##### 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, 2007ORo

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
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   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


16Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 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


26Item 6.


Selected Consolidated Financial Data


28Item 7.


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


30Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


41Item 8.


Financial Statements and Supplementary Data


42Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


42Item 9A.


Controls and Procedures


42Item 9B.


Other Information


43PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


43Item 11.


Executive Compensation


43Item 12.


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


44Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


45Item 14.


Principal Accounting Fees and Services


45PART IVItem 15.


Exhibits, Financial Statement Schedules


45SignaturesEX-10.33 Lease Agreement, dated October 18, 2007 (Brighton Landing, LLC)EX-23.1 Consent of BDO Seidman, LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEO & CFO    AMICAS, Vision Series, Office Solutions, RadStream, Insight
    Dashboards, and AMICAS Insight Solutions
 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 sm
           2




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##### Table of Contents



Industry
    Background
  1
  2
          1 http://www.cms.hhs.gov/NationalHealthExpendData/25_NHE_Fact_Sheet.asp
 2 http://www.aaos.org/news/bulletin/jul07/reimbursement1.asp
 3




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##### Table of Contents



US
    Radiology PACS Market, 2007-2012
  Large Academic/Research Hospitals


Large Community Hospitals(>250,000 Exams)


(100,000-250,000 Exams)


Small Community Hospitals (<100,000 Exams)


Diagnostic Imaging CentersPenetration


Annual


Penetration


Annual


Penetration


Annual


Penetration


AnnualRate


Purchases


Rate


Purchases


Rate


Purchases


Rate


Purchases2007


95.4
%


70



76.5
%


240



35.0
%


290



36.3
%


2452008


97.5
%


70



80.4
%


260



42.2
%


350



41.3
%


3002009


98.5
%


70



84.8
%


290



50.5
%


420



46.7
%


3452010


99.5
%


70



88.2
%


310



60.2
%


500



53.0
%


3852011


99.7
%


70



90.7
%


330



71.6
%


590



58.4
%


4302012


99.9
%


70



92.1
%


350



83.9
%


680



63.8
%


465CAGR (07-12)






0.0
%






7.8
%






18.6
%






13.8
%   US
    Radiology RIS Market, 2007-2012
  Large Academic/Research Hospitals


Large Community Hospitals(>250,000 Exams)


(100,000-250,000 Exams)


Small Community Hospitals (<100,000 Exams)


Diagnostic Imaging CentersPenetration


Annual


Penetration


Annual


Penetration


Annual


Penetration


AnnualRate


Purchases


Rate


Purchases


Rate


Purchases


Rate


Purchases2007


100.0
%


26



89.6
%


100



69.3
%


140



45.4
%


2752008


100.0
%


26



92.7
%


100



72.1
%


140



49.8
%


2902009


100.0
%


27



95.1
%


110



75.0
%


150



54.0
%


2952010


100.0
%


27



96.8
%


110



78.0
%


160



58.1
%


3002011


100.0
%


28



98.5
%


120



81.1
%


160



60.7
%


3002012


100.0
%


28



99.9
%


120



84.3
%


170



63.4
%


305CAGR (07-12)






1.5
%






3.7
%






4.0
%






2.1
%        4




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##### Table of Contents



Business
    Strategy
      
    ambulatory care facilities, which primarily consist of radiology
    groups, imaging centers, multi-specialty groups and billing
    services, and
    acute care facilities, which primarily consist of hospitals and
    integrated delivery networks (IDNs).          Products
    and Services
   5




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Vision
    Series Products
  Vision Series RIS.
  Vision Series PACS. tm
  Vision Series Document Management.
  Vision Series Financials. follow-up
  Vision Reach.
  EDI Services.
 6




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
    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.
  Insight Dashboards.
  Vision Series Financials.
  Professional
    Services: AMICAS Insight Solutions
   7




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Technical
    Support
  Software Support.
  Hardware Support. on-site
  Future
    Products
    
    Strong teleradiology capabilities;
    Extended functionality for referring physicians and for
    referring physician communications;
    Extended 3D visualization including advanced clinical
    applications;
    More complete integration of related clinical tools; and
    More extensive workflow capabilities.  Research
    and Development
      Sales and
    Marketing
   8




