##### Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 o
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2008
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File No. 001-11182
 BIO-IMAGING TECHNOLOGIES, INC.
  Delaware
    
    11-2872047(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)826 Newtown-Yardley Road, Newtown, Pennsylvania
    
    18940-1721(Address of Principal Executive Offices)
    
    (Zip Code)
 (Registrants Telephone Number, Including Area Code)
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting company þ
  o þ
  Class
    
    Number of SharesCommon Stock, $0.00025 par value
    
    14,332,568




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##### 



BIO-IMAGING
TECHNOLOGIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (unaudited)
    
    
    1BALANCE SHEETS
as of June 30, 2008 and
December 31, 2007
    
    
    2STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2008 and 2007
    
    
    3STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2008 and 2007
    
    
    4STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2008 and 2007
    
    
    5NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17Results of Operations
    
    
    21Business Segments
    
    
    27Liquidity and Capital Resources
    
    
    27Changes to Critical Accounting Policies and Estimates
    
    
    29Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4T. Controls and Procedures
    
    
    30PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    40Item 4. Submission of Matters to a Vote of Security Holders
    
    
    40Item 5. Other Information
    
    
    41Item 6. Exhibits
    
    
    41SIGNATURES
    
    
    42Certification of principal executive officerCertification of principal financial and accounting officerCertification of principal executive officer pursuant to Section 906Certification of principal financial and accounting officer pursuant to Section 906




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PART I. FINANCIAL INFORMATION .
 
 Item 1. Financial Statements.
    -1-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    15,047
    
    
    $
    17,915Accounts receivable, net
    
    
    9,782
    
    
    
    5,881Prepaid expenses and other current assets
    
    
    1,639
    
    
    
    1,235Deferred income taxes
    
    
    2,952
    
    
    
    2,930Total current assets
    
    
    29,420
    
    
    
    27,961Property and equipment, net
    
    
    8,946
    
    
    
    7,980Intangibles, net
    
    
    2,288
    
    
    
    450Goodwill
    
    
    27,820
    
    
    
    6,025Other assets
    
    
    679
    
    
    
    641Total assets
    
    $
    69,153
    
    
    $
    43,057LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,819
    
    
    $
    1,864Accrued expenses and other current liabilities
    
    
    6,124
    
    
    
    4,616Deferred revenue
    
    
    16,525
    
    
    
    11,664Current maturities of capital lease obligations
    
    
    92
    
    
    
    97Total current liabilities
    
    
    25,560
    
    
    
    18,241Long-term capital lease obligations
    
    
    69
    
    
    
    Deferred income tax  non-current
    
    
    638
    
    
    
    691Other liabilities
    
    
    606
    
    
    
    597Total liabilities
    
    
    26,873
    
    
    
    19,529Commitments and Contingencies
    
    
    
    
    
    
    Stockholders equity:Preferred stock- $0.00025 par value;
authorized 3,000,000 shares, 0 issued and
outstanding at June 30, 2008 and at December
31, 2007
    
    
    
    
    
    
    Common stock  $0.00025 par value; authorized
18,000,000 shares, issued and outstanding
14,337,521 shares at June 30, 2008 and
11,765,483 shares at December 31, 2007
    
    
    4
    
    
    
    3Additional paid-in capital
    
    
    41,840
    
    
    
    25,084Retained earnings (accumulated deficit)
    
    
    174
    
    
    
    (1,710
    )Accumulated other comprehensive income
    
    
    262
    
    
    
    151Stockholders equity
    
    
    42,280
    
    
    
    23,528Total liabilities and stockholders equity
    
    $
    69,153
    
    
    $
    43,057
  -2-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Three Months EndedJune 30,(in thousands, except per share data)
    
    2008
    
    
    2007Service revenues
    
    $
    15,222
    
    
    $
    9,457Reimbursement revenues
    
    
    4,073
    
    
    
    2,229Total revenues
    
    
    19,295
    
    
    
    11,686Cost and expenses:Cost of service revenues
    
    
    8,576
    
    
    
    5,477Cost of reimbursement revenues
    
    
    4,073
    
    
    
    2,229Sales and marketing expenses
    
    
    2,822
    
    
    
