##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2008ORo

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(State or other jurisdiction
    of
    incorporation or organization)

59-2248411(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
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-12 o þ
      Documents
    Incorporated by Reference




---



##### 





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


Business


2Item 1A.


Risk Factors


15Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


26Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


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


27Item 6.


Selected Consolidated Financial Data


29Item 7.


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


31Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


43Item 8.


Financial Statements and Supplementary Data


43Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


43Item 9A.


Controls and Procedures


44Item 9B.


Other Information


46PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


46Item 11.


Executive Compensation


46Item 12.


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


46Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


48Item 14.


Principal Accounting Fees and Services


48PART IVItem 15.


Exhibits, Financial Statement Schedules


48SignaturesEx-10.35 Fourth Amendment to Employment Agreement of Stephen N. Kahane, dated February 10, 2009Ex-10.36 Second Amendment to Employment Agreement of Kevin C. Burns, dated February 10, 2009Ex-23.1 Consent of BDO Seidman, LLPEx-31.1 Certification of Chief Executive Officer Pursuant to Section 302Ex-31.2 Certification of Chief Financial Officer Pursuant to Section 302Ex-32.1 Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906    AMICAS, AMICAS One Suite, AMICAS PACS, AMICAS RIS, AMICAS
    Financials, AMICAS Documents,
 AMICAS Dashboards, AMICAS Watch, AMICAS Reach, AMICAS
    RadStream, RealTime Worklist, Halo
 Viewer, and Cashfinder Worklist are trademarks, service marks
    or registered trademarks and service
 marks of AMICAS, Inc. All other trademarks 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
        Industry
    Background
  1 2
    1
 2 Medicare Part B Imaging Services: Rapid
    Spending Growth and Shift to Physician Offices Indicate Need for
    CMS to Consider Additional Management Practices
 2




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3
      Trends
    in Imaging
          3
 3




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##### Table of Contents



and/or
  Image
    and Information Management Solutions
    Market / Product Segment




2007


2008


2009


2010


2011


2012


2013


CAGR (08-13)PACS Penetration Rate - Hospitals






44
%


49
%


52
%


56
%


59
%


63
%


67
%

n/aPACS Penetration Rate - Ambulatory






42
%


47
%


51
%


55
%


59
%


64
%


68
%

n/aRIS Penetration Rate - Ambulatory






54
%


56
%


57
%


59
%


60
%


61
%


63
%

n/aNew PACS Contracts - Hospitals






565



620



600



610



730



825



895


8.0%New PACS Contracts - Ambulatory






265



335



330



355



475



570



655


16.3%New RIS Contracts - Ambulatory






267



278



270



280



325



370



405


7.2%PACS Market Opportunity - Hospitals ($M)





$
679.4


$
710.8


$
724.0


$
758.4


$
845.6


$
878.3


$
892.0


4.6%PACS Market Opportunity - Ambulatory ($M)





$
174.2


$
204.6


$
198.2


$
208.4


$
260.0


$
291.3


$
320.0


10.7%RIS Market Opportunity - Ambulatory ($M)





$
124.6


$
119.3


$
105.5


$
106.9


$
120.2


$
130.2


$
141.0


2.1%       Business
    Strategy
   4




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
    Ambulatory Imaging Businesses.  This segment
    consists primarily of radiology groups, teleradiology
    businesses, imaging centers, multi-specialty groups and billing
    services.
    Acute Care Facilities.  This segment consists
    primarily of hospitals and integrated delivery networks
    (IDNs).  Ambulatory
    Imaging Businesses
  tm
      Acute
    Care Facilities
     5




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AMICAS
    Solutions
      
    AMICAS PACS.  AMICAS PACS is our Web-based
    picture archiving and communications system designed to capture,
    store, manipulate, and distribute diagnostic images for
    radiologists, specialists, referring physicians, patients, and
    the entire healthcare enterprise. This system can scale from a
    single radiologist staffed imaging center, to teleradiology
    operations and to the largest acute care settings, managing
    hundreds of thousands of annual exams. The system includes a
    rich clinical tool set as well as an industry leading real-time
    workflow engine, RealTime
    Worklisttm,

    which allows for workflow customization and personalization for
    diverse clinical environments.
    AMICAS RIS.  AMICAS RIS is our Web-based
    radiology information system designed to address the
    administrative functions for capturing radiology orders,
    detailing the patient demographic information, scheduling
    appointments and resources, processing transcriptions and
    generating reports, as well as coding and preparing billing and
    reimbursement data.
    AMICAS RadStream.  AMICAS RadStream is designed
    to improve and document the communication of critical results
    and to improve radiologist productivity by reducing
    interruptions. The software was initially designed and developed
    by the Radiology Informatics Research Core at Cincinnati
    Childrens Hospital Medical Center in collaboration with
    researchers at the University of Cincinnati College of Business.
    In April of 2006, we announced a strategic technology
    acquisition resulting in the exclusive licensing and worldwide
    distribution rights to RadStream. AMICAS RadStream became
    generally available to AMICAS customers in 2008.
    AMICAS Documents.AMICAS Documents is a module
    of our solution designed to capture, digitize and associate
    paper records with other digital information. Todays
    diagnostic imaging environment involves existing and
    newly-generated paper-based information that needs to be
    integrated with the digital practice via an automated and
    workflow based system. This module, which we license from a
    third party and incorporate into our solutions, enables our
    customers to move to paperless, as well as filmless, operations.
    AMICAS Financials.  AMICAS Financials offers
    patient accounting and revenue cycle management capabilities
    that facilitates expedient and compliant claims submission,
    payer
    follow-up
    and other billing and accounts receivable management activities.
    AMICAS Financials is a next generation radiology practice
    management and billing software system designed to meet the
    challenges of todays complex radiology billing environment.
    AMICAS Reach.  AMICAS Reach is our powerful
    zero-client Web-based tool designed specifically for the needs
    of the referring physician. AMICAS Reach uses the latest
    Web-based technologies to integrate a radiology report with key
    images to create a single multi-media report for
    referring physicians. AMICAS Reach uses common email to alert
    end-users (typically referring physicians) that their
    patients results are available. The end-user may then
    authenticate into AMICAS Reach to gain access to their results,
    in the form of reports and key images. 6




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
    AMICAS Dashboards.  AMICAS Dashboards is our
    Web-based business intelligence system providing key performance
    indicators presented in an easy to understand graphical format.
    AMICAS Dashboards offers the analytics necessary for our
    customers to navigate through the pressures of continually
    changing competitive landscapes and regulatory environments.
    AMICAS Payer and Patient Services.  Our revenue
    cycle management solutions offer transaction-based functions,
    including patient billing and insurance claims submission and
    remittance. The use of payer and patient services can improve a
    healthcare practices cash flow by enabling more accurate
    and rapid submission of claims to third-party payers and more
    rapid receipt of corresponding reimbursements.    
    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.  Innovative
    New Products
      
