##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-25311
  AMICAS, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

59-2248411(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   20 Guest Street, Suite 400, Boston, Massachusetts
    02135
 (Address of principal executive
    offices, including zip code)
  Registrants telephone number, including area code:
 (617) 779-7878
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001

The NASDAQ Stock Market LLCRights to purchase Series B
    Preferred Stock

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o þ o
  Rule 12b-12 o þ
      Documents Incorporated by Reference




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##### 



AMICAS,
    INC.
  Form 10-K
  Table of
    Contents
  PagePART IItem 1.


Business


2Item 1A.


Risk
    Factors


14Item 1B.


Unresolved Staff
    Comments


23Item 2.


Properties


24Item 3.


Legal
    Proceedings


24Item 4.


Submission of
    Matters to a Vote of Security Holders


24PART IIItem 5.


Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


24Item 6.


Selected
    Consolidated Financial Data


26Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


28Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


39Item 8.


Financial
    Statements and Supplementary Data


39Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


40Item 9A.


Controls and
    Procedures


40Item 9B.


Other
    Information


40PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance of the
    Registrant


41Item 11.


Executive
    Compensation


41Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


41Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


41Item 14.


Principal
    Accountant Fees and Services


41PART IVItem 15.


Exhibits and
    Financial Statements


42SignaturesEx-23.1 Consent of BDO Seidman, LLP, Independent Registered Public Accounting FirmEx-31.1 Certification of Chief Executive OfficerEx-31.2 Certification of Chief Financial OfficerEx-32.1 Certification of Chief Executive Officer and Chief Financial Officer    AMICAS, Vision Series, Office Solutions and AMICAS Insight
    Services are trademarks, service marks or
 registered trademarks of AMICAS, Inc. All other trademark and
    company names mentioned are the
 property of their respective owners.
 1




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##### Table of Contents



PART I  Item 1.
    Business  General
  tm end-to-end best-of-breed sm
           2




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Industry
    Background
    hard-to-transport
       3




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##### Table of Contents



Turnkey
    Radiology PACS Market: Market Penetration Forecasts for
    Hospitals and Imaging Centers (U.S.), 2002-2012
  Hospitals

Penetration

Total

Imaging

PenetrationTotal

With

Rate

Imaging

Centers

RateYear

Hospitals

PACS

(%)

Centers

With PACS

(%)2002


5,794



896



15.5



4,589



335



7.32003


5,726



1,105



19.3



5,057



450



8.92004


5,659



1,325



23.4



5,306



605



11.42005


5,593



1,561



27.9



5,535



780



14.12006


5,528



1,804



32.6



5,719



967



16.92007


5,463



2,056



37.6



5,844



1,175



20.12008


5,399



2,311



42.8



5,950



1,398



23.52009


5,336



2,568



48.1



6,044



1,662



27.52010


5,274



2,818



53.4



6,120



1,977



32.32011


5,212



3,060



58.7



6,185



2,344



37.92012


5,151



3,307



64.2



6,241



2,783



44.6CAGR (2005-2012):










11.3
%










19.9
%         Business
    Strategy
      
    ambulatory care facilities, which primarily consist of imaging
    centers, radiology groups and billing services, and
    acute care facilities, which primarily consist of hospitals and
    integrated delivery networks (IDNs).  end-to-end
 4




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Products
    and Services
      Vision
    Series Products
  Vision Series RIS.
 5




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Vision Series PACS.
  Vision Series Document Management.
  Vision Series Financials. follow-up
  EDI Services.
    
    Automated patient statement and collection letter processing
    services;
    Automated electronic submission of insurance claims and claims
    editing to include electronic remittance of insurance payments
    and automatic posting of explanation of benefits data; and
    Automated electronic access to insurance and managed care plans
    to determine a patients eligibility and covered benefits.  Computed Radiography.
  Innovative
    New Products
    RadStream.
 6




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Vision Reach. e-mail e-mail
  Insight Dashboards.
  Insight Services.
  Professional
    Services: AMICAS Insight Solutions
    Technical
    Support
  Software Support.
  Hardware Support. on-site
  Future
    Products
   7




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
    Extended functionality for referring physicians and for
    referring physician communications;
    Extended 3D visualization including advanced clinical
    applications;
    More complete integration of related clinical tools such as
    computer assisted diagnosis (CAD) modules and applications; and
    More extensive options related to portable, handheld and kiosk
    device access.  Research
    and Development
      Sales and
    Marketing
        Intellectual
    Property
       8




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and/or
    Competition
    
    Product features and functionality;
    Ongoing product enhancements;
    Technology architecture and design;
    Customer service, support, and satisfaction;
    Distribution coverage and quality;
    Vendor reputation and stability; and
    Price.       9




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Privacy
    Issues
    
    Security that requires both user identification numbers
    (IDs) and passwords to access our systems locally or
    remotely, with the potential of requiring digital certificates
    for remote, Internet-based access, should such measures be
    required;
    Encryption of data transmitted over the Internet;
    Use of a mechanism for preventing unauthorized access to private
    data resources on our internal network, commonly referred to as
    a firewall;
    Logging on reporting capabilities; and
    Data integrity mechanisms.      
    Using individual network user IDs and passwords for each
    employee handling electronic data within our internal
    network; and
    Requiring each employee to sign an agreement to comply with all
    Company policies, including our policy regarding the handling of
    confidential information.    Healthcare
    Regulation
      Health Insurance Portability and Accountability Act of
    1996, or HIPAA.
  
    Electronic transactions involving healthcare information;
    Privacy of individually identifiable protected health
    information (PHI); and 10




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
    Security of healthcare information and electronic signatures.            Other Privacy Requirements.
  FDA.
  The Federal Anti-Kickback Statute.
 11




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Stark Law.
  Other Fraud and Abuse Laws.
    Access to
    Our Filings with the Securities and Exchange
    Commission
  www.amicas.com Form 10-K. Form 10-K, Form 10-Q, Form 8-K,
   12




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02135-2040.
  Employees
      Stephen
    N. Kahane
  E-Health
  Joseph
    D. Hill
    Peter
    A. McClennen
    Medical
    Division Sale
   13




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Item 1A.
    Risk
    Factors  Warning
    About Forward-Looking Statements and Risk Factors That May
    Affect Future Results
  Form 10-K
    Form 10-Q Form 8-K.
 14




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Our
    operating results will vary from period to period. In addition,
    we have experienced losses in the past and may never achieve
    consistent profitability.
    and/or
  
    release of new products, product upgrades and services, and the
    rate of adoption of these products and services by new and
    existing customers;
    timing, cost and success or failure of our new product and
    service introductions and upgrade releases;
    length of sales and delivery cycles;
    size and timing of orders for our products and services;
    changes in the mix of products
    and/or
    services sold;
    availability of specified computer hardware for resale;
    deferral
    and/or
    realization of deferred software license and system revenues
    according to contract terms;
    interpretations of accounting regulations, principles or
    concepts that are or may be considered relevant to our business
    arrangements and practices;
    changes in customer purchasing patterns;
    changing economic, political and regulatory conditions,
    particularly with respect to the information technology-spending
    environment;
    competition, including alternative product and service
    offerings, and price pressure;
    customer attrition;
    timing of, and charges or costs associated with, mergers,
    acquisitions or other strategic events or transactions,
    completed or not completed;
    timing, cost and level of advertising and promotional programs;
    changes of accounting estimates and assumptions used to prepare
    the prior periods financial statements and accompanying
    notes, and managements discussion and analysis of
    financial condition and results of operations (e.g., our
    valuation of assets and estimation of liabilities); and
    uncertainties concerning threatened, pending and new litigation
    against us, including related professional services fees.   15




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and/or period-to-period
  Our
    future success is dependent in large part on the success of our
    current products.
    If our
    new products, including product upgrades, and services do not
    achieve sufficient market acceptance, our business, financial
    condition, cash flows, revenues, and operating results will
    suffer.
    
    new products and services including AMICAS Office Solutions,
    Dashboards, Vision Reach and Radstream; and
    enhancements to our existing products, support and services
    including Vision Series RIS and Vision
    Series Financials.      and/or
  National
    and regional competitors could cause us to lower our prices or
    to lose customers.
    
    product features and functionality;
    customer service, support and satisfaction; 16