    1,739General and administrative expenses
    
    
    2,046
    
    
    
    1,490Amortization of intangible assets related to acquisitions
    
    
    172
    
    
    
    77Total cost and expenses
    
    
    17,689
    
    
    
    11,012Income from operations
    
    
    1,606
    
    
    
    674Interest income
    
    
    101
    
    
    
    155Interest expense
    
    
    (3
    )
    
    
    (6
    )Income before income tax provision
    
    
    1,704
    
    
    
    823Income tax provision
    
    
    643
    
    
    
    329Net income
    
    $
    1,061
    
    
    $
    494Basic income per common share
    
    $
    0.07
    
    
    $
    0.04Weighted average number of common shares
    
    
    14,279
    
    
    
    11,602Diluted income per common share
    
    $
    0.07
    
    
    $
    0.04Weighted average number of dilutive common equivalent shares
    
    
    15,168
    
    
    
    12,654
  -3-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Six Months EndedJune 30,(in thousands, except per share data)
    
    2008
    
    
    2007Service revenues
    
    $
    26,383
    
    
    $
    18,267Reimbursement revenues
    
    
    7,151
    
    
    
    4,495Total revenues
    
    
    33,534
    
    
    
    22,762Cost and expenses:Cost of service revenues
    
    
    14,882
    
    
    
    10,754Cost of reimbursement revenues
    
    
    7,151
    
    
    
    4,495Sales and marketing expenses
    
    
    4,799
    
    
    
    3,299General and administrative expenses
    
    
    3,708
    
    
    
    2,909Amortization of intangible assets related to acquisitions
    
    
    235
    
    
    
    130Total cost and expenses
    
    
    30,775
    
    
    
    21,587Income from operations
    
    
    2,759
    
    
    
    1,175Interest income
    
    
    254
    
    
    
    316Interest expense
    
    
    (3
    )
    
    
    (10
    )Income before income tax provision
    
    
    3,010
    
    
    
    1,481Income tax provision
    
    
    1,126
    
    
    
    592Net income
    
    $
    1,884
    
    
    $
    889Basic income per common share
    
    $
    0.14
    
    
    $
    0.08Weighted average number of common shares
    
    
    13,157
    
    
    
    11,535Diluted income per common share
    
    $
    0.13
    
    
    $
    0.07Weighted average number of dilutive common equivalent shares
    
    
    14,114
    
    
    
    12,668
  -4-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months EndedJune 30,(in thousands)
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    1,884
    
    
    $
    889Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    1,709
    
    
    
    1,073Benefit for deferred income taxes
    
    
    (258
    )
    
    
    (364
    )Bad debt provision
    
    
    (29
    )
    
    
    Stock based compensation expense
    
    
    250
    
    
    
    196Gain on foreign currency options
    
    
    
    
    
    
    (10
    )Changes in operating assets and liabilities, net of acquisitions:Decrease (increase) in accounts receivable
    
    
    766
    
    
    
    (488
    )(Increase) decrease in prepaid expenses and other current assets
    
    
    (203
    )
    
    
    57Increase in other assets
    
    
    (24
    )
    
    
    (45
    )Increase (decrease) in accounts payable
    
    
    626
    
    
    
    (445
    )Increase in accrued expenses and other current liabilities
    
    
    1,098
    
    
    
    754Increase in deferred revenue
    
    
    987
    
    
    
    2,159Increase in other liabilities
    
    
    24
    
    
    
    5Net cash provided by operating activities
    
    
    6,830
    
    
    
    3,781Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,005
    )
    
    
    (1,784
    )Net cash paid for acquisition
    
    
    (8,193
    )
    
    
    (3,565
    )Net cash used in investing activities
    
    
    (10,198
    )
    
    
    (5,349
    )Cash flows from financing activities:Payments under equipment lease obligations
    
    
    (111
    )
    
    
    (274
    )Excess tax benefit related to stock options
    
    
    50
    
    
    
    Proceeds from exercise of stock options
    
    
    352
    
    
    
    150Net cash provided by (used in) financing activities
    
    
    291
    
    
    