    Intrinsic 3D functionality;
    Mammography workflow capabilities;
    Federated architecture for high availability; and
    More robust teleradiology capabilities.    
    Non-radiology imaging capabilities, including cardiology,
    pathology, etc.;
    Enterprise Content Management, or ECM;
    Remote hosting solutions  including the possibility
    of software-as-a-service;
    Extended 3D visualization including advanced clinical
    applications; and
    More complete integration of related clinical tools.  AMICAS
    Professional Services
   7




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Technical
    Support
  Software Support.
  Hardware Support. on-site
  Research
    and Development
        Sales and
    Marketing
        Intellectual
    Property
     8




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and/or
      Competition
  start-up
  
    Product features and functionality;
    Ongoing product enhancements;
    Price;
    Technology architecture and design;
    Customer service, support, and satisfaction;
    Distribution coverage and quality;
    Customer satisfaction and customer reference sites; and
    Vendor reputation, including real and perceived financial
    stability and wherewithal.   9




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and/or
            Privacy
    Issues
    
    Security that requires both user identification 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;
    Support for encryption of data transmitted over the Internet; 10




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
    Use of a mechanism for preventing unauthorized access to private
    data resources on our internal network, commonly referred to as
    a firewall; and
    Audit logging and reporting capabilities.      
    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.    Government
    Regulation
  United
    States Food and Drug Regulation
       11




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
    the QSRs, which require manufacturers to follow design, testing,
    control, documentation and other quality assurance procedures
    during the manufacturing process;
    regulations which prohibit the promotion of products for
    unapproved or off-label uses and impose other
    restrictions on labeling; and
    reporting regulations, which require that manufacturers report
    to the FDA certain adverse events that may be attributed to the
    medical device.    Health
    Insurance Portability and Accountability Act of
    1996
    
    Electronic transactions involving healthcare information;
    The privacy of individually identifiable patient information,
    called protected health information, or
    PHI; and
    The security of PHI.         12




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Compliance
    with Fraud and Abuse Laws
    Anti-Kickback
    Statute
    
    the referral of an individual for a service or product for which
    payment may be made by Medicare, Medicaid or other
    government-sponsored healthcare program; or
    purchasing, ordering, arranging for, or recommending the
    ordering of, any service or product for which payment may be
    made by a government-sponsored healthcare program.      and/or
  Physician
    Self-Referral Laws
   13




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Other
    Fraud and Abuse Laws
        Third-Party
    Reimbursement
    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,
 14




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MA 02135-2040.
  Employees
    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.
  Our
    pending acquisition of Emageon Inc. may have unexpected
    consequences or impose additional costs on us.
    
    difficulties in integration of the operations, technologies and
    products and services of the acquired companies;
    the risk of diverting managements attention from normal
    daily operations of the business;
    potential cost and disruptions caused by the integration of
    financial reporting systems and development of uniform
    standards, controls, procedures and policies; 15




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
    accounting consequences, including amortization of acquired
    intangible assets or other required purchase accounting
    adjustments, resulting in variability or reductions of our
    reported earnings;
    potential difficulties in completing projects associated with
    purchased in-process research and development;
    risks of entering markets in which we have no or limited direct
    prior experience and where competitors in these markets have
    stronger market positions;
    the potential loss of our key employees or those of the acquired
    company due to the employment uncertainties inherent in the
    acquisition process;
    the assumption of known and potentially unknown liabilities of
    the acquired company;
    the risk that we may find that the acquired company or business
    does not further our business strategy or that we paid more than
    what the company or business was worth;
    our relationship with current and new employees and customers
    could be impaired;
    the acquisition may result in litigation from terminated
    employees or third parties who believe a claim against us would
    be valuable to pursue;
    our due diligence process may fail to identify significant
    issues with product quality, product architecture and legal
    contingencies, among other matters; and
    there may be insufficient revenues to offset increased expenses
    associated with acquisitions.  non-amortizable
  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; 16




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
    competition, including alternative product and service
    offerings, and price pressure;
    rates and timing of 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; and
    timing of revenue recognition can be delayed due to structured
    term deals, which can impact cash flow, operating margins and
    net income.  and/or
  If our
    new and existing products, including product upgrades, and
    services do not achieve and maintain sufficient market
    acceptance, our business, financial condition, cash flows,
    revenues, and operating results will suffer.
    
    existing products and services, such as our AMICAS One Suite
    products, and related product and service offerings;
    new products and services, such as AMICAS Dashboards, AMICAS
    Financials and RadStream; and
    enhancements to our existing products, support and services,
    including AMICAS RIS and AMICAS PACS.     17




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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;
    price;
    ongoing product enhancements; and
    vendor reputation and stability.      We
    rely on some of our existing customers to serve as reference
    sites for us in developing and expanding relationships with
    other customers and potential customers, and if the customers
    who serve as reference sites become unwilling to do so, our
    ability to obtain new customers or to expand customer
    relationships could be materially harmed.
   18




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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, application service
    provider, or ASP delivered offerings or software as a service or
    SAAS delivered offerings, our revenues may be adversely
    impacted.
  and/or 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
 19




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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.
    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.
   20




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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
  Our
    customers and potential customers may not be able to obtain
    financing, which could impact their purchasing decisions with
    respect to our products.
  and/or
  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.
   21




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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
    and/or
 22




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E-Commerce
    Regulations
    FDA
    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.
    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
 23




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We
    depend on our partners and 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.
    We may
    be exposed to credit risks of our customers.
   24




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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.
      The
    trading price of our common stock has been volatile and will
    likely remain volatile.
    
    variations in our operating results,
    announcements of new services, strategic alliances or
    significant agreements by us or by our competitors,
    recruitment or departure of key personnel,
    changes in the estimates of our operating results or changes in
    recommendations by any securities analysts that follow our
    common stock, and
    market conditions in our industry, the industries of our
    customers and the economy as a whole.   25




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If
    securities analysts do not publish research or reports about our
    business, or if they downgrade our stock, the price of our stock
    could decline.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    2009Location

Square Footage

Monthly Cost

Lease ExpirationBoston, Massachusetts


27,081


$
67,703


January 2013Daytona Beach, Florida


35,655


$
35,655


April 2009     Item 3.
    Legal
    Proceedings    Litigation Related to the Offer and Merger. Fishman v.
    Williamson, et al.,
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   26




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PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Market Information.
  2008