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
    price;
    ongoing product enhancements; and
    vendor reputation and stability.      Changes
    in the regulatory and economic environment in the healthcare
    industry could cause us to lose revenue and incur substantial
    costs to comply with new regulations.
    and/or and/or
  If the
    marketplace demands subscription pricing
    and/or
    application service provider, or ASP, delivered offerings, our
    revenues may be adversely impacted.
   17




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and/or and/or
  Our
    business could suffer if our products and services contain
    errors, experience failures, result in loss of our
    customers data or do not meet customer
    expectations.
  and/or and/or
  Our
    competitive position could be significantly harmed if we fail to
    protect our intellectual property rights from third-party
    challenges.
        Intellectual
    property infringement claims against us could be costly to
    defend and could divert our managements attention away
    from our business.
   18




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We may
    undertake additional acquisitions, which may involve significant
    uncertainties and may increase costs and divert management
    resources from our core business activities, or we may fail to
    realize anticipated benefits of such acquisitions.
  and/or
  
    our ability to cross-sell products and services to customers
    with whom we have established relationships and those with whom
    the acquired business had established relationships;
    diversion of our managements attention from our existing
    business;
    potential conflicts in customer and supplier relationships;
    our ability to coordinate organizations that are geographically
    diverse and may have different business cultures;
    dilution to existing stockholders if we issue equity securities
    in connection with acquisitions;
    assumption of liabilities or other obligations in connection
    with the acquisition; and
    compliance with regulatory requirements.  and/or
  Technology
    solutions may change faster than we are able to update our
    technologies, which could cause a loss of customers and have a
    negative impact on our revenues.
    
    develop new or enhance existing products and services to meet
    the changing needs of our customers and the marketplace in a
    timely and cost-effective way; and
    respond effectively to technological changes, new product
    offerings, product enhancements and new services of our
    competitors.  and/or
 19




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##### Table of Contents



Our
    inability to renew, or make material modifications to,
    agreements with our third-party product and service providers
    could lead to a loss of customers and have a negative impact on
    our revenues.
    The
    nature of our products and services exposes us to product
    liability claims that may not be adequately covered by insurance
    or contractual indemnification.
      We may
    be subject to claims resulting from the activities of our
    strategic partners.
    We are
    subject to government regulation and legal uncertainties,
    compliance with which could have a material adverse effect on
    our business.
  HIPAA
   20




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and/or
  Other
    E-Commerce
    Regulations
    FDA
  and/or
  We and
    our customers must comply with various federal and state
    anti-kickback, self-referral, false claims and similar laws, the
    breach of which could cause a material adverse effect on our
    business, financial condition and results of
    operations.
   21




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##### Table of Contents



State
    and federal laws relating to confidentiality of patient medical
    records could limit our customers ability to use our
    services and expose us to liability.
  and/or
  We
    depend on partners/suppliers for delivery of electronic data
    interchange (e.g., insurance claims processing and invoice
    printing services), commonly referred to as EDI, hardware
    maintenance services, third-party software or software or
    hardware components of our offerings, and sales lead generation.
    Any failure, inability or unwillingness of these suppliers to
    perform these services or provide their products could
    negatively impact our customers satisfaction and our
    revenues.
  on-site and/or
  Our
    systems may be vulnerable to security breaches and
    viruses.
  and/or
  Our
    growth could be limited if we are unable to attract and retain
    qualified personnel.
   22




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##### Table of Contents



We may
    be exposed to credit risks of our customers.
    Our
    future success depends on our ability to successfully develop
    new products and adapt to new technological
    change.
    We are
    exposed to potential risks and we will continue to incur
    increased costs as a result of the internal control testing and
    evaluation process mandated by Section 404 of the
    Sarbanes-Oxley Act of 2002.
      Item 1B.
    Unresolved
    Staff Comments   23




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##### Table of Contents



Item 2.
    Properties    2007Location

Square Footage


Monthly Cost


Lease ExpirationBoston, Massachusetts


26,614


$
57,960


January 2008Daytona, Florida


35,253


$
46,241


July 2008     Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Market Information.
  2005

High


LowFirst Quarter

$
4.60


$
3.65Second Quarter

$
4.78


$
2.85Third Quarter

$
5.69


$
4.25Fourth Quarter

$
5.43


$
4.17   2006First Quarter

$
5.60


$
4.27Second Quarter

$
4.79


$
2.68Third Quarter

$
3.58


$
2.50Fourth Quarter

$
3.32


$
2.58  24




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##### Table of Contents



Stock Price Performance Graph.
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among AMICAS, Inc, The NASDAQ Composite Index
    And The Russell 2000 Index
  
  *
    $100 invested on 12/31/01 in stock or index 
    including reinvestment of dividends. Fiscal year ending
    December 31.  12/31/01


12/31/02


12/31/03


12/31/04


12/31/05


12/31/06AMICAS Common Stock



100.00




68.14




78.23




78.76




87.79




52.04NASDAQ Composite



100.00




71.97




107.18




117.07




120.50




137.02Russel
    2000©
    index



100.00




79.52




117.09




138.55




144.86




171.47   Stockholders.
  Dividend Policies.
  Unregistered Sales of Securities.
 25




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##### Table of Contents



Issuer Purchases of Equity Securities.
  Total Number ofSharesPurchased as


Approximate DollarTotal





Part of Publicly


Value of Shares ThatNumber of





Announced


May Yet BeShares


Average Price


Plans or


Purchased Under thePeriod

Purchased


Paid per Share


Programs


Plans or ProgramsAs of September 30, 2006


4,193,454


$
3.337



4,193,454


$
1,004,570October 1, 2006 through
    October 31, 2006














1,004,570November 1, 2006 through
    November 30, 2006














1,004,570December 1, 2006 through
    December 31, 2006


344,436


$
2.903



4,537,890



0Total:


4,537,890


$
3.304



4,537,890


$
0   Item 6.
    Selected
    Consolidated Financial Data  Form 10-K.
  Form 10-K
  For the Year Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share data)Consolidated Statements of
    Operations Data(a)(b)(c)RevenuesMaintenance and services

$
36,258


$
36,813


$
29,543


$
24,534


$
25,005Software licenses and system sales


13,179



15,998



12,776



9,677



13,046Total revenues


49,437



52,811



42,319



34,211



38,051Costs and expensesCost of revenues:Maintenance and services


15,003



14,163



13,060



13,999



11,247Software licenses and system
    sales, includes amortization of software costs of $1,958 in
    2006, $1,966 in 2005, $3,178 in 2004, $1,873 in 2003 and $911 in
    2002


7,644



6,413



6,154



5,147



4,518Impairment of capitalized software










3,229



490



Selling, general and administrative


21,770



20,701



25,824



14,577



16,707 26




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##### Table of Contents



For the Year Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share data)Research and development


8,705



9,047



9,488



7,565



6,041Depreciation and amortization


1,238



1,777



1,968



1,331



1,439Settlements, severance and
    impairment charges






5,677



5,730







(6,000
)Acquired in-process technology














750



Restructuring credits










(155
)






(501
)Total costs and expenses


54,360



57,778



65,298



43,859



33,451Operating (loss)
    income


(4,923
)


(4,967
)


(22,979
)


(9,648
)


4,600Interest income (expense), net


3,753



1,765



(1,336
)


(876
)


(447
)(Loss) income from continuing
    operations, before income taxes


(1,170
)


(3,202
)


(24,315
)


(10,524
)


4,153(Benefit from) provision for
    income taxes


84



(1,197
)


2,200



200



162(Loss) income from continuing
    operations


(1,254
)


(2,005
)


(26,515
)


(10,724
)


3,991Gain on Sale of discontinued
    operations, net of income taxes of $33,906 in 2005


230



46,277











(Loss) income from discontinued
    operations, net of income taxes






(57
)


14,058



18,687



20,159Net (loss) income

$
(1,024
)

$
44,215


$
(12,457
)

$
7,963


$
24,150(Loss) Earnings per
    share  basicContinuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)

$
(0.25
)

$
0.10Discontinued operations


0.00



1.00



0.32



0.43



0.48$
(0.03
)

$
0.96


$
(0.29
)

$
0.18


$
0.58(Loss) Earnings per
    share  dilutedContinuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)

$
(0.25
)

$
0.08Discontinued operations


0.00



1.00



0.32



0.43



0.41$
(0.03
)