    (124
    )Effect of exchange rate changes on cash
    
    
    209
    
    
    
    8Net decrease in cash and cash equivalents
    
    
    (2,868
    )
    
    
    (1,684
    )Cash and cash equivalents at beginning of period
    
    
    17,915
    
    
    
    16,167Cash and cash equivalents at end of period
    
    $
    15,047
    
    
    $
    14,483Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    3
    
    
    $
    10Cash paid during the period for income taxes
    
    $
    1,050
    
    
    $
    613
  -5-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months EndedJune 30,2008
    
    2007Supplemental cash flow disclosure(in thousands)Schedule of non cash investing and financing activities:Increase in property, plant and equipment acquisitions
in accounts payable
    
    $
    22
    
    
    $
    185
 For the Six Months EndedJune 30,2008
    
    2007Acquired business(in thousands)Accounts receivable
    
    $
    4,926
    
    
    $
    228Prepaid and other current assets
    
    
    258
    
    
    Property and equipment
    
    
    741
    
    
    
    185Other assets
    
    
    37
    
    
    
    53Intangible assets and goodwill
    
    
    23,871
    
    
    
    4,590Current liabilities assumed
    
    
    (1,062
    )
    
    
    (377
    )Other liabilities assumed
    
    
    (4,474
    )
    
    
    (353
    )Common stock issued
    
    
    (16,104
    )
    
    
    (760
    )Cash paid for acquired business, net of
cash acquired for the six months ended June
30, 2008 of $418
    
    $
    8,193
    
    
    $
    3,566
 For the Six Months EndedJune 30,2008
    
    2007Statement of comprehensive income(in thousands)Net income
    
    $
    1,884
    
    
    $
    889Equity adjustment from foreign currency translation
    
    
    111
    
    
    
    (5
    )Total comprehensive income
    
    $
    1,995
    
    
    $
    884
  -6-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Interim Financial Statements:
 Basis of Presentation.
      Functional Currency.
    -7-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Stockholders Equity Rollforward
  Additional
    
    
    Retained Earnings
    
    
    Accumulated OtherCommon Stock
    
    
    Paid-in
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Income
    
    
    EquityBalance at December 31,
2007
    
    
    11,765
    
    
    $
    3
    
    
    $
    25,084
    
    
    $
    (1,710
    )
    
    $
    151
    
    
    $
    23,528Stock options exercised
    
    
    264
    
    
    
    
    
    
    
    352
    
    
    
    
    
    
    
    
    
    
    
    352Restricted shares issued
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250Stock issued for
acquisitions
    
    
    2,288
    
    
    
    1
    
    
    
    16,104
    
    
    
    
    
    
    
    
    
    
    
    16,105Tax benefit on exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Equity adjustment from
foreign currency
translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    111Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,884
    
    
    
    
    
    
    
    1,884Balance at June 30, 2008
    
    
    14,338
    
    
    $
    4
    
    
    $
    41,840
    
    
    $
    174
    
    
    $
    262
    
    
    $
    42,280
 Note 3  Earnings Per Share:
  -8-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Six Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income  basic and diluted
    
    $
    1,884
    
    
    $
    889
    
    
    $
    1,061
    
    
    $
    494Denominator  basic:Weighted average number
of common shares
    
    
    13,157
    
    
    
    11,535
    
    
    
    14,279
    
    
    
    11,602Basic income per common share
    
    $
    0.14
    
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.04Denominator  diluted:Weighted average number
of common shares
    
    
    13,157
    
    
    
    11,535
    
    
    
    14,279
    
    
    
    11,602Common share equivalents
of outstanding stock options
    
    
    774
    
    
    
    1,068
    
    
    
    705
    
    
    
    988Common share equivalents of
unrecognized compensation expense
    
    
    183
    
    
    
    65
    
    
    
    184
    
    
    
    64Weighted average number of
dilutive common equity shares
    
    
    14,114
    
    
    
    12,668
    
    
    
    15,168
    
    
    
    12,654Diluted income per
common share
    
    $
    0.13
    
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.04
  Note 4  Commitments and Contingencies:
  -9-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 5  Business Segments
  -10-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  PharmaceuticalContract
    