High


LowFirst Quarter

$
3.05


$
1.70Second Quarter

$
2.96


$
2.00Third Quarter

$
2.93


$
2.13Fourth Quarter

$
2.44


$
1.27   2007First Quarter

$
3.10


$
2.66Second Quarter

$
3.54


$
2.75Third Quarter

$
3.68


$
2.34Fourth Quarter

$
3.04


$
2.39  27




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Stock Price Performance Graph.
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among AMICAS, Inc, The NASDAQ Composite Index
    And The Russell 2000 Index
  
     12/31/03


12/31/04


12/31/05


12/31/06


12/31/07


12/31/08AMICAS Common Stock



100.00




100.68




112.22




66.52




60.18




37.78NASDAQ Composite



100.00




110.08




112.88




126.51




138.13




80.47Russell
    2000©

    index



100.00




118.33




123.72




146.44




144.15




95.44   Stockholders.
  Dividend Policies.
  Sales of Unregistered Securities.
 28




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Issuer Purchases of Equity Securities. Rule 10b5-1
  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, 2008





$







$
October 1, 2008 through October 31, 2008














November 1, 2008 through November 30, 2008


115,836



1.438



115,836



4,833,457December 1, 2008 through December 31, 2008


77,301



1.554



193,137



4,713,365Total:


193,137


$
1.484   Item 6.
    Selected
    Consolidated Financial Data  Form 10-K.
  Form 10-K
  For the Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Consolidated Statements of Operations Data(a)(b)(c)RevenuesMaintenance and services

$
39,886


$
38,175


$
36,258


$
36,813


$
29,543Software licenses and system sales


10,467



11,713



13,179



15,998



12,776Total revenues


50,353



49,888



49,437



52,811



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


17,679



16,469



15,003



14,163



13,060Software licenses and system sales, includes amortization of
    software costs of $2,204 in 2008, $1,957 in 2007 $1,958 in 2006,
    $1,966 in 2005, and $3,178 in 2004


7,000



6,486



7,644



6,413



6,154Impairment of capitalized software


















3,229Selling, general and administrative


20,512



21,809



21,770



20,701



25,824Research and development


8,657



8,527



8,705



9,047



9,488Depreciation and amortization


1,084



1,120



1,238



1,777



1,968Settlements, severance and impairment charges


27,490











5,677



5,730Restructuring credits


















(155
)Total costs and expenses


82,422



54,411



54,360



57,778



65,298 29




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##### Table of Contents



For the Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Operating loss


(32,069
)


(4,523
)


(4,923
)


(4,967
)


(22,979
)Interest income (expense), net


2,187



3,870



3,753



1,765



(1,336
)Loss on sale of investments


(31
)














Loss from continuing operations, before income taxes


(29,913
)


(653
)


(1,170
)


(3,202
)


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


158



209



84



(1,197
)


2,200Loss from continuing operations


(30,071
)


(862
)


(1,254
)


(2,005
)


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










230



46,277



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














(57
)


14,058Net (loss) income

$
(30,071
)

$
(862
)

$
(1,024
)

$
44,215


$
(12,457
)(Loss) earnings per share  basicContinuing operations income taxes

$
(0.77
)

$
(0.02
)

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations income taxes


0.00



0.00



0.00



1.00



0.32$
(0.77
)

$
(0.02
)

$
(0.03
)

$
0.96


$
(0.29
)(Loss) earnings per share  dilutedContinuing operations

$
(0.77
)

$
(0.02
)

$
(0.03
)

$
(0.04
)

$
(0.61
)Discontinued operations


0.00



0.00



0.00



1.00



0.32$
(0.77
)

$
(0.02
)

$
(0.03
)

$
0.96


$
(0.29
)Cash provided by (used in) operating activities

$
4,435


$
6,975


$
3,565


$
(7,689
)

$
4,735     (a)
    
    The consolidated statement of operations for the year ended
    December 31, 2004 has been prepared to present the results
    of the Medical Division as discontinued operations.(b)
    
    Consolidated statements of operations data include $1,524,
    $1,878 and $1,763 of stock based compensation related to the
    adoption of SFAS 123(R), Share-Based Payment,
    for the years ended December 31, 2008, December 31,
    2007 and December 31, 2006, respectively.(c)
    
    Includes operating activities of the Medical Division through
    the sale of the Medical Division on January 3, 2005.  December 31,2008


2007


2006


2005


2004(In thousands)Consolidated Balance Sheet DataCash and cash equivalents

$
7,366


$
8,536


$
7,331


$
82,214


$
12,634Marketable securities


47,627



67,071



64,436







Working capital


47,054



70,101



68,964



79,036



19,968Total assets


77,098



128,441



126,871



140,285



133,886Total long-term debt


















28,674Total stockholders equity


55,295



108,246



107,555



119,913



64,655  30




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
        RESULTS
    OF OPERATIONS
  Revenues
  Year Ended December 31,2008


Change


2007


Change


2006(Dollars in thousands)Maintenance and services

$
39,886



4.5
%

$
38,175



5.3
%

$
36,258Percentage of total revenues


79.2
%






76.5
%






73.3
%Software licenses and system sales

$
10,467



(10.6
)%

$
11,713



(11.1
)%

$
13,179Percentage of total revenues


20.8
%






23.5
%






26.7
%Total revenues

$
50,353



0.9
%

$
49,888



0.9
%

$
49,437  31




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##### Table of Contents



Maintenance
    and services revenues
      
    Software and hardware maintenance revenues increased
    approximately $2.2 million in fiscal year 2008 as compared
    to fiscal year 2007. The increase was primarily a result of the
    increase in the size of our installed customer base. The growth
    in our installed customer base is dependent on our ability to
    sell software licenses and systems sales and to maintain our
    existing installed base through product upgrades and new and
    innovative features.
    EDI revenues increased approximately $0.3 million in fiscal
    year 2008 as compared to fiscal year 2007. The growth in EDI
    revenues was primarily the result of increases in our rates as
    volumes from customers for these services remained relatively
    constant.
    Service revenues decreased by approximately $0.8 million in
    fiscal year 2008 as compared to fiscal year 2007. The decrease
    in service revenues is primarily the result of an increase in
    the number of agreements with extended payment terms, resulting
    in a longer time to recognize revenue.    Software
    license and systems revenues
         32




