##### Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2008
 or
 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
    
    14,341,403




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##### 



BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATION.Item 1. Consolidated Financial Statements (unaudited)
    
    
    1BALANCE SHEETS
as of September 30, 2008 and December 31, 2007
    
    
    2STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2008 and 2007
    
    
    3STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2008 and 2007
    
    
    4STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2008 and 2007
    
    
    5NOTES TO CONSOLIDATED
FINANCIAL 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
    
    
    40Item 3. Defaults Upon Senior Securities
    
    
    40Item 4. Submission of Matters to a Vote of Security Holders
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    40SIGNATURES
    
    
    42EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  - i -




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PART I. FINANCIAL INFORMATION .
 
 Item 1. Financial Statements.
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,253
    
    
    $
    17,915Accounts receivable, net
    
    
    12,088
    
    
    
    5,881Prepaid expenses and other current assets
    
    
    1,438
    
    
    
    1,235Deferred income taxes
    
    
    2,124
    
    
    
    2,930Total current assets
    
    
    28,903
    
    
    
    27,961Property and equipment, net
    
    
    9,467
    
    
    
    7,980Intangibles, net
    
    
    2,840
    
    
    
    450Goodwill
    
    
    26,857
    
    
    
    6,025Other assets
    
    
    629
    
    
    
    641Total assets
    
    $
    68,696
    
    
    $
    43,057LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,831
    
    
    $
    1,864Accrued expenses and other current liabilities
    
    
    5,095
    
    
    
    4,616Deferred revenue
    
    
    14,826
    
    
    
    11,664Current maturities of capital lease obligations
    
    
    86
    
    
    
    97Total current liabilities
    
    
    23,838
    
    
    
    18,241Long-term capital lease obligations
    
    
    51
    
    
    
    Deferred income tax  non-current
    
    
    966
    
    
    
    691Other liabilities
    
    
    547
    
    
    
    597Total liabilities
    
    
    25,402
    
    
    
    19,529Commitments and Contingencies
    
    
    
    
    
    
    Stockholders equity:Preferred stock- $0.00025 par value;
authorized 3,000,000 shares, 0 issued and
outstanding at September 30, 2008 and at
December 31, 2007
    
    
    
    
    
    
    Common stock  $0.00025 par value; authorized
18,000,000 shares, issued and outstanding
14,339,038 shares at September 30, 2008 and
11,765,483 shares at December 31, 2007
    
    
    4
    
    
    
    3Additional paid-in capital
    
    
    41,939
    
    
    
    25,084Retained earnings (accumulated deficit)
    
    
    1,249
    
    
    
    (1,710
    )Accumulated other comprehensive income
    
    
    102
    
    
    
    151Stockholders equity
    
    
    43,294
    
    
    
    23,528Total liabilities and stockholders equity
    
    $
    68,696
    
    
    $
    43,057
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Three Months EndedSeptember 30,(in thousands, except per share data)
    
    2008
    
    
    2007Service revenues
    
    $
    15,104
    
    
    $
    9,563Reimbursement revenues
    
    
    3,047
    
    
    
    2,894Total revenues
    
    
    18,151
    
    
    
    12,457Cost and expenses:Cost of service revenues
    
    
    8,465
    
    
    
    5,365Cost of reimbursement revenues
    
    
    3,047
    
    
    
    2,894Sales and marketing expenses
    
    
    2,705
    
    
    
    1,688General and administrative expenses
    
    
    2,102
    
    
    
    1,545Amortization of intangible assets related to acquisitions
    
    
    251
    
    
    
    77Total cost and expenses
    
    
    16,570
    
    
    
    11,569Income from operations
    
    
    1,581
    
    
    
    888Interest income
    
    
    98
    
    
    
    168Interest expense
    
    
    (1
    )
    
    
    (1
    )Income before income tax provision
    
    
    1,678
    
    
    
    1,055Income tax provision
    
    
    603
    
    
    