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Intellectual
    Property
        and/or
    Competition
    
    Product features and functionality;
    Ongoing product enhancements;
    Price;
    Technology architecture and design;
    Customer service, support, and satisfaction; 9




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
    Distribution coverage and quality
    Customer satisfaction and customer reference sites; and
    Vendor reputation, including real and perceived financial
    stability and wherewithal.        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 10




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
    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
          
    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.   11




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##### Table of Contents



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.          Compliance
    with Fraud and Abuse Laws
    Anti-Kickback
    Statute
   12




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##### Table of Contents




    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
    Other
    Fraud and Abuse Laws
   13




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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,
  02135-2040.
  Employees
      Stephen
    N. Kahane
   14




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E-Health
  Joseph
    D. Hill
    Medical
    Division Sale
         15




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##### Table of Contents



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
    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; 16




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
    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;
    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/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 Vision Series suite
    of products, and related product and service offerings;
    new products and services, including Insight Dashboards, Vision
    Reach, Vision Series Financials and RadStream; and
    enhancements to our existing products, support and services,
    including Vision Series RIS and Vision Series 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.     18




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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.
    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.
  and/or and/or and/or
 19




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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.
   20




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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
  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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##### Table of Contents



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.
    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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##### Table of Contents



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.
    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.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    2008Location

Square Footage


Monthly Cost


Lease ExpirationBoston, Massachusetts


27,081


$
65,446


January 2013Daytona, Florida


35,253


$
48,109


July 2008    25




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##### Table of Contents



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.
  2007

High


LowFirst Quarter

$
3.10


$
2.66Second Quarter

$
3.54


$
2.75Third Quarter

$
3.68


$
2.34Fourth Quarter

$
3.04


$
2.39   2006First Quarter

$
5.60


$
4.27Second Quarter

$
4.79


$
2.68Third Quarter

$
3.58


$
2.50Fourth Quarter

$
3.32


$
2.58  26




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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 12/31/02 in stock or index-including
    reinvestment of dividends.
    Fiscal year ending December 31.  12/31/02


12/31/03


12/31/04


12/31/05


12/31/06


12/31/07AMICAS Common Stock



100.00




114.81




115.58




128.83




76.36




69.09NASDAQ Composite



100.00




149.75




164.64




168.60




187.83




205.22Russell
    2000©
    index



100.00




147.25




174.24




182.18




215.64




212.26   Stockholders.
  Dividend Policies.
  Unregistered Sales of Securities.
 27




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##### Table of Contents



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, 2007





$







$
October 1, 2007 through October 31, 2007














November 1, 2007 through November 30, 2007














December 1, 2007 through December 31, 2007


300,800



2.669



300,800



24,197,168Total:


300,800


$
2.669



300,800


$
24,197,168   Item 6.
    Selected
    Consolidated Financial Data  Form 10-K.
  Form 10-K
  For the Year Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Consolidated Statements of Operations Data(a)(b)(c)RevenuesMaintenance and services

$
38,175


$
36,258


$
36,813


$
29,543


$
24,534Software licenses and system sales


11,713



13,179



15,998



12,776



9,677Total revenues


49,888



49,437



52,811



42,319



34,211Costs and expensesCost of revenues:Maintenance and services


16,469



15,003



14,163



13,060



13,999Software licenses and system sales, includes amortization of
    software costs of $1,957 in 2007 $1,958 in 2006, $1,966 in 2005,
    $3,178 in 2004 and $1,873 in 2003


6,486



7,644



6,413



6,154



5,147Impairment of capitalized software














3,229



490Selling, general and administrative


21,809



21,770



20,701



25,824



14,577 28




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##### Table of Contents



For the Year Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Research and development


8,527



8,705



9,047



9,488



7,565Depreciation and amortization


1,120



1,238



1,777



1,968



1,331Settlements, severance and impairment charges










5,677



5,730



Acquired in-process technology


















750Restructuring credits














(155
)


