As part of this agreement, any inventions related to thrombin peptides and tissue repair made by Dr. Carney are automatically added to the licensing agreement. The initial agreement was built around two patents covering the composition and use of TP508. Additional patents have been added to the agreement for new uses of the peptide in cardiovascular, orthopedics, and chronic wounds. This licensing agreement has been amended subject to consummation of the asset purchase agreement. The terms of the amended license agreement are described under “Amended and Restated Patent License Agreement” starting on page 30

     Chrysalis Facilities. Chrysalis’ corporate offices are located at 2200 Market, Suite 600, Galveston Texas with approximately 2,000 sq. ft. for offices, equipment and a conference room. Chrysalis occupies approximately 4,000 square feet of laboratory space in the same building, and has analytical chemistry equipment, refrigerated monitored storage, and capacity for tissue culture, microbiology, and bioactivity assay development.

     Dr. Darrell Carney and other UTMB staff conduct research for Chrysalis utilizing laboratory facilities at the UTMB Human Biological Chemistry and Genetics Department and Dr. Carney’s Thrombin Receptor Research

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Lab. This space includes laboratories assigned to Dr. Carney and others for biochemistry, peptide synthesis and purification, tissue culture, molecular biology, and microscopy and shared UTMB resource core laboratories, and facilities for animal surgery and housing, computation analysis, and histology analysis.

     Chrysalis Employees. Chrysalis currently employs 13 employees. All of Chrysalis’ employees, other than Dr. Carney and Dr. David Hobson, Chrysalis’ Vice President, Research and Development, are expected to remain as Chrysalis employees during the 90-day transition services period. Dr. Carney and Dr. Hobson are expected to enter into two and one-year employment agreements, respectively, with OrthoLogic prior to closing. In the event OrthoLogic does not hire any of Chrysalis’ employees following the transition services period, Chrysalis will pay them severance equal to three months’ salary unless any such employee is entitled to receive a greater amount payable pursuant to a written consent.

     Chrysalis Legal Proceedings. Chrysalis is not a party to any material legal proceedings.

The Asset Purchase Agreement and Plan of Reorganization

Description of the Asset Sale

     On April 28, 2004, Chrysalis and OrthoLogic announced that they had entered into an Asset Purchase Agreement and Plan of Reorganization to sell substantially all of Chrysalis’ assets (except cash but including intellectual property) to OrthoLogic.

     Consideration to be Received in the Asset Sale. In exchange for Chrysalis’ assets, OrthoLogic will pay Chrysalis:

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     Chrysalis has agreed to place                shares (    percent of the shares issued at closing) of OrthoLogic common stock into an escrow account to pay for indemnification claims made by OrthoLogic within the 18 months following the closing. Except for shares for which OrthoLogic has made a claim within the 18 months following the closing and which claims have not yet been resolved, all remaining shares in the escrow account will be released to Chrysalis or its assigns 18 months following the closing.

     Assets Transferred and Liabilities Assumed. Chrysalis is selling and transferring substantially all of the assets of its business (other than cash), which includes substantially all of its equipment, licenses and rights to intellectual property, inventory and certain contracts. OrthoLogic will assume Chrysalis’ obligations under the category of contracts called “assumed contracts,” which includes the University of Texas patent license, the real property lease on the Galveston building (other than an $18,000 termination fee for which Chrysalis will remain liable), lab equipment and office equipment leases and certain service provider leases. However, any obligation not expressly assumed by OrthoLogic pursuant to the Asset Purchase Agreement and Plan of Reorganization will remain Chrysalis’ responsibility, which will include obligations related to any employee salary deferrals, severance payments, change-in-control severance payments, bonus payments, worker’s compensation claims, stock options, taxes, liabilities related to excluded assets and undisclosed or contingent liabilities, if any.

Other Material Terms of the Asset Purchase Agreement

     Representations and Warranties. The Asset Purchase Agreement and Plan of Reorganization contains customary representations and warranties from Chrysalis to OrthoLogic relating to, among other things:

     OrthoLogic has made representations and warranties to Chrysalis regarding OrthoLogic’s legal capacity and authority to enter into and perform its obligations under the Asset Purchase Agreement and Plan of Reorganization, the accuracy of its filings with the Securities and Exchange Commission and the lack of required consents or approvals.

     All of Chrysalis’ representations and warranties terminate 18 months after the closing.

     Conditions to the Closing. The closing of the sale will be held promptly after approval by Chrysalis’ stockholders and the satisfaction of all other conditions to closing. The obligation of OrthoLogic to purchase Chrysalis’ assets is subject to various conditions, which must be satisfied prior to September 25, 2004, including the following:

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     Indemnification and Escrow Arrangements. Chrysalis has agreed to indemnify OrthoLogic for any losses and claims against it arising from:

     Of the $25.0 million purchase price being paid at the closing in OrthoLogic common stock,                shares of the stock (approximately  % of the shares issued at closing) will be deposited in an escrow fund to pay for such eligible indemnity claims, if any, that are brought within 18 months of the closing. The eligible indemnity claims are, in the aggregate, monetarily capped at the value of the stock in the escrow account as of the closing. The stock in the escrow account will be held in two separate accounts, one equal to 15% of the shares of stock issued at the closing (the “General Escrow Shares”) and the other equal to  % of the shares of stock issued at closing (the “Carney Escrow Shares”). Claims made against the escrow account will be paid out first from the General Escrow Shares and, when that account is depleted, then from the Carney Escrow Shares. Disbursements of the Carney Escrow Shares to OrthoLogic represent a reduction on a share-for-share basis from the number of shares that will be allocated to Chrysalis’ president, Darrell Carney, in the liquidation of Chrysalis. Please refer to Annex C for the complete text of the Escrow Agreement relating to these escrow shares.

     OrthoLogic has agreed to indemnify Chrysalis for any of Chrysalis’ losses resulting from any inaccuracy in or breach or nonperformance of any of OrthoLogic’s representations, warranties, covenants or agreements, its conduct and operation of the purchased assets after the closing and its failure to pay, perform or otherwise discharge the liabilities it agreed to assume as part of its purchase of the Chrysalis assets.

     Termination and Breakup Fees. Chrysalis must pay a termination fee to OrthoLogic if the Asset Purchase Agreement and Plan of Reorganization is terminated under specified circumstances as follows:

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Other Related Material Contracts

     Transition Services Agreement. At the closing, Chrysalis and OrthoLogic will enter into a transition services agreement pursuant to which Chrysalis will retain all of its employees not already hired by OrthoLogic for a period of up to 90 days following the closing. Chrysalis will make each employee available to work on OrthoLogic designated projects during the 90-day period for a fee that is approximately equal to Chrysalis’ cost of retaining each such employee. Chrysalis will be responsible for any severance or other bonuses related to each employee’s termination, except that OrthoLogic will reimburse Chrysalis for up to $125,000 of severance paid to Chrysalis’ chief operating officer upon termination.

     Lockup Agreement. As a condition of closing, Chrysalis must cause all of its stockholders who are beneficial owners of 5% or more of the outstanding common stock of Chrysalis on a fully diluted basis as of April 28, 2004 to enter into a lockup agreement with OrthoLogic by which the stockholder agrees not to dispose of more than 5% of its allocation of the shares of OrthoLogic received by it as part of the purchase price on any given day in the first 60 days following the closing, unless the transaction is a permitted transfer. Permitted transfers are limited to transfers by gift, intestacy, to a family trust or an immediate family member.

Amended and Restated Patent License Agreement

     Prior to this transaction, Chrysalis held an exclusive worldwide license from the University of Texas in the patents underlying Chrysalin and OrthoLogic held an exclusive sublicense from Chrysalis in respect of such patents for all orthopedic indications worldwide. Under this sublicense, OrthoLogic was required to pay various milestone payments and future royalties to Chrysalis. In connection with the proposed asset sale, Chrysalis and the University of Texas entered into an amended and restated Patent License Agreement (the “Patent License Agreement”) which will become effective and be assumed by OrthoLogic upon consummation of the asset sale.

     The Patent License Agreement includes the following key provisions:

     • Grant of License. The Patent License Agreement grants to OrthoLogic an exclusive, worldwide, royalty-bearing license to the patents underlying Chrysalin and related inventions and discoveries conceived or reduced to practice by the University of Texas during the two year period following the effective date of the Patent License Agreement, subject to the retention by the University of Texas of the right to use the licensed technology for various educational and other non-commercial purposes. OrthoLogic has the right to grant sublicenses under the Patent License Agreement.

     • Royalty Rates. The Patent License Agreement provides for the payment of royalties to the University of Texas on all sales of products by OrthoLogic or any sublicensee which are covered by the licensed patents. The royalty rate will be between 2.5% and 3.3%. In addition, OrthoLogic will be required to pay sublicensing fees to the University of Texas in connection with any sublicensing.

     • Milestone Payments. The Patent License Agreement eliminates the existing requirement to pay milestone payments upon the occurrence of product development events.

     • Assignment Incentive. The Patent License Agreement includes incentives for the University of Texas to assign its ownership rights in the underlying patents and to cause the co-owner of such rights also to assign its rights

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in the underlying patents to OrthoLogic. These incentives include special bonus payments and an increase in the running royalty rates. If both co-owners assign their rights, the running royalty rates will increase to 3.3%.

     • Enforcement. Under the Patent License Agreement, OrthoLogic has the right to enforce for its own account the licensed patent rights against infringement.

     • Expiration. The Patent License Agreement will terminate upon the last to expire of the licensed patents or, if earlier, when the last of the patents is found to be invalid or unenforceable.