$
0.96


$
(0.29
)

$
0.18


$
0.49Cash provided by (used in)
    operating activities(d)

$
3,565


$
(7,689
)

$
4,735


$
2,180


$
20,758     (a)
    
    On November 25, 2003, we acquired 100% of the outstanding
    capital stock of Amicas PACS, Corp., formerly Amicas, Inc., a
    developer of Web-based diagnostic image management software
    solutions. Our 2003 statement of operations includes only
    one month of operating results of Amicas PACS and our
    2002 statement of operations does not include operating
    results of Amicas PACS.(b)
    
    The consolidated statement of operations data for the year ended
    December 31, 2004 has been prepared and historical
    consolidated statements of operations have been reclassified to
    present the results of the Medical Division as discontinued
    operations.(c)
    
    Consolidated statement of operations data includes $1,763
    related to the adoption of SFAS 123(R), Share-Based
    Payment, for the year ended December 31, 2006.(d)
    
    Includes operating activities of the Medical Division through
    the sale of the Medical Division on January 3, 2005.  27




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##### Table of Contents



December 31,2006


2005


2004


2003


2002(In thousands)Consolidated Balance Sheet
    DataCash and cash equivalents

$
7,331


$
82,214


$
12,634


$
20,128


$
39,474Marketable securities


64,436















Working capital


68,964



79,036



19,968



9,548



27,220Total assets


126,871



140,285



133,886



132,576



117,131Total long-term debt










28,674



29,757



18,941Total stockholders equity


107,555



119,913



64,655



70,662



60,433   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
  TM end-to-end TM
      
    In January 2005, we completed the sale of our medical division
    to Cerner Corporation. As consideration for the sale, we
    received $100 million in cash, subject to a post-closing
    purchase price reduction of $1.6 million. In 2005, we
    recorded a net gain on the sale of $46.3 million, net of
    income taxes of $33.9 million.
    In January 2005, we repaid the entire outstanding balance under
    our credit facility with Wells Fargo Foothill, Inc. of
    approximately $23.2 million and we terminated the credit
    facility.
    On November 25, 2003, we acquired 100% of the outstanding
    capital stock of Amicas PACS, Corp., formerly known as Amicas,
    Inc. (Amicas PACS), a developer of Web-based
    diagnostic image management software solutions., for
    $31 million in cash, including direct transaction costs of
    which $15 million was financed through the use of our
    credit line. The merger agreement provided for an additional
    purchase payment of up to $25 million based on attainment
    of specified earnings targets through 2004. In December 28




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##### Table of Contents



2004, the merger agreement was amended. The amendment terminated
    the earn-out consideration obligations set forth in the merger
    agreement and provided that we pay former Amicas PACS
    stockholders $10.0 million which was recorded as additional
    goodwill and certain Amicas PACS employees $4.5 million
    related to the satisfaction of certain obligations. All amounts
    were paid as of December 31, 2005.  David and Susan
    Jones v. InfoCure Corporation, et al.
  RESULTS
    OF OPERATIONS
  Revenues
  Year Ended December 31,2006


Change


2005


Change


2004(Dollars in thousands)Maintenance and services

$
36,258



(1.5
)%

$
36,813



24.6
%

$
29,543Percentage of total revenues


73.3
%






69.7
%






69.8
%Software licenses and system sales

$
13,179



(17.6
)%

$
15,998



25.2
%

$
12,776Percentage of total revenues


26.7
%






30.3
%






30.2
%Total revenues

$
49,437



(6.4
)%

$
52,811



24.8
%

$
42,319            29




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##### Table of Contents



Cost
    of Revenues
  Year Ended December 31,2006


Change


2005


Change


2004(Dollars in thousands)Maintenance and services

$
15,003



5.9
%

$
14,163



8.4
%

$
13,060Percentage of maintenance and
    services revenues


41.4
%






38.5
%






44.2
%Software licenses and system sales

$
7,644



19.2
%

$
6,413



4.2
%

$
6,154Percentage of software licenses
    and system sales


58.0
%






40.1
%






48.2
%Total cost of revenues

$
22,647



10.1
%

$
20,576



7.1
%

$
19,214                30




---



##### Table of Contents



Operating
    Expenses
  Year Ended December 31,2006


Change


2005


Change


2004(Dollars in thousands)Selling, general and administrative

$
21,770



5.2
%

$
20,701



(19.8
)%

$
25,824Percentage of total revenues


44.0
%






39.2
%






61.0
%Research and development

$
8,705



(3.8
)%

$
9,047



(4.6
)%

$
9,488Percentage of total revenues


17.6
%






17.1
%






22.4
%Depreciation and amortization

$
1,238



(30.3
)%

$
1,777



(9.7
)%

$
1,968Percentage of total revenues


2.5
%






3.4
%






4.7
%   Selling,
    general and administrative
          Research
    and development
       31




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##### Table of Contents



Depreciation
    and amortization expense
      Settlements,
    Severance and Impairment Charges
    
    Settlement of earn-out.  In connection with the
    termination of the $4.3 million earn-out consideration
    obligations relating to the acquisition of Amicas PACS, we
    recognized $1.9 million of expense for amounts paid to
    certain Amicas PACS employees under the Amicas PACS bonus plan.
    Included in the $1.9 million was $1.1 million for the
    acceleration of earn-out bonuses, pursuant to agreements with
    former Amicas PACS executives, whose employment was terminated
    by mutual agreement.
    Settlement of litigation.  On October 14,
    2005, the Company announced that David and Susan Jones
    (Plaintiffs) and InfoCure Corporation (now known as
    AMICAS, Inc.), Richard Perlman and James Price agreed to settle
    and to resolve and terminate, fully and finally, the issues
    between them in the lawsuit styled David and Susan
    Jones v. InfoCure Corporation, et al. filed in
    2001 concerning a 1999 transaction (see Note M to our
    Consolidated Financial Statements). As part of the settlement,
    the Company agreed to pay $3.25 million to the Plaintiffs.
    The Company recorded a $2.75 million charge related to the
    settlement of this litigation in 2005. The $2.75 million
    charge is net of the reimbursement received of $325,000 from the
    co-defendants, who are two former executive officers of the
    Company, and $0.5 million for previously accrued amounts.
    Restructuring charges:  The 2004 Plan.
  The 2005 Plan.
  Office Closure.
  Executive Termination Costs.
 32




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##### Table of Contents




    Settlement of earn-out.  In connection with the
    termination of the earn-out consideration obligations relating
    to the acquisition of Amicas PACS, in 2004 we recognized
    $2.4 million of expense for amounts paid to certain Amicas
    PACS employees under the Amicas PACS bonus plan.
    Severance regarding corporate headquarters
    relocation.  We recorded severance-related costs
    of $1.3 million, including executive-related severance
    costs of $0.4 million. In December 2004, we relocated our
    corporate headquarters from Ridgefield, Connecticut to Boston,
    Massachusetts. On October 15, 2004, we notified 57 of our
    employees that, in connection with the relocation of our
    corporate headquarters, their employment would be terminated
    under a plan of termination.
    Impairment charge.  We recorded an impairment
    charge of $1.2 million to write-down our enterprise
    resource planning software, or ERP, relating to our decision to
    cease using a portion of our ERP. This decision was due to the
    downsizing of our business as a result of the Medical Division
    sale.
    Settlement of litigation.  We recorded costs of
    $0.8 million relating to the settlement of litigation. In
    August 2003, we were served with a summons and complaint as part
    of a bankruptcy proceeding relating to a former business
    associate of ours. The complaint alleged that in 2001, we
    received a preference payment from the business associate and
    sought to avoid and recover the $0.8 million payment made
    to us. We agreed to settle this matter in March 2004 and paid
    $0.3 million to the former business associate through its
    committee of unsecured creditors. Also, in September 2004, a
    lawsuit styled DR Systems, Inc. v. VitalWorks Inc. and
    Amicas, Inc. was filed in the United States District Court
    for the Southern District of California. The complaint alleged
    that VitalWorks and Amicas infringed the plaintiffs patent
    through the manufacture, use, importation, sale
    and/or offer
    for sale of automated medical imaging and archival systems. The
    plaintiff sought monetary damages, treble damages and a
    permanent injunction. On November 3, 2004, we served our
    answer. On January 26, 2005, the parties entered into a
    Settlement, Release and License agreement, and on
    February 4, 2005, a stipulation of dismissal, dismissing
    the lawsuit with prejudice, was entered. In connection with this
    agreement, we paid the plaintiff $0.5 million in 2005. This
    amount was accrued at December 31, 2004 and paid as of
    December 31, 2005.  Restructuring
    Credits
    Interest
    Income (Expense)
  Year Ended December 31,2006