Total costs and expenses


54,411



54,360



57,778



65,298



43,859Operating loss income


(4,523
)


(4,923
)


(4,967
)


(22,979
)


(9,648
)Interest income (expense), net


3,870



3,753



1,765



(1,336
)


(876
)Loss from continuing operations, before income taxes


(653
)


(1,170
)


(3,202
)


(24,315
)


(10,524
)Provision for (benefit from) income taxes


209



84



(1,197
)


2,200



200Loss from continuing operations


(862
)


(1,254
)


(2,005
)


(26,515
)


(10,724
)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
)


14,058



18,687Net (loss) income

$
(862
)

$
(1,024
)

$
44,215


$
(12,457
)

$
7,963(Loss) earnings per share  basicContinuing operations income taxes

$
(0.02
)

$
(0.03
)

$
(0.04
)

$
(0.61
)

$
(0.25
)Discontinued operations income taxes


0.00



0.00



1.00



0.32



0.43$
(0.02
)

$
(0.03
)

$
0.96


$
(0.29
)

$
0.18(Loss) earnings per share  dilutedContinuing operations

$
(0.02
)

$
(0.03
)

$
(0.04
)

$
(0.61
)

$
(0.25
)Discontinued operations


0.00



0.00



1.00



0.32



0.43$
(0.02
)

$
(0.03
)

$
0.96


$
(0.29
)

$
0.18Cash provided by (used in) operating activities(d)

$
6,975


$
3,565


$
(7,689
)

$
4,735


$
2,180     (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 for the years ended
    December 31, 2004 and 2003, respectively, 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 statements of operations data include $1,878 and
    $1,763 related to the adoption of SFAS 123(R),
    Share-Based Payment, for the years ended
    December 31, 2007 and December 31, 2006, respectively.(d)
    
    Includes operating activities of the Medical Division through
    the sale of the Medical Division on January 3, 2005.  29




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##### Table of Contents



December 31,2007


2006


2005


2004


2003(In thousands)Consolidated Balance Sheet DataCash and cash equivalents

$
8,536


$
7,331


$
82,214


$
12,634


$
20,128Marketable securities


67,071



64,436











Working capital


70,770



68,964



79,036



19,968



9,548Total assets


128,441



126,871



140,285



133,886



132,576Total long-term debt














28,674



29,757Total stockholders equity


108,246



107,555



119,913



64,655



70,662  Item 7.Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
  tm sm
      
    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.  David and Susan
    Jones v. InfoCure Corporation, et al.
 30




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Revenues
  Year Ended December 31,2007


Change


2006


Change


2005(Dollars in thousands)Maintenance and services

$
38,175



5.3
%

$
36,258



(1.5
)%

$
36,813Percentage of total revenues


76.5
%






73.3
%






69.7
%Software licenses and system sales

$
11,713



(11.1
)%

$
13,179



(17.6
)%

$
15,998Percentage of total revenues


23.5
%






26.7
%






30.3
%Total revenues

$
49,888



0.9
%

$
49,437



(6.4
)%

$
52,811            31




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##### Table of Contents



Cost
    of Revenues
  Year Ended December 31,2007


Change


2006


Change


2005(Dollars in thousands)Maintenance and services

$
16,469



9.8
%

$
15,003



5.9
%

$
14,163Percentage of maintenance and services revenues


43.1
%






41.4
%






38.5
%Software licenses and system sales

$
6,486



(15.1
)%

$
7,644



19.2
%

$
6,413Percentage of software licenses and system sales


55.4
%






58.0
%






40.1
%Total cost of revenues

$
22,955



1.4
%

$
22,647



10.1
%

$
20,576                    32




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##### Table of Contents



Operating
    Expenses
  Year Ended December 31,2007


Change


2006


Change


2005(Dollars in thousands)Selling, general and administrative

$
21,809



0.2
%

$
21,770



5.2
%

$
20,701Percentage of total revenues


43.7
%






44.0
%






39.2
%Research and development

$
8,527



(2.1
)%

$
8,705



(3.8
)%

$
9,047Percentage of total revenues


17.1
%






17.6
%






17.1
%Depreciation and amortization

$
1,120



(9.5
)%

$
1,238



(30.3
)%

$
1,777Percentage of total revenues


2.2
%






2.5
%






3.4
%   Selling,
    general and administrative
            Research
    and development
         33