Finder’s Fee

     Pursuant to the consulting agreement between Chrysalis and HC Technologies, Inc. dated May 15, 2003, Chrysalis is required upon closing to pay a finder’s fee equal to 5% of the total consideration paid for Chrysalis’ assets in the asset sale. Also pursuant to the consulting agreement, Chrysalis is required to use best efforts to pay such finder’s fee in cash. As a result, at closing HC Technologies, Inc. is entitled to a payment of $1,375,000 based on a total value at closing of $27.5 million. HC Technologies, Inc. and Chrysalis have agreed that HC Technologies, Inc. will receive 85% of this amount in cash, or $1,168,750, and the remainder in shares of OrthoLogic common stock. All of the shares HC Technologies, Inc. receives at closing will be placed in escrow pursuant to the escrow agreement previously described so that HC Technologies, Inc. will have the same percentage of its payment subject to the escrow agreement as Chrysalis’ stockholders. HC Technologies, Inc. will not be paid any fee on the contingent $7.0 million payment unless the related trigger event occurs and OrthoLogic issues the shares. If OrthoLogic issues such shares upon a trigger event, HC Technologies, Inc. will receive the 5% it is owed in such OrthoLogic common stock; in the event that any portion of the $7.0 million is paid in cash, HC Technologies, Inc. will receive 5% of such amount in cash and a reduced number of shares equal to the amount it received in cash.

Governmental Approvals

     No regulatory approval is required in order to consummate the transaction.

Accounting Treatment

     The transaction will be accounted for as a “purchase” for financial accounting purposes. The purchase price will be allocated based upon the fair value of the assets acquired and liabilities assumed.

Reasons for Engaging in the Asset Sale

     OrthoLogic Corp.

     OrthoLogic’s Board of Directors believed the acquisition of exclusive rights to Chrysalin for all indications would be a key strategic acquisition for OrthoLogic as it continued its research into orthopedic indications for Chrysalin. The Board of Directors weighed the benefits of the acquisition against the costs of the acquisition and ultimately decided it was in the best interests of OrthoLogic to obtain the full licensed rights to Chrysalin which would broaden the scope of OrthoLogic’s potential Chrysalin Product Platform significantly.

     Some of the positive considerations the Board of Directors discussed were:

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     Some of the negative considerations the Board of Directors discussed were the following:

     Chrysalis Biotechnology, Inc.

     Chrysalis’ Board of Directors considered a number of factors in reaching its decision to approve the asset sale, including other strategic alternatives to increase stockholder value. These considerations included the following:

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     In addition, Chrysalis’ Board also identified and considered a number of potentially negative factors that could result from the acquisition, including the following:

     Chrysalis’ Board took into account all of these factors, including the potential benefit to members of Chrysalis’ management, in approving the Asset Purchase Agreement. The Board determined that the opportunity presented by a combination with OrthoLogic to provide Chrysalis’ stockholders with cash and freely tradable securities at a substantial premium over their investment cost, and the difficulty in securing additional capital on favorable terms or at all at this time was sufficient to warrant the decision to approve the transaction. Any stockholders desiring to liquidate their investment and receive a favorable return thereon will be able to do so, while those electing to continue to remain stockholders and support the Chrysalin product platform will still be able to do so, as OrthoLogic stockholders.

Background, Past Contacts, and Negotiations

     OrthoLogic and Chrysalis have a long historical business relationship. Since 1997, OrthoLogic has held a minority stockholder interest in Chrysalis and holds the license to Chrysalis for orthopedic indications. The license agreement with Chrysalis requires OrthoLogic to pay certain other milestone payments and royalties, based upon OrthoLogic’s development of Chrysalin and achievement of commercial success. Most recently in 2003, OrthoLogic made a milestone pre-payment of $250,000 required for a potential IND using Chrysalin for a cartilage defect repair indication. Chrysalis and OrthoLogic’s management began discussing a potential asset sale in the fall of 2003.

     October 19, 2003 – OrthoLogic’s Chairman of the Board of Directors and Chief Executive Officer met Chrysalis’ President for dinner in Boston, Massachusetts to review the status of various research and development projects. The parties discussed briefly a potential acquisition of Chrysalis by OrthoLogic, but tabled the topic with an agreement to revisit the issue some time in the future.

     December 5, 2003 – At an OrthoLogic Board of Directors’ conference call, the Chairman of the Board and the Chief Executive Officer discussed, among other things, the idea of exploring the feasibility and business reasons for pursuing a transaction with Chrysalis.

     December 6-18, 2003 – OrthoLogic’s Chief Executive Officer and Chrysalis’ President had several telephone calls to discuss the idea of a potential acquisition of Chrysalis by OrthoLogic. The parties agreed that OrthoLogic should prepare a written expression of its interest by the end of the year for Chrysalis’ Board of Directors to consider.

     December 19, 2003 – OrthoLogic’s Board of Directors and its counsel held a meeting to review and discuss a draft nonbinding expression of interest (an “EIP”) for the acquisition of Chrysalis. The OrthoLogic Board

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of Directors unanimously approved a finalized EIP and authorized the OrthoLogic Chief Executive Officer to deliver it to Chrysalis. The EIP was delivered to Chrysalis’ President that same day.

     January 6, 2004 – Chrysalis held a Board meeting by teleconference in which it was decided that while the combination of the companies made strategic sense, the terms as proposed by OrthoLogic, in the Board’s belief, were not adequate, and instructed Chrysalis’ President to provide a written response to OrthoLogic relaying this.

     January 7, 2004 – Chrysalis sent OrthoLogic a written response to the EIP. While conceptually agreeing that a combination of the two companies made good strategic sense, there was considerable disagreement regarding structure of the deal and the valuation of Chrysalis.

     January 8, 2004 – OrthoLogic sent a written response back to Chrysalis explaining its view of the transaction terms.

     January 13, 2004 – Chrysalis’ President emailed OrthoLogic’s Chief Executive Officer a response to the January 8, 2004 letter from OrthoLogic, which acknowledged a difference of opinion, but agreed that additional discussion was warranted.

     January 14, 2004 – OrthoLogic’s Chief Executive Officer and Chrysalis’ President attended a technology conference in San Francisco. Over the course of the three day conference, the parties met several times to discuss the differences in the parties’ view of the potential transaction.

     January 24, 2004 – At the regularly scheduled OrthoLogic Board of Directors’ meeting, the Board approved modified terms for the potential transaction and authorized the Chairman of the Board and the Chief Executive Officer to reopen negotiations with Chrysalis.

     February 2, 2004 – OrthoLogic sent a revised EIP to Chrysalis that proposed a valuation of up to $34.5 million and other terms.

     February 3-8, 2004 – OrthoLogic’s Chief Executive Officer and Chrysalis’ President had a number of telephone conversations over several days to negotiate terms of the EIP.

     February 9, 2004 – Chrysalis held a Board meeting to review the EIP proposed by OrthoLogic, and approved the terms of the EIP. OrthoLogic and Chrysalis signed a non-binding EIP that described the basic terms of a proposed asset transaction as well as conditions necessary to effectuate the negotiation and signing of a definitive agreement. An initial 30-day due diligence period began on February 10, 2004. OrthoLogic paid $100,000 in connection with the signing of the EIP as payment for exclusivity with Chrysalis for a 30-day period.

     February 10-17, 2004 – OrthoLogic sent several representatives to Chrysalis’ facilities in Galveston, Texas to begin conducting due diligence on Chrysalis. During due diligence, OrthoLogic concluded that the current license which Chrysalis held from the University of Texas for Chrysalin was too restrictive and would need to be modified in order for the transaction to move forward.

     February 17- March 10, 2004 - The balance of the initial 30-day due diligence period was spent in negotiations between Chrysalis, OrthoLogic and the University of Texas, attempting to come to agreement on a new license for Chrysalin which would be acceptable to all parties.

     March 10-12, 2004 – OrthoLogic’s Chief Executive Officer met several times with Chrysalis’ President at a conference in San Francisco to discuss the on-going negotiations with the University of Texas. The parties agreed to continue due diligence for another 30 days and continue to negotiate with the University of Texas.

     March 16-April 26, 2004 – OrthoLogic and Chrysalis, through their counsel, engaged in extensive negotiations with the University of Texas on the new license for Chrysalin that would take effect upon a closing of a deal with Chrysalis.

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     April 27, 2004 - Chrysalis and the University of Texas entered into a new license, effective upon the closing of the asset sale to OrthoLogic.

     April 28, 2004 – OrthoLogic and Chrysalis entered into a definitive Asset Purchase Agreement and Plan of Reorganization.

     June 1, 2004 – OrthoLogic and Chrysalis executed the First Amendment to the Asset Purchase Agreement and Plan of Reorganization, relating to the maximum number of shares issuable to avoid issuing 20% or more of the number of OrthoLogic shares outstanding at closing.

Stockholder Approval

     Chrysalis is seeking written consents to approve (i) the sale of substantially all of the Chrysalis assets (except cash) to OrthoLogic pursuant to the Asset Purchase Agreement and Plan of Reorganization and the related transactions described in that agreement, and (ii) the plan of complete liquidation and dissolution pursuant to which Chrysalis will wind down its operations and dissolve. To consummate such proposed actions, Chrysalis is required to obtain written consent from holders of at least a majority of its outstanding common stock on an as-converted basis.

     Chrysalis is asking stockholders to execute and return the written consent attached as Annex E to this consent solicitation to Chrysalis’ Secretary as soon as possible by returning the executed written consent in the enclosed self-addressed stamped envelope. If a stockholder does not respond and Chrysalis receives the requisite number of consents voting in favor of the asset purchase, such stockholder will receive a written notice from the Chrysalis Board of Directors of the approval of the consent promptly thereafter. If a stockholder does respond and subsequently wishes to revoke their consent, such stockholder may call Dennis McWilliams at (409) 750-9251, and Chrysalis will disregard such stockholder’s signed consent, provided that the closing has not already occurred.

