10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

Commission File No. 1-11182

BIO-IMAGING TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its Charter)

Delaware	11-2872047
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
826 Newtown-Yardley Road, Newtown, Pennsylvania (Address of Principal Executive Offices)	18940-1721 (Zip Code)

(267) 757-3000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock $0.00025 par value per share	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Exchange Act:

None

Check if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes: o     No: þ

Check if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes: o     No: þ

Check whether the Registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes: þ      No: o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Check if the Registrant is a larger accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and larger accelerated filer” in Rule 12b-2 of the Exchange Act of 1934.

Large accelerated filer o     Accelerated filer o     Non-accelerated filer þ

Check whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).  Yes: o     No: þ

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was $27,391,181 on June 30, 2006, the last business day of the Registrant’s most recently completed second fiscal quarter, based on the average bid and asked prices on that date.

Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of February 28, 2007:

Class	Number of Shares
Common Stock, $.00025 par value	11,473,470

The following documents are incorporated by reference into the Annual Report on Form 10-K: Portions of the Registrant’s definitive Proxy Statement for its 2007 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

TABLE OF CONTENTS

Item			Page
PART I
	1.	Business		1
	1A.	Risk Factors		7
	1B.	Unresolved Staff Comments		14
	2.	Properties		14
	3.	Legal Proceedings		14
	4.	Submission of Matters to a Vote of Security Holders		14
PART II
	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		14
	6.	Selected Financial Data		17
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
	7A.	Quantitative and Qualitative Disclosures About Market Risk		26
	8.	Financial Statements and Supplementary Data		27
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		50
	9A.	Controls and Procedures		50
	9B.	Other Information		50
PART III
	10.	Directors and Executive Officers of the Registrant		50
	11.	Executive Compensation		50
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		50
	13.	Certain Relationships and Related Transactions		50
	14.	Principal Accountant Fees and Services		51
PART IV
	15.	Exhibits, Financial Statement Schedules		51
SHARE PURCHASE AGREEMENT
DEVELOPMENT AND SUPPLY AGREEMENT
CONSENT OF PRICEWATERHOUSECOOPERS LLP
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302
CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER PURSUANT TO SECTION 302
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 1350
CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER PURSUANT TO SECTION 1350

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PART I

Item 1.   Business.

General

Bio-Imaging Technologies, Inc., referred to herein as “we”, “us” and “our”, is a global pharmaceutical contract service organization, providing services that support the product development process of the pharmaceutical, biotechnology and medical device industries. We specialize in assisting our clients in the design and management of the medical imaging component of clinical trials for all modalities, which consist of computerized tomography (CT), magnetic resonance imaging (MRI), x-rays, dual energy x-ray absorptiometry (DXA/DEXA), positron emission tomography (PET), single photon emission computerized tomography (SPECT), quantitative coronary angiography (QCA), cardiac MRI and CT, intravascular ultrasound (IVUS), peripheral quantitative angiography (QVA) and ultrasound.

We utilize proprietary processes and software applications in providing our services to pharmaceutical companies conducting clinical studies in which medical imaging modalities are used to evaluate the efficacy and safety of pharmaceuticals, biologics or medical devices. Our digital image processing and computer analysis techniques enable technologists or radiologists to make highly precise measurements and biostatistical inferences about drug or device effects. The resulting data enables our clients and regulatory reviewers, primarily the U.S. Food and Drug Administration and comparable European agencies, to evaluate product efficacy and safety. In addition, we have developed specialized computer services and software applications that enable independent radiologists and other medical specialists involved in clinical trials to review medical image data in an entirely digital format. Our services also include the regulatory submission of medical images, quantitative data and text.

We are directing our marketing and sales efforts towards those clinical development areas that use medical imaging. These areas include oncology, musculoskeletal, central nervous system, neurovascular and cardiovascular, among others.

We have a European facility in Leiden, the Netherlands that provides centralized image processing services for our European clients. We manage our services for European-based clinical trials from this facility. Our European facility has similar processing and analysis capabilities as our United States headquarters.

In February 2007, we acquired 100% of the stock of Theralys S.A., referred to as Theralys, a privately held company located in Lyon, France. Theralys is an imaging core lab providing centralized blinded read services and customized image analysis services primarily in the field of central nervous system disorders and neurovascular diseases. Theralys’ proprietary image processing software enables the introduction of quantitative imaging markers in the design of clinical trials for Neurovascular and CNS disorders, which include stroke, secondary prevention drugs, multiple sclerosis and dementia, including Alzheimer’s disease. Theralys’ proprietary and validated software for clinical trials includes applications that enable the automated quantitation of various imaging parameters such as brain, white matter lesion and hippocampal volumes and MRI diffusion and perfusion.

In December 2004, we acquired 100% of the stock of Heart Core B.V., referred to as Heart Core, a privately held company located in Leiden, the Netherlands. Heart Core is a global provider of centralized imaging analysis services in the field of cardiovascular, pulmonary and orthopedic clinical research.