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##### Table of Contents



Cost
    of Revenues
  Year Ended December 31,2008


Change


2007


Change


2006(Dollars in thousands)Maintenance and services

$
17,679



7.3
%

$
16,469



9.8
%

$
15,003Percentage of maintenance and services revenues


44.3
%






43.1
%






41.4
%Software licenses and system sales

$
7,000



7.9
%

$
6,486



(15.1
)%

$
7,644Percentage of software licenses and system sales


66.9
%






55.4
%






58.0
%Total cost of revenues

$
24,679



7.5
%

$
22,955



1.4
%

$
22,647     Cost
    of maintenance and services revenues
    
    Cost of software and hardware maintenance and services increased
    by approximately $0.5 million. The increase in cost of
    software and hardware maintenance and services is due primarily
    to an increase in salaries and benefits of approximately
    $0.5 million.
    Cost of EDI revenues increased by approximately
    $0.7 million. The increase in EDI costs is due primarily to
    a reduced cost in fiscal year 2007, as the Company recorded an
    approximately $0.7 million reduction in cost of maintenance
    and services revenues for unearned discounts which were
    recognized in 2007 as a result of the termination of the
    agreement with Cerner.
    As a percentage of revenue, cost of maintenance and services
    revenues increased from 43.1% to 44.3%. Excluding the impact of
    the unearned discounts, the cost of maintenance and services as
    a percent of maintenance and services revenue decreased slightly
    in fiscal year 2008 versus fiscal year 2007.   33




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##### Table of Contents



Cost
    of software license and system sales
    
    Cost of software license and system sales increased by
    approximately $0.5 million or 7.9% in fiscal year 2008 as
    compared to fiscal year 2007. The increase in cost of software
    license and system sales is attributable to $0.3 million
    write off of third party costs that were previously capitalized
    and $0.2 million increase in amortization of software costs
    related to the purchase of AMICAS Financials, as described below.
    Cost of software license and system sales as a percentage of
    software license and system revenues increased to 66.9% in
    fiscal year 2008 as compared to 55.4% in fiscal year 2007.
    Amortization of software costs and the write off of third party
    costs represent approximately 5% of the increase. The remaining
    increase of approximately 7% is due primarily to the product mix
    of software revenues versus systems sales.      Operating
    Expenses
  Year Ended December 31,2008


Change


2007


Change


2006(Dollars in thousands)Selling, general and administrative

$
20,512



(5.9
)%

$
21,809



0.2
%

$
21,770Percentage of total revenues


40.7
%






43.7
%






44.0
%Research and development

$
8,657



1.5
%

$
8,527



(2.1
)%

$
8,705Percentage of total revenues


17.2
%






17.1
%






17.6
%Depreciation and amortization

$
1,084



(3.2
)%

$
1,120



(9.5
)%

$
1,238Percentage of total revenues


2.2
%






2.2
%






2.5
%   Selling,
    general and administrative
     34




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##### Table of Contents



Research
    and development
          Depreciation
    and amortization
       35




---



##### Table of Contents



Impairment.
    Interest
    Income (Expense)
  Year Ended December 31,2008


Change


2007


Change


2006(Dollars in thousands)Interest income

$
2,187



(43.5
)%

$
3,870



3.1
%

$
3,753Interest expense


















         Income
    Taxes
       36




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##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
                  Contractual
    Obligations
    Fiscal Year Ended2009


2010


2011


2012


Thereafter


Totals(In thousands)Operating leases(a)

$
991


$
876


$
883


$
893


$
29


$
3,672Other commitments(b)


888



96















984Total

$
1,879


$
972


$
883


$
893


$
29


$
4,656  37




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##### Table of Contents



(a)
    
    In October 2007, we signed a lease to remain in our Boston,
    Massachusetts corporate headquarters until January 2013. The
    base rent is $65,446 per month and increases by $1.00 per square
    foot annually over the lease term. In February 2009, we extended
    the lease in our Daytona Beach, Florida facility from May 2009
    to April 2012. The base rent of $25,500 begins in May 2009 and
    increases by $1,000 per month in the second year and an
    additional $500 per month in the third year.(b)
    
    Included in other commitments are the following:  
    We are committed to paying approximately $24,000 per month
    through April 2010 for certain EDI services.
    In connection with our employee savings plans, we have
    committed, for the 2009 plan year, to contribute to the plans.
    Our matching contribution for 2009 is estimated to be
    approximately $0.6 million in cash. Our matching
    contribution for 2008 was approximately $0.6 million of
    which $0.5 million was paid in 2008 and $0.1 million
    was paid in February 2009.  Rule 10b5-1
            Critical
    Accounting Policies
   38




---



##### Table of Contents



Revenue Recognition. 97-2, SOP 98-9, SOP 97-2 SOP 81-1 EITF 01-14, and/or
  and/or SOP 81-1
     39




---



##### Table of Contents



Cash Equivalents and Marketable Debt
    Securities.
    Accounts Receivable.
  Long-lived Assets.
  Goodwill.
       40




---



##### Table of Contents



Software Development Costs.
   41




---



##### Table of Contents



Income Taxes.
  Accounting for Share-Based Payment.
  Loss Contingencies.
  Recent
    Accounting Pronouncements
  instrument-by-instrument
  SFAS No. 141-R, (SFAS 141-R). SFAS No. 141-R SFAS No. 141-R
   42




---



##### Table of Contents



No. 157-2 (FSP 157-2), FSP 157-2
  Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk        Item 8.
    Financial
    Statements and Supplementary Data  page F-1.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   43




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##### Table of Contents



Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  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
  Changes
    in Internal Controls
   44




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
    CONTROL OVER FINANCIAL REPORTING
      Internal Control 
    Integrated Framework
            
    45




---



##### Table of Contents



Item 9B.
    Other
    Information   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   46




---



##### Table of Contents



Equity
    Compensation Plan Information
    (a)


(b)


(c)Number of Securities RemainingNumber of Securities to


Weighted-Average


Available for Future Issuancebe Issued Upon Exercise


Exercise Price of


Under Equity Compensationof Outstanding Options,


Outstanding Options,


Plans (Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column (a))Equity compensation plans approved by security holders(1)


4,706,626


$
3.03



3,719,544
(2)Equity compensation plans not approved by security holders(3)


3,602,733


$
2.68



Total


8,309,359


$
2.88



3,719,544     (1)
    
    Consists of our:  
    2006 Stock Incentive Plan;
    2002 Employee Stock Purchase Plan;
    1996 Stock Option Plan;
    Length-of-Service Nonqualified Stock Option (LOSSO)
    Plan; and
    Directors Stock Option Plan.    (2)
    