Dissenter’s or Appraisal Rights

     Chrysalis’ stockholders are not entitled to any dissenter’s or appraisal rights with respect to the sale of the Chrysalis assets under Delaware law or Chrysalis’ Certificate of Incorporation.

Interests of Certain Chrysalis Related Persons in the Asset Sale

     Certain of the members of Chrysalis’ Board and its management team have interests, which could be adverse to those of Chrysalis’ stockholders. Below is a description of such interests.

     Dr. Carney will receive shares of registered OrthoLogic common stock (in the same form and manner as Chrysalis’ other holders of common stock), in return for the 548,446 shares of Chrysalis common stock beneficially owned by Dr. Carney and his wife and family partnerships (excluding shares held by certain of Dr. Carney’s relatives of which he disclaims beneficial ownership). However, pursuant to the Asset Purchase Agreement and Plan of Reorganization, Dr. Carney is required to place an additional number of shares in escrow equal to ten percent of the amount he is entitled to receive. Dr. Carney currently owns non-qualified stock options exercisable for 50,000 shares of Chrysalis common stock. Additional non-qualified stock options to purchase 20,000 shares of Chrysalis common stock will immediately vest upon consummation of the asset sale. In addition, Dr. Carney will receive a consulting agreement with OrthoLogic which will pay him an annual consulting fee of $200,000 for at least two years. He is also entitled to receive $37,733 in deferred compensation (accrued through June 30, 2004) from Chrysalis. Dr. Carney waived his rights to receive a change of control payment pursuant to his employment agreement, in the amount of one and a half year’s salary (approximately $300,000), in exchange for a “completion” bonus payable upon final distribution of any remaining Chrysalis assets under the plan of liquidation. Chrysalis’ Board of Directors has approved the payment of a “completion” bonus to Dr. Carney to incentivize him to assist the

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liquidating trustee following the liquidation of Chrysalis. Dr. Carney will be paid $75,000 cash on or before the final liquidating distribution to Chrysalis’ stockholders.

     Mr. McWilliams will receive shares of registered OrthoLogic common stock (in the same form and manner as Chrysalis’ other holders of common stock), in return for the 14,000 shares of Chrysalis common stock beneficially owned by Mr. McWilliams. Mr. McWilliams currently owns incentive stock options exercisable for 48,000 shares of Chrysalis common stock. Additional incentive stock options to purchase 33,000 shares of Chrysalis common stock will immediately vest upon consummation of the asset sale. In addition, Mr. McWilliams will receive a severance payment equal to his annual base salary and health benefits for twelve months (of which $125,000 shall be paid by OrthoLogic). Mr. McWilliams will also be entitled to receive $68,500 in deferred compensation (accrued through June 30, 2004) from Chrysalis. Further, Chrysalis’ Board of Directors has approved the payment of a “completion” bonus to Mr. McWilliams to incentivize him to assist the liquidating trustee following the liquidation of Chrysalis. Mr. McWilliams will be paid $75,000 cash on or before the final liquidating distribution to Chrysalis’ stockholders.

     Dr. Hobson currently owns incentive stock options exercisable for 19,000 shares of Chrysalis common stock. Additional incentive stock options to purchase 23,000 shares of Chrysalis common stock will immediately vest upon consummation of the asset sale. In addition, Dr. Hobson has been offered a one-year minimum contract with OrthoLogic which includes a one year severance. In the event that Dr. Hobson does not accept OrthoLogic’s contract offer, he shall be entitled to receive one year of his Chrysalis salary of $145,000 as severance. Dr. Hobson is also be entitled to receive $25,000 in deferred compensation (accrued through June 30, 2004) from Chrysalis.

     Mr. Lamm will receive registered shares of OrthoLogic common stock (in the same form and manner as Chrysalis’ other holders of common stock), in return for his 34,286 shares of Chrysalis common stock and for any exercised stock options out of the 22,500 he was granted as part of his service on Chrysalis Board. All of Mr. Lamm’s options are vested.

     Dr. Hunke will receive registered shares of OrthoLogic common stock (in the same form and manner as Chrysalis’ other holders of common stock), in return for his 8,915 shares of Chrysalis common stock and for any exercised stock options out of the 22,500 he was granted as part of his service on Chrysalis’ Board. All of Dr. Hunke’s options are vested. In addition, Dr. Hunke will receive registered shares of OrthoLogic common stock in return for the 5,000 shares of Chrysalis Series A preferred stock he owns in the same form, relative amount, and manner as Chrysalis’ other Series A stockholders.

     Chrysalis’ Board of Directors has approved the payment of a cash bonus to all holders of options to purchase shares of Chrysalis’ common stock in order to help facilitate the exercise of all outstanding options. However, Chrysalis will not pay any cash out-of-pocket to pay for such bonuses. Instead, optionees will be able to exercise any options that they currently own and Chrysalis will waive the requirement to pay the exercise price. Optionees who avail themselves of this bonus will recognize income as a result of such bonus. Chrysalis urges any optionee who utilizes this bonus payment to consult with their own tax advisers to determine the tax consequences of such bonus payment.

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Material Federal Income Tax Consequences to Chrysalis Stockholders

     The following discussion summarizes the material federal income tax considerations of the asset sale and liquidation relevant to holders of shares of Chrysalis capital stock who are holders of record on the closing date and receive shares of OrthoLogic common stock pursuant to the plan of liquidation. This discussion is based on currently existing provisions of the Internal Revenue Code of 1986, as amended, (the “Code”), existing and proposed Treasury Department regulations thereunder and current administrative rulings and court decisions, each as in effect as of the date of this consent solicitation/prospectus and all of which are subject to change. Any such change, which may or may not be retroactive, could alter the tax consequences to Chrysalis or the Chrysalis stockholders.

     Chrysalis stockholders should be aware that this discussion does not deal with all federal income tax considerations that may be relevant to certain stockholders of Chrysalis in light of their particular circumstances, such as stockholders who are preferred stockholders, who are financial institutions, insurance companies, tax-exempt organizations, dealers in securities, or foreign persons, who do not hold their shares of Chrysalis capital stock as capital assets, or who acquired their shares in connection with stock option plans or otherwise as compensation. In addition, the following discussion does not address the tax consequences of the asset sale and the liquidation under foreign, state or local tax laws or the tax consequences of transactions effectuated prior or subsequent to or concurrently with the asset sale and the liquidation (whether or not such transactions are in connection with such transactions), including, without limitation, transactions in which Chrysalis capital stock is acquired or OrthoLogic common stock is disposed of. ACCORDINGLY, Chrysalis STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE TRANSACTIONS DESCRIBED IN THIS CONSENT SOLICITATION STATEMENT/PROSPECTUS, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SUCH TRANSACTIONS IN THEIR PARTICULAR CIRCUMSTANCES.

     Chrysalis has not requested a ruling from the Internal Revenue Service (the “IRS”) with regard to any of the federal income tax consequences of the asset sale and the liquidation. The following discussion assumes that the asset sale together with the liquidation of Chrysalis will qualify as a “Reorganization” within the meaning of Section 368(a)(1)(C) of the Code.

     Subject to the limitations and qualifications referred to herein, assuming the asset sale together with the liquidation qualifies as a “Reorganization,” the material federal income tax consequences are as follows:

          (i) Holders of Chrysalis capital stock will not recognize gain or loss upon their receipt of OrthoLogic common stock in exchange for Chrysalis capital stock in the asset sale and the liquidation except to the extent of (a) OrthoLogic common stock issuable as the contingent portion of the purchase price (the “Deferred Shares”) that are recharacterized as interest income under the imputed interest rules of the Code (we refer to the Deferred Shares that are recharacterized as interest income as the Deferred Interest Shares); (b) cash received in lieu of fractional shares of OrthoLogic common stock; (c) cash issuable as the contingent portion of the purchase price; and (d) cash received in exchange for Chrysalis capital stock.

          (ii) Chrysalis stockholders receiving cash or other non-stock property in addition to OrthoLogic common stock in the liquidation will recognize gain equal to the lesser of the amount of cash received or the gain realized as a result of the liquidation (i.e., the fair market value of the OrthoLogic common stock and all other property received by the stockholder less the stockholder’s tax basis in the Chrysalis capital stock surrendered). The gain recognized is treated as capital gain or dividend income depending on whether the non-stock consideration has the effect of a dividend distribution and whether Chrysalis has adequate earnings and profits; provided, however, under the imputed interest rules of the Code, if cash is paid more than one year following the assert sale and liquidation as part of the contingent purchase price, a portion of such gain will be recharacterized for federal income tax purposes as interest income.

          (iii) The aggregate tax basis of the OrthoLogic common stock received by Chrysalis stockholders in the asset sale and liquidation (other than the Deferred Interest Shares) will be the same as

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the aggregate tax basis of the Chrysalis capital stock surrendered in exchange reduced by any basis allocable to fractional shares for which cash is received. Prior to the final determination of the amount and timing of all Deferred Shares and escrow shares to be issued to Chrysalis stockholders, the interim basis of the shares of OrthoLogic common stock received by Chrysalis stockholders will be determined as though the escrow shares and the maximum number of Deferred Shares (not including Deferred Interest Shares) were actually received by Chrysalis stockholders. After final determination of the amount and timing of all Deferred Shares and escrow shares to be issued to Chrysalis stockholders, the final basis of the shares of OrthoLogic common stock received by Chrysalis stockholders will be recalculated to take into account the actual number of shares received.