We were incorporated in Delaware in 1987 under the name Wise Ventures, Inc. Our name was changed to Bio-Imaging Technologies, Inc. in 1991. The address of our principal executive offices is 826 Newtown-Yardley Road, Newtown, Pennsylvania, 18940, and our telephone number is 267-757-3000. Our Internet website is www.bioimaging.com. We also utilize the Internet website www.capmed.com for the CapMed division of our business. We make available on our Internet website all of our public filings with the Securities and Exchange Commission, or SEC. However, nothing on our Internet website is intended to be incorporated by reference into this Form 10-K or any other filing made by us with the SEC. The public may read or copy any filings Bio-Imaging, Technologies, Inc. files with the SEC at the SEC Public Reference Room at 100 F. Street, N.E., Room 1580, Washington, D.C. 20549. The public can also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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Business Services

Core Laboratory Services

We are a leading provider of medical imaging management services for clinical development purposes. Our imaging core laboratory facilities in the United States and Europe provide centralized image data collection, processing, analysis and archival services for clinical trials conducted worldwide. The facilities are designed for high-volume efficient processing of film and digital image data in a secure environment that complies with regulatory guidelines for clinical data management.

Medical image data are received by us from clinical trial sites, located throughout the world. We have developed procedures for data tracking and quality control that we believe to be of significant value to our clients. Our facilities contain specialized hardware and software for the digitization of films and translation of digital data, enabling data to be standardized, regardless of its source. We believe our ability to handle most commercially available image file formats is a valuable technical asset and an important competitive advantage in gaining new business from large global multi-center clinical trials.

We perform image analyses on client data using internally developed or specially configured software. We measure key indicators of drug efficacy in different organs and disease states. The results from image analysis derived in our facilities are transferred to databases that can be transmitted electronically to our clients or integrated directly into our Bio/ImageBase^tm package for regulatory submission on our client’s behalf.

Information Management Services

Our information management services focus on providing specialized solutions for improving the quality, speed and flexibility of image data management for clinical trials. We believe that our Computer Assisted Masked Reading systems, or CAMR^tm systems, offer numerous advantages over conventional film-based medical image reading scenarios, including increased reading speed, greater standardization of image reading, and reduced error in the capture of reader interpretations.

Using our CAMR^tm systems, independent medical specialists can review medical image data from clinical trials in a digital format. The CAMR^tm systems display all modalities of medical image data, regardless of source equipment. In addition, the systems display either translated digital data or digitized films. Such image reviews are often required during clinical trials to evaluate patients’ responses to therapy or to determine if patients qualify for studies. By using the CAMR^tm systems to read and evaluate image data, medical specialists achieve greater reading speed than is possible with film and perform evaluations in a more objective, reproducible manner.

We have also developed remote CAMR^tm systems, or rCAMR^tm systems, that are located on the premises, either home or office, of the individual medical specialists who are engaged by the sponsor to perform the analysis of the medical image data. Historically, the CAMR^tm systems have been utilized to determine efficacy of the compounds being studied. More recently, clients are requesting us to provide rapid turn-around reads for inclusion/exclusion criteria. We believe that the rCAMR^tm system is the optimal tool for this work because it allows us, at our client’s discretion, to provide the images to an expert in the field to facilitate the review of the images from the expert’s office or home.

We have developed an image database software application, Bio/ImageBase^tm, that enables our clients to submit their medical images and related clinical data to the FDA in a digital format. Using data stored on CD-ROM or DVD disks, Bio/ImageBase^tm allows clients and FDA medical reviewers to review medical images and related clinical data. We believe that Bio/ImageBase^tm offers the potential to decrease review time, resulting in faster regulatory approvals and reduced time-to-market for new drugs, biologics and medical devices.

Our Bio/ImageBase^tm software has been installed at client sites and on two “off-the-shelf” image reading and review computer systems at the FDA. We have been using our Bio/ImageBase^tm software to submit medical images and related data to the FDA since mid-1993. In March 1996, Bio/ImageBase^tm was cited in the FDA’s 1996 Computer-Assisted Product License Application Guidance Manual as an acceptable database for submission of imaging data.

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CapMed Division

Our CapMed division includes the Personal Health Record software, or PHR, which is a software application that enables users to manage and store personal health information, including their medical images, on the privacy of their desktop computer, while linking directly to sponsor-directed resources such as drug information, patient education or disease guidelines. CapMed also includes the Personal HealthKey^tm that plugs into a computer’s USB port, allowing doctors and patients easy access to the patient’s medical record without the need for additional hardware or software, and it is password protected.

Other Services

We provide technical consulting in the evaluation of the sites that may participate in clinical trials. We also consult with clients regarding regulatory issues involved in the design, execution, analysis and submission of medical image data in clinical trials.

Target Markets

Our primary target market is comprised of pharmaceutical, biotechnology and medical device companies whose clinical development pipelines include drugs, biologics or devices that are typically evaluated by medical imaging methods. This global target market includes leading international pharmaceutical companies and biotechnology companies with products currently in the clinical development pipeline.