    Consists of 3,719,544 shares issuable under our 2006 Stock
    Incentive Plan. Directors and employees are eligible to receive
    grants under the 2006 Stock Incentive Plan, which is
    administered by our Compensation Committee. The Compensation
    Committee approves options, rights or stock grants under the
    2006 Stock Incentive Plan, including (i) the number of
    shares of common stock covered by such options, rights or stock
    grants, (ii) the dates upon which such options, rights or
    stock grants become exercisable (which is typically over a three
    to four year period), (iii) the exercise price of such
    options, rights or stock grants (which may not be less than the
    fair market value of a share of stock on the date the option or
    right is granted), and (iv) the duration of the options,
    rights or stock grants (which may not exceed ten years). The
    Compensation Committee has delegated to our Chief Executive
    Officer the authority to grant a limited number of options under
    the 2006 Stock Incentive Plan to new and current employees,
    other than executive officers and certain other officers. As of
    December 31, 2008, our Chief Executive Officer had the
    authority to grant options for up to 665,266 shares of our
    common stock.(3)
    
    Consists of our 2000 Broad-Based Stock Plan (the 2000
    Plan), for which stockholder approval was neither sought
    nor obtained, and which was adopted by the Board of Directors
    effective June 13, 2000. The 2006 Stock Incentive Plan
    replaced the 2000 Plan. Options outstanding under the 2000 Plan
    continue to have force and effect in accordance with the
    provisions of the instruments evidencing such options. However,
    no further options will be granted under the 2000 Plan, and no
    shares remain reserved for issuance under this plan. 47




---



##### 



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  Item 15(a)(1)and (2)  Financial Statements.
  page F-1
  Financial
    Statements and Supplementary Data
   
  PageFinancial Statements:Report of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-2Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-3Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for the years ended
    December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007, and 2006


F-5Notes to Consolidated Financial Statements


F-6    Item 15(a)(3)
    Exhibits.  Form 10-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, as amended
    (incorporated by reference to Exhibit 3.1 to the
    Registrants Annual Report on
    Form 10-K,
    filed with the Commission on March 30, 2000). 48




---



##### Table of Contents



ExhibitNo.



Description3
.2



Third Amended and Restated Bylaws of AMICAS, Inc. (incorporated
    by reference to Exhibit 3.1 to the Registrants
    Current Report on
    Form 8-K,
    filed with the Commission on December 13, 2007).4
.1



Specimen Certificate for shares of common stock (incorporated by
    reference to Exhibit 4.2 to the Registrants Annual
    Report on
    Form 10-K,
    filed with the Commission March 30, 2005).4
.2



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
.3



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 to InfoCures Registration
    Statement on
    Form SB-2,
    filed with the Commission on December 27, 1996).10
.2



Form of Incentive Stock Option Agreement of InfoCure Corporation
    (incorporated by reference to Exhibit 10.2 to
    InfoCures Registration Statement on
    Form SB-2,
    filed with the Commission on December 27, 1996).10
.3



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



InfoCure Corporation Length-of-Service Nonqualified Stock Option
    Plan (incorporated by reference to Exhibit 10.49 to
    InfoCures Annual Report on
    Form 10-KSB,
    filed with the Commission 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,
    filed with the Commission on March 30, 2000).10
.7



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
.8



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
.9



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
.10



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
.11



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
.12



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
.13



InfoCure Corporation 2000 Broad-Based Stock Plan (incorporated
    by reference to Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q,
    filed with the Commission on November 14, 2000).10
.14



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
.15



Form of Letter to Stockholders (incorporated by reference to
    Exhibit 20 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on December 9, 2002).10
.16



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). 49




---



##### Table of Contents



ExhibitNo.



Description10
.17



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
.18



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
.19



Agreement of Sublease, dated February 15, 2005, by and
    among AMICAS, Inc. and Patientkeeper, Inc. (incorporated by
    reference to 10.1 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 10, 2005).10
.20



Amended and Restated Sublease, dated March 8, 2005, by and
    among AMICAS, Inc. and Chordiant Software, Inc. (incorporated by
    reference to 10.2 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 10, 2005).10
.21



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
.22



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
.23



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
.24



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
.25



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
.26



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
.27



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).10
.28



2007 Employee Stock Purchase Plan (incorporated by reference as
    Exhibit A to the Registrants Definitive Proxy
    Statement on Schedule 14A for its 2007 Annual Meeting of
    Stockholders, filed with Commission on April 30, 2007).10
.29



Amended and Restated Directors Stock Option Plan (incorporated
    by reference to Exhibit 10.1 to the Registrants
    Current Report on
    Form 8-K,
    filed with the Commission on July 10, 2007).10
.30



Separation Agreement, dated October 25, 2007, by and
    between AMICAS, Inc. and Peter McClennen (incorporated by
    reference as Exhibit 10.1 to the Registrants
    Quarterly Report on
    Form 10-Q,
    filed with the Commission on November 11, 2007).10
.31



Lease agreement, dated October 18, 2007, by and between
    AMICAS, Inc. and Brighton Landing, LLC. (incorporated by
    reference to Exhibit 10.33 to the Registrants Annual Report
    on
    Form 10-K,
    filed with the Commission on March 17, 2008).10
.32



Employment Agreement, dated April 7, 2008, by and between
    AMICAS, Inc. and Kevin C. Burns (incorporated by reference as
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q,
    filed with the Commission on August 6, 2008).10
.33



409A Amendment to Employment Agreement of Stephen N. Kahane,
    dated December 31, 2008, by and between AMICAS, Inc. and
    Stephen N. Kahane (incorporated by reference as
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K,
    filed with the Commission on January 5, 2009).10
.34



409A Amendment to Employment Agreement of Kevin C. Burns, dated
    December 31, 2008, by and between AMICAS, Inc. and Kevin C.
    Burns (incorporated by reference as Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K,
    filed with the Commission on January 5, 2009).10
.35*



Fourth Amendment to Employment Agreement of Stephen N. Kahane,
    dated February 10, 2009, by and between AMICAS, Inc. and
    Stephen N. Kahane.10
.36*



Second Amendment to Employment Agreement of Kevin C. Burns,
    dated February 10, 2009, by and between AMICAS, Inc. and
    Kevin C. Burns. 50




---



##### Table of Contents



ExhibitNo.