          (iv) The holding period of the OrthoLogic common stock received by the Chrysalis stockholders in the liquidation will include the holding period of the Chrysalis capital stock surrendered in the exchange.

          (v) Chrysalis will not recognize gain solely as a result of the asset sale and liquidation.

          (vi) Chrysalis stockholders receiving cash in lieu of a fractional interest in shares of OrthoLogic common stock will be treated as if such holder actually received such fractional share interest which was subsequently redeemed by OrthoLogic, resulting in the cash such holder receives in lieu of such fractional share interest being treated as having been received as full payment in exchange for common stock redeemed as provided in section 302(a) of the Code. Such holder should generally recognize capital gain or loss for federal income tax purposes measured by the difference between the amount of cash received and the portion of the tax basis of the shares of Chrysalis capital stock allocable to such fractional share interest.

     For federal income tax purposes, holders of Chrysalis capital stock should be treated as having received the General Escrow Shares upon the consummation of the asset sale and liquidation. Because the number of escrow shares to be returned to OrthoLogic or any other beneficiary is based upon the value of the OrthoLogic common stock at the time of the asset sale, Chrysalis stockholders should not recognize gain or loss upon the return of escrow shares to OrthoLogic or any other beneficiary. The basis of such returned shares should be added to the adjusted basis of the remaining shares of OrthoLogic common stock received in the asset sale and liquidation by the Chrysalis stockholders. No gain or loss should be recognized and no amount should be included in the income of the Chrysalis stockholders by reason of any release of escrow shares to the Chrysalis stockholders.

     Under the imputed interest rules of the Code, because Chrysalis common stockholders could receive Deferred Shares more than one year following the asset sale and liquidation, a portion of those contingent shares (i.e., the Deferred Interest Shares) will be recharacterized for federal income tax purposes as interest income and will be taxable to Chrysalis stockholders as ordinary interest income when received. In general, the portion of any Deferred Shares constituting Deferred Interest Shares will be equal to the excess of the fair market value of the Deferred Shares when received over the present value of that fair market value as of the date of the asset sale (determined using a discount rate equal to the appropriate “applicable federal rate” for the month of the asset sale). A Chrysalis stockholder’s tax basis for Deferred Interest Shares will equal their fair market value when received and the holding period for Deferred Interest Shares will commence the day following their receipt.

     Although Chrysalis stockholders who acquired their Chrysalis capital stock upon exercise of employee stock options or otherwise as compensation will generally recognize no gain or loss upon receipt of OrthoLogic common stock (other than Deferred Interest Shares) in the asset sale and liquidation, special rules may also apply. For example, if a Chrysalis stockholder acquired Chrysalis capital stock upon exercise of a non-qualified stock option in anticipation of the asset sale and liquidation, the fair market value of shares of Chrysalis capital stock received in excess of the option exercise price would be treated as ordinary, compensation income subject to withholding. In addition, if a Chrysalis stockholder acquired Chrysalis capital stock upon exercise of an “incentive stock option” less than one year prior to the asset sale, cash received in the asset sale and liquidation would be treated as ordinary, compensation income rather than capital gain because the deemed redemption of the fractional interest in OrthoLogic common shares would constitute a “disqualifying disposition.” The application of additional special rules may depend upon whether the Chrysalis capital stock acquired upon exercise of an employee stock option was subject to a “substantial risk of forfeiture” when acquired and, if so, whether the Chrysalis stockholder

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made a valid and timely election under Section 83(b) of the Code. CHRYSALIS STOCKHOLDERS WHO ACQUIRED THEIR CHRYSALIS CAPITAL STOCK UPON EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

     For the asset sale and liquidation of Chrysalis to qualify as a “Reorganization,” the “continuity of interest” requirement must be satisfied. To satisfy the continuity of interest requirement, the Chrysalis stockholders must receive a meaningful ownership interest in OrthoLogic as a result of the asset sale and liquidation. In general, this requirement will be considered satisfied if the fair market value of the OrthoLogic stock to be received by Chrysalis stockholders in the asset sale and liquidation constitutes a substantial part of the total consideration received by the Chrysalis stockholders in the asset sale and liquidation. For advance ruling purposes, the IRS has provided that the continuity of interest requirement will be satisfied if the Chrysalis stockholders exchange their Chrysalis stock for OrthoLogic stock that has a fair market value, as of the closing date, that equals or exceeds 50% of the total consideration received by such Chrysalis stockholders. This safe harbor merely indicates the level of continuity required by the IRS for the issuance of an advance ruling and does not necessarily represent the degree of continuity that is required to qualify as a “Reorganization.” Courts have held the continuity of interest requirement to be satisfied where the stockholders of the acquired corporation receive a lower percentage (e.g., 40%) of acquiring corporation stock. No assurance can be given that the “continuity of interest” requirement will be satisfied. If such requirement is not satisfied, the asset sale and the liquidation would not be treated as a “Reorganization” under the Code.

     In addition, (1) OrthoLogic must continue at least one significant historic business line of Chrysalis or use a significant portion of Chrysalis’ assets in OrthoLogic’s ongoing business; (2) Chrysalis must not be an investment company as that term is defined under the Code; and (3) the portion of the purchase price paid in OrthoLogic common stock must be equal to at least 80% or more of the fair market value of the assets of Chrysalis being purchased by OrthoLogic pursuant to the asset sale. These requirements are set forth in the Asset Purchase Agreement as either pre-closing or post-closing conditions. If any of these requirements are not met, then the asset sale and liquidation would not be treated as a “Reorganization” under the Code.

     A successful IRS challenge to the “Reorganization” status of the asset sale and liquidation (as a result of the failure of the “continuity of interest” requirement or otherwise) would result in several significant adverse tax consequences. First, a Chrysalis stockholder would recognize additional gain or loss with respect to each share of Chrysalis capital stock surrendered in the liquidation equal to the difference between the stockholder’s basis in such share and the fair market values of the OrthoLogic common stock received in the liquidation and the contingent right to receive escrow shares and Deferred Shares in the future. In such event, a stockholder’s aggregate basis in the OrthoLogic common stock so received would equal its fair market value and the stockholder’s tax holding period for such stock would begin the day after the date of the liquidation. Second, the transfer of Chrysalis’ assets to OrthoLogic would be treated as a taxable sale of such assets. The corporate level gain Chrysalis would recognize upon such a taxable sale of assets would be equal to the difference between Chrysalis’s adjusted tax basis in such assets and the fair market value of all of the consideration received from OrthoLogic in the asset sale (including, but not limited to, all of the OrthoLogic common stock issued by OrthoLogic, cash and all of the liabilities assumed by OrthoLogic). Chrysalis’ tax liability associated with any such recognized gain, after taking into account the effect of any relevant and available Chrysalis tax attributes (e.g., current and carryover net operating losses and tax credits), is a liability that is not assumed by OrthoLogic in accordance with the Asset Purchase Agreement. It is anticipated that any such tax liability would be material and would reduce the amounts of cash and OrthoLogic common stock otherwise distributable in the liquidation.

Management’s Discussion and Analysis of Financial Condition

     OrthoLogic.

     Please see the OrthoLogic “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Annexes F and G.

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     Chrysalis.

Overview

     Chrysalis has operated as a development stage company since its inception and is a research and development organization focused on products based on the synthetic peptide Chrysalin. Chrysalin, or “TP-508,” is a 23-amino acid synthetic peptide representing a receptor-binding domain of the human thrombin molecule, a naturally occurring molecule in the body responsible for both blood clotting and initiating many of the cellular events responsible for tissue repair in bone and cartilage. Chrysalis’ lead drug is currently in Phase 3 clinical trials for bone fractures and Phase 1/2 testing for spine fusion through its collaboration with OrthoLogic, and is in Phase 2 clinical testing for diabetic ulcers. Chrysalis also has active preclinical programs in dental bone repair and cardiovascular applications.

     Chyrsalis principally focuses its corporate resources on the development of products based on the Chrysalin platform. Chrysalis currently has four active research categories focusing on Chrysalin: orthopedic tissue repair, dermal wound healing, dental bone repair, and cardiovascular research. The orthopedic program has been funded since 1998 through partnership with OrthoLogic, while the other programs are funded directly by Chrysalis through a combination of corporate, equity-based, and grant funding. In April 2004, OrthoLogic and Chrysalis agreed that OrthoLogic would acquire all the assets of Chrysalis.

Results of Operations Comparing Quarters Ended March 31, 2004 to 2003

     Revenues, Cost of Revenues, and Gross profits

     During the first quarter of 2004 compared with the same period in 2003, Chrysalis saw an increase in revenue of approximately $73,000 as a result of increased sponsored research activity offset by a reduction in grant revenue. Sponsored projects from OrthoLogic increased from approximately $350,000 in 2003 to approximately $475,000 in 2004 related to greater manufacturing activity.

     Research and Development Expense

     Research and development expenses in the first quarter of 2004 increased by approximately $327,000 to approximately $795,000 compared with the same quarter in 2003. This was primarily caused by the increased activity for OrthoLogic.

     General and Administrative (G&A) Expenses

     G&A costs increased by approximately $67,000 in the first quarter of 2004 compared with the same quarter of 2003, primarily due to an increase in patenting expenses in the first quarter of 2004. Other legal expenses also increased in the first quarter of 2004 as compared to 2003 due to activities relating to the acquisition agreement negotiations with OrthoLogic.

Results of Operations Comparing Years Ended December 31, 2003 to 2002

     Overview

     During 2003, Chrysalis began to realize an increase in sponsored research projects from OrthoLogic in support of OrthoLogic’s Phase 3 clinical program for Chrysalin in bone fractures. In addition, Chrysalis was engaged in discussions for additional strategic partnerships and venture investments to fund Chyrsalin programs not licensed to OrthoLogic.