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##### Table of Contents



Depreciation
    and amortization
        Settlements,
    severance and impairment charges
  2007
    Severance Costs
      Settlement of earn-out.
  Settlement of litigation. David and Susan
    Jones v. InfoCure Corporation, et al.
 34




---



##### Table of Contents



Restructuring
    charges:
  The 2005 Plan.
  Office Closure.
  Executive Termination Costs.
  Interest
    Income (Expense)
  Year Ended December 31,2007


Change


2006


Change


2005(Dollars in thousands)Interest income

$
3,870



3.1
%

$
3,753



49.2
%

$
2,516Interest expense














(100.0
)%


(751
)         Income
    Taxes
       35




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##### Table of Contents



Gain
    on the sale of discontinued operations
          (Loss)
    Income from Discontinued Operations
    LIQUIDITY
    AND CAPITAL RESOURCES
           36




---



##### Table of Contents



Contractual
    Obligations
    Fiscal Year Ended2008


2009


2010


2011


Thereafter


Totals(In thousands)Operating leases(a)

$
1,152


$
848


$
874


$
866


$
923


$
4,663Other commitments(b)


888



288



96











1,272Total

$
2,040


$
1,136


$
970


$
866


$
923


$
5,935     (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.(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 2008 plan year, to contribute to the plans.
    Our matching contribution for 2008 is estimated to be
    approximately $0.6 million in cash. Our matching
    contribution for 2007 was approximately $0.6 million of
    which $0.5 million was paid in 2007 and $0.1 million
    paid in February 2008.  Rule 10b5-1
        Agreements
    with Cerner
   37




---



##### Table of Contents



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 SOP 81-1.
    Cash Equivalents and Marketable Debt
    Securities.
    Accounts Receivable.
  Long-lived Assets.
 39




---



##### Table of Contents



Goodwill and Business Combinations.
  Software Development Costs.
    Income Taxes.
  Accounting for Share-Based Payment.
  Loss Contingencies.
 40




---



##### Table of Contents



Recent
    Accounting Pronouncements
      instrument-by-instrument
  SFAS No. 141-R, (SFAS 141-R). SFAS No. 141-R SFAS No. 141-R SFAS 141-R
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk       41




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##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  page F-1.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Changes
    in Internal Controls
    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 42




---



##### Table of Contents




    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-1 Form 10-K.
  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   43




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    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)


3,074,418


$
3.87



5,821,494
(2)Equity compensation plans not approved by security holders(3)


3,998,622


$
2.82



Total


7,073,040


$
3.27



5,821,494     (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)
    
    Includes 5,821,494 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, 2007, our Chief Executive Officer had the
    authority to grant options for up to 116,876 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. 44




---



##### 



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  Financial Statements. page F-1
  Financial
    Statements and Supplementary Data
   
  PageFinancial Statements:Reports of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of December 31,
    2007 and 2006


F-3Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006 and 2005


F-4Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for the years ended
    December 31, 2007, 2006 and 2005


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006, and 2005


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 Infocuse 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).3
.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 7, 2008).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). 45




---



##### Table of Contents



ExhibitNo.



Description4
.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,
    filed with the Commission on March 30, 2000).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).10
.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). 46




---



##### Table of Contents



ExhibitNo.



Description10
.18



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
.19



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
.20



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
.21



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
.22



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
.23



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
.24



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
.25



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
.26



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
.27



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
.28



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
.29



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
.30



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
.31



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
.32



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
.33*



Lease agreement, dated October 18, 2007, by and between AMICAS,
    Inc and Brighton Landing, LLC.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, 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. 47




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
    CONTROL OVER FINANCIAL REPORTING
  
  Internal Control 
    Integrated Framework
            
    F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
          Internal Control 
    Integrated Framework
  
    F-2




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED BALANCE SHEETS
  December 31,2007