We focus our marketing on the following stages of clinical development:

Phase II — Clinical Trials

Phase II clinical trials are generally conducted over six months to two years and involve basic efficacy, safety and dose-range testing in approximately 50 to 400 patients suffering from the disease or condition under study. Such trials help determine the best effective dose, confirm that the drug works as expected and provide initial safety data.

Phase III — Clinical Trials

Phase III clinical trials are generally conducted over one to four years and involve efficacy and safety studies in broader populations of hundreds or thousands of patients and many investigational sites, such as hospitals and clinics. These trials are sometimes referred to as pivotal studies for submission to the regulatory agencies. Generally, Phase III studies are intended to provide additional information on drug safety and efficacy, and the evaluation of the risk-benefit of the drug and information for the adequate labeling of the product.

Phase IV — Post Approval Studies

Phase IV studies are studies conducted after a pharmaceutical drug or device has been approved for use. These studies are generally conducted over a two to four year period and involve either a continuation of a Phase III patient population or the recruitment of a new patient population. As there continues to be pressure to expedite approval of pharmaceuticals and medical devices, there is an increase in the number of conditional approvals based on the conduct of additional Phase IV studies.

In addition, our experience spans a wide range of therapeutic areas with a concentration in the following:

Cancer Therapeutics

Many pharmaceutical companies are currently developing new therapies for the treatment of cancer. For solid tumor studies, medical imaging modalities are used to determine the response of treated and untreated tumors. These medical images are evaluated by medical specialists during the course of oncology clinical trials to determine the extent of disease and changes in tumor size over time.

The FDA’s guidelines aimed at accelerating access to new drugs for the review and approval of new cancer therapies place greater emphasis on shrinkage of tumors as an early indicator of anti-tumor efficacy. We believe that these FDA guidelines may have a favorable impact on our business as pharmaceutical and biotechnology companies

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may have an increased need for regulatory compliant medical imaging services to conduct their oncology clinical trials.

Musculoskeletal Therapeutics

Anti-inflammatory clinical trials, such as those focused on arthritis, include radiologic evaluation of the bones and joints to determine drug efficacy. We believe that demand among pharmaceutical companies for our services will increase as new classes of biotechnology-derived drugs enter and progress through the clinical development pipeline.

Osteoporosis is a disease characterized by thinning bones, which leads to fractures in the elderly. The FDA guidance document for developing treatments for this disease recognized DEXA as one of the primary efficacy and safety measurement tools available. Furthermore, all data needs to go through a quality assurance laboratory. This is now standard practice in all studies using DEXA instruments whether for osteoporosis, oncology or anti-obesity, or muscle wasting assessment.

Central Nervous System and Neurovascular Therapeutics

Many pharmaceutical companies are developing drugs for treatment of neurovascular diseases and conditions of the central nervous system, referred to as CNS, such as multiple sclerosis, infectious diseases that target the CNS, stroke and Alzheimer’s disease. For many of these diseases, the diagnosis is largely dependent upon imaging, particularly MRI. We believe that the central nervous system clinical trials business may increase as more therapies progress through the research pipeline and as baby boomers continue to age, driving the demand for these products.

Cardiovascular Therapeutics

We provide our services to clients developing drugs and medical devices for the diagnosis and treatment of cardiovascular diseases and conditions that are evaluated with the aid of medical imaging. We offer various cardiovascular, quantitative, image-analysis services including: quantitative coronary angiography (QCA), cardiac MRI and CT, ultrasound, intravascular ultrasound (IVUS) and peripheral quantitative angiography (QVA). We have participated in numerous multinational trials for leading pharmaceutical, biotechnology and medical device companies throughout the world. In addition, as research continues to advance, our collective knowledge base of the underlying pathophysiology of cardiovascular disease will grow as well as the need for advanced imaging technology to be used in cardiovascular trials. For example, CT may be used to identify coronary calcifications, which are considered to be a predictor of cardiovascular risk. It follows that clinical trials involving therapeutic interventions targeting coronary calcifications will require imaging as an endpoint of efficacy.

Diagnostic Imaging Agents

We provide our services to clients developing diagnostic imaging agents that are designed to diagnose disease conditions more quickly and accurately in their development in order to facilitate earlier and more accurate treatment.

Market Trends

We believe that a variety of favorable regulatory, technological and market trends may positively impact the demand for medical imaging management services, including:

•  FDA initiatives to streamline the regulatory submission and review process that are being implemented continue to have a beneficial impact on us. The FDA is investing in new information technology and is continuing the process of formulating and disseminating guidelines for standardizing the submission of electronic data, including medical images. We expect submission of image data to continue to be a requirement in key therapeutic and diagnostic areas for evaluating the effectiveness of a drug or imaging agent.

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•  Consolidation, restructuring and downsizing in the pharmaceutical industry in response to downward pressure on certain pharmaceutical and biotechnology companies’ drug prices has resulted in increased outsourcing of certain research and development activities.