     Revenues, Cost of Revenues, and Gross profits

     Total revenues in 2003 increased by approximately $1.0 million due to a significant increase in OrthoLogic sponsored research projects. Grant revenues decreased approximately $205,000 due to the completion of Chrysalis’ grant in 2002 for cartilage repair.

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     Research and Development (“R&D”) Expense

     Research and development expenses in 2003 remained at approximately $2.2 million, which was consistent with R&D expenditures in 2002. R&D salary costs decreased by $130,000 in 2003 compared with 2002 due to a reduction in staff in 2003 to reduce costs in non-sponsored research areas. The salary cost decrease was offset by an increase in third party subcontract expenses related primarily to manufacturing for OrthoLogic.

     General and Administrative Expenses

     General and administrative costs increased by approximately $275,000 to $1.4 million in 2003 compared with 2002, due to normal increases in salaries and consulting fees paid in 2003, as well as an increase in professional services due to higher legal fees related to Chrysalis’ efforts to raise financing in 2003. Insurance costs also increased in 2003 due to higher director’s insurance costs.

Liquidity and Capital Resources

     Chrysalis has historically financed its operations through receipt of payments from third parties primarily for licensing and strategic partnering services and through the issuance of $4.8 million of preferred stock. In 2003, cash increased by approximately $217,000 due to the influx of $750,000 received from the sale of convertible bridge notes. These notes, supplemented by an additional $300,000 raised in January of 2004, are promissory notes earning an interest rate of 8% per annum, and are convertible into equity securities upon the completion of a financing for a minimum of $4.0 million, or upon the sale or merger of Chrysalis. Cash decreased to approximately $630,000 at March 31, 2004 due to continued research in the first quarter.

     In April 2004, Chrysalis entered into a definitive agreement with OrthoLogic for the acquisition of substantially all of the assets of Chrysalis. In the event that Chrysalis does not complete the sale with OrthoLogic, Chrysalis will need to raise additional cash prior to the end of the year to finance ongoing operations, and to offset the expenses incurred to date related to the Asset Purchase Agreement. There can be no assurance Chrysalis will be successful in its efforts to generate capital.

     At March 31, 2004, future commitments of Chrysalis include $1.1 million of notes due in June 2008 which are convertible into Series D preferred stock.

Quantitative and Qualitative Disclosures About Market Risk

     OrthoLogic. Please see OrthoLogic’s disclosure on “Quantitative and Qualitative Disclosures About Market Risk” in Annexes F and G.

     Chrysalis. Chrysalis does not have significant exposure to market risk as the interest rate on the notes payable approximates fair value.

Per Share Data

     The information below reflects the historical net income and the book value per share of OrthoLogic’s common stock, as well as the unaudited OrthoLogic pro forma combined net income per share and the OrthoLogic pro forma combined book value per share after giving effect to the acquisition. You should read the following tables in conjunction with the unaudited pro forma condensed consolidated financial statements of OrthoLogic, the historical consolidated financial statements and related notes of OrthoLogic included elsewhere herein and the historical consolidated financial statements of Chrysalis and related notes which are included in the “F” pages in this document.

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OrthoLogic Corp. Share Data

Unaudited OrthoLogic Corp. Pro Forma Combined Per Share Data

Market Price and Dividend Data

     OrthoLogic’s common stock is listed on the Nasdaq National Market under the symbol “OLGC.” The following table sets forth the range of high and low per-share closing sales prices for OrthoLogic common stock as reported on the Nasdaq National Market for the periods indicated.

     As of June 1, 2004, 34,527,152 shares of OrthoLogic’s common stock were outstanding and held by approximately 1,086 stockholders of record. As of April 27, 2004, the date preceding the public announcement of the asset sale, OrthoLogic’s common stock’s closing price was $7.70.

     Dividends. OrthoLogic has never paid a cash dividend on its common stock. Its Board of Directors currently anticipates that all of its earnings, if any, will be retained for use in its business and does not intend to pay any cash dividends on its common stock in the foreseeable future.

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     Chrysalis Biotechnology, Inc.’s equity is not traded on any public market. It has never paid a cash dividend on any of its stock. It intends to make distributions to stockholders pursuant to its plan of liquidation. There are, as of June 1, 2004, 143 Chrysalis stockholders of record.

Certain Relationships and Related Transactions

     OrthoLogic has entered into indemnity agreements with all of its directors and officers for the indemnification of and advancing of expenses to such persons to the full extent permitted by law.

Security Ownership of Certain Beneficial Owners and Management

     OrthoLogic. Please see Annex H for beneficial ownership information for OthoLogic.

     Chrysalis. On an as-converted-to-common stock basis (including the conversion of the notes) as of    , the date of this consent solicitation/prospectus, 2,048,310 shares of Chrysalis common stock are eligible to vote on the asset sale and on the plan of liquidation and dissolution. As of such date, Chrysalis had 1,201,940 shares of common stock outstanding, 89,850 shares of Series A preferred shares convertible into 205,371 shares of common stock, Series B preferred shares convertible into 346,467 shares of common stock, Series C preferred shares convertible into 190,476 shares of common stock and Series D preferred shares convertible into 104,056 shares of common stock outstanding, (assuming a June 30, 2004 closing date). The following table sets forth information regarding the beneficial ownership of Chrysalis’ equity on an as-converted-to-common stock basis as the date of this consent solicitation as though the convertible notes had been converted into 104,056 shares of Chrysalis common stock with respect to (i) each person known to Chrysalis to own beneficially more than five percent of the outstanding shares of its voting stock; (ii) each of Chrysalis’ directors, (iii) each of Chrysalis’ executive officers and (iv) all of Chrysalis’ directors and executive officers as a group.

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     Please also see Annex H for information about OrthoLogic’s directors and officers and executive compensation.

Description of the Plan of Complete Liquidation and Dissolution

Dissolution under Delaware Law

     Section 275 of the Delaware General Corporation Law provides that a corporation may dissolve upon either (a) a majority vote of the Board of Directors of the corporation followed by a majority vote of its stockholders (which may be effected either through a vote at a special meeting of stockholders or by written consent of such stockholders who hold an amount of shares sufficient to approve the proposal at a special meeting); or (b) a unanimous stockholder consent. Following such approval, the dissolution is effected by filing a certificate of dissolution with the Secretary of State of the State of Delaware. Once a corporation is dissolved, its existence is automatically continued for a term of three years, but solely for the purpose of winding up its business. The process of winding up includes:

     If any action, suit or proceeding is commenced by or against the corporation before or within the winding up period, the corporation will, solely for the purpose of such action, suit or proceeding, automatically continue to exist beyond the three-year period until any judgments, orders or decrees are fully executed.

The Plan of Liquidation

     The following is a brief summary of the plan of liquidation. It is qualified in its entirety by reference to the full text of the plan of liquidation attached as Annex B and incorporated herein by reference. You should read the plan of liquidation carefully.

     Effective Date. The plan of liquidation will become effective only if (1) the asset sale and plan of liquidation are approved by written consent by holders of a majority of Chrysalis’ capital stock, voting as a single class, with holders of Chrysalis’ preferred stock voting on an as-converted to common stock basis, and (2) the asset sale to OrthoLogic is consummated. Following the consummation of the asset sale, the Board of Directors will, in its discretion, determine a date on which the plan of liquidation will become effective and the most efficient means to liquidate. However, it is intended that the shares of OrthoLogic common stock that Chrysalis receives upon closing of the asset sale will be distributed to the stockholders as soon as practical after closing. It is anticipated that Chrysalis will retain all of the $2.5 million in cash it receives at closing for a period of at least 90 days during the

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transition services period under the transition services agreement. Following such period, Chrysalis intends to distribute its remaining cash, less any accrued expenses and any amount Chrysalis believes should be retained to cover any remaining contingent liabilities that may arise in the three-year period following dissolution. It should be noted that such amount of cash will have been depleted during the 90-day period to pay all transaction related expenses as well as any portion of the finder’s fee required to be paid in cash.

     Cessation of Business. If the asset sale and plan of liquidation are approved, Chrysalis will continue to operate its business until the asset sale is consummated. Following the consummation of the asset sale, Chrysalis will cease its business and will not engage in any business activities except for the purposes of collecting and distributing its assets, paying, satisfying and discharging any existing debts and obligations (or making provisions for payment thereof), and doing all other acts required to liquidate and wind up its business and affairs, except that Chrysalis will continue certain of its operations for at least 90 days pursuant to the transition services agreement.

     Certificate of Dissolution. After the plan of liquidation becomes effective, Chrysalis’ officers shall, at such time as the Board of Directors determines, obtain any certificates required by the Delaware tax authorities and, upon obtaining such certificates and paying such taxes as may be owing, will file with the Delaware secretary of state a certificate of dissolution. Chrysalis’ dissolution will become effective, in accordance with Delaware law, upon proper filing of such certificate of dissolution with the Secretary of State or upon such later date as may be specified in the certificate of dissolution. Pursuant to Delaware law, Chrysalis will continue to exist for three years after the dissolution becomes effective or for such longer period as the Delaware Court of Chancery shall direct, for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against Chrysalis, and enabling Chrysalis gradually to settle and close its business, to dispose of and convey its property, to discharge its liabilities and to distribute to its stockholders any remaining assets (including the possibility of additional shares (and cash, if applicable) related to the contingent $7.0 million payment), but not for the purpose of continuing the business for which Chrysalis was organized.