Change


2005


Change


2004(Dollars in thousands)Interest income

$
3,753



49.2
%

$
2,516



1,443.6
%

$
163Interest expense






(100.0
)%


(751
)


(49.9
)%


(1,499
)      33




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##### Table of Contents



Income
    Taxes
      Gain
    on the sale of discontinued operations
          (Loss)
    Income from Discontinued Operations
    LIQUIDITY
    AND CAPITAL RESOURCES
   34




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##### Table of Contents



Contractual
    Obligations
    YearsTotals


2007


2008


2009


Thereafter(In thousands)Operating leases(a)

$
1,620


$
1,262


$
358


$




Other commitments(b)


6,154



3,034



2,496



624



Total

$
7,774


$
4,296


$
2,854


$
624



     (a)
    
    In March 2005, we entered into subleases for additional space at
    our Boston, Massachusetts corporate headquarters. 35




---



##### Table of Contents



(b)
    
    Included in other commitments are the following:  
    In connection with the Purchase Agreement with Cerner, the
    Company assigned its agreement with a third-party provider of
    EDI services for patient claims processing to Cerner. The annual
    processing services fee will range from $0.2 million to
    $0.3 million based on the Companys and Cerners
    combined volume usage in the last month of the preceding year.
    The Company also assigned its patient statement agreement with
    National Data Corp. to Cerner. The Company committed to minimum
    quarterly volumes and paid a minimum quarterly fee of
    $0.6 million to Cerner through March 2006. Thereafter, the
    minimum quarterly volume commitments will be reduced by
    1.25% per quarter until April 2009. The Company is also
    committed to paying Cerner approximately $0.2 million per
    year through April 2007 for certain EDI services.
    In connection with our employee savings plans, we have
    committed, for the 2007 plan year, to contribute to the plans.
    Our matching contribution for 2007 is estimated to be
    approximately $0.5 million in cash. Our matching
    contribution for 2006 was approximately $0.5 million of
    which $0.4 million was paid in 2006 and $0.1 million
    paid in January 2007.  Rule 10b5-1
             36




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##### Table of Contents



Critical
    Accounting Policies
      Revenue Recognition. 97-2, SOP 98-9, SOP 97-2 SOP 81-1 01-14, Out-of-Pocket (off-the-shelf and/or
    Cash Equivalents and Marketable Debt
    Securities.
  held-to-maturity, Held-to-maturity available-for-sale
 37




---



##### Table of Contents



held-to-maturity available-for-sale
  Accounts Receivable.
  Long-lived Assets.
  Goodwill and Business Combinations.
  Software Development Costs.
    Income Taxes.
  Accounting for Share-Based Payment.
  Loss Contingencies.
 38




---



##### Table of Contents



Recent
    Accounting Pronouncements
     Item 7A.  Quantitative
    and Qualitative Disclosures about Market Risk          Item 8.
    Financial
    Statements and Supplementary Data  page F-1.
 39




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the Company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that the receipts and expenditures of
    the Company are being made only in accordance with
    authorizations of its management and directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on its
    financial statements.    Internal Control-Integrated
    Framework
  page F-2 Form 10-K
   Item 9B.
    Other
    Information  Changes
    in Internal Controls
   40




---



##### Table of Contents



PART III  Form 10-K Form 10-K,
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  www.amicas.com/investor Form 8-K 02135-2040.
    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   41




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statements  Financial Statements. page F-1
  Financial
    Statements and Supplementary Data
  PageFinancial Statements:Reports of
    Independent Registered Public Accounting Firm


F-1Consolidated
    Balance Sheets as of December 31, 2006 and 2005


F-3Consolidated
    Statements of Operations and Comprehensive Loss (Income) for the
    years ended December 31, 2006, 2005 and 2004


F-4Consolidated
    Statements of Stockholders Equity for the years ended
    December 31, 2006, 2005 and 2004


F-5Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005, and 2004


F-6Notes to
    Consolidated Financial Statements


F-7   Exhibits. Regulation S-K
  ExhibitNo.



Description2
.1



Agreement and Plan of
    Distribution, dated as of February 21, 2001, by and between
    InfoCure Corporation and PracticeWorks, Inc. (incorporated by
    reference to Exhibit 2.1 to the Registrants Current
    Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).2
.2



Agreement and Plan of Merger,
    dated as of November 25, 2003, by and among VitalWorks
    Inc., PACS Acquisition Corp., Amicas, Inc., and the
    Stockholders Representative (incorporated by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on December 10, 2003).2
.3



First Amendment to Agreement and
    Plan of Merger dated as of December 9, 2004 by and among
    VitalWorks Inc., Amicas, Inc., and Seth Rudnick, Hamid
    Tabatabaie and Alexander Spiro solely in their representative
    capacity as Committee Members constituting the
    Stockholders Representative (incorporated by reference to
    Exhibit 2.1 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on December 10, 2004).3
.1



Certificate of Incorporation of
    InfoCure Corporation with all amendments (incorporated by
    reference to Exhibit 3.1 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 1999).3
.2



Second Amended and Restated Bylaws
    of InfoCure (incorporated by reference to Exhibit 3.2 to
    the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).4
.1



See Exhibits 3.1 and 3.2 for
    provisions of the Certificate of Incorporation, as amended, and
    Bylaws of InfoCure defining rights of the holders of common
    stock of InfoCure.4
.2



Specimen Certificate for shares of
    common stock (incorporated by reference to Exhibit 4.2 to
    our Annual Report on
    Form 10-K,
    filed with the Commission on March 30, 2005).4
.3



Rights Agreement, including all
    exhibits, dated as of December 5, 2002, between VitalWorks
    Inc. and StockTrans, Inc., as Rights Agent (incorporated by
    reference to Exhibit 4 to the Registrants Current
    Report on
    Form 8-K,
    filed with the Commission on December 9, 2002).4
.4



Amended and Restated Warrant,
    originally issued to Crescent International Ltd. on
    September 28, 1998, as amended and restated on
    March 6, 2001 (incorporated by reference to
    Exhibit 10.44 to the Registrants Annual Report on
    Form 10-K,
    filed with the Commission on April 2, 2001).10
.1



InfoCure Corporation 1996 Stock
    Option Plan (incorporated by reference to Exhibit 10.1
    filed with InfoCures Registration Statement on
    Form SB-2)
    (Registration
    No. 333-18923). 42




---



##### Table of Contents



ExhibitNo.



Description10
.2



Form of Incentive Stock Option
    Agreement of InfoCure Corporation (incorporated by reference to
    Exhibit 10.2 filed with InfoCures Registration
    Statement on
    Form SB-2)
    (Registration
    No. 333-18923).10
.3



InfoCure Corporation
    1997 Directors Stock Option Plan (incorporated by
    reference to Exhibit 10.48 filed with InfoCures
    Annual Report on
    Form 10-KSB
    on April 1, 1998).10
.4



InfoCure Corporation
    Length-of-Service
    Nonqualified Stock Option Plan (incorporated by reference to
    Exhibit 10.49 filed with InfoCures Annual Report on
    Form 10-KSB
    on April 1, 1998).10
.5



Amendment to InfoCure Corporation
    1996 Stock Option Plan (incorporated by reference to
    Exhibit 10.15 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).10
.6



Amendment to InfoCure Corporation
    Length-of-Service
    Nonqualified Stock Option Plan (incorporated by reference to
    Exhibit 10.16 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).10
.7



Amendment to InfoCure Corporation
    Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 10.17 to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).10
.8



InfoCure Corporation Employee
    Stock Purchase Plan (incorporated by reference to
    Exhibit 10.50 filed with InfoCures Annual Report on
    Form 10-KSB
    on April 1, 1998).10
.9



Form of Stock Option Grant
    Certificate and schedule of recipients of such options
    (incorporated by reference to Exhibit 10.22 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).10
.10



Form of Stock Option Grant
    Certificate and schedule of recipients of such options
    (incorporated by reference to Exhibit 10.23 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1999).10
.11