Description21
.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, an independent registered public
    accounting firm.31
.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. 51




---



##### Table of Contents



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




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
7,366


$
8,536Marketable securities


47,627



67,071Accounts receivable, net of allowances of $158 and $231


10,224



10,483Prepaid expenses and other current assets


2,261



2,931Total current assets


67,478



89,021Property and equipment, less accumulated depreciation and
    amortization of $7,495 and $6,848


965



1,186Goodwill






27,313Acquired/developed software, less accumulated amortization of
    $10,195 and $7,992


5,805



8,008Other intangible assets, less accumulated amortization of $2,144
    and $1,742


1,256



1,658Other assets


1,594



1,255Total assets

$
77,098


$
128,441LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
4,156


$
7,094Accrued employee compensation and benefits


1,611



1,451Deferred revenue


14,657



10,375Total current liabilities


20,424



18,920Unrecognized tax benefits


1,379



1,275Commitments and contingencies (see Note I)Stockholders equity:Preferred stock $.001 par value; 2,000,000 shares
    authorized; none issued






Common stock $.001 par value, 200,000,000 shares
    authorized, 51,473,965 and 51,296,823 shares issued


51



51Additional paid-in capital


230,905



229,056Accumulated deficit


(128,549
)


(98,478
)Accumulated other comprehensive income


100



60Treasury stock, at cost, 16,270,088 and 6,824,192 shares


(47,212
)


(22,443
)Total stockholders equity


55,295



108,246Total liabilities and stockholders equity

$
77,098


$
128,441    F-2




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2008


2007


2006(In thousands, except per share data)RevenuesMaintenance and services

$
39,886


$
38,175


$
36,258Software licenses and system sales


10,467



11,713



13,179Total revenues


50,353



49,888



49,437Costs and expensesCost of revenues:Maintenance and services


17,679



16,469



15,003Software licenses and system sales, includes amortization of
    software costs of $2,204 in 2008, $1,957 in 2007, and $1,958 in
    2006


7,000



6,486



7,644Selling, general and administrative


20,512



21,810



21,770Research and development


8,657



8,527



8,705Depreciation and amortization


1,084



1,119



1,238Impairment of goodwill


27,313







Impairment of other intangibles


177







82,422



54,411



54,360Operating loss


(32,069
)


(4,523
)


(4,923
)Interest income


2,187



3,870



3,753Loss on sale of investments


(31
)






Loss from continuing operations, before income taxes


(29,913
)


(653
)


(1,170
)Provision for income taxes


158



209



84Loss from continuing operations


(30,071
)


(862
)


(1,254
)Gain on sale of discontinued operations, net of benefit from
    taxes of $230 in 2006










230Net loss

$
(30,071
)

$
(862
)

$
(1,024
)Earnings (loss) per share:Basic:Continuing operations

$
(0.77
)

$
(0.02
)

$
(0.03
)Discontinued operations


0.00



0.00



0.00$
(0.77
)

$
(0.02
)

$
(0.03
)Diluted:Continuing operations

$
(0.77
)

$
(0.02
)

$
(0.03
)Discontinued operations


0.00



0.00



0.00$
(0.77
)

$
(0.02
)

$
(0.03
)Weighted average number of shares outstanding:Basic


38,842



44,657



46,499Diluted


38,842



44,657



46,499    F-3




---



##### 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 (Loss)


Stock


Equity


Loss(In thousands, except share data)Balance 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 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
)


107,555Issuance of common stock, net of related expense for:Exercise of stock options


203,872











414















414Issuance of restricted stock


25,985











71















71Repurchase of treasury stock






(300,800
)


















(803
)


(803
)Share-based payment














1,807















1,807Unrealized gain on marketable securities






















64







64



64Net loss


















(862
)










(862
)


(862
)Total comprehensive loss


































(798
)Balance at December 31, 2007


51,296,823



(6,824,192
)


51



229,056



(98,478
)


60



(22,443
)


108,246Issuance of common stock, net of related expense for:Exercise of stock options and issuance of shares under the
    Employee Stock Purchase Plan


145,342











325















325Issuance of restricted stock


31,800











89















89Repurchase of treasury stock






(9,445,896
)


















(24,769
)


(24,769
)Share-based payment














1,435















1,435Unrealized gain on marketable securities






















40







40



40Net loss


















(30,071
)










(30,071
)


(30,071
)Total comprehensive loss


































(30,031
)Balance at December 31, 2008


51,473,965



(16,270,088
)

$
51


$
230,905


$
(128,549
)

$
100


$
(47,212
)

$
55,295    F-4




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2008


2007


2006(In thousands)Operating activitiesLoss from continuing operations

$
(30,071
)

$
(862
)

$
(1,254
)Income from discontinued operations










230Net loss


(30,071
)


(862
)


(1,024
)Adjustments to reconcile net loss to cash provided by operating
    activities:Loss from the sale of discontinued operations










(230
)Depreciation and amortization


1,084



1,119



1,238Provisions for bad debts


115



185



746Loss (gain) on sale of fixed assets


6







(6
)Impairment of other intangibles


177







Impairment of goodwill


27,313







Amortization of software development costs


2,204



1,957



1,958Non-cash stock compensation expense


1,524



1,878



1,763Changes in operating assets and liabilities:Accounts receivable


145



719



3,184Prepaid expenses and other current assets


330



1,100



(2,558
)Accounts payable and accrued expenses


(2,777
)


493



(3,549
)Deferred revenue including unearned discount


4,282



(889
)


2,043Unrecognized tax benefits


103



1,275



Cash provided by operating activities


4,435



6,975



3,565Investing activitiesProceeds from sale of assets










6Purchases of property and equipment


(645
)


(510
)


(921
)Purchase of technology






(2,300
)


Purchases of held-to-maturity securities


(236,147
)


(94,898
)


(49,094
)Maturities of held-to-maturity securities


237,739



100,263



22,762Purchases of available-for-sale securities


(37,033
)


(45,275
)


(48,405
)Sales of available-for-sale securities


54,925



37,340



10,297Cash provided by (used in) investing activities


18,839



(5,380
)


(65,355
)Financing activitiesRepurchase of common stock


(24,769
)


(803
)


(15,168
)Exercise of stock options


325



413



1,632Tax benefit from change in valuation allow related to stock
    option exercises










443Cash used in financing activities


(24,444
)


(390
)


(13,093
)Increase (decrease) in cash and cash equivalents


(1,170
)


1,205



(74,883
)Cash and cash equivalents at beginning of year


8,536



7,331



82,214Cash and cash equivalents at end of year

$
7,366


$
8,536


$
7,331    F-5




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
  A.
    Business  tm tm
        B.
    Segment
    Reporting    C.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation
   F-6




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates
    Revenue
    Recognition
  97-2, SOP 98-9, SOP 97-2 SOP 81-1 EITF 01-14, and/or
  and/or SOP 81-1
   F-7




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Cash
    and Cash Equivalents
      Marketable
    Securities
    Concentration
    of Risk
     F-8




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounts
    Receivable and Allowance for Doubtful Accounts
  and/or
    2008


2007


2006Balance at beginning of period

$
231


$
1,050


$
767Additions charged to costs and expenses


115



185



746Reductions(a)


(188
)


(1,004
)


(463
)Balance at end of period

$
158


$
231


$
1,050     (a)
    
    Write-offs, returns and discounts, net of recoveries.  Fair
    Value
  and/or
             F-9