     Liquidation of other Assets. As soon as reasonably practical after the effective date of the plan of liquidation, all of Chrysalis’ assets, other than those sold to OrthoLogic and those not already converted to cash or cash equivalents, will, to the extent possible, be sold and converted to cash or cash equivalents. Sales of Chrysalis’ assets will be made on such terms as are approved by the Board of Directors and may be conducted by either competitive bidding, public sales or privately negotiated sales. Authorization and approval of the plan of liquidation will constitute approval of any such sales, and as such Chrysalis does not anticipate that any further stockholder votes will be solicited with respect to the approval of the specific terms of any particular sales of assets approved by Chrysalis’ Board of Directors. The plan of liquidation permits Chrysalis to utilize a liquidating trustee, which Chrysalis anticipates engaging for the liquidation and distribution of Chrysalis’ assets, including the distribution of the escrow shares and the $7.0 million of contingent shares (and cash, if applicable), if earned.

     Payment of Liabilities and Obligations. Chrysalis will pay or make reasonable provision to pay all claims and obligations of the company, including all contingent, conditional or unmatured contractual claims known to Chrysalis, and all claims which are known to Chrysalis but for which the identity of the claimant is unknown. Chrysalis will pay all such claims and obligations in full and make any such provisions for payment if there are sufficient assets and funds available. If there are insufficient assets and funds available, Chrysalis will pay such claims and obligations according to their priority.

     Final Record Date and Restrictions on Transfer. Chrysalis will close its stock transfer books and discontinue recording transfers of shares of common stock and preferred stock on the earliest to occur of:

and, thereafter, certificates representing shares of common stock and preferred stock will not be assignable or transferable on Chrysalis’ books except by will, intestate succession or operation of law. After the final record date, Chrysalis will not issue any new stock certificates, other than replacement certificates. Any person holding options,

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warrants or other rights to purchase common stock or preferred stock must exercise such instruments or rights prior to the final record date.

     Contingent Liabilities, Contingency Reserve and Liquidating Trust. Under Delaware law, Chrysalis is required, in connection with its dissolution, to pay or provide for payment of all of its liabilities and obligations. Following the authorization and approval of the plan of liquidation by Chrysalis’ stockholders, Chrysalis will pay all expenses and fixed and other known liabilities to the extent of its available funds and assets.

     It is anticipated that the cash proceeds from the asset sale to OrthoLogic will be sufficient to fully pay all known liabilities and obligations. As a result, Chrysalis does not expect that there will be any remaining funds or assets available for distribution to its stockholders.

     The plan of liquidation authorizes Chrysalis’ Board of Directors to appoint one or more individuals or entities to act as trustee or trustees of the liquidating trust or trusts and to cause Chrysalis to enter into a liquidating trust agreement or agreements with such trustee or trustees on such terms and conditions as may be approved by its Board of Directors. Approval of the plan of liquidation by the stockholders will also constitute the approval by the stockholders of any such appointment and any liquidating trust agreement or agreements.

     The liquidating trust would be evidenced by a trust agreement between Chrysalis and the trustee(s). The purpose of the trust would be to serve as a temporary repository for the trust property prior to its disposition or distribution to Chrysalis’ stockholders. The transfer to the trust and distribution of interests therein to Chrysalis’ stockholders would enable Chrysalis to divest the trust property and permit its stockholders to enjoy the economic benefits of ownership thereof. Pursuant to the trust agreement, the trust property would be transferred to the trustee or trustees immediately following creation of the trust, to be held in trust for the benefit of the stockholder beneficiaries subject to the terms of the trust agreement. It is anticipated that the interests would be evidenced only by the records of the trust and there would be no certificates or other tangible evidence of such interests and that no holder of capital stock would be required to pay any cash or other consideration for the interests to be received in the distribution or to surrender or exchange shares of capital stock in order to receive the interests. It is further anticipated that pursuant to such trust agreement (i) approval of a majority of the trustees, if more than one, would be required to take any action; and (ii) the trust would be irrevocable and would terminate after the earliest of (x) the trust property having been fully distributed, or (y) a majority in interest of the beneficiaries of the trust, or a majority of the trustees, having approved of such termination, or (z) a specified number of years having elapsed after the creation of the trust.

     Under Delaware law, in the event Chrysalis fails to create an adequate contingency reserve for payment of its expenses and liabilities, or should such contingency reserve and the assets held by the liquidating trust or trusts be exceeded by the amount ultimately found payable in respect of expenses and liabilities, each stockholder could be held liable for the payment to creditors of such stockholder’s pro rata share of such excess, limited to amounts which are received by such stockholder from Chrysalis or from the liquidating trust or trusts.

     If Chrysalis was held by a court to have failed to make adequate provision for its expenses and liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeded the amount available from the contingency reserve and the assets, if any, to Chrysalis’ stockholders of the liquidating trust or trusts, a creditor of Chrysalis’ could seek an injunction against the making of distributions under the plan of liquidation on the ground that the amounts to be distributed were needed to provide for the payment of Chrysalis’ expenses and liabilities.

     Distributions to Stockholders. Chrysalis anticipates that the cash proceeds received at closing will be sufficient to cover all of its liquidation expenses, including the payment of a finder’s fee in cash to Dallas Anderson in the amount of 5% of the value of the transaction, in connection with his services as finder in this transaction. See “Finder’s Fee” on page 31 for a more complete description of this payment. Consequently, Chrysalis will distribute all of the shares of OrthoLogic common stock it receives at closing to its stockholders under the plan of liquidation (subject to the requirement to put    % of the shares in escrow. The holders of the Chrysalis preferred stock are entitled to liquidation preferences totaling approximately $5.9 million in the aggregate, divided among the series of preferred stockholders approximately as follows:

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     Following such distributions, the holders of all such series of preferred stock shall convert into common stock. Assuming all of Chrysalis’ outstanding options are exercised prior to closing, Chrysalis will have 2,336,153 shares of common stock outstanding to share in the remaining assets subject to additional shares being issued to pay accrued interest upon conversion of the convertible notes. As a result of the ceiling and floor on the number of shares of OrthoLogic common stock being issued upon closing, the value of the shares that Chrysalis may receive at closing is unknown at this time. Also, there is the potential of additional shares being issued as a result of the contingent $7.0 million payment. Finally, a certain percentage of the shares being issued at closing are being placed in escrow to cover certain indemnities being given by Chrysalis to OrthoLogic. It is impossible to ascertain at this time whether any or all of these shares will be available for issuance to Chrysalis’ stockholders. Given these variables, it is difficult to ascertain with any certainty the exact value of the shares of OrthoLogic common stock that each stockholder will receive at closing and upon subsequent distributions under the plan of liquidation.

     Expenses of Liquidation and Dissolution. Chrysalis will bear all of its expenses incurred in carrying out the plan of liquidation, including, but not limited to, legal, accounting and administrative expenses, transaction costs and tax obligations.

Indemnification of Chrysalis’ Officers, Directors, Employees and Agents

     Following the adoption and approval of the plan of liquidation by Chrysalis’ stockholders, Chrysalis will continue to indemnify its officers, directors, employees and agents in accordance with its certificate of incorporation and bylaws, including for actions taken in connection with the plan of liquidation and the winding up of Chrysalis’ affairs.

Abandonment, Amendment

     Under the plan of liquidation, Chrysalis’ Board of Directors may modify, amend or abandon the plan of liquidation, notwithstanding stockholder authorization and approval, to the extent permitted by Delaware law. Chrysalis will not amend or modify the plan of liquidation under circumstances that would require additional stockholder approval under Delaware law without complying with Delaware law.

Comparative Rights of Chrysalis Stockholders and OrthoLogic Stockholders

     OrthoLogic is a Delaware corporation governed by the Delaware General Corporation Law. Chrysalis is also a Delaware corporation governed by the Delaware General Corporation Law. The rights of OrthoLogic stockholders are governed by its Amended and Restated Certificate of Incorporation, Certificate of Designation of Series A Preferred Stock, Rights Agreement and Bylaws and the rights of Chrysalis stockholders are governed by Chrysalis’ Certificate of Incorporation, Certificate of Designations of Series A, B, and C, Certificate of Designations of Series D and Bylaws. The following is a summary of some of the rights of OrthoLogic and Chrysalis stockholders and certain charter and bylaw provisions of the companies. This summary is provided in light of the potential distribution to Chrysalis stockholders of shares of OrthoLogic common stock in connection with the liquidation and dissolution of Chrysalis. This summary does not purport to be a complete discussion of, and is qualified in its entirety by reference to, Delaware law, as well as to OrthoLogic’s Amended and Restated Certificate of Incorporation, Certificate of Designation of Series A Preferred Stock, Rights Agreement and Bylaws and Chrysalis’ Certificate of Incorporation, Certificates of Designation and Bylaws.

The Capital Stock of OrthoLogic and Chrysalis

     OrthoLogic. The authorized capital stock of OrthoLogic consists of 50,000,000 shares of common stock, par value $.0005 per share, and 2,000,000 shares of preferred stock, par value $.0005 per share, of which 500,000 shares are designated Series A Preferred Stock.

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     Chrysalis. The authorized capital stock of Chrysalis consists of 20,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share, of which 89,850 shares are designated Series A Preferred Stock, 346,467 shares are designated Series B Preferred Stock, 190,476 shares are designated Series C Preferred Stock and 106,725 shares are designated Series D Preferred Stock. In connection with the sale of Chrysalis to OrthoLogic, the notes payable will convert to approximately 104,056 shares of Series D preferred stock (assuming a June 30, 2004 closing date).