    CapMed
    
    Consolidated(in thousands)
    
    Services
    
    Division
    
    TotalFor the three months ended
June 30, 2008Total revenues
    
    $
    19,182
    
    
    $
    113
    
    
    $
    19,295Total cost and expenses
    
    $
    16,900
    
    
    $
    789
    
    
    $
    17,689Income (loss) from operations
    
    $
    2,282
    
    
    $
    (676
    )
    
    $
    1,606For the three months ended
June 30, 2007Total revenues
    
    $
    11,487
    
    
    $
    199
    
    
    $
    11,686Total cost and expenses
    
    $
    10,398
    
    
    $
    614
    
    
    $
    11,012Income (loss) from operations
    
    $
    1,089
    
    
    $
    (415
    )
    
    $
    674For the six months ended
June 30, 2008Total revenues
    
    $
    33,283
    
    
    $
    251
    
    
    $
    33,534Total cost and expenses
    
    $
    29,304
    
    
    $
    1,471
    
    
    $
    30,775Income (loss) from operations
    
    $
    3,979
    
    
    $
    (1,220
    )
    
    $
    2,759For the six months ended
June 30, 2007Total revenues
    
    $
    22,429
    
    
    $
    333
    
    
    $
    22,762Total cost and expenses
    
    $
    20,457
    
    
    $
    1,129
    
    
    $
    21,586Income (loss) from operations
    
    $
    1,972
    
    
    $
    (796
    )
    
    $
    1,176
  Note 6  Accounts Receivable and Allowance for Doubtful Accounts
  -11-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands)
    
    June 30, 2008
    
    
    December 31, 2007Billed trade accounts receivable
    
    $
    7,977
    
    
    $
    5,090Unbilled trade accounts receivable
    
    
    1,782
    
    
    
    746Other
    
    
    23
    
    
    
    45Total Receivables
    
    $
    9,782
    
    
    $
    5,881Allowance Rollforward (in thousands):Balance at January 1, 2008
    
    $
    29Additions
    
    
    Write offs (net of recoveries)
    
    
    (29
    )Balance at June 30, 2008
    
    $
    0
 Note 7  Income Taxes
     -12-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Note 8  Acquisition
 Phoenix Data Systems, Inc. Acquisition
   -13-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Net Working Capital
    
    $
    352Fixed Assets
    
    
    590Other Assets
    
    
    158Other Liabilities
    
    
    (101
    )Software
    
    
    500Trademark
    
    
    50Customer Backlog
    
    
    600Customer Relationships
    
    
    300Non-Compete Agreements
    
    
    100Goodwill, including Workforce
    
    
    21,858Deferred Tax Liabilities
    
    
    579Total Purchase Price
    
    $
    24,986
  Pro Forma Results.
 -14-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Six Months EndedJune 30,(in thousands)
    
    2008
    
    2007Total revenue
    
    $
    37,983
    
    
    $
    28,168Operating income
    
    
    2,057
    
    
    
    1,481Net income
    
    
    1,378
    
    
    
    930Basic net income per share
    
    $
    0.10
    
    
    $
    0.07Diluted net income per share
    
    $
    0.09
    
    
    $
    0.06
 Theralys S.A. Acquisition
  Note 9  Intangible Assets
  June 30,
    
    
    Estimated(Dollars in thousands)
    
    2008
    
    
    Useful LifeAmortized intangible assets:Technology
    
    $
    1,109
    
    
    5 yearsTrademarks
    
    
    441
    
    
    5 yearsCustomer backlog
    
    
    1,177
    
    
    3 to 7 yearsCustomer relationship
    
    
    548
    
    
    7 yearsNon-competition agreement
    
    
    425
    
    
    2 to 3 years
 -15-




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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30,
    
    
    Estimated(Dollars in thousands)
    
    2008
    
    
    Useful Life3,700Accumulated amortization
    
    
    (1,412
    )$
    2,288Unamortized intangible assets:Goodwill
    
    $
    27,820
  Fiscal years ending2008
    
    $
    5652009
    
    
    4822010
    
    
    4052011
    
    
    3502012
    
    
    277Thereafter
    
    
    495$
    2,574
 -16-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 Overview
 Pharmaceutical Contract Services
      -17-