    408Net income
    
    $
    1,075
    
    
    $
    647Basic income per common share
    
    $
    0.07
    
    
    $
    0.06Weighted average number of common shares
    
    
    14,334
    
    
    
    11,658Diluted income per common share
    
    $
    0.07
    
    
    $
    0.05Weighted average number of dilutive common equivalent shares
    
    
    15,173
    
    
    
    12,678
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Nine Months EndedSeptember 30,(in thousands, except per share data)
    
    2008
    
    
    2007Service revenues
    
    $
    41,487
    
    
    $
    27,830Reimbursement revenues
    
    
    10,198
    
    
    
    7,388Total revenues
    
    
    51,685
    
    
    
    35,218Cost and expenses:Cost of service revenues
    
    
    23,347
    
    
    
    16,085Cost of reimbursement revenues
    
    
    10,198
    
    
    
    7,388Sales and marketing expenses
    
    
    7,504
    
    
    
    4,938General and administrative expenses
    
    
    5,810
    
    
    
    4,536Amortization of intangible assets related to acquisitions
    
    
    486
    
    
    
    207Total cost and expenses
    
    
    47,345
    
    
    
    33,154Income from operations
    
    
    4,340
    
    
    
    2,064Interest income
    
    
    352
    
    
    
    484Interest expense
    
    
    (4
    )
    
    
    (11
    )Income before income tax provision
    
    
    4,688
    
    
    
    2,537Income tax provision
    
    
    1,729
    
    
    
    1,001Net income
    
    $
    2,959
    
    
    $
    1,536Basic income per common share
    
    $
    0.22
    
    
    $
    0.13Weighted average number of common shares
    
    
    13,554
    
    
    
    11,577Diluted income per common share
    
    $
    0.20
    
    
    $
    0.12Weighted average number of dilutive common equivalent shares
    
    
    14,461
    
    
    
    12,669
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months EndedSeptember 30,(in thousands)
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    2,959
    
    
    $
    1,536Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    2,347
    
    
    
    1,717Benefit (provision) for deferred income taxes
    
    
    240
    
    
    
    (125
    )Bad debt provision
    
    
    (29
    )
    
    
    Stock based compensation expense
    
    
    452
    
    
    
    365Gain on foreign currency options
    
    
    
    
    
    
    (10
    )Changes in operating assets and liabilities, net of acquisitions:Increase in accounts receivable
    
    
    (1,364
    )
    
    
    (1,602
    )Decrease in prepaid expenses and other current assets
    
    
    68
    
    
    
    81Increase in other assets
    
    
    53
    
    
    
    45Increase (decrease) in accounts payable
    
    
    1,404
    
    
    
    (135
    )Increase in accrued expenses and other current liabilities
    
    
    601
    
    
    
    1,218(Decrease) increase in deferred revenue
    
    
    (1,133
    )
    
    
    2,091(Decrease) increase in other liabilities
    
    
    (39
    )
    
    
    19Net cash provided by operating activities
    
    
    5,559
    
    
    
    5,200Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,360
    )
    
    
    (2,959
    )Net cash paid for acquisition
    
    
    (8,129
    )
    
    
    (3,566
    )Net cash used in investing activities
    
    
    (10,489
    )
    
    
    (6,525
    )Cash flows from financing activities:Payments under equipment lease obligations
    
    
    (135
    )
    
    
    (378
    )Excess tax benefit related to stock options
    
    
    77
    
    
    
    Proceeds from exercise of stock options
    
    
    381
    
    
    
    220Net cash provided by (used in) financing activities
    
    
    323
    
    
    
    (158
    )Effect of exchange rate changes on cash
    
    
    (55
    )
    
    
    20Net decrease in cash and cash equivalents
    
    
    (4,662
    )
    
    
    (1,463
    )Cash and cash equivalents at beginning of period
    
    
    17,915
    
    
    
    16,166Cash and cash equivalents at end of period
    
    $
    13,253
    
    
    $
    14,703Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    2
    
    
    $
    24Cash paid during the period for income taxes
    
    $
    908
    
    
    $
    547
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months EndedSeptember 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
    