•  Overall, growth in pharmaceutical and biotechnology research and development spending is increasing. As a result, we believe that the outsourcing of development activities should like-wise increase.

•  New classes of drugs to treat conditions traditionally evaluated by imaging are entering or progressing through the clinical development pipeline, leading to increased demand for medical imaging-related services. In addition, we believe that digital technologies for data acquisition and management are penetrating the radiology community.

•  We believe that as pharmaceutical and biotechnology companies increasingly attempt to expand the market for new drugs by conducting clinical trials and pursuing regulatory approval in multiple countries simultaneously, contract service organizations with a global presence and expertise will continue to benefit.

Due to several factors, including, without limitation, competition from commercial competitors and academic research centers, the risk of project cancellations, slowing of patient enrollment in on-going studies or delay of future project awards, among others, we cannot assure you that demand for our services and technologies will grow, sustain growth, or that additional revenue generating opportunities will be realized by us.

Intellectual Property

Proprietary protection for our computer-imaging programs, processes and know-how is important to our business. We have developed certain technically derived procedures and computer software applications that are intended to increase the effectiveness and quality of our services. We rely upon patents, trademarks, copyrights, trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. We have claimed trademark protection for Bio/ImageBase^tm, CAMR^tm, rCAMR^tm, Intelligent Imaging^tm and Personal Health Key^tm. We hold patents for the two DEXA phantoms, titled Spine and Variable Composition Phantoms, which we sell to trial sites. We have a patent pending on our Personal Health Key^tm. We have registered our Stylized Man Design with the U.S. Patent and Trademark Office. We cannot assure you that we can limit unauthorized or wrongful disclosures of trade secrets or otherwise confidential information. In addition, to the extent we rely on trade secrets and know-how to maintain our competitive technological position, we cannot assure you that others may not develop independently the same, similar or superior techniques. Although our intellectual property rights are important to the results of our operations, we believe that other factors, such as our independence, process knowledge, technical expertise and experience are more important, and that, overall, these technological capabilities offer significant benefits to our clients.

Government Regulation

The research and development, manufacture and marketing of drugs and medical devices are subject to stringent regulation by the FDA in the United States and by similar authorities in other countries. In addition, regulations imposed by other federal agencies, as well as state and local authorities, may impact such research and development, manufacturing and marketing.

The FDA has established mandatory procedures and safety standards that apply to the clinical testing, manufacturing and marketing of drugs and medical devices. These procedures and safety standards include, among other things, the completion of adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug or device for its recommended conditions or use. We advise our clients in the execution of clinical trials and other drug and device development tasks. We do not administer drugs to or utilize medical devices on patients.

The success of our business is dependent upon continued acceptance by the FDA and other regulatory authorities of the data and analyses generated by our services in connection with the evaluation of the safety and efficacy of new drugs and devices. The FDA has formal guidelines that encourage the use of surrogate measures, through submission of digital image data, for evaluation of drugs to treat life- threatening or debilitating conditions. We cannot assure you that the FDA or other regulatory authorities will accept the data or analyses generated by us in

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the future and, even assuming acceptance, we cannot assure you that the FDA or other regulatory authorities will require the application of imaging techniques to numbers of patients and over time periods substantially similar to those required of traditional safety and efficacy techniques.

Changes in the FDA’s policy for the evaluation of therapeutic oncology agents may have a positive impact on the time to market of such therapeutics. According to FDA guidelines, approval times for new cancer therapies can be shortened if evidence of tumor shrinkage is verifiable and demonstrable through the use of objective measurement techniques. These guidelines place greater reliance on the use of medical image data to demonstrate objective tumor shrinkage. In addition, the FDA has implemented guidelines aimed at accelerating other therapeutic categories through the use of imaging markers as surrogate endpoints for measuring therapeutic effectiveness. We believe the FDA’s initiatives to streamline and accelerate the submission and review process of therapeutic agents has had a favorable impact on our business.

We believe that our ability to achieve continued and sustainable growth will be materially dependent upon, among other factors, the continued stringent enforcement of the comprehensive regulatory framework by various government agencies. Any significant change in these regulatory requirements or the enforcement thereof, especially relaxation of standards, could adversely affect our prospects.

The current European market regulation is more fragmented than in the United States. However, we believe that our expertise in working with the standards of the FDA provides us with experience when working with the various European regulatory agencies.