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.
   CapMed Division
   -18-




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Forward Looking Statements
  Application of Critical Accounting Policies and Estimates
    -19-




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-20-




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Results of Operations
 Three Months Ended June 30, 2008 and 2007
 Three Months
    
    
    
    
    
    Three MonthsEnded
    
    
    
    
    
    EndedJune 30,
    
    % of Total
    
    June 30,
    
    % of Total(in thousands)
    
    2008
    
    Revenue
    
    2007
    
    Revenue
    
    $ Change
    
    % ChangeService revenues
    
    $
    15,222
    
    
    
    78.9
    %
    
    $
    9,457
    
    
    
    80.9
    %
    
    $
    5,765
    
    
    
    61.0
    %Reimbursement
revenues
    
    
    4,073
    
    
    
    21.1
    %
    
    
    2,229
    
    
    
    19.1
    %
    
    
    1,844
    
    
    
    82.7
    %Total revenues
    
    
    19,295
    
    
    
    100.0
    %
    
    
    11,686
    
    
    
    100.0
    %
    
    
    7,609
    
    
    
    65.1
    %Cost and expenses:Cost of service revenue
    
    
    8,576
    
    
    
    44.5
    %
    
    
    5,477
    
    
    
    46.9
    %
    
    
    3,099
    
    
    
    56.6
    %Cost of reimbursement
revenue
    
    
    4,073
    
    
    
    21.1
    %
    
    
    2,229
    
    
    
    19.1
    %
    
    
    1,844
    
    
    
    82.7
    %Sales and marketing
expenses
    
    
    2,822
    
    
    
    14.6
    %
    
    
    1,739
    
    
    
    14.9
    %
    
    
    1,083
    
    
    
    62.3
    %General and administrative
expenses
    
    
    2,046
    
    
    
    10.6
    %
    
    
    1,490
    
    
    
    12.7
    %
    
    
    556
    
    
    
    37.3
    %Amortization of intangible
assets related to
acquisitions
    
    
    172
    
    
    
    0.9
    %
    
    
    77
    
    
    
    0.6
    %
    
    
    95
    
    
    
    123.4
    %Total cost and expenses
    
    
    17,689
    
    
    
    91.7
    %
    
    
    11,012
    
    
    
    94.2
    %
    
    
    6,677
    
    
    
    60.6
    %Income from operations
    
    
    1,606
    
    
    
    8.3
    %
    
    
    674
    
    
    
    5.8
    %
    
    
    932
    
    
    
    138.3
    %Interest income
    
    
    101
    
    
    
    0.5
    %
    
    
    155
    
    
    
    1.3
    %
    
    
    (54
    )
    
    
    (34.8
    )%Interest expense
    
    
    (3
    )
    
    
    0.0
    %
    
    
    (6
    )
    
    
    (0.1
    )%
    
    
    3
    
    
    
    (50.0
    )%Income before
income tax provision
    
    
    1,704
    
    
    
    8.8
    %
    
    
    823
    
    
    
    7.0
    %
    
    
    881
    
    
    
    107.0
    %Income tax provision
    
    
    643
    
    
    
    3.3
    %
    
    
    329
    
    
    
    2.8
    %
    
    
    314
    
    
    
    95.4
    %Net income
    
    $
    1,061
    
    
    
    5.5
    %
    
    $
    494
    
    
    
    4.2
    %
    
    $
    567
    
    
    
    114.8
    %
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Six Months Ended June 30, 2008 and 2007
 Six
    
    
    
    
    
    SixMonths
    
    
    
    
    
    MonthsEnded
    
    
    
    
    
    EndedJune 30,
    
    % of Total
    
    June 30,
    
    % of Total(in thousands)
    
    2008
    
    Revenue
    
    2007
    
    Revenue
    
    $ Change
    
    % ChangeService revenues
    
    $
    26,383
    
    
    
    78.7
    %
    
    $
    18,267
    
    
    
    80.3
    %
    
    $
    8,116
    
    
    
    44.4
    %Reimbursement
revenues
    
    
    7,151
    
    
    