    $
    195
    
    
    $
    88
 For the Nine Months EndedSeptember 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
    
    
    23,712
    
    
    
    4,590Current liabilities assumed
    
    
    (1,124
    )
    
    
    (377
    )Other liabilities assumed
    
    
    (4,474
    )
    
    
    (353
    )Common stock issued
    
    
    (15,947
    )
    
    
    (760
    )Cash paid for acquired business, net of
cash acquired for the nine months ended
September 30, 2008 of $418
    
    $
    8,129
    
    
    $
    3,566
 For the Nine Months EndedSeptember 30,2008
    
    2007Statement of comprehensive income(in thousands)Net income
    
    $
    2,959
    
    
    $
    1,536Equity adjustment from foreign currency translation
    
    
    (49
    )
    
    
    10Total comprehensive income
    
    $
    2,910
    
    
    $
    1,546
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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
  Accumu-latedRetained
    
    
    OtherAdditional
    
    
    Earnings
    
    
    Compre-Common Stock
    
    
    Paid-in
    
    
    (Accumulated
    
    
    hensive
    
    
    Stockholders(in thousands)
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit)
    
    
    Income
    
    
    EquityBalance at December 31, 2007
    
    
    11,765
    
    
    $
    3
    
    
    $
    25,084
    
    
    $
    (1,710
    )
    
    $
    151
    
    
    $
    23,528Stock options exercised
    
    
    287
    
    
    
    
    
    
    
    381
    
    
    
    
    
    
    
    
    
    
    
    381Restricted shares issued
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation
    
    
    
    
    
    
    
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    452Stock issued for acquisitions
    
    
    2,288
    
    
    
    1
    
    
    
    16,103
    
    
    
    
    
    
    
    
    
    
    
    16,104Stock acquired from acquisition purchase price adjustment
    
    
    (22
    )
    
    
    
    
    
    
    (158
    )
    
    
    
    
    
    
    
    
    
    
    (158
    )Tax benefit on exercise of stock options
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    77Equity adjustment from foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    (49
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,959
    
    
    
    
    
    
    
    2,959Balance at September 30, 2008
    
    
    14,339
    
    
    $
    4
    
    
    $
    41,939
    
    
    $
    1,249
    
    
    $
    102
    
    
    $
    43,294
 Note 3  Earnings Per Share
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Nine Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income   basic and diluted
    
    $
    2,959
    
    
    $
    1,536
    
    
    $
    1,075
    
    
    $
    647Denominator  basic:Weighted average number
of common shares
    
    
    13,554
    
    
    
    11,577
    
    
    
    14,334
    
    
    
    11,658Basic income per common share
    
    $
    0.22
    
    
    $
    0.13
    
    
    $
    0.07
    
    
    $
    0.06Denominator  diluted:Weighted average number
of common shares
    
    
    13,554
    
    
    
    11,577
    
    
    
    14,334
    
    
    
    11,658Common share equivalents
of outstanding stock options
    
    
    719
    
    
    
    1,025
    
    
    
    652
    
    
    
    951Common share equivalents of
unrecognized compensation expense
    
    
    188
    
    
    
    67
    
    
    
    187
    
    
    
    69Weighted average number of
dilutive common equity shares
    
    
    14,461
    
    
    
    12,669
    
    
    
    15,173
    
    
    
    12,678Diluted income per
common share
    
    $
    0.20
    
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.05
  Note 4  Commitments and Contingencies
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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 September 30, 2008Total revenues
    
    $
    18,140
    
    
    $
    11
    
    
    $
    18,151Total cost and expenses
    
    $
    15,794
    
    
    $
    776
    
    
    $
    16,570Income (loss) from operations
    
    $
    2,346
    
    
    $
    (765
    )
    
    $
    1,581For the three months ended September 30, 2007Total revenues
    
    $
    12,394
    
    
    $
    63
    
    
    $
    12,457Total cost and expenses
    
    $
    10,829
    
    
    $
    740
    
    
    $
    11,569Income (loss) from operations
    
    $
    1,565
    
    
    $
    (677
    )
    