Competition

We continue to experience competition from commercial competitors and academic research centers. The biopharmaceutical services industry is highly competitive, and we face numerous potential competitors in our business, including hundreds of contract research organizations. We primarily compete against specialty contract research organizations, or CROs, and to a lesser extent, universities and teaching hospitals. Certain of these competitors are owned by or are divisions of larger organizations, some of which have substantially greater resources than we do. As competition increases, we will look to provide value-added services and undertake marketing and sales programs to differentiate our services based on our expertise and experience in specific therapeutic and diagnostic areas, our technical expertise, our regulatory and clinical development experience, our quality performance and our international capabilities. Our competitive position also depends upon our ability to attract and retain qualified personnel and develop and preserve proprietary technology, processes and know-how. Competition in our industry has resulted in additional pressure being placed on price, service and quality. Although we believe that we are well positioned against our competitors due to our experience in clinical trials and regulatory compliance along with our international presence, we cannot assure you that our competitors or clients will not provide or develop services similar or superior to those provided by us. This competition could have a material adverse impact on us.

Marketing and Sales

We provide and market our services on an international basis primarily to pharmaceutical, biotechnology and medical device companies. Our sales and marketing activities are directed by a Senior Vice President of Medical Affairs and a Vice President of Global Business Development, supported by in-house staff and field business development personnel.

Our selling efforts are focused on North America and Western Europe. Our marketing activities include exhibiting at major trade shows, advertising in trade journals and the sponsoring of industry associations.

Significant Clients

During fiscal 2006, contracts with one client, Novartis Pharmaceutical, Inc., which encompassed 14 projects, represented 10.9% of our service revenues for the year ended December 31, 2006, while for the year ended December 31, 2005, no one client accounted for 10% or more of our service revenues. These contracts are

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terminable by our client at any time and for any reason. The loss of this client, or a reduction in services provided to this client, would have a material adverse effect on our business, financial condition and results of operations.

Employees

As of December 31, 2006, we had 283 employees, four of whom are executive officers.

Of our employees, as of December 31, 2006, 26 were engaged in sales and marketing, 227 were engaged in client related projects and 30 were engaged in administration and management. A significant number of our management and professional employees have prior industry experience. We believe that we have been successful in attracting skilled and experienced personnel, however, it remains a competitive market for recruiting such personnel. Although all of our employees are covered by confidentiality and non-competition agreements, we cannot assure you that such agreements will be enforceable. As of February 28, 2007, we have employment agreements with two of our executive officers. See “Item 11. Executive Compensation”. We consider relations with our employees to be good.

Item 1A.   Risk Factors.

The more prominent risks and uncertainties inherent in our business are described below. However, additional risks and uncertainties may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations may suffer. Investing in our common stock involves a high degree of risk. Any of the following factors could harm our business and future results of operations and you could lose all or part of your investment.

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.

Our clients may terminate or delay their contracts for a variety of reasons, including, but not limited to:

•  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.

In addition, we believe that FDA-regulated companies may proceed with fewer clinical trials or conduct them without assistance of contract service organizations if they are trying to reduce costs as a result of cost containment pressures associated with healthcare reform, budgetary limits or changing priorities. These factors may cause such companies to cancel contracts with contract service organizations.

We cannot assure you that our clients will continue to use our services or that we will be able to replace, in a timely or effective manner, departing clients with new clients that generate comparable revenues. Further, we cannot assure you that our clients will continue to generate consistent amounts of revenues over time.

The loss, reduction in scope or delay of a large contract or the loss or delay of multiple contracts could materially adversely affect our business, although our contracts entitle us to receive all fees earned up to the time of termination. The loss of business from our client, Novartis Pharmaceutical, Inc., would have a material adverse effect on our financial condition.

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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.

We depend on research and development expenditures by pharmaceutical, biotechnology and medical device companies to sustain our business. Our operations could be materially and adversely affected if:

•  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.

During fiscal 2006, contracts with one client, Novartis Pharmaceutical, Inc., which encompassed 14 projects, represented 10.9% of our service revenues for the year ended December 31, 2006, while for the comparable period last year, no one client accounted for 10% or more of our service revenues for the year ended December 31, 2005. The loss of business from a significant client or our failure to continue to obtain new business to replace completed or canceled projects would have a material adverse effect on our business and revenues.

Our contracted/committed backlog may not be indicative of future results.

Our reported contracted/committed backlog of $75.2 million at December 31, 2006 is based on anticipated service revenue from uncompleted projects with clients. Backlog is the expected service revenue that remains to be earned and recognized on signed and verbally agreed to contracts. Contracts included in backlog are subject to termination by our clients at any time. In the event that a client cancels a contract, we would be entitled to receive payment for all services performed up to the cancellation date and subsequent client authorized services related to the cancellation of the project. The duration of the projects included in our backlog range from less than three months to seven years. We cannot assure that this backlog will be indicative of future results. A number of factors may affect backlog, including:

•  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.

Also, if clients delay projects, the projects will remain in backlog, but will not generate revenue at the rate originally expected. Accordingly, the historical relationship of backlog to revenues may not be indicative of future results.

We have experienced substantial expansion in the past, and if we fail to properly manage that expansion, our business may suffer.

Our business has expanded substantially in the past. Our continuing sales and marketing efforts have increased the number of projects under management from 270 in fiscal 2005 to 284 in fiscal 2006. In addition, we acquired Theralys in February 2007, HeartCore in December 2004 and CapMed in November 2003.