Tax Disaffiliation Agreement,
    dated as of March 5, 2001, by and between InfoCure
    Corporation and PracticeWorks, Inc. (incorporated by reference
    to Exhibit 10.1 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.12



Employee Benefits and Compensation
    Allocation Agreement, dated as of March 5, 2001, by and
    between InfoCure Corporation and PracticeWorks, Inc.
    (incorporated by reference to Exhibit 10.4 to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.13



Intellectual Property License
    Agreement, dated as of March 5, 2001, by and between
    InfoCure Corporation and PracticeWorks Systems, LLC
    (incorporated by reference to Exhibit 10.5(a) to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.14



Intellectual Property License
    Agreement, dated as of March 5, 2001, by and between
    InfoCure Corporation and PracticeWorks Systems, LLC
    (incorporated by reference to Exhibit 10.5(b) to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.15



Assignment of Copyrights, dated as
    of March 5, 2001, by and between InfoCure Corporation and
    PracticeWorks Systems, LLC (incorporated by reference to
    Exhibit 10.5(c) to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.16



Assignment of Trademarks, dated as
    of March 5, 2001, by and between InfoCure Corporation and
    PracticeWorks Systems, LLC (incorporated by reference to
    Exhibit 10.5(d) to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on March 20, 2001).10
.17



InfoCure Corporation 2000
    Broad-Based Stock Plan (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2000).10
.18



Lease Agreement, dated
    March 13, 2001, by and between InfoCure Corporation and
    Joseph V. Fisher, LLC (incorporated by reference to
    Exhibit 10.3 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 16, 2001).10
.19



VitalWorks Inc. 401(k) Profit
    Sharing Plan (incorporated by reference to Exhibit 10.1 to
    the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on August 13, 2002).10
.20



VitalWorks Inc. 2002 Employee
    Stock Purchase Plan (incorporated by reference to
    Exhibit 10.2 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on August 13, 2002). 43




---



##### Table of Contents



ExhibitNo.



Description10
.21



Form of Employment Agreement,
    dated April 26, 2004, by and between VitalWorks Inc. and
    our Named Executive Officers (incorporated by reference to
    Exhibit 10 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 10, 2004).10
.22



Amended Employment Agreement,
    dated July 26, 2004, by and between VitalWorks Inc. and
    Stephen N. Kahane (incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on November 9, 2004).10
.23



Form of Amended Employment
    Agreement, dated July 26, 2004, by and between VitalWorks
    Inc. and Joseph M. Walsh, Michael A. Manto and Stephen Hicks
    (incorporated by reference to Exhibit 10.2 to the
    Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on November 9, 2004).10
.24



Employment Agreement, dated
    October 1, 2004, by and between VitalWorks Inc. and Joseph
    D. Hill (incorporated by reference to Exhibit 10.3 to the
    Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on November 9, 2004).10
.25



Asset Purchase Agreement, dated as
    of November 15, 2004, by and between VitalWorks Inc. and
    Cerner Corporation (incorporated by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on November 18, 2004).10
.26



Agreement of Sublease, dated
    February 15, 2005, by and among AMICAS, Inc. and
    Patientkeeper, Inc. (incorporated by reference to Exhibit 10.1
    to our Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 10, 2005).10
.27



Amended and Restated Sublease,
    dated March 8, 2005, by and among AMICAS, Inc. and
    Chordiant Software, Inc. (incorporated by reference to Exhibit
    10.2 to our Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 10, 2005).10
.28



Employment Agreement, dated
    March 28, 2005, by and between AMICAS Inc. and Peter
    McClennen (incorporated by reference to Exhibit 2.1 to the
    Registrants Current report on
    Form 8-K,
    filed with the Commission on March 31, 2005).10
.29



Separation Agreement, dated
    March 31, 2005, by and between AMICAS Inc. and Hamid
    Tabatabaie (incorporated by reference to Exhibit 2.1 to the
    Registrants Current report on
    Form 8-K,
    filed with the Commission on April 6, 2005).10
.30



AMICAS, Inc. 401(k) Retirement
    Savings Plan effective December 1, 2005 (incorporated by
    reference to Exhibit 10.34 to the Registrants Annual
    Report on
    Form 10-K
    filed with the Commission on March 31, 2006).10
.31



2006 Stock Incentive Plan
    (incorporated by reference to Exhibit 99.1 to the
    Registrants Registration Statement on
    Form S-8,
    filed with the Commission on July 24, 2006).10
.32



Non-Employee Director Compensation
    Plan (incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on July 25, 2006).10
.33



Form of Incentive Stock Option
    Agreement under 2006 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.2 to the Registrants Current
    Report on
    Form 8-K,
    filed with the Commission on July 25, 2006).10
.34



Form of Nonqualified Stock Option
    Agreement under 2006 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.3 to the Registrants Current
    Report on
    Form 8-K,
    filed with the Commission on July 25, 2006).10
.35



Form of Restricted Stock Agreement
    for Employees under 2006 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.4 to the Registrants Current
    Report on
    Form 8-K,
    filed with the Commission on July 25, 2006).10
.36



Form of Restricted Stock Agreement
    for Non-Employee Directors under 2006 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.5 to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on July 25, 2006).21
.1



Subsidiaries of the Registrant
    (incorporated by reference to Exhibit 21.1 to
    Registrants Annual Report on
    Form 10-K
    filed with the Commission on March 30, 2005).23
.1*



Consent of BDO Seidman, LLP,
    independent registered public accounting firm.24
.1



Powers of Attorney (included on
    signature page). 44




---



##### Table of Contents



ExhibitNo.



Description31
.1*



Certification of Chief Executive
    Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2*



Certification of Chief Financial
    Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
.1*



Certifications of Chief Executive
    Officer and Chief Financial Officer Pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     *
    
    Filed herewith.
    
    Management contract or compensatory plan or arrangement. 45




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              Internal Control 
    Integrated Framework
  
    F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
    CONTROL OVER FINANCIAL REPORTING
      Internal
    Control-Integrated Framework
        Internal
    Control-Integrated Framework
    
    F-2




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2006


2005(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
7,331


$
82,214Marketable securities


64,436



Accounts receivable, net of
    allowances of $1,050 and $767


11,387



15,316Computer hardware held for resale


94



127Prepaid expenses and other current
    assets


4,635



1,025Total current assets


87,883



98,682Property and equipment, less
    accumulated depreciation and amortization of $6,155 and $5,347


1,369



1,259Goodwill


27,313



27,313Acquired/developed software, less
    accumulated amortization of $6,035 and $4,077


7,665



9,623Other intangible assets, less
    accumulated amortization of $1,316 and $889


2,084



2,511Other assets


557



897Total assets

$
126,871


$
140,285LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued
    expenses

$
7,155


$
9,085Accrued employee compensation and
    benefits


897



2,050Accrued restructuring costs






16Deferred revenue, including
    unearned discounts of $336 and $360


10,867



8,495Total current
    liabilities


18,919



19,646Other liabilities, primarily
    unearned discounts re: outsourced printing services


397



726Commitments and contingencies
    (see Note M)Stockholders equity:Preferred stock $.001 par
    value; 2,000,000 shares authorized; none issued






Common stock $.001 par value,
    200,000,000 shares authorized, 51,066,966 and
    50,355,684 shares issued


51



50Additional paid-in capital


226,764



222,927Accumulated other comprehensive
    income


(4
)


Accumulated deficit


(97,616
)


(96,592
)Treasury stock, at cost, 6,523,392
    and 1,985,502 shares


(21,640
)


(6,472
)Total stockholders
    equity


107,555



119,913Total liabilities and
    stockholders equity

$
126,871


$
140,285    F-3




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##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004(In thousands, except per share data)RevenuesMaintenance and services

$
36,258


$
36,813


$
29,543Software licenses and system sales


13,179



15,998



12,776Total revenues


49,437



52,811



42,319Costs and expensesCost of revenues:Maintenance and services


15,003



14,163



13,060Software licenses and system
    sales, includes amortization of software costs of $1,958 in
    2006, $1,965 in 2005 and $3,178 in 2004