2006(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
8,536


$
7,331Marketable securities


67,071



64,436Accounts receivable, net of allowances of $231 and $1,050


10,483



11,387Prepaid expenses and other current assets


3,600



4,729Total current assets


89,690



87,883Property and equipment, less accumulated depreciation and
    amortization of $6,848 and $6,155


1,186



1,369Goodwill


27,313



27,313Acquired/developed software, less accumulated amortization of
    $7,992 and $6,035


8,008



7,665Other intangible assets, less accumulated amortization of $1,742
    and $1,316


1,658



2,084Other assets


586



557Total assets

$
128,441


$
126,871LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued expenses

$
7,094


$
7,155Accrued employee compensation and benefits


1,451



897Deferred revenue, including unearned discounts of $- and $336


10,375



10,867Total current liabilities


18,920



18,919Unrecognized tax benefits


1,275



Other liabilities, primarily unearned discounts re: outsourced
    printing services






397Commitments and contingencies (see Note L)Stockholders equity:Preferred stock $.001 par value; 2,000,000 shares
    authorized; none issued






Common stock $.001 par value, 200,000,000 shares
    authorized, 51,296,823 and 51,066,966 shares issued


51



51Additional paid-in capital


229,056



226,764Accumulated deficit


(98,478
)


(97,616
)Accumulated other comprehensive income (loss)


60



(4
)Treasury stock, at cost, 6,824,192 and 6,523,392 shares


(22,443
)


(21,640
)Total stockholders equity


108,246



107,555Total liabilities and stockholders equity

$
128,441


$
126,871    F-3




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  Year Ended December 31,2007


2006


2005(In thousands, except per share data)RevenuesMaintenance and services

$
38,175


$
36,258


$
36,813Software licenses and system sales


11,713



13,179



15,998Total revenues


49,888



49,437



52,811Costs and expensesCost of revenues:Maintenance and services


16,469



15,003



14,163Software licenses and system sales, includes amortization of
    software costs of $1,957 in 2007, $1,958 in 2006 and $1,965 in
    2005


6,486



7,644



6,413Selling, general and administrative


21,810



21,770



20,701Research and development


8,527



8,705



9,047Depreciation and amortization


1,119



1,238



1,777Settlement, severance and impairment charges










5,67754,411



54,360



57,778Operating loss


(4,523
)


(4,923
)


(4,967
)Interest income


3,870



3,753



2,516Interest expense










(751
)Loss from continuing operations, before income taxes


(653
)


(1,170
)


(3,202
)Provision for (Benefit from) income taxes


209



84



(1,197
)Loss from continuing operations


(862
)


(1,254
)


(2,005
)Gain on sale of discontinued operations, net of benefit from
    taxes of $230 in 2006 and provision for taxes of $33,906 in 2005






230



46,277Loss from discontinued operations










(57
)Net (loss) income

$
(862
)

$
(1,024
)

$
44,215Earnings (loss) per share:Basic:Continuing operations

$
(0.02
)

$
(0.03
)

$
(0.04
)Discontinued operations


0.00



0.00



1.00$
(0.02
)

$
(0.03
)

$
0.96Diluted:Continuing operations

$
(0.02
)

$
(0.03
)

$
(0.04
)Discontinued operations


0.00



0.00



1.00$
(0.02
)

$
(0.03
)

$
0.96Weighted average number of shares outstanding:Basic


44,657



46,499



46,285Diluted


44,657



46,499



46,285    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 (Loss)


Stock


Equity


Loss(In thousands, except share data)Balance at December 31, 2004


46,338,568



(1,985,502
)

$
46


$
211,888


$
(140,807
)

$



$
(6,472
)

$
64,655


$
Issuance 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
)


107,555Issuance 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 income (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
)

$
108,246    F-5




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)Operating activitiesLoss from continuing operations

$
(862
)

$
(1,254
)

$
(2,005
)Income from discontinued operations






230



46,220Net (loss) income


(862
)


(1,024
)


44,215Adjustments to reconcile net income (loss) to cash provided by
    (used in) operating activities:Gain from the sale of discontinued operations






(230
)