     OrthoLogic. Holders of OrthoLogic’s common stock are entitled to one vote per share for the election of directors and other corporate matters, but are not entitled to cumulative voting rights. The holders are entitled to dividends in such amounts and at such times as may be declared by OrthoLogic’s Board of Directors out of funds legally available therefor. Upon liquidation or dissolution, holders of OrthoLogic common stock are entitled to share ratably in all net assets available for distribution to stockholders after payment of any debts or obligations owed to OrthoLogic’s creditors. The shares of OrthoLogic common stock carry no preemptive rights.

     Chrysalis. Holders of Chrysalis’ common stock are entitled to one vote per share for the election of directors and other corporate matters, but are not entitled to cumulative voting rights. The holders are entitled to dividends in such amounts and at such times as may be declared by Chrysalis’ Board of Directors out of funds legally available therefor. Upon liquidation or dissolution, holders of common stock, together with holders of preferred stock entitled to share pro rata with the holders of common stock, are entitled to share ratably in all net assets available for distribution to stockholders after payment of any liquidation preferences to holders of preferred stock. The Chrysalis common stock carries no preemptive rights.

     OrthoLogic. OrthoLogic currently has one designated series of preferred stock, the Series A Preferred Stock. No shares of OrthoLogic’s Series A Preferred Stock are outstanding at this time. For a discussion of the Rights Agreement pursuant to which such shares are issuable, see the item below labeled “Stockholder Rights Plan”.

     Chrysalis. Chrysalis currently has four designated series of preferred stock authorized: Series A, Series B, Series C and Series D. The following descriptions are equally applicable to all four series.

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     OrthoLogic. OrthoLogic has adopted a stockholder rights plan that, among other things, discourages some types of transactions that may involve an actual or threatened change of control of OrthoLogic. Under the plan, holders of shares of OrthoLogic common stock issued and outstanding are entitled to purchase one one-hundredth of a share of Series A Preferred Stock. The purchase right is exercisable upon the earlier of: 1) 10 business days following a public announcement relating to the acquisition of beneficial ownership of 15% or more of OrthoLogic’s common stock; or 2) 15 business days following the commencement of a tender offer or exchange offer if, upon consummation thereof, beneficial ownership of 20% or more of OrthoLogic’s common stock would be obtained.

     Chrysalis. Chrysalis does not currently have a stockholder rights plan.

The Board of Directors of OrthoLogic and Chrysalis

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation and Bylaws state that although the authorized number of directors shall be determined from time to time by the Board of Directors, the number of directors shall not be less than three nor more than nine. OrthoLogic’s Board of Directors currently consists of seven members.

     Chrysalis. Chrysalis’ Certificate of Incorporation and Bylaws state that although the authorized number of directors shall be determined from time to time by the Board of Directors, the number of directors shall not be less than one. Chrysalis’ Board of Directors currently consists of three members.

     OrthoLogic. OrthoLogic’s Bylaws state that directors need not be stockholders.

     Chrysalis. Chrysalis’ Bylaws have no specific qualifications for directors.

     OrthoLogic. Pursuant to OrthoLogic’s Amended and Restated Certificate of Incorporation, OrthoLogic’s Board of Directors is classified into three classes, with each class holding office for a three-year period. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible.

     Chrysalis. Chrysalis has no classes of directors.

     OrthoLogic. Pursuant to OrthoLogic’s Bylaws and except as otherwise provided by law, a majority of the directors constitutes a quorum for the transaction of business at any meeting of OrthoLogic’s Board of Directors and the act of a majority of the directors present at any meeting at which there is a quorum is deemed an act of the Board.

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     Chrysalis. Pursuant to Chrysalis’ Bylaws and except as otherwise provided by law, a majority of the directors constitutes a quorum for the transaction of business at any meeting of Chrysalis’ Board and the act of a majority of the directors present at any meeting at which there is a quorum is deemed an act of the Board.

     OrthoLogic. OrthoLogic’s Bylaws provide that any action required or permitted to be taken by OrthoLogic’s Board of Directors may be taken without a meeting if all members of the Board consent in writing.

     Chrysalis. Chrysalis’ Bylaws provide that any action required or permitted to be taken by Chrysalis’ Board of Directors may be taken without a meeting if all members of the Board consent in writing.

     OrthoLogic. Because all members of the OrthoLogic Board of Directors serve on a staggered board that is divided into three classes, with each class serving a three-year term, only a portion of the Board is elected each year. Assuming a quorum is present, directors are elected at OrthoLogic’s Annual Meeting by the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote thereon.

     Chrysalis. Assuming a quorum is present, directors are elected at Chrysalis’ Annual Meeting by the affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote thereon.

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation provides that any additional directors of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. In addition, any vacancy on OrthoLogic’s Board of Directors, however resulting (including, without limitation, newly created directorships), may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected.

     Chrysalis. Chrysalis’ Certificate of Incorporation provides that any additional directors elected to fill a vacancy resulting from an increase in the number of directors shall hold office for a term that shall coincide with the remaining term of that directorship, but in no case will a decrease in the number of directors shorten the term of any incumbent director. In addition, any vacancy on Chrysalis’ Board of Directors, however resulting (including, without limitation, newly created directorships), may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the remainder of the term to which such director shall have been elected.

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation provides that, subject to the rights, if any, of the holders of shares of preferred stock, any or all directors may be removed at any time, but only for cause and only by the affirmative vote of a majority of outstanding shares entitled to vote generally in the election of directors, with such shares being treated as one class.

     Chrysalis. Chrysalis’ Bylaws provide that, subject to the rights, if any, of the holders of shares of preferred stock, any or all directors may be removed at any time, but only for cause and only by the affirmative vote of a majority of outstanding shares entitled to vote generally in the election of directors, with such shares being treated as one class.

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Special Matters Relating to OrthoLogic and Chrysalis Stockholders

     OrthoLogic. Pursuant to OrthoLogic’s Bylaws and except as otherwise provided by law, notice of any annual or special meeting of stockholders must be served upon or mailed to each stockholder entitled to vote at the meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.

     Chrysalis. Pursuant to Chrysalis’ Bylaws and except as otherwise provided by law, notice of any annual or special meeting of stockholders must be served upon or mailed to each stockholder entitled to vote at the meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation and Bylaws provide that special meetings of the stockholders may be called at any time for any purpose or purposes only by the president or the Board of Directors pursuant to a resolution approved by a majority of the whole board, or at the request in writing of stockholders owning at least 35% of the capital stock issued, outstanding and entitled to vote.

     Chrysalis. Chrysalis’ Certificate of Incorporation and Bylaws provide that special meetings of the stockholders may be called at any time for any purpose or purposes only by the Board of Directors.

     OrthoLogic. OrthoLogic’s Bylaws provide that the holders of a majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum at all meetings of the stockholders for the transaction of business. The affirmative vote of the majority of such quorum shall be deemed the act of the stockholders. If the quorum requirement is not satisfied at a meeting of the stockholders, the presiding officer of that meeting may adjourn the meeting to another place, date or time, without notice other than announcement at that meeting, until a quorum is present or represented.

     Chrysalis. Chrysalis’ Bylaws provide that the holders of a majority of the shares entitled to vote, represented in person or by proxy, will constitute a quorum at all meetings of the stockholders for the transaction of business. The affirmative vote of the majority of such quorum shall be deemed the act of the stockholders. If the quorum requirement is not satisfied at a meeting of the stockholders, the holders of a majority of the shares of stock represented at such meeting may adjourn the meeting to another place, date or time, without notice other than announcement at that meeting, until a quorum is present or represented.

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation and Bylaws provide that any action required or permitted to be taken by stockholders must be effected at a duly called annual or special meeting of such stockholders and may not be effected by written consent.

     Chrysalis. Chrysalis’ Bylaws provide that any action required or permitted to be taken by stockholders may be effected by written consent signed by holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation provides that the affirmative vote of the holders of two-thirds of OrthoLogic’s outstanding stock entitled to vote is required for the approval of any significant corporate transaction involving OrthoLogic, e.g., a merger, substantial asset purchase or sale, or any other transaction requiring stockholder approval under the Delaware General Corporation Law, where an “Interested

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Person” is a party. An “Interested Person” is any person, entity or group thereof having beneficial ownership, directly or indirectly, of 5% or more of any class of OrthoLogic’s voting securities. The two-thirds approval requirement described above is not applicable to any transaction approved by resolution of OrthoLogic’s Board of Directors, so long as a majority of the directors voting for the approval are “Continuing Directors.” A “Continuing Director” is an OrthoLogic director that is not, and has no affiliation with, an “Interested Person” and: 1) was a member of the Board prior to the relevant Interested Person becoming such; or 2) whose initial election succeeds that of a “Continuing Director” or is a newly created directorship, and in either case, was recommended by a majority vote of the “Continuing Directors” then in office.

     Chrysalis. Chrysalis’ Certificate of Incorporation and Bylaws provide no special voting rights. Pursuant to Delaware General Corporation Law, holders of each of Chrysalis’ series of preferred stock have a right to vote as a separate class for a proposed amendment to Chrysalis’ Certificate of Incorporation if such amendment would: (1) increase or decrease the aggregate number of authorized shares of such class, (2) increase or decrease the per value of the shares of such class, or (3) alter or change the powers, preferences or special rights of such class so as to affect them adversely.

     OrthoLogic. OrthoLogic’s Bylaws provide that a stockholder who wishes to present to the Chairman of the Board or the President an item for consideration as an agenda item for a meeting of stockholders may do so if such stockholder complies with the procedures and deadlines set forth in the Bylaws.

     Chrysalis. Chrysalis’ Bylaws do not provide a mechanism for stockholder proposals.