7,644



6,413



6,154Impairment of capitalized software










3,229Selling, general and administrative


21,770



20,701



25,824Research and development


8,705



9,047



9,488Depreciation and amortization


1,238



1,777



1,968Settlement, severance and
    impairment charges






5,677



5,730Restructuring credits










(155
)54,360



57,778



65,298Operating loss


(4,923
)


(4,967
)


(22,979
)Interest income


3,753



2,516



163Interest expense






(751
)


(1,499
)Loss from continuing
    operations, before income taxes


(1,170
)


(3,202
)


(24,315
)(Benefit from) Provision for
    income taxes


84



(1,197
)


2,200Loss from continuing
    operations


(1,254
)


(2,005
)


(26,515
)Gain on sale of discontinued
    operations, net of benefit from taxes of $230 in 2006 and
    provisions for taxes of $33,906 in 2005


230



46,277



(Loss) income from discontinued
    operations






(57
)


14,058Net (loss) income

$
(1,024
)

$
44,215


$
(12,457
)Earnings (loss) per
    shareBasic:Continuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations


0.00



1.00



0.32$
(0.03
)

$
0.96


$
(0.29
)Diluted:Continuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations


0.00



1.00



0.32$
(0.03
)

$
0.96


$
(0.29
)Weighted average number of
    shares outstandingBasic


46,499



46,285



43,563Diluted


46,499



46,285



43,563    F-4




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY AND
 COMPREHENSIVE
    INCOME (LOSS)
  AccumulatedShares





Additional





Other





TotalCommon


Treasury


Common


Paid-in


Accumulated


Comprehensive


Treasury


Stockholders


ComprehensiveStock


Stock


Stock


Capital


Deficit


Income


Stock


Equity


Loss(In thousands, except share data)Balance at December 31, 2003


45,278,816



(1,985,502
)

$
45


$
205,439


$
(128,350
)

$
0


$
(6,472
)

$
70,662Issuance of common stock, net of
    related expense for:Matching contribution 401(k) plan


64,269











252















252Exercise of stock options and
    warrants


995,483







1



2,320















2,321Tax benefit from change in
    valuation allowance and other














3,877















3,877Net loss


















(12,457
)










(12,457
)Balance at December 31, 2004


46,338,568



(1,985,502
)


46



211,888



(140,807
)






(6,472
)


64,655Issuance of common stock, net of
    related expense for:Matching contribution 401(k) plan


32,099











161















161Exercise of stock options


3,985,017







4



8,989















8,993Modification of stock option
    agreements














1,211















1,211Tax benefit from change in
    valuation allowance from stock option exercises














678















678Net income (loss)


















44,215











44,215Balance at December 31, 2005


50,355,684



(1,985,502
)


50



222,927



(96,592
)






(6,472
)


119,913Issuance of common stock, net of
    related expense for:Exercise of stock options and
    issuance of shares under the Employee Stock Purchase Plan


681,602







1



1,631















1,632Issuance of restricted stock


29,680











37















37Repurchase of treasury stock






(4,537,890
)


















(15,168
)


(15,168
)Share-based payment














1,736















1,736Unrealized loss on marketable
    securities






















(4
)






(4
)


(4
)Tax benefit from change in
    valuation allowance from stock option exercises














443















443Net income (loss)


















(1,024
)










(1,024
)


(1,024
)Total comprehensive loss


































(1,028
)Balance at December 31, 2006


51,066,966



(6,523,392
)

$
51


$
226,764


$
(97,616
)

$
(4
)

$
(21,640
)

$
107,555    F-5




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,2006


2005


2004(In thousands)Operating activitiesLoss from continuing operations

$
(1,254
)

$
(2,005
)

$
(26,515
)Income from discontinued operations


230



46,220



14,058Net income (loss)


(1,024
)


44,215



(12,457
)Adjustments to reconcile net
    income (loss) to cash (used in) provided by operating activities:Gain from the sale of discontinued
    operations


(230
)


(81,143
)


Impairment of capitalized software










3,229Other impairment charges










1,351Restructuring and severance charges










1,093Depreciation and amortization


1,238



1,777



3,047Provisions for bad debts


746



(1,432
)


2,424Gain on sale of fixed assets


(6
)


(41
)


Amortization of deferred finance
    costs










226Write-off of deferred financing
    costs






661



Amortization of software
    development costs


1,958



1,965



3,178Deferred income taxes






28,200



1,950Non-cash stock compensation expense


1,763



1,211



Changes in operating assets and
    liabilities:Accounts receivable


3,184



(2,460
)


(7,356
)Computer hardware held for resale,
    prepaid expenses and other


(2,558
)


2,070



(134
)Accounts payable and accrued
    expenses


(3,549
)


(908
)


3,870Deferred revenue including
    unearned discount


2,043



(2,339
)


5,514Other liabilities






(143
)


(1,200
)Tax benefit from change in
    valuation allow related to stock option exercises






678



Cash provided by (used in)
    operating activities


3,565



(7,689
)


4,735Investing activitiesBusiness acquisition, net of cash
    acquired










(3,675
)Software product development costs










(1,638
)Proceeds from sale of discontinued
    operations






98,408



Payment of transaction costs
    related to sale of discontinued operations






(1,043
)


Proceeds from sale of assets


6



268



Purchases of property and equipment


(921
)


(684
)


(2,227
)Purchases of
    held-to-maturity
    securities


(49,094
)






Maturities of
    held-to-maturity
    securities


22,762







Purchases of
    available-for-sale
    securities


(48,405
)






Sales of
    available-for-sale
    securities


10,297







Cash provided by (used in)
    investing activities


(65,355
)


96,949



(7,540
)Financing activitiesPrincipal repayments on long-term
    debt






(28,673
)


(6,827
)Repurchase of Company Stock


(15,168
)






Exercise of stock options and
    warrants


1,632



8,993



2,305Tax benefit from change in
    valuation allow related to stock option exercises


443Deferred finance costs and other










(167
)Cash provided by (used in)
    financing activities


(13,093
)


(19,680
)


(4,689
)(Decrease) increase in cash and
    cash equivalents


(74,883
)


69,580



(7,494
)Cash and cash equivalents at
    beginning of year


82,214



12,634



20,128Cash and cash equivalents at
    end of year

$
7,331


$
82,214


$
12,634    F-6




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   A.  Business
  end-to-end
      B.  Segment
    Reporting
    C.  Summary
    of Significant Accounting Policies
  Principles
    of Consolidation
    Use of
    Estimates
   F-7




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
  97-2, SOP 98-9, SOP 97-2 SOP 81-1 01-14, Out-of-Pocket (off-the-shelf and/or and/or
    Cash
    and Cash Equivalents
      Marketable
    Securities
  held-to-maturity, Held-to-maturity available-for-sale
 F-8




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Concentration
    of Risk
    Accounts
    Receivable, Revenue Reserve and Allowance for Doubtful
    Accounts
  and/or
    2006


2005


2004Balance at beginning of period

$
767


$
2,200


$
2,800Additions charged to costs and
    expenses


746



140



350Additions charged to other
    accounts(a)






229



1,811Reductions(b)


(463
)


(1,802
)


(2,761
)Balance at end of period

$
1,050


$
767


$
2,200
(c)     (a)
    
    Charged to revenues(b)
    
    Write-offs, returns and discounts, net of recoveries and, in
    2004, reclassification of the Medical Division allowance of
    $1,200 to current assets of discontinued operations(c)
    
    Includes $200 from a business acquisition  Fair
    Value
    Computer
    Hardware Held For Resale
  first-in
  Long-lived
    Assets
   F-9




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
    and Business Combinations
      Software
    Development Costs
      Deferred
    Finance Costs
    Property
    and Equipment
    Income
    Taxes
   F-10




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Earnings
    (Loss) Per Share
  (in
    thousands, except per share data):
  Year Ended December 31,2006


2005


2004Numerator  income
    (loss):Continuing operations

$
(1,254
)

$
(2,005
)

$
(26,515
)Discontinued operations


230



46,220



14,058$
(1,024
)

$
44,215


$
(12,457
)Denominator:Basic EPS 
    weighted-average shares


46,499



46,285



43,563Effect of dilutive securities,
    stock option and warrant rights










Diluted EPS  adjusted
    weighted-average shares and assumed conversions


46,499



46,285



43,563Basic EPS:Continuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations


0.00



1.00



0.32$
(0.03
)