(81,143
)Depreciation and amortization


1,119



1,238



1,777Provisions for bad debts


185



746



(1,432
)Gain on sale of fixed assets






(6
)


(41
)Write-off of deferred financing costs










661Amortization of software development costs


1,957



1,958



1,965Deferred income taxes










28,200Non-cash stock compensation expense


1,878



1,763



1,211Changes in operating assets and liabilities:Accounts receivable


719



3,184



(2,460
)Prepaid expenses and other current assets


1,100



(2,558
)


2,070Accounts payable and accrued expenses


493



(3,549
)


(908
)Deferred revenue including unearned discount


(889
)


2,043



(2,339
)Other liabilities










(143
)Unrecognized tax benefits


1,275







Tax benefit from change in valuation allow related to stock
    option exercises










678Cash provided by (used in) operating activities


6,975



3,565



(7,689
)Investing activitiesProceeds from sale of discontinued operations










98,408Payment of transaction costs related to sale of discontinued
    operations










(1,043
)Proceeds from sale of assets






6



268Purchases of property and equipment


(510
)


(921
)


(684
)Purchase of technology


(2,300
)






Purchases of held-to-maturity securities


(94,898
)


(49,094
)


Maturities of held-to-maturity securities


100,263



22,762



Purchases of available-for-sale securities


(45,275
)


(48,405
)


Sales of available-for-sale securities


37,340



10,297



Cash (used in) provided by investing activities


(5,380
)


(65,355
)


96,949Financing activitiesPrincipal repayments on long-term debt










(28,673
)Repurchase of common stock


(803
)


(15,168
)


Exercise of stock options and warrants


413



1,632



8,993Tax benefit from change in valuation allow related to stock
    option exercises






443



Cash used in financing activities


(390
)


(13,093
)


(19,680
)Increase (decrease) in cash and cash equivalents


1,205



(74,883
)


69,580Cash and cash equivalents at beginning of year


7,331



82,214



12,634Cash and cash equivalents at end of year

$
8,536


$
7,331


$
82,214    F-6




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  A.
    Business  sm
      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 EITF 01-14, and/or SOP 81-1. and/or
    Cash
    and Cash Equivalents
      Marketable
    Securities
   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
    2007


2006


2005Balance at beginning of period

$
1,050


$
767


$
2,200Additions charged to costs and expenses


185



746



140Additions charged to other accounts(a)










229Reductions(b)


(1,004
)


(463
)


(1,802
)Balance at end of period

$
231


$
1,050


$
767     (a)
    
    Charged to revenues(b)
    
    Write-offs, returns and discounts, net of recoveries.  Fair
    Value
    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
      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 31,2007


2006


2005Numerator  income (loss):Continuing operations

$
(862
)

$
(1,254
)

$
(2,005
)Discontinued operations






230



46,220$
(862
)

$
(1,024
)

$
44,215Denominator:Basic EPS  weighted-average shares


44,657



46,499



46,285Effect of dilutive securities, stock option and warrant rights










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


44,657



46,499



46,285Basic EPS:Continuing operations

$
(0.02
)

$
(0.03
)

$
(0.04
)Discontinued operations


0.00



0.00



1.00$
(0.02
)

$
(0.03
)

$
0.96Diluted EPS:Continuing operations

$
(0.02
)

$
(0.03
)

$
(0.04
)Discontinued operations


0.00



0.00



1.00$
(0.02
)

$
(0.03
)

$
0.96     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 EndedDecember 31,2005Loss from continuing operations, as reported

$
(2,005
)Less: total stock-based employee compensation expense determined
    under fair value based method for all awards, net of related tax
    effects


(2,934
)Pro forma loss from continuing operations

$
(4,939
)Loss per share from continuing operations:Basic and diluted  as reported

$
(0.04
)Basic and diluted  pro forma

$
(0.11
)     Year EndedDecember 31,2005Risk-free interest rate

4.1%Expected dividend yield

0.0Expected stock price volatility

63.1%Weighted average expected life

4.8 years     D.
    Recent
    Accounting Pronouncements   F-12




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      instrument-by-instrument
  SFAS No. 141-R, (SFAS 141-R). SFAS No. 141-R SFAS No. 141-R SFAS 141-R
  E.
    Discontinued
    Operations       F-13