    21.3
    %
    
    
    4,495
    
    
    
    19.7
    %
    
    
    2,656
    
    
    
    59.1
    %Total revenues
    
    
    33,534
    
    
    
    100.0
    %
    
    
    22,762
    
    
    
    100.0
    %
    
    
    10,772
    
    
    
    47.3
    %Cost and expenses:Cost of service revenue
    
    
    14,882
    
    
    
    44.4
    %
    
    
    10,754
    
    
    
    47.2
    %
    
    
    4,128
    
    
    
    38.4
    %Cost of reimbursement
revenue
    
    
    7,151
    
    
    
    21.3
    %
    
    
    4,495
    
    
    
    19.7
    %
    
    
    2,656
    
    
    
    59.1
    %Sales and marketing
expenses
    
    
    4,799
    
    
    
    14.3
    %
    
    
    3,299
    
    
    
    14.5
    %
    
    
    1,500
    
    
    
    45.5
    %General and administrative
expenses
    
    
    3,708
    
    
    
    11.1
    %
    
    
    2,909
    
    
    
    12.8
    %
    
    
    799
    
    
    
    27.5
    %Amortization of intangible
assets related to
acquisitions
    
    
    235
    
    
    
    0.7
    %
    
    
    130
    
    
    
    0.6
    %
    
    
    105
    
    
    
    80.8
    %Total cost and expenses
    
    
    30,775
    
    
    
    91.8
    %
    
    
    21,587
    
    
    
    94.8
    %
    
    
    9,188
    
    
    
    42.6
    %Income from operations
    
    
    2,759
    
    
    
    8.2
    %
    
    
    1,175
    
    
    
    5.2
    %
    
    
    1,584
    
    
    
    134.8
    %Interest income
    
    
    254
    
    
    
    0.8
    %
    
    
    316
    
    
    
    1.4
    %
    
    
    (62
    )
    
    
    (19.6
    )%Interest expense
    
    
    (3
    )
    
    
    0.0
    %
    
    
    (10
    )
    
    
    0.0
    %
    
    
    7
    
    
    
    (70.0
    )%Income before
income tax provision
    
    
    3,010
    
    
    
    9.0
    %
    
    
    1,481
    
    
    
    6.5
    %
    
    
    1,529
    
    
    
    103.2
    %Income tax provision
    
    
    1,126
    
    
    
    3.4
    %
    
    
    592
    
    
    
    2.6
    %
    
    
    534
    
    
    
    90.2
    %Net income
    
    $
    1,884
    
    
    
    5.6
    %
    
    $
    889
    
    
    
    3.9
    %
    
    $
    995
    
    
    
    111.9
    %
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Business Segments
    
 Liquidity and Capital Resources
 Six Months
    
    Six MonthsEnded
    
    Ended(in thousands)
    
    June 30, 2008
    
    June 30, 2007Net cash provided by operating activities
    
    $
    6,830
    
    
    $
    3,781Net cash used in investing activities
    
    $
    (10,198
    )
    
    $
    (5,349
    )Net cash provided by (used in) financing activities
    
    $
    291
    
    
    $
    (124
    )
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Payments Due By PeriodLess than 1
    
    
    
    
    
    
    
    
    
    More thanContractual obligations
    
    Total
    
    year
    
    1-3 years
    
    3-5 years
    
    5 yearsCapital lease obligations
    
    $
    163
    
    
    $
    104
    
    
    $
    48
    
    
    $
    11
    
    
    $
    Facility rent operating
leases
    
    $
    5,505
    
    
    $
    2,363
    
    
    $
    2,433
    
    
    $
    709
    
    
    $
    Employment agreements
    
    $
    404
    
    
    $
    404
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual cash
obligations
    
    $
    6,072
    
    
    $
    2,871
    
    
    $
    2,481
    
    
    $
    720
    
    
    $
    
     
    
    our ability to gain new client contracts;
    
    project cancellations;
    
    the variability of the timing of payments on existing client contracts; and
    
    other changes in our operating assets and liabilities.
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Changes to Critical Accounting Policies and Estimates
    - 29 -




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Interest Rate Risk
  Foreign Currency Risk
   