    $
    888For the nine months ended September 30, 2008Total revenues
    
    $
    51,423
    
    
    $
    262
    
    
    $
    51,685Total cost and expenses
    
    $
    45,159
    
    
    $
    2,186
    
    
    $
    47,345Income (loss) from operations
    
    $
    6,264
    
    
    $
    (1,924
    )
    
    $
    4,340For the nine months ended September 30, 2007Total revenues
    
    $
    34,822
    
    
    $
    396
    
    
    $
    35,218Total cost and expenses
    
    $
    31,321
    
    
    $
    1,833
    
    
    $
    33,154Income (loss) from operations
    
    $
    3,501
    
    
    $
    (1,437
    )
    
    $
    2,064
  Note 6  Accounts Receivable and Allowance for Doubtful Accounts
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands)
    
    September 30, 2008
    
    
    December 31, 2007Billed trade accounts receivable
    
    $
    11,010
    
    
    $
    5,090Unbilled trade accounts receivable
    
    
    1,049
    
    
    
    746Other
    
    
    29
    
    
    
    45Total Receivables
    
    $
    12,088
    
    
    $
    5,881Allowance Rollforward (in thousands):Balance at January 1, 2008
    
    $
    29Additions
    
    
    Write offs (net of recoveries)
    
    
    (29
    )Balance at September 30, 2008
    
    $
    0
 Note 7  Income Taxes
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Note 8  Acquisition
 Phoenix Data Systems, Inc. Acquisition
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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.
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Nine Months EndedSeptember 30,(Dollars in thousands)
    
    2008
    
    2007Total revenue
    
    $
    56,134
    
    
    $
    43,767Operating income
    
    
    3,638
    
    
    
    2,601Net income
    
    
    2,453
    
    
    
    1,764Basic net income per share
    
    $
    0.17
    
    
    $
    0.13Diluted net income per share
    
    $
    0.16
    
    
    $
    0.12
 Theralys S.A. Acquisition
  Note 9  Intangible Assets
  September 30,
    
    
    Estimated(in thousands)
    
    2008
    
    
    Useful LifeAmortized intangible assets:Technology
    
    $
    1,454
    
    
    5 yearsTrademarks
    
    
    444
    
    
    5 yearsCustomer backlog
    
    
    1,218
    
    
    3 to 7 yearsCustomer relationship
    
    
    911
    
    
    7 yearsNon-competition agreement
    
    
    425
    
    
    2 to 3 years4,452Accumulated amortization
    
    
    (1,612
    )$
    2,840Unamortized intangible assets:Goodwill
    
    $
    27,015
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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fiscal years ending2008
    
    $
    2002009
    
    
    6342010
    
    
    5362011
    
    
    4642012
    
    
    373Thereafter
    
    
    633$
    2,840
 
 -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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Results of Operations
 Three Months Ended September 30, 2008 and 2007
 Three
    
    
    
    
    
    ThreeMonths
    
    
    
    
    
    MonthsEnded
    
    
    
    
    
    EndedSeptember 30,
    
    % of Total
    
    September 30,
    
    % of Total(in thousands)
    
    2008
    
    Revenue
    
    2007
    
    Revenue
    
    $ Change
    
    % ChangeService revenues
    
    $
    15,104
    
    
    
    83.2
    %
    
    $
    9,563
    
    
    
    76.8
    %
    
    $
    5,541
    
    
    
    57.9
    %Reimbursement revenues
    
    
    3,047
    
    
    
    16.8
    %
    
    
    2,894
    
    
    
    23.2
    %
    
    
    153
    
    
    
    5.3
    %Total revenues
    
    
    18,151
    
    
    
    100.0
    %
    
    
    12,457
    
    
    
    100.0
    %
    
    
    5,694
    
    
    
    45.7
    %Cost and expenses:Cost of service revenue
    
    
    8,465
    
    
    