Rapid expansion, internally or through acquisitions, could strain our operational, human and financial resources. If we fail to properly manage this expansion, our results of operations and financial condition might be adversely affected. In order to manage our expansion, we must:

•  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

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•  attract and retain qualified management, sales, professional and technical operating personnel.

We will face additional risks in expanding foreign operations. Specifically, we might find it difficult to:

•  assimilate differences in foreign business practices and regulations;

•  hire and retain qualified personnel; and

•  overcome language and cultural barriers.

We may engage in future acquisitions, which may be expensive and time consuming and from which we may not realize anticipated benefits.

We may acquire additional businesses, technologies and products if we determine that these additional businesses, technologies and products complement our existing business or otherwise serve our strategic goals. If we do undertake transactions of this sort, the process of integrating an acquired business, technology or product may result in operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of our business. Moreover, we may never realize the anticipated benefits of any acquisition. Future acquisitions could result in potentially dilutive issuances of our securities, the incurrence of debt and contingent liabilities and amortization expenses related to intangible assets, which could adversely affect our results of operations and financial condition.

On February 6, 2007, we acquired 100% of the outstanding securities of Theralys, a privately held company headquartered in Lyon, France. The aggregate purchase price was 2,731,257 Euros ($3,556,097 as determined by an agreed upon exchange rate), of which 2,375,484 Euros ($3,092,881) was paid in cash and 355,773 Euros ($463,216) was paid in 57,408 shares of our common stock. In addition to the aggregate purchase price, certain stockholders of Theralys received an aggregate of 36,000 shares of our common stock at an average price of $8.06885 per share.

Loss of key personnel, or failure to attract and retain additional personnel, may cause the success and growth of our business to suffer.

Future success depends on the personal efforts and abilities of the principal members of our senior management to provide strategic direction, develop business, manage operations and maintain a cohesive and stable environment. Specifically, we are dependent upon Mark L. Weinstein, President and Chief Executive Officer, David A. Pitler, Senior Vice President Operations, Colin G. Miller, Ph.D., Senior Vice President Medical Affairs and Ted I. Kaminer, Senior Vice President and Chief Financial Officer. Although we have employment agreements with Mr. Weinstein and Mr. Kaminer, this does not necessarily mean that they will remain with us. Although we have executive retention agreements with our officers, we do not have employment agreements with any other key personnel. Furthermore, our performance also depends on our ability to attract and retain management and qualified professional and technical operating staff. Competition for these skilled personnel is intense. The loss of services of any key executive, or inability to continue to attract and retain qualified staff, could have a material adverse effect on our business, results of operations and financial condition. We do not maintain any key employee insurance on any of our executives.

Our revenues, earnings and operating costs are exposed to exchange rate fluctuations.

In fiscal 2006, a portion of our service revenues were denominated in foreign currency. Our financial statements are denominated in United States dollars. In the event a greater portion of our service revenues are denominated in a foreign currency changes in foreign currency exchange rates could affect our results of operations and financial condition. Fluctuations in foreign currency exchange rates could materially impact the operating costs of our European facility in Leiden, the Netherlands which are primarily Euro denominated.

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Risks Related to Our Industry

Our failure to compete effectively in our industry could cause our revenues to decline.

Significant factors in determining whether we will be able to compete successfully include:

•  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.

If our services are not competitive based on these or other factors, our business, financial condition and results of operations will be materially harmed.

The biopharmaceutical services industry is highly competitive, and we face numerous competitors in our business, including hundreds of contract research organizations. If we fail to compete effectively, we will lose clients, which would cause our business to suffer. We primarily compete against in-house departments of pharmaceutical companies, full service contract research organizations, or CROs, small specialty CROs, and to a lesser extent, universities and teaching hospitals. Some of these competitors have substantially greater capital, technical and other resources than we do. In addition, certain of our competitors that are smaller specialized companies may compete effectively against us because of their concentrated size and focus.

Changes in outsourcing trends in the pharmaceutical and biotechnology industries could adversely affect our operating results and growth rate.

Service revenues depend greatly on the expenditures made by the pharmaceutical and biotechnology industries in research and development. Accordingly, economic factors and industry trends that affect our clients in these industries also affect our business. For example, the practice of many companies in these industries has been to hire outside organizations like us to conduct clinical research projects. This practice has grown significantly in the last decade, and we have benefited from this trend. However, if this trend were to change and companies in these industries were to reduce the number of research and development projects they outsource, our business could be materially adversely affected.

Additionally, numerous governments have undertaken efforts to control growing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. If future regulatory cost containment efforts limit the profits that can be derived on new drugs, our clients might reduce their research and development spending, which could reduce our business.

Failure to comply with existing regulations could result in increased costs to complete clinical trials.