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      EITF 03-13,
    Year EndedDecember 31,2005Revenues

$
Gross profit


Operating loss


(57
)Loss from discontinued operations

$
(57
)   G.
    Settlements,
    Severance and Impairment Charges  2007
    Severance 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
    $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 F-14




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  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.
  Office Closure.
  Executive Termination Costs.
  H.
    Marketable
    Securities   F-15




---



##### Table of Contents



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


UnrealizedCost


Gains


Losses


Fair ValueAvailable-for-sale:State and municipal obligations

$
29,950


$



$



$
29,950Federal agency obligations


5,801



5



(9
)


5,797Total

$
35,751


$
5


$
(9
)

$
35,747   December 31, 2006Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueHeld-to-maturity:Commercial paper

$
12,812


$
1


$
(1
)

$
12,812Certificates of deposit


15,877



5







15,882Total

$
28,689


$
6


$
(1
)

$
28,694    F-16




---



##### Table of Contents



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


December 31,2007


2006Due within one year

$
14,216


$
5,501Due between one to five years


8,837



8,096Due after 10 years


22,300



22,150Total

$
45,353


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


December 31,Period


2007


2006(Years)


(In thousands)Equipment, primarily computers, and software


3-5


$
4,614


$
4,114Equipment under capital lease obligations


3-5



2,627



2,627Furniture and other


3-7



793



7838,034



7,524Less accumulated depreciation and amortization






6,848



6,155$
1,186


$
1,369     J.
    Goodwill,
    Acquired/Developed Software and Other Intangible
    Assets    December 31,2007


2006Estimated


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


$
16,000


$
(7,992
)

$
8,008


$
13,700


$
(6,035
)

$
7,665Trademarks


15


$
1,900


$
(517
)

$
1,383


$
1,900


$
(391
)

$
1,509Non-compete agreements


5



1,500



(1,225
)


275



1,500



(925
)


575$
3,400


$
(1,742
)

$
1,658


$
3,400


$
(1,316
)

$
2,084    F-17




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (in thousands):
  2008


2009


2010


2011


2012


Thereafter


TotalAcquired software

$
2,231


$
2,286


$
2,123


$
328


$
328


$
712


$
8,008Trademarks


127



127



127



126



127



749



1,383Non-compete agreements


275























275Total

$
2,633


$
2,413


$
2,250


$
454


$
455


$
1,461


$
9,666     K.
    Accrued
    Expenses  in thousands
  December 31,


December 31,2007


2006Accounts payable

$
3,645


$
2,920Accrued expenses


2,331



2,216Income taxes payable


157



1,265Sales tax payable


961



754Total

$
7,094


$
7,155   L.
    Commitments
    and Contingencies      Year

Operating(In thousands)2008

$
1,1522009


8482010


8742011


866Thereafter


923Total

$
4,663    F-18




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Agreements
    with Cerner
           F-19




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Legal
    Proceedings
      M.
    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
   F-21




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    Option Plans
          six-year
     F-22




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Share-Based
    Payment
        2007


2006(In thousands)


(In thousands)Cost of revenues: maintenance and service

$
106


$
54Research and development


266



196Selling, general and administrative


1,506



1,513Total share-based compensation expense

$
1,878


$
1,763     Year Ended December 31, 2007


Year Ended December 31, 2006Stock Option Plan

Stock Purchase Plan


Stock Option Plan


Stock Purchase PlanAverage risk-free interest rate

4.69%


4.47
%


4.82
%


4.47
%Expected dividend yield












Expected stock price volatility

44.2%-45.1%


41.7
%


41.7
%


41.7
%Weighted-average expected life (in years)

5.4


0.5



4.9



0.5Weighted-average fair value

$1.41

$
1.06


$
1.56


$
1.42  F-23




---



##### Table of Contents



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





Weighted


Remaining


AggregateAvailable for





Average


Contractual


IntrinsicGrant


Shares


Exercise Price


Term


Value(1)(Years)Outstanding at December 31, 2005


14,930



6,672



3.23



6.10Granted






937



3.61Exercised






(563
)