 Item 4T. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures.
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Changes in internal control over financial reporting
 - 31 -




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PART II. OTHER INFORMATION .
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Risks Related to Our Company and Business
 We may incur financial losses because contracts may be delayed or terminated or reduced in scope
for reasons beyond our control.
  
    
    unexpected or undesired clinical results;
    
    the clients decision to terminate the development of a particular product or to end a
particular study;
    
    insufficient patient enrollment in a study;
    
    insufficient investigator recruitment;
    
    failure to perform our obligations under the contract; or
    
    the failure of products to satisfy safety requirements.
    We depend on a small number of industries and clients for all of our business, and the loss of one
such
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significant client could cause revenues to drop quickly and unexpectedly.
  
    
    clients businesses experience financial problems or are affected by a general economic
downturn;
    
    consolidation in the pharmaceutical, biotechnology or medical device industries leads to
a smaller client base for us; or
    
    clients reduce their research and development expenditures.
  Our contracted/committed backlog may not be indicative of future results.
  
    
    the variable size and duration of the projects (some are performed over several years);
    
    the loss or delay of projects;
    
    the change in the scope of work during the course of a project; and
    
    the cancellation of such contracts by our clients.
  We have experienced substantial expansion in the past, and if we fail to properly manage that
expansion, our business may suffer.
   
    
    effectively market our services to pharmaceutical, biotechnology and medical device
companies;
    
    continue to improve operating, administrative and information systems;
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
    
    accurately predict future personnel and resource needs to meet client contract
commitments;
    
    successfully integrate our acquired companies and businesses;
    
    track the progress of on-going client projects; and
    
    attract and retain qualified management, sales, professional and technical operating
personnel.
  
    
    assimilate differences in foreign business practices and regulations;
    
    hire and retain qualified personnel; and
    
    overcome language and cultural barriers.
 We recently acquired PDS and may engage in future acquisitions, which may be expensive and time
consuming and from which we may not realize anticipated benefits.
  Loss of key personnel, or failure to attract and retain additional personnel, may cause the success
and growth of our business to suffer.
  Our revenues, earnings and operating costs are exposed to exchange rate fluctuations.
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Our investments may be exposed to credit risk.
  Risks Related to Our Industry
 Our failure to compete effectively in our industry could cause our revenues to decline.
  
    
    consultative and clinical trials design capabilities;
    
    reputation for on-time quality performance;
    
    expertise and experience in specific therapeutic areas;
    
    the scope of service offerings;
    
    strength in various geographic markets;
    
    the price of services;
    
    ability to acquire, process, analyze and report data in a time-saving and accurate
manner;
    
    ability to manage large-scale clinical trials both domestically and internationally;
    
    our size; and
    
    the service and product offerings of our competitors.
   Changes in outsourcing trends in the pharmaceutical and biotechnology industries could adversely
affect our operating results and growth rate.
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Failure to comply with existing regulations could result in increased costs to complete clinical
trials.
  Our CapMed division may not reach profitability.
  Changes in governmental regulation could decrease the need for the services we provide, which would
negatively affect our future business opportunities.
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If governmental agencies do not accept the data and analyses generated by our services, the need
for our services would be eliminated or substantially reduced.
  We may be exposed to liability claims as a result of our involvement in clinical trials.
  Risks Related to Our Common Stock
 Your percentage ownership and voting power and the price of our common stock may decrease as a
result of events that increase the number of our outstanding shares.
  Common stock outstanding
    
    
    14,338Common stock issuable upon:Exercise of options which are outstanding
    
    
    1,626Exercise of options which have not been granted
    
    
    1,201Total common stock outstanding assuming exercise or conversion of
all of the above
    
    
    17,165
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Shares of our common stock eligible for public sale may have a negative impact on its market price.
   There are a limited number of stockholders who have significant control over our common stock,
allowing them to have significant influence over the outcome of all matters submitted to our
stockholders for approval, which influence may conflict with our interests and the interests of our
other stockholders.
  Because we do not intend to pay dividends, stockholders will benefit from an investment in our
common stock only if it appreciates in value.
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Trading in our common stock may be volatile, which may result in substantial declines in its market
price.
  