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Fair Value Measurements Using


Assets atLevel 1


Level 2


Level 3


Fair ValueCash and cash equivalents

$
7,366


$



$



$
7,366Federal agency obligations


7,581











7,581State and municipal obligations






23,847







23,847Total

$
14,947


$
23,847


$



$
38,794   No. 157-2 (FSP 157-2), FSP 157-2
  Long-lived
    Assets
    Goodwill
   F-10




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               F-11




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Software
    Development Costs
      Property
    and Equipment
    Income
    Taxes
   F-12




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Loss
    Per Share
  (in thousands,
    except per share data):
  Year Ended December 31,2008


2007


2006Numerator  income (loss):Continuing operations

$
(30,071
)

$
(862
)

$
(1,254
)Discontinued operations










230$
(30,071
)

$
(862
)

$
(1,024
)Denominator:Basic weighted-average shares outstanding


38,842



44,657



46,499Effect of dilutive securities










Diluted weighted-average shares outstanding


38,842



44,657



46,499Basic EPS:Continuing operations

$
(0.77
)

$
(0.02
)

$
(0.03
)Discontinued operations


0.00



0.00



0.00$
(0.77
)

$
(0.02
)

$
(0.03
)Diluted EPS:Continuing operations

$
(0.77
)

$
(0.02
)

$
(0.03
)Discontinued operations


0.00



0.00



0.00$
(0.77
)

$
(0.02
)

$
(0.03
)     Comprehensive
    Loss
    Share
    Based Payment
   F-13




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  D.
    Recent
    Accounting Pronouncements  instrument-by-instrument
  SFAS No. 141-R, (SFAS 141-R). SFAS No. 141-R SFAS No. 141-R SFAS 141-R
    No. 157-2 (FSP 157-2), FSP 157-2
  E.
    Marketable
    Securities   F-14




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31, 2008Unrealized


Unrealized


FairCost


Gains


Losses


ValueAvailable-for-sale:State and municipal obligations

$
23,858


$
8


$
(19
)

$
23,847Federal agency obligations


7,470



111







7,581Total

$
31,328


$
119


$
(19
)

$
31,428   December 31, 2008Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueHeld-to-maturity:Commercial paper

$
6,698


$
2


$
(5
)

$
6,695Certificates of deposit


9,500



27



(3
)


9,524Total

$
16,198


$
29


$
(8
)

$
16,219       December 31, 2007Unrealized


Unrealized


FairCost


Gains


Losses


ValueAvailable-for-sale:State and municipal obligations

$
34,038


$
23


$
(31
)

$
34,030Federal agency obligations


11,255



68







11,323Total

$
45,293


$
91


$
(31
)

$
45,353   December 31, 2007Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueHeld-to-maturity:Commercial paper

$
7,928


$
16


$
(1
)

$
7,943Certificates of deposit


13,790



17



(2
)


13,805Total

$
21,718


$
33


$
(3
)

$
21,748    F-15




---



##### Table of Contents



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


December 31,2008


2007Due within one year

$
13,332


$
14,216Due between one to five years


2,891



8,837Due between five to ten years


2,000



Due after 10 years


13,205



22,300Total

$
31,428


$
45,353   F.
    Property
    and Equipment    Depreciation/Amortization


December 31,Period


2008


2007(Years)


(In thousands)Equipment, primarily computers, and software


3-5


$
4,943


$
4,614Equipment under capital lease obligations


3-5



2,627



2,627Furniture and other


3-7



890



7938,460



8,034Less accumulated depreciation and amortization






7,495



6,848$
965


$
1,186     G.
    Goodwill,
    Acquired or Developed Software and Other Intangible
    Assets    December 31,2008


2007Estimated


Gross





Net


Gross





NetEconomic


Carrying


Accumulated


Carrying


Carrying


Accumulated


CarryingLife


Amount


Amortization


Value


Amount


Amortization


Value(Years)


(In thousands)Goodwill





$







$



$
27,313






$
27,313Acquired software


7


$
16,000


$
(10,195
)

$
5,805


$
16,000


$
(7,992
)

$
8,008Trademarks


15


$
1,900


$
(644
)

$
1,256


$
1,900


$
(517
)

$
1,383Non-compete agreements


5



1,500



(1,500
)






1,500



(1,225
)


275$
3,400


$
(2,144
)

$
1,256


$
3,400


$
(1,742
)

$
1,658      F-16




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (in thousands):
  2009


2010


2011


2012


2013


Thereafter


TotalAcquired software

$
2,286


$
2,122


$
329


$
328


$
329


$
411


$
5,805Trademarks


126



127



126



127



127



623



1,256Total

$
2,412


$
2,249


$
455


$
455


$
456


$
1,034


$
7,061     H.
    Accrued
    Expenses  in thousands
  December 31,


December 31,2008


2007Accounts payable

$
1,675


$
3,645Accrued expenses


1,661



2,331Income taxes payable






157Sales tax payable


820



961Total

$
4,156


$
7,094   I.
    Commitments
    and Contingencies      Year

Operating(In thousands)2009

$
9912010


8762011


8832012


8932013


29Total

$
3,672    F-17




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Legal
    Proceedings
    Litigation Related to the Offer and Merger. Fishman v. Williamson, et al.,
   F-18




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  J.
    Stockholders
    Equity  Stockholder
    Rights Plan
              Employee
    Savings Plans
  and/or
 F-19




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Employee
    Stock Purchase Plan
    Stock
    Option Plans
           F-20




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Share-Based
    Payment
        2008


2007


2006(In thousands)


(In thousands)


(In thousands)Cost of revenues: maintenance and service

$
138


$
106


$
54Research and development


413



266



196Selling, general and administrative


973



1,506



1,513Total share-based compensation expense

$
1,524


$
1,878


$
1,763  F-21




---



##### Table of Contents



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


Year EndedDecember 31, 2008


December 31, 2007


Year Ended December 31, 2006Stock


Stock

Stock


Stock


StockStock Option

Purchase


Option

Purchase


Option


PurchasePlan

Plan


Plan

Plan


Plan


PlanAverage risk-free interest rate

2.19%


1.88
%

4.69%


4.47
%


4.82
%


4.47
%Expected dividend yield


















Expected stock price volatility

43.6% - 51.4%


47.9
%

44.2% - 45.1%


41.7
%


41.7
%


41.7
%Weighted-average expected life (in years)

5.9


0.5


5.4


0.5



4.9



0.5Weighted-average fair value

$0.96

$
0.91


$1.41

$
1.06


$
1.56


$
1.42     true-up
   F-22




---



##### 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)(Years)Outstanding at December 31, 2006


8,519



6,681


$
3.32



5.97


$
2,427Granted






1,160



2.99Exercised






(204
)


