Greenbackd

OrthoLogic Corporation (NASDAQ:CAPS) has filed its 10K for the year ended December 31, 2008.

We’ve been following CAPS (see our post archive here) because it trades below its net cash value and Biotechnology Value Fund (BVF) has disclosed a 13.42% holding. It’s an unusual holding for us because BVF’s holding is passive. At CAPS’s $0.51 close Friday it has a market capitalization of $20.8M. Our initial estimate for CAPS’s net cash value was $44.1M or $1.08 per share. We’ve now adjusted that valuation to $43.8M or $1.07 per share. CAPS’s cash burn rate is quite high relative to its net cash position, so rapid steps need to be taken for this to be a profitable investment.

The value proposition updated

The summary of our estimate for the company’s liquidation value is set out below (the “Book Value” column shows the assets as they are carried in the financial statements, and the “Liquidating Value” column shows our estimate of the value of the assets in a liquidation):

Off-balance sheet arrangements and Contractual obligations

There is no discussion in the 10K about CAPS’s off-balance sheet arrangements. CAPS’s only contractual obligation disclosed in 10K is for the company’s Tempe, Arizona facility and is $1.3M through 2012.

Conclusion

At its $0.51 close Friday, CAPS is trading at 47% of our estimate of its $1.07 per share net cash value. The risk for this investment continues to be that CAPS dissipates its cash before it or BVF can salvage any value. Management is taking steps to reduce its cash burn and repurchase undervalued stock, which is encouraging.

[Full Disclosure:  We do not have a holding in CAPS. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]