    
    operating results;
    
    analysts reports;
    
    market conditions in the industry;
    
    changes in governmental regulations; and
    
    changes in general conditions in the economy or the financial markets.
   Certain provisions of our charter and Delaware law could make a takeover difficult and may prevent
or frustrate attempts by our stockholders to replace or remove our management team.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
 (a)
    
    Our annual meeting of stockholders was held on May 14, 2008.(b)
    
    The following is a list of all of the nominees for Director of our company
who were elected at the annual meeting and whose term of office continued after the
meeting;
 (i)
    
    Mark L. Weinstein(ii)
    
    Jeffrey H. Berg, Ph.D.(iii)
    
    Richard F. Cimino(iv)
    
    E. Martin Davidoff, CPA, Esq.(v)
    
    David E. Nowicki, D.M.D.(vi)
    
    David M. Stack(vii)
    
    James A. Taylor, Ph.D.
 (c)
    
    There were present at the annual meeting, in person or by proxy, 12,536,124
shares of Common Stock, out of a total number of 14,238,300 shares of Common Stock
issued and outstanding and entitled to vote at the annual meeting.(d)
    
    The results of the vote of the stockholders taken at the annual meeting by
ballot and by proxy as solicited by us on behalf of the board of directors were as
follows:
 (i)
    
    The results of the vote taken at the annual meeting for
the election of the nominees for our board of directors were as follows:
 Nominee
    
    For
    
    WithheldMark L. Weinstein
    
    
    11,868,162
    
    
    
    71,899Jeffrey H. Berg, Ph.D.
    
    
    11,873,962
    
    
    
    66,099Richard F. Cimino
    
    
    11,869,887
    
    
    
    70,174E. Martin
Davidoff, CPA, Esq.
    
    
    11,848,862
    
    
    
    91,199David E. Nowicki, D.M.D.
    
    
    11,848,902
    
    
    
    91,159David M. Stack
    
    
    11,849,462
    
    
    
    90,599James A. Taylor, Ph.D.
    
    
    11,869,362
    
    
    
    70,699
 (ii)
    
    A vote was taken to amend the 2002 Stock Incentive
Plan, as amended and restated on May 11, 2005, that will (i) increase the
number of shares of the Companys common stock available for issuance under
the plan by an additional 1,000,000 shares, (ii) increase the limitation on
the maximum number of shares of common stock, for which stock options may
be granted in the aggregate per fiscal year, and (iii) revise the
50,000-share limitation on the maximum number of shares of common stock for
which
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restricted stock and restricted stock unit awards may be made so that
it is clear that such limitation applies on a per person per fiscal year
basis. The results of the vote taken at the annual meeting with respect to
such amendment were as follows:
 For
    
    Against
    
    Abstain7,900,394
    
    
    483,185
    
    
    
    51,270
 (iii)
    
    A vote was taken on the proposal to ratify the
appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2008. The
results of the vote taken at the annual meeting with respect to such
appointment were as follows:
 For
    
    Against
    
    Abstain11,793,098
    
    
    142,841
    
    
    
    4,122
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 10.1
    
    Agreement and Plan of Merger, dated March 24,
2008, by and among the Company, Bio-Imaging Acquisition Corporation and
Phoenix Data Systems, Inc. and its Stockholders Representative
(incorporated by reference to Exhibit 10.1 on our Current Report on
Form 8-K/A dated March 24, 2008).31.1
    
    Certification of principal executive officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    Certification of principal financial and
accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (filed herewith).32.1
    
    Certification of principal executive officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
1350 (furnished herewith).32.2
    
    Certification of principal financial and
accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. 1350 (furnished herewith).
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BIO-IMAGING TECHNOLOGIES, INC.DATE: August 5, 2008
    
    By:
    
    /s/ Mark L. WeinsteinMark L. Weinstein, President and Chief ExecutiveOfficer (Principal Executive Officer)DATE: August 5, 2008
    
    By:
    
    /s/ Ted I. KaminerTed I. Kaminer, Senior Vice President and ChiefFinancial Officer(Principal Financial and Accounting Officer)
 -42-