     OrthoLogic. OrthoLogic’s Bylaws provide that nominations of persons for election to the Board of Directors at any meeting at which elections are held may be made by any stockholder who is a stockholder of record, who is entitled to vote at such meeting and who complies with the procedures and deadlines set forth in the Bylaws. OrthoLogic’s Bylaws also provide that nominations may be made by the Board of Directors or a committee appointed by the Board.

     Chrysalis. Chrysalis’ Bylaws do not provide a mechanism for nominations of persons for election to the Board of Directors.

Amendments to the Organizational Documents of OrthoLogic and Chrysalis

     OrthoLogic. Subject to applicable law and the restrictions described in OrthoLogic’s Amended and Restated Certificate of Incorporation, OrthoLogic reserves the right to amend, alter, change or repeal any provision contained in such Certificate. OrthoLogic’s Amended and Restated Certificate of Incorporation provides that the approval of the holders of at least two-thirds of the voting power of the outstanding stock entitled to vote is required in order to alter, amend or adopt any provision inconsistent with, or repeal the provisions in the Amended and Restated Certificate of Incorporation relating to: 1) the procedure for a) electing directors, and b) nominating candidates for the Board of Directors; 2) the number and term, classification scheme, removal, vacancies and rights of preferred stockholders with respect to, directors; 3) action by consent of stockholders; 4) supermajority voting requirements; 5) the restrictions on calling special meetings of stockholders; 6) amendments to the Bylaws; and 7) amendments to the Amended and Restated Certificate of Incorporation. Notwithstanding the foregoing two-thirds voting requirement, only a majority approval is required for amending the above provisions if the Continuing Directors (meaning those directors not affiliated with persons holding 5% or more of OrthoLogic’s voting securities) shall, by a majority vote, adopt a resolution approving the amendment or repeal proposal and determine to recommend it for approval by the holders of stock entitled to vote thereon.

     Chrysalis. Pursuant to the Delaware General Corporation Law, holders of a majority of the outstanding shares of capital stock entitled to vote thereon may amend the Certificate of Incorporation. See the description of

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“Special Voting Rights” above for a description of the voting rights of holders of preferred stock to amend the Certificate of Incorporation under Delaware General Corporation law.

     OrthoLogic. The Delaware General Corporation Law states that stockholders entitled to vote have the power to adopt, amend or repeal the bylaws of a corporation. A corporation, in its certificate of incorporation, may also confer this power on the Board of Directors in addition to the stockholders. OrthoLogic’s Amended and Restated Certificate of Incorporation authorizes its Board of Directors, by majority vote thereof, to adopt, repeal, alter, amend or rescind its Bylaws. OrthoLogic’s Amended and Restated Certificate of Incorporation also provides that its Bylaws may be adopted, repealed, altered, amended, or rescinded by the affirmative vote of two-thirds of the outstanding stock entitled to vote thereon; except that only a majority approval is required if the Continuing Directors (meaning those directors not affiliated with persons holding 5% or more of OrthoLogic’s voting securities) shall, by a majority vote, adopt a resolution approving the amendment or repeal proposal and determine to recommend it for approval by the holders of stock entitled to vote thereon.

     Chrysalis. The Delaware General Corporation Law states that stockholders entitled to vote have the power to adopt, amend or repeal the bylaws of a corporation. A corporation, in its certificate of incorporation, may also confer this power on the Board of Directors in addition to the stockholders. Chrysalis’ Certificate of Incorporation authorizes its Board of Directors, by majority vote thereof, to adopt, repeal, alter, amend or rescind its Bylaws. Chrysalis’ Bylaws also provide that they may be adopted, repealed, altered, amended, or rescinded by the affirmative vote of a majority of the outstanding stock entitled to vote thereon.

Limitation of Liability, Indemnification and Insurance by or for OrthoLogic and Chrysalis

     OrthoLogic. OrthoLogic’s Amended and Restated Certificate of Incorporation provides that no director shall be personally liable for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law: 1) for breach of the duty of loyalty; 2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; 3) pursuant to Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of dividends or unlawful stock purchase or redemption); or 4) for any transaction from which the director derived an improper personal benefit.

     Chrysalis. Chrysalis’ Certificate of Incorporation provides that no director shall be personally liable for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law: 1) for breach of the duty of loyalty; 2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; 3) pursuant to Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of dividends or unlawful stock purchase or redemption); or 4) for any transaction from which the director derived an improper personal benefit.

     OrthoLogic. OrthoLogic’s Bylaws provides that, subject to certain specific limitations, OrthoLogic will indemnify, to the fullest extent permitted by applicable law, each person who is or was a director or officer, and may indemnify each employee and agent of OrthoLogic, against all expense, liability and loss arising out of or in any way related to their status as such or their acts, omissions or services rendered in such capacities. In addition, OrthoLogic’s Bylaws provides that OrthoLogic may maintain insurance, at its expense, to protect against any expense, liability or loss, whether or not the power to indemnify is available under the specific circumstance.

     Chrysalis. Chrysalis’ Bylaws provide that, subject to certain specific limitations, Chrysalis will indemnify, to the fullest extent permitted by applicable law, each person who is or was a director or officer, and may indemnify each employee and agent of Chrysalis, against all expense, liability and loss arising out of or in any way related to their status as such or their acts, omissions or services rendered in such capacities. In addition, Chrysalis’ Bylaws

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provide that Chrysalis may maintain insurance, at its expense, to protect against any expense, liability or loss, whether or not the power to indemnify is available under the specific circumstance.

Legal Matters

     Certain legal matters in connection with the OrthoLogic common stock offered hereby have been passed upon for OrthoLogic Corp. by Quarles & Brady Streich Lang, LLP of Phoenix, Arizona.

Experts

     The consolidated financial statements of OrthoLogic Corp. and subsidiaries as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, included in this prospectus have been audited by Deloitte & Touche LLP, independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the sale of the bone device business), and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

     The consolidated financial statements of Chrysalis Biotechnology, Inc. (a development stage company) as of December 31, 2003 and 2002, and for the years then ended included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion and includes explanatory paragraphs relating to Chrysalis Biotechnology, Inc.’s ability to continue as a going concern and the definitive agreement entered into by Chrysalis with OrthoLogic Corp.), and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

     Item 20. Indemnification of Directors and Officers

     Section 145 of the General Corporation Law of the State of Delaware, or DGCL, empowers a Delaware corporation to indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation) by reason of the fact that such person is or was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

     A Delaware corporation may indemnify past or present officers and directors of such corporation or of another corporation or other enterprise at the former corporation’s request, in an action by or in the right of the corporation to procure a judgment in its favor under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in defense of any action referred to above, or in defense of any claim, issue or matter therein, the corporation must indemnify such person against the expenses (including attorneys’ fees) which such person actually and reasonably incurred in connection therewith. Section 145 further provides that any indemnification shall be made by the corporation only as authorized in each specific case upon a determination that indemnification of such person is proper because he has met the applicable standard of conduct (i) by the stockholders, (ii) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, (iii) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (iv) by independent legal counsel in a written opinion, if there are no such disinterested directors, or if such disinterested directors so direct. Section 145 further provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

     OrthoLogic has directors’ and officers’ insurance which provides for indemnification of officers and directors of the Company and certain other persons against liabilities and expenses incurred by any of them in certain stated proceedings and under certain stated conditions. OrthoLogic has also entered into separate indemnification agreements with each of its directors and certain officers that may require the Company, among other things, to indemnify such directors against certain liabilities that may arise by reason of their status or service as directors or officers to the maximum extent permitted under Delaware law.

     OrthoLogic’s amended and restated certificate of incorporation provides that indemnification shall be to the fullest extent permitted by the DGCL for all current or former directors or officers. Reference is made to Item 22 for OrthoLogic’s undertakings with respect to indemnification for liabilities arising under the Securities Act.

     Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

     See the exhibit index for a list of exhibits filed as part of this registration statement.

(b) Financial Statement Schedules. See the “F” pages included as part of this registration statement.

     Item 22. Undertakings

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     The undersigned Registrant hereby undertakes:

     (2) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

         (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended;

         (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

         (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in the registration statement;

     (3) That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

     (4) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

     (5) That, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the Registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

     (6) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request;

     (7) That, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form;

     (8) That every prospectus (i) that is filed pursuant to paragraph (6) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933, as amended, and is used in

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connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

     (9) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired therein, that was not the subject of and included in the registration statement when it became effective.

     Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 20 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tempe, State of Arizona, on June 3, 2004.

POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas R. Trotter and Sherry A. Sturman, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

S-1

S-2

Financial Statements

Chrysalis Biotechnology Audited Financial Statements
OrthoLogic Corp. Unaudited Pro forma Consolidated Financial Statements

Chrysalis Biotechnology, Inc.
(A Development Stage Company)

Consolidated Financial Statements for the Three Months Ended March 31, 2004 and for the Years Ended December 31, 2003 and 2002 and Independent Auditors’ Report

F-1

CHRYSALIS BIOTECHNOLOGY, INC.
(A Development Stage Company)

TABLE OF CONTENTS

F-2

INDEPENDENT AUDITORS’ REPORT

Board of Directors
Chrysalis Biotechnology, Inc.
Galveston, Texas

     We have audited the accompanying consolidated balance sheets of Chrysalis Biotechnology, Inc. (a development stage company) as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the two years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2003 and 2002, and the results of its operations and its cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States of America.

     The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s recurring losses from operations in the development stage and ability to fund its future operations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     As described in Note 1 to the financial statements, on April 28, 2004 the Company entered into a definitive agreement with OrthoLogic Corp. for the acquisition of substantially all of the intellectual property of the Company.

Phoenix, Arizona
June 1, 2004

F-3

CHRYSALIS BIOTECHNOLOGY, INC.
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 AND DECEMBER 31, 2003 AND 2002