Our business is subject to numerous governmental regulations, primarily relating to pharmaceutical product development and the conduct of clinical trials. In particular, we are subject to 21 CFR Part 11 of the Code of Federal Regulations that provides the criteria for acceptance by the FDA of electronic records. If we fail to comply with these governmental regulations, it could result in the termination of ongoing clinical research or the disqualification of data for submission to regulatory authorities. We also could be barred from providing clinical trial services in the

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future or be subjected to fines. Any of these consequences would harm our reputation, our prospects for future work and our operating results.

Our CapMed division may not reach profitability.

Our CapMed division had a loss from operations of $1,554,564 in fiscal 2006. If our CapMed division continues to incur such losses, our businesses, results of operations and financial condition will be materially adversely affected.

Changes in governmental regulation could decrease the need for the services we provide, which would negatively affect our future business opportunities.

In recent years, the United States Congress and state legislatures have considered various types of healthcare reform in order to control growing healthcare costs. The United States Congress and state legislatures may again address healthcare reform in the future. We are unable to predict what legislative proposals will be adopted in the future, if any. Similar reform movements have occurred in Europe and Asia.

Implementation of healthcare reform legislation that results in additional costs could limit the profits that can be made by clients from the development of new products. This could adversely affect our clients’ research and development expenditures, which could, in turn, decrease the business opportunities available to us both in the United States and abroad. In addition, new laws or regulations may create a risk of liability, increase costs or limit service offerings. We cannot predict the likelihood of any of these events.

In addition to healthcare reform proposals, the expansion of managed care organizations in the healthcare market may result in reduced spending on research and development. Managed care organizations’ efforts to cut costs by limiting expenditures on pharmaceuticals and medical devices could result in pharmaceutical, biotechnology and medical device companies spending less on research and development. If this were to occur, we would have fewer business opportunities and our revenues could decrease, possibly materially.

Governmental agencies throughout the world, but particularly in the United States, strictly regulate the drug development/approval process. Our business involves helping pharmaceutical and biotechnology companies navigate the regulatory drug approval process. Changes in regulation, such as relaxation in regulatory requirements or the introduction of simplified drug approval procedures or an increase in regulatory requirements that we may have difficulty satisfying could eliminate or substantially reduce the need for our services. If these changes in regulations were to occur, our business, results of operations and financial condition could be materially adversely affected. These and other changes in regulation could have a material adverse impact on our available 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.

The success of our business is dependent upon continued acceptance by the FDA and other regulatory authorities of the data and analyses generated by our services in connection with the evaluation of the safety and efficacy of new drugs and devices. The FDA has formal guidelines that encourage the use of “surrogate measures” through submission of digital image data, for evaluation of drugs to treat life-threatening or debilitating conditions. We cannot assure you that the FDA or other regulatory authorities will accept the data or analyses generated by us in the future and, even assuming acceptance, the FDA or other regulatory authorities may not require the application of imaging techniques to numbers of patients and over time periods substantially similar to those required of traditional safety and efficacy techniques. If the governmental agencies do not accept data and analyses generated by our services in connection with the evaluation of new drugs and devices, the need for our services would be eliminated or substantially reduced, and, as a result, our business, results of operations and financial condition could be materially adversely affected.

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We may be exposed to liability claims as a result of our involvement in clinical trials.

We may be exposed to liability claims as a result of our involvement in clinical trials. We cannot assure you that liability claims will not be asserted against us as a result of work performed for our clients. We maintain liability insurance coverage in amounts that we believe are sufficient for the pharmaceutical services industry. Furthermore, we cannot assure you that our clients will agree to indemnify us, or that we will have sufficient insurance to satisfy any such liability claims. If a claim is brought against us and the outcome is unfavorable to us, such outcome could have a material adverse impact on us.

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.

As of December 31, 2006, we had the following capital structure:

Common stock outstanding	11,309,550
Common stock issuable upon:
Exercise of options which are outstanding	1,870,662
Exercise of options which have not been granted	714,216
Total common stock outstanding assuming exercise or conversion of all of the above	13,894,428

As of December 31, 2006, we had outstanding options to purchase 1,870,662 shares of common stock at exercise prices ranging from $0.63 to $7.03 per share (exercisable at a weighted average of $2.61 per share), of which 1,690,362 options were then exercisable. Exercise of our outstanding options into shares of our common stock may significantly and negatively affect the market price for our common stock as well as decrease your percentage ownership and voting power. In addition, we may conduct future offerings of our common stock or other securities with rights to convert the securities into shares of our common stock. As a result of these and other events, such as future acquisitions, that increase the number of our outstanding shares, your percentage ownership and voting power and the price of our common stock may decrease.

Shares of our common stock eligible for public sale may have a negative impact on its market price.

Future sales of shares of our common stock by existing holders of our common stock or by holders of outstanding options, upon the exercise thereof, could have a negative impact on the market price of our common stock. As of December 31, 2006, we had 11,309,550 shares of our common stock issued and outstanding, all of which are currently freely tradable. On March 1, 2006, in connection with his employment agreement dated March 28, 2005, we issued 14,850 shares of restricted stock to our President and Chief Executive Officer, this was net of 10,150 shares withheld for withholding taxes associated with the issuance of the shares.