    46.6
    %
    
    
    5,365
    
    
    
    43.1
    %
    
    
    3,100
    
    
    
    57.8
    %Cost of reimbursement revenue
    
    
    3,047
    
    
    
    16.8
    %
    
    
    2,894
    
    
    
    23.2
    %
    
    
    153
    
    
    
    5.3
    %Sales and marketing
expenses
    
    
    2,705
    
    
    
    14.9
    %
    
    
    1,688
    
    
    
    13.6
    %
    
    
    1,017
    
    
    
    60.2
    %General and administrative expenses
    
    
    2,102
    
    
    
    11.6
    %
    
    
    1,545
    
    
    
    12.4
    %
    
    
    557
    
    
    
    36.1
    %Amortization of intangible
assets related to
acquisitions
    
    
    251
    
    
    
    1.4
    %
    
    
    77
    
    
    
    0.6
    %
    
    
    174
    
    
    
    226.0
    %Total cost and expenses
    
    
    16,570
    
    
    
    91.3
    %
    
    
    11,569
    
    
    
    92.9
    %
    
    
    5,001
    
    
    
    43.2
    %Income from operations
    
    
    1,581
    
    
    
    8.7
    %
    
    
    888
    
    
    
    7.1
    %
    
    
    693
    
    
    
    78.0
    %Interest income
    
    
    98
    
    
    
    0.5
    %
    
    
    168
    
    
    
    1.4
    %
    
    
    (70
    )
    
    
    (41.7
    )%Interest expense
    
    
    (1
    )
    
    
    0.0
    %
    
    
    (1
    )
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Income before
income tax provision
    
    
    1,678
    
    
    
    9.2
    %
    
    
    1,055
    
    
    
    8.5
    %
    
    
    623
    
    
    
    59.1
    %Income tax provision
    
    
    603
    
    
    
    3.3
    %
    
    
    408
    
    
    
    3.3
    %
    
    
    195
    
    
    
    47.8
    %Net income
    
    $
    1,075
    
    
    
    5.9
    %
    
    $
    647
    
    
    
    5.2
    %
    
    $
    428
    
    
    
    66.2
    %
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Nine Months Ended September 30, 2008 and 2007
 Nine
    
    
    
    
    
    NineMonths
    
    
    
    
    
    MonthsEnded
    
    
    
    
    
    EndedSeptember 30,
    
    % of Total
    
    September 30,
    
    % of Total(in thousands)
    
    2008
    
    Revenue
    
    2007
    
    Revenue
    
    $ Change
    
    % ChangeService revenues
    
    $
    41,487
    
    
    
    80.3
    %
    
    $
    27,830
    
    
    
    79.0
    %
    
    $
    13,657
    
    
    
    49.1
    %Reimbursement
revenues
    
    
    10,198
    
    
    
    19.7
    %
    
    
    7,388
    
    
    
    21.0
    %
    
    
    2,810
    
    
    
    38.0
    %Total revenues
    
    
    51,685
    
    
    
    100.0
    %
    
    
    35,218
    
    
    
    100.0
    %
    
    
    16,467
    
    
    
    46.8
    %Cost and expenses:Cost of service revenue
    
    
    23,347
    
    
    
    45.2
    %
    
    
    16,085
    
    
    
    45.7
    %
    
    
    7,262
    
    
    
    45.1
    %Cost of reimbursement
revenue
    
    
    10,198
    
    
    
    19.7
    %
    
    
    7,388
    
    
    
    21.0
    %
    
    
    2,810
    
    
    
    38.0
    %Sales and marketing
expenses
    
    
    7,504
    
    
    
    14.5
    %
    
    
    4,938
    
    
    
    14.0
    %
    
    
    2,566
    
    
    
    52.0
    %General and administrative
expenses
    
    
    5,810
    
    
    
    11.2
    %
    
    
    4,536
    
    
    
    12.9
    %
    
    
    1,274
    
    
    
    28.1
    %Amortization of intangible
assets related to
acquisitions
    
    
    486
    
    
    