$
0.96


$
(0.29
)Diluted EPS:Continuing operations

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations


0.00



1.00



0.32$
(0.03
)

$
0.96


$
(0.29
)     Comprehensive
    Income (Loss)
    Share
    Based Payment
   F-11




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (in thousands, except per share data)
  Year Ended December 31,2005


2004Loss from continuing operations,
    as reported

$
(2,005
)

$
(26,515
)Less: total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(2,934
)


(1,425
)Pro forma loss from continuing
    operations

$
(4,939
)

$
(27,940
)Loss per share from continuing
    operations:Basic and diluted  as
    reported

$
(0.04
)

$
(0.61
)Basic and diluted  pro
    forma

$
(0.11
)

$
(0.64
)     Year Ended December 31,2005


2004Risk-free interest rate


4.1
%


3.0
%Expected dividend yield


0.0



0.0Expected stock price volatility


63.1
%


72.1
%Weighted average expected life (in
    years)


4.8



4.8     D.  Recent
    Accounting Pronouncements
   F-12




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      E.  Discontinued
    Operations
            03-13,
 F-13




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Year Ended December 31,2005


2004Revenues





$
71,093Gross profit






52,360Operating income (loss)

$
(57
)


14,060Income (loss) from discontinued
    operations


(57
)


14,058   F.  Business
    Combination
           F-14




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      G.  Settlements,
    Severance and Impairment Charges
      
    Settlement of earn-out.  In connection with the
    termination of the earn-out consideration obligations relating
    to the acquisition of Amicas PACS, the Company recognized
    $1.9 million of expense for amounts paid to certain Amicas
    PACS employees under the Amicas PACS bonus plan. Included in the
    $1.9 million was $1.1 million for the acceleration of
    earn-out bonuses, pursuant to agreements with former Amicas PACS
    executives, whose employment was terminated by mutual agreement.
    Settlement of litigation.  On October 14,
    2005, the Company announced that David and Susan Jones
    (Plaintiffs) and InfoCure Corporation (now known as
    AMICAS, Inc.), Richard Perlman and James Price agreed to settle
    and to resolve and terminate, fully and finally, the issues
    between them in the lawsuit styled David and Susan
    Jones v. InfoCure Corporation, et al. filed in
    2001 concerning a 1999 transaction. As part of the settlement,
    the Company agreed to pay $3.25 million to the Plaintiffs.
    The Company recorded a $2.75 million charge related to the
    settlement of this litigation in 2005. The $2.75 million
    charge is net of the reimbursement received of
    $0.325 million from the co-defendants, who are two former
    executive officers of the Company, and $0.5 million for
    previously accrued amounts.
    Restructuring charges:  The 2004 Plan.
  The 2005 Plan.
 F-15




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Office Closure.
  Executive Termination Costs.
    
    Settlement of earn-out.  In connection with the
    termination of the earn-out consideration obligations relating
    to the acquisition of Amicas PACS, the Company recognized
    $2.4 million of expense for amounts paid, or to be paid, to
    certain Amicas PACS employees under the Amicas PACS bonus plan.
    The 2004 Plan.  The Company recorded
    $1.3 million of severance-related costs, including
    executive-related severance costs of $0.4 million. In
    December 2004, the Company relocated its corporate headquarters
    from Ridgefield, Connecticut to Boston, Massachusetts. On
    October 15, 2004, the Company notified 57 of its employees
    that, in connection with the relocation of the Companys
    corporate headquarters, their employment would be terminated
    under a plan of termination.
    Impairment charges.  The Company recorded an
    impairment charge of $1.2 million to write-down its
    enterprise resource planning software (ERP) relating
    to the Companys decision to cease using a portion of its
    ERP. This decision was due to the downsizing of the Company as a
    result of the Medical Division sale.
    Settlement of litigation.  The Company recorded
    costs of $0.8 million relating to the settlement of
    litigation. In August 2003, the Company was served with a
    summons and complaint as part of a bankruptcy proceeding
    relating to a former business associate. The complaint alleged
    that in 2001, the Company received a preference payment from the
    business associate and sought to avoid and recover the
    $0.8 million payment made to AMICAS. The matter was settled
    in March 2004 and the Company paid $0.3 million to the
    former business associate through its committee of unsecured
    creditors. Also, in September 2004, a lawsuit styled DR
    Systems, Inc. v. VitalWorks Inc. and Amicas, Inc. was
    filed in the United States District Court for the Southern
    District of California. The complaint alleged that VitalWorks
    and Amicas infringed the plaintiffs patent through the
    manufacture, use, importation, sale
    and/or offer
    for sale of automated medical imaging and archival systems. The
    plaintiff sought monetary damages, treble damages and a
    permanent injunction. On November 3, 2004, the Company
    served its answer. On January 26, 2005, the parties entered
    into a Settlement, Release and License agreement, and on
    February 4, 2005, a stipulation of dismissal, dismissing
    the lawsuit with prejudice, was entered. In connection with this
    agreement, the Company paid the plaintiff $0.5 million in
    2005. This amount was accrued at December 31, 2004.  H.  Marketable
    Securities
  held-to-maturity available-for-sale Held-to-maturity available-for-sale
 F-16




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31, 2006Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueMarketable securitiesAvailable-for-sale:State and municipal obligations

$
29,950


$



$



$
29,950Federal agency


5,801



5



(9
)


5,797Held-to-maturity:Commercial paper


12,812



1



(1
)


12,812Certificates of deposit


15,877



5







15,882Total


64,440


$
11


$
(10
)

$
64,441   available-for-sale
  December 31,2006Contractual maturities of
    available-for-sale
    securitiesDue within one year

$
5,501Due between one to five years


8,096Due after 10 years


22,150Total

$
35,747     I.  Property
    and Equipment
    Depreciation/Amortization


December 31,Period


2006


2005(Years)


(In thousands)Equipment, primarily computers,
    and software


3-5


$
4,114


$
3,446Equipment under capital lease
    obligations


3-5



2,627



2,630Furniture and other


3-7



783



5307,524



6,606Less accumulated depreciation and
    amortization






6,155



5,347$
1,369


$
1,259    F-17




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   J.  Goodwill,
    Acquired/Developed Software and Other Intangible
    Assets
    December 31,2006


2005Estimated


Gross





Net


Gross





NetEconomic


Carrying


Accumulated


Carrying


Carrying


Accumulated


CarryingLife


Amount


Amortization


Value


Amount


Amortization


Value(Years)


(In thousands)Goodwill





$
27,313






$
27,313


$
27,313






$
27,313Acquired software


7


$
13,700


$
(6,035
)

$
7,665


$
13,700


$
(4,077
)

$
9,623Trademarks


15


$
1,900


$
(391
)

$
1,509


$
1,900


$
(264
)

$
1,636Noncompete agreements


5



1,500



(925
)


575



1,500



(625
)


875$
3,400


$
(1,316
)

$
2,084


$
3,400


$
(889
)

$
2,511       (in thousands):
  Total


2007


2008


2009


2010


2011


ThereafterAcquired software

$
7,665


$
1,957


$
1,957


$
1,957


$
1,794







Trademarks


1,509



127



127



127



127



126


$
875Non-compete agreements


575



300



275















Total

$
9,749


$
2,384


$
2,359


$
2,084


$
1,921


$
126


$
875   K.  Accrued
    Expenses
  in thousands
  December 31,


December 31,2006


2005Accounts Payable

$
2,920


$
1,416Accrued Expenses


2,216



5,391Income taxes payable


1,265



1,446Sales tax payable


754



833Total

$
7,155


$
9,085  F-18




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  L.  Long-Term
    Debt
      M.  Commitments
    and Contingencies
      Year

Operating(In thousands)2007

$
1,2622008


358Total

$
1,620            F-19




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Legal
    Proceedings
    N.  Stockholders
    Equity
  Stockholder
    Rights Plan
           F-20




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Employee
    Savings Plans
  and/or
  Employee
    Stock Purchase Plan
    Stock
    Option Plans
         F-21




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Length-of-Service
    Share-Based
    Payment
     F-22




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,2006(Thousands)Cost of revenues: maintenance and
    service

$
54Research and development


196Selling, general and administrative


1,513Total share-based payment

$
1,763     Year Ended December 31, 2006Stock Option Plan


Stock Purchase PlanAverage risk-free interest rate


4.82
%


4.47
%Expected dividend yield






Expected stock price volatility


41.7
%


41.7
%Weighted-average expected life (in
    years)