2.24







1,195Forfeited






(365
)


4.13Outstanding 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


$
1,519Options exercisable at December 31, 2005






4,148


$
2.95Options exercisable at December 31, 2006






4,368


$
3.16



4.64


$
2,362Options exercisable at December 31, 2007






5,078


$
3.28



3.82


$
1,517     (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, 2007 and
    the exercise price of the underlying options. F-24




---



##### Table of Contents



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


WeightedRemaining


AverageRange of

Number


Contractual


ExerciseExercise Prices

of Shares


Life


Price(Years)$0.7517.84


350



0.1


$
4.58     Restricted
    Stock
        Shares of


Weighted AverageRestricted


Grant Date FairStock


ValueRestricted at December 31, 2005





$
Granted


29,680



2.83Unrestricted






Restricted at December 31, 2006


29,680



2.83Granted


25,985



3.23Unrestricted


(29,680
)


2.83Restricted at December 31, 2007


25,985


$
3.23   N.
    Income
    Taxes   F-25




---



##### Table of Contents



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


December 31,


December 31,2007


2006


2005Income tax (benefit) provision from continuing operationsCurrent federal

$
15


$



$
(245
)Current state


194



84



(111
)Total current (benefit) provision


209



84



(356
)Deferred federal


489



1,112



(578
)Deferred state


(249
)


1,175



(263
)Valuation allowance


(240
)


(2,287
)


Total deferred (benefit) provision










(841
)Total income tax (benefit) provision from continuing operations

$
209


$
84


$
(1,197
)    December 31,2007


2006


2005Expense computed at statutory rates

$
(228
)

$
(410
)

$
(1,121
)State taxes, net of federal benefit


(36
)


818



(159
)Permanent differences


271



164



62Change in valuation allowances and other


202



(488
)


21Total income tax expense (benefit)


209


$
84


$
(1,197
)  F-26




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2007


2006(In thousands)Deferred income tax assets:Allowance for doubtful accounts

$
92


$
419Goodwill amortization


910



1,366Accrued expenses


562



515Unearned discounts re: outsourced printing services






293Net operating loss and credit carry forwards


25,513



25,886Change in Amicas PACS tax accounting method






Share-based payment


1,076



582Difference between book and tax bases of property and equipment


549



83528,704



29,896Less valuation allowance


25,761



26,0012,943



3,895Deferred income tax liabilities:Acquired/developed software


2,281



3,062Other intangible assets


662



8332,943



3,895Net deferred income tax asset

$



$
       SFAS No. 141-R, Business Combinations
 F-27




---



##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      AmountUnrecognized tax benefits at January 1, 2007

$
1,112,500Additions for tax positions related to the current year


Additions for tax positions of prior years


Reductions for tax positions of prior years


Unrecognized tax benefits at December 31, 2007

$
1,112,500    F-28




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##### Table of Contents



AMICAS,
    INC. and Subsidiary
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  O.
    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, 2007Total revenues

$
12,433


$
12,502


$
13,301


$
11,652


$
49,888Gross profit


6,922



6,638



7,181



6,192



26,933Net 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



45,503



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
)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
)   P.
    Supplemental
    Disclosure of Cash Flow and Noncash Activities       F-29




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##### Table of Contents



SIGNATURES      By:
    /s/  Joseph
    D. Hill   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 17, 2008/s/  JOSEPH
    D. HILLJoseph
    D. Hill

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

March 17, 2008/s/  PHILLIP
    M. BERMANPhillip
    M. Berman

Director

March 17, 2008/s/  STEPHEN
    J. DENELSKYStephen
    J. DeNelsky

Director

March 17, 2008/s/  STEPHEN
    J. LIFSHATZStephen
    J. Lifshatz

Director

March 17, 2008/s/  DAVID
    B. SHEPHERDDavid
    B. Shepherd

Director

March 17, 2008/s/  JOHN
    J. SVIOKLAJohn
    J. Sviokla

Director

March 17, 2008