    0.9
    %
    
    
    207
    
    
    
    0.6
    %
    
    
    279
    
    
    
    134.8
    %Total cost and expenses
    
    
    47,345
    
    
    
    91.5
    %
    
    
    33,154
    
    
    
    94.1
    %
    
    
    14,191
    
    
    
    42.8
    %Income from operations
    
    
    4,340
    
    
    
    8.5
    %
    
    
    2,064
    
    
    
    5.9
    %
    
    
    2,276
    
    
    
    110.3
    %Interest income
    
    
    352
    
    
    
    0.7
    %
    
    
    484
    
    
    
    1.3
    %
    
    
    (132
    )
    
    
    (27.3
    )%Interest expense
    
    
    (4
    )
    
    
    0.0
    %
    
    
    (11
    )
    
    
    0.0
    %
    
    
    7
    
    
    
    63.6
    %Income before
income tax provision
    
    
    4,688
    
    
    
    9.2
    %
    
    
    2,537
    
    
    
    7.2
    %
    
    
    2,151
    
    
    
    84.8
    %Income tax provision
    
    
    1,729
    
    
    
    3.3
    %
    
    
    1,001
    
    
    
    2.8
    %
    
    
    728
    
    
    
    72.7
    %Net income
    
    $
    2,959
    
    
    
    5.9
    %
    
    $
    1,536
    
    
    
    4.4
    %
    
    $
    1,423
    
    
    
    92.6
    %
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Business Segments
    
 Liquidity and Capital Resources
 Nine Months
    
    Nine MonthsEnded
    
    Ended(in thousands)
    
    September 30, 2008
    
    September 30, 2007Net cash provided by operating activities
    
    $
    5,559
    
    
    $
    5,200Net cash used in investing activities
    
    $
    (10,489
    )
    
    $
    (6,525
    )Net cash provided by (used in) financing activities
    
    $
    323
    
    
    $
    (158
    )
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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
    
    $
    138,813
    
    
    $
    85,455
    
    
    $
    48,931
    
    
    $
    4,427
    
    
    $
    Facility rent operating
leases
    
    $
    5,999,325
    
    
    $
    2,433,864
    
    
    $
    2,175,330
    
    
    $
    867,302
    
    
    $
    522,829Employment agreements
    
    $
    244,165
    
    
    $
    244,165
    
    
    $
    
    
    
    $
    
    
    
    $
    Total contractual cash
obligations
    
    $
    6,382,303
    
    
    $
    2,763,484
    
    
    $
    2,224,261
    
    
    $
    871,729
    
    
    $
    522,829
     
    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.
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The current economic downturn coupled with the current regulatory environment could have a negative
impact on the pharmaceutical, biotechnology and medical device industrieis.
  The current economic downturn may harm our business.
  We depend on a small number of industries and clients for all of our business, and the loss of one
such 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.
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
    
    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;
    
    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.
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Our revenues, earnings and operating costs are exposed to exchange rate fluctuations.
  Our investments may be exposed to credit risk.
  We may be required to record additional significant charges to earnings if our goodwill becomes
impaired.
  Risks Related to Our Industry
 Our failure to compete effectively in our industry could cause our revenues to decline.
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
    
    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.
   Failure to comply with existing regulations could result in increased costs to complete clinical
trials.
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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.
     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.
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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
    
    
    14,339Common stock issuable upon:Exercise of options which are outstanding
    
    
    1,721Exercise of options which have not been granted
    
    
    1,081Total common stock outstanding assuming exercise or conversion of
all of the above
    
    
    17,141
  Shares of our common stock eligible for public sale may have a negative impact on its market price.
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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.
  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.
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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.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
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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: November 7, 2008
    
    By:
    
    /s/ Mark L. WeinsteinMark L. Weinstein,
President and Chief Executive Officer 
(Principal Executive Officer)DATE: November 7, 2008
    
    By: /s
    
    / Ted I. KaminerTed I. Kaminer,
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
 -42-