4.9



0.5     true-up
   F-23




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   shares in
    thousands)
  WeightedAverageShares





Weighted


Remaining


AggregateAvailable for





Average


Contractual


IntrinsicGrant


Shares


Exercise Price


Term


Value(1)Outstanding at December 31,
    2003






9,132


$
2.77Granted






2,999



3.57Exercised






(851
)


2.22Forfeited






(391
)


4.18Outstanding at December 31,
    2004






10,889



2.98Granted






1,187



4.03Exercised






(3,842
)


2.23Forfeited






(1,562
)


4.55Outstanding at December 31,
    2005


14,930



6,672



3.23Granted






937



3.61Exercised






(563
)


2.24Forfeited






(365
)


4.13Outstanding at December 31,
    2006






6,681


$
3.32



5.97


$
2,427Options exercisable at
    December 31, 2004






7,882


$
2.75Options exercisable at
    December 31, 2005






4,148


$
2.95Options exercisable at
    December 31, 2006






4,368


$
3.16



4.64


$
2,362     (1)
    
    The aggregate intrinsic value on this table was calculated based
    on the positive difference between the closing market value of
    the Companys common stock on December 31, 2006 and
    the exercise price of the underlying options.  Warrants
  (shares in thousands
  Weighted AverageRange of

Number of


Remaining


Weighted AverageExercise Prices

Shares


Contractual Life


Exercise Price(Years)$0.75 2.50


2



0.8


$
0.792.5117.84


350



1.1



4.58$0.7517.84


352



1.1


$
4.55    F-24




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Restricted
    Stock
        Shares of


Weighted AverageRestricted


Grant DateStock


Fair ValueOutstanding at December 31,
    2005





$
Granted


29,680



2.83Exercised/vested






Forfeited/cancelled






Outstanding at December 31,
    2006


29,680


$
2.83   O.  Income
    Taxes
   F-25




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31,


December 31,


December 31,2006


2005


2004Income tax (benefit) provision
    from continuing operationsCurrent Federal

$



$
(245
)

$
Current State


84



(111
)


Total current (benefit) provision


84



(356
)


Deferred Federal


1,112



(578
)


2,100Deferred State


1,175



(263
)


100Valuation Allowance


(2,287
)






Total deferred (benefit) provision






(841
)


2,200Total income tax (benefit)
    provision from continuing operations

$
84


$
(1,197
)

$
2,200     December 31,2006


2005


2004Computed expected
    Income tax expense (benefit)

$
(410
)

$
(1,121
)

$
(8,510
)State taxes, net of federal benefit


818



(159
)


(233
)Permanent differences


164



62



129Change in valuation allowances


(488
)


21



10,814Total income tax expense (benefit)

$
84


$
(1,197
)

$
2,200  F-26




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2006


2005


2004(In thousands)Deferred income tax assets:Allowance for doubtful accounts

$
419


$
414


$
1,326Goodwill amortization


1,366



1,829



6,218Accrued expenses


515



1,952



1,449Unearned discounts re: outsourced
    printing services


293



436



1,989Net operating loss and credit
    carry forwards


25,886



27,883



51,751Change in Amicas PACS tax
    accounting method






365



709Share-based payment


582







Property and equipment


835



279



29,896



33,158



63,442Less valuation allowance


26,001



28,287



27,2263,895


$
4,871


$
36,216Deferred income tax liabilities:Acquired/developed software

$
3,062


$
3,863


$
6,571Other intangible assets


833



1,008



1,146Property and equipment










2993,895



4,871



8,016Net deferred income tax asset

$



$



$
28,200        F-27




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   P.  Quarterly
    Results of Operations (Unaudited)
  Three Months Ended


Year EndedMarch 31


June 30


September 30


December 31


December 31(In thousands, except per share data)Year Ended December 31,
    2006Total revenues

$
13,971


$
12,220


$
11,802


$
11,444


$
49,437Gross profit


7,579



7,129



5,960



6,122



26,790Loss from continuing operations(a)


(254
)


319



(173
)


(1,146
)


(1,254
)Income from discontinued operations


(248
)






478







230Net income (loss)(a)

$
(502
)

$
319


$
305


$
(1,146
)

$
(1,024
)Weighted average number of shares
    outstandingBasic


48,611



45,275



45,114



45,135



46,499Diluted


48,611



46,538



45,114



45,135



46,499Earnings (loss) per
    share  basicContinuing operations

$
(0.01
)

$
0.01


$
0.00


$
(0.03
)

$
(0.03
)Discontinued operations


(0.01
)


0.00



0.01



0.00



0.00$
(0.01
)

$
0.01


$
0.01


$
(0.03
)

$
(0.03
)Earnings (loss) per
    share  dilutedContinuing operations

$
(0.01
)

$
0.01


$
0.00


$
(0.03
)

$
(0.03
)Discontinued operations


(0.01
)


0.00



0.01



0.00



0.00$
(0.01
)

$
0.01


$
0.01


$
(0.03
)

$
(0.03
)Year Ended December 31,
    2005Total revenues

$
12,083


$
12,796


$
13,612


$
14,320


$
52,811Gross profit


7,426



7,918



8,576



8,315



32,235Loss from continuing operations


(2,252
)


(31
)


(540
)


818



(2,005
)Income from discontinued operations


(3
)






(25
)


(29
)


(57
)Gain on Sale of Medical


46,073











204



46,277Net income (loss)

$
43,818


$
(31
)

$
(565
)

$
993


$
44,215Weighted average number of shares
    outstandingBasic


44,530



45,169



47,208



48,064



46,285Diluted


44,530



45,169



47,208



50,894



46,285Earnings (loss) per
    share  basicContinuing operations

$
(0.05
)

$
(0.00
)

$
(0.01
)

$
0.02


$
(0.04
)Discontinued operations


1.03



0.00



0.00



0.00



1.00$
0.98


$
(0.00
)

$
(0.01
)

$
0.02


$
0.96Earnings (loss) per
    share  dilutedContinuing operations

$
(0.05
)

$
(0.00
)

$
(0.01
)

$
0.02


$
(0.04
)Discontinued operations


1.03



0.00



0.00



(0.00
)


1.00$
0.98


$
(0.00
)

$
(0.01
)

$
0.02


$
0.96  F-28




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (a)
    
    The Company adopted SFAS 123(R), Share-based
    payment, effective January 1, 2006. Quarterly amounts
    during the year ended December 31, 2006 related to the
    adoption of this statement include $0.5 million,
    $0.5 million, $0.4 million and $0.4 million for
    the quarters ended March 31, June 30,
    September 30, and December 31, 2006, respectively.  Q.  Supplemental
    Disclosure of Cash Flow and Noncash Activities
       F-29




---



##### Table of Contents



SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the
    Securities Exchange Act of 1934, the registrant has duly caused
    this report to be signed on its behalf by the undersigned,
    thereunto duly authorized on this 16th day of March, 2007.



AMICAS, Inc. By:
    /s/  Joseph
    D. Hill   Senior Vice President and Chief Financial Officer
  By:
    /s/  Stephen
    N. Kahane M.D., M.S.   Chief Executive Officer
  POWER OF
    ATTORNEY
  attorneys-in-fact Form 10-K, attorneys-in-fact attorneys-in-fact
  Signature

Title

Date/s/  STEPHEN
    N. KAHANE M.D.,
    M.S.Stephen
    N. Kahane M.D., M.S.

Chairman of the Board and Chief
    Executive Officer (Principal Executive Officer)

March 16, 2007/s/  JOSEPH
    D. HILLJoseph
    D. Hill

Senior Vice President and Chief
    Financial Officer (Principal Financial and Accounting Officer)

March 16, 2007/s/  PHILLIP
    M. BERMANPhillip
    M. Berman

Director

March 16, 2007/s/  STEPHEN
    J. DENELSKYStephen
    J. DeNelsky

Director

March 16, 2007/s/  DAVID
    B. SHEPHERDDavid
    B. Shepherd

Director

March 16, 2007/s/  JOHN
    J. SVIOKLAJohn
    J. Sviokla

Director

March 16, 2007/s/  LISA
    W. ZAPPALALisa
    W. Zappala

Director

March 16, 2007