2.03







298Forfeited






(590
)


3.69Outstanding at December 31, 2007


6,058



7,047


$
3.28



5.03


$
1,519Granted






2,410



2.06Exercised






(17
)


1.78







298Forfeited






(1,131
)


3.61Outstanding at December 31, 2008


3,720



8,309


$
2.88



5.03


$
1,519Options exercisable at December 31, 2006






4,368


$
3.16



4.64


$
2,362Options exercisable at December 31, 2007






5,078


$
3.28



3.82


$
1,517Options exercisable at December 31, 2008






5,161


$
3.20



3.77


$
80     (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, 2008 and
    the exercise price of the underlying options.  Warrants
    Restricted
    Stock
     F-23




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##### Table of Contents



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


Weighted AverageRestricted


Grant Date FairStock


ValueRestricted at December 31, 2007


25,985


$
3.23Granted


36,269



2.79Unrestricted


(25,985
)


3.23Restricted at December 31, 2008


36,269


$
2.79Granted


91,934Unrestricted


55,665   K.
    Income
    Taxes      December 31,


December 31,


December 31,2008


2007


2006Income tax (benefit) provision from continuing operationsCurrent federal

$



$
15


$
Current state


158



194



84Total current (benefit) provision


158



209



84Deferred federal


(1,907
)


489



1112Deferred state


(525
)


(249
)


1175Valuation allowance


2432



(240
)


(2,287
)Total deferred (benefit) provision










Total income tax provision from continuing operations

$
158


$
209


$
84     December 31,2008


2007


2006Benefit computed at statutory rates

$
(10,469
)

$
(228
)

$
(410
)State taxes, net of federal benefit


(239
)


(36
)


818Permanent differences


374



271



164Goodwill impairment


8,035







Change in valuation allowances and other


2,457



202



(488
)Total income tax expense

$
158


$
209


$
84  F-24




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##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007(In thousands)Deferred income tax assets:Allowance for doubtful accounts

$
63


$
92Goodwill amortization


2,174



910Accrued expenses


654



562Net operating loss and credit carry forwards


22,837



22,166Credit carry forwards


3,362



3,349Share-based payment


1,326



1,076Difference between book and tax bases of property and equipment


571



54930,987



28,704Less valuation allowance


28,193



25,7612,794



2,943Deferred income tax liabilities:Acquired/developed software


2,297



2,281Other intangible assets


497



6622,794



2,943Net deferred income tax asset

$



$
       SFAS No. 141-R, Business Combinations
   F-25




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##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        L.
    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, 2008Maintenance and service revenues

$
9,753


$
10,552


$
9,616


$
9,965


$
39,886Software license and system sales


3,035



3,023



2,682



1,727



10,467Total revenues


12,788



13,575



12,298



11,692



50,353Cost of maintenance and services


4,269



4,692



4,579



4,139



17.679Cost of software license and system sales


2,211



1,731



1,638



1,420



7,000Selling, general and administrative


5,002



5,282



4,880



5,348



20,512Research and development


2,195



2,195



2,124



2,143



8,657Depreciation and amortization


275



277



283



249



1,084Impairment(a)














27,490



27,490Operating loss


(1,164
)


(602
)


(1,206
)


(29,097
)


(32,069
)Interest income


789



572



420



406



2,187Loss on sale of investments


(31
)














(31
)Loss before tax


(406
)


(30
)


(786
)


(28,691
)


(29,913
)Provision for income tax


61



67



23



7



158Net loss


(467
)


(97
)


(809
)


(28,698
)


(30,071
)Weighted average number of shares outstandingBasic


43,628



40,740



36,004



35,329



38,842Diluted


43,628



40,740



36,004



35,329



38,842Loss per share  basic

$
(0.01
)

$
(0.00
)

$
(0.02
)

$
(0.81
)

$
(0.77
)Loss per share  diluted

$
(0.01
)

$
(0.00
)

$
(0.02
)

$
(0.81
)

$
(0.77
)  F-26




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##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three Months Ended


Year EndedMarch 31


June 30


September 30


December 31


December 31(In thousands, except per share data)YEAR ENDED DECEMBER 31, 2007Maintenance and service revenues

$
9,208


$
9,583


$
9,739


$
9,645


$
38,175Software license and system sales


3,225



2,919



3,562



2,007



11,713Total revenues


12,433



12,502



13,301



11,652



49,888Cost of maintenance and services


3,992



4,194



4,149



4,134



16,469Cost of software license and system sales


1,519



1,670



1,971



1,326



6,486Selling, general and administrative


5,377



5,480



5,290



5,662



21,809Research and development


2,022



2,278



2,112



2,115



8,527Depreciation and amortization


272



264



300



284



1,120Operating loss


(749
)


(1,384
)


(521
)


(1,869
)


(4,523
)Interest income


957



930



992



991



3,870Income (loss) before tax


208



(454
)


471



(878
)


(653
)Provision for income tax


62



26



97



24



209Net income (loss)


146



(480
)


374



(902
)


(862
)Weighted average number of shares outstandingBasic


44,549



44,568



44,762



44,746



44,657Diluted


45,360



44,568



45,663



44,746



44,657Earnings (loss) per share  basic

$
0.00


$
(0.01
)

$
0.01


$
(0.02
)

$
(0.02
)Earnings (loss) per share  diluted

$
0.00


$
(0.01
)

$
0.01


$
(0.02
)

$
(0.02
)     (a)
    
    In the quarter ended December 31, 2008, the Company
    recognized a charge of $27.3 million relating to the
    impairment of goodwill. See Note C to the Consolidated
    Financial Statements.  M.
    Supplemental
    Disclosure of Cash Flow and Noncash Activities     F-27




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##### Table of Contents



SIGNATURES      By:
    /s/  Kevin
    C. Burns   Senior Vice President and Chief Financial Officer
  By:
    /s/  Stephen
    N. Kahane M.D., M.S.   Chief Executive Officer
  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 12, 2009/s/  KEVIN
    C. BURNSKevin
    C. Burns

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

March 12, 2009/s/  STEPHEN
    J. DENELSKYStephen
    J. Denelsky

Director

March 12, 2009/s/  JOSEPH
    D. HILLJoseph
    D. Hill

Director

March 12, 2009/s/  STEPHEN
    J. LIFSHATZStephen
    J. Lifshatz

Director

March 12, 2009/s/  DAVID
    B. SHEPHERDDavid
    B. Shepherd

Director

March 12, 2009/s/  JOHN
    J. SVIOKLAJohn
    J. Sviokla

Director

March 12, 2009