We are unable to estimate the number of shares that may be sold because this will depend on the market price for our common stock, the personal circumstances of the sellers and other factors. Any sale of substantial amounts of our common stock or other securities in the open market may adversely affect the market price of the securities offered hereby and may adversely affect our ability to obtain future financing in the capital markets as well as create a potential market overhang.

There are a limited number of shareholders 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.

Our directors, officers and principal stockholders (stockholders owning 10% or more of our common stock), including Covance Inc., beneficially owned 34% of the outstanding shares of common stock and stock options that could have been converted to common stock at December 31, 2006, and such stockholders will have significant influence over the outcome of all matters submitted to our stockholders for approval, including the election of our directors and other corporate actions. In addition, such influence by these affiliates could have the effect of

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discouraging others from attempting to take us over, thereby increasing the likelihood that the market price of the common stock will not reflect a premium for control.

Because we do not intend to pay dividends, stockholders will benefit from an investment in our common stock only if it appreciates in value.

We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance further research and development and do not expect to pay any cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.

Trading in our common stock may be volatile, which may result in substantial declines in its market price.

The market price of our common stock has experienced historical volatility and might continue to experience volatility in the future in response to quarter-to-quarter variations in:

•  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.

The overall market (including the market for our common stock) has also experienced significant decreases in value in the past. This volatility and potential market decline could affect the market prices of securities issued by many companies, often for reasons unrelated to their operating performance, and may adversely affect the price of our common stock. Between January 1, 2006 and December 31, 2006, our common stock has traded at a low of $3.11 per share and a high of $8.10 per share. Between January 1, 2007 and February 28, 2007, our common stock has traded at a low of $6.78 per share and a high of $9.40 per share.

Our common stock began trading on the NASDAQ Global Market, formerly called the NASDAQ National Market, on December 18, 2003 and has a limited trading market. We cannot assure that an active trading market will develop or, if developed, will be maintained. As a result, our stockholders may find it difficult to dispose of shares of our common stock and, as a result, may suffer a loss of all or a substantial portion of their investment.

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.

We have an authorized class of 3,000,000 shares of undesignated preferred stock, of which 1,250,000 shares were previously issued, and the remaining 1,750,000 shares may be issued by our board of directors, on such terms and with such rights, preferences and designation as the Board may determine. Issuance of such preferred stock, depending upon the rights, preferences and designations thereof, may have the effect of delaying, deterring or preventing a change in control of our company. In addition, we are subject to provisions of Delaware corporate law which, subject to certain exceptions, will prohibit us from engaging in any “business combination” with a person who, together with affiliates and associates, owns 15% or more of our common stock for a period of three years following the date that the person came to own 15% or more of our common stock unless the business combination is approved in a prescribed manner.

These provisions of our certificate of incorporation, and of Delaware law may have the effect of delaying, deterring or preventing a change in control of our company, may discourage bids for our common stock at a premium over market price and may adversely affect the market price, and the voting and other rights of the holders, of our common stock. In addition, these provisions make it more difficult to replace or remove our current

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management team in the event our stockholders believe this would be in the best interest of our company and our stockholders.

Item 1B.   Unresolved Staff Comments.

None.

Item 2.   Properties.

We lease 54,400 square feet of office space located in Newtown, Pennsylvania. This lease expires June 2010 and provides for a fixed base rent of $93,000 per month with an annual inflation increase. We lease 7,447 square feet of additional office space located in Newtown, Pennsylvania for $6,100 per month in base rent expiring November 2008. In addition, we lease 15,500 square feet of office space in Leiden, the Netherlands. This lease, denominated in Euro, expires in May 2008 and provides for a base rent of $30,500 per month, based upon the conversion rate as of December 31, 2006, with an annual inflation increase. We believe that these facilities will be adequate for our needs for the foreseeable future.

Item 3.   Legal Proceedings.

In the normal course of business, we may be a party to legal proceedings. We are not currently a party to any material legal proceedings.

Item 4.   Submission of Matters to a Vote of Security Holders.

None.

PART II

Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock began trading on the NASDAQ Global Market, formerly called the NASDAQ National Market, on December 18, 2003 under the symbol BITI. Prior to listing on the NASDAQ Global Market, our common stock was traded on the American Stock Exchange under the symbol BIT from February 25, 2003. Our common stock was quoted on the NASD OTC Bulletin Board under the symbol BITI prior to being listed on the American Stock Exchange.

The following table sets forth the high and low bid quotations for our common stock as reported on the NASDAQ Global Market for each of the quarters from the quarter ended March 31, 2005 through December 31, 2006. Such quotations reflect interdealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

	Common
	Stock
Quarter Ended	High		Low
March 31, 2005		5.51		2.59
June 30, 2005		3.15		2.49
September 30, 2005		3.55		2.72
December 31, 2005		3.29		2.10
March 31, 2006		4.73		3.11
June 30, 2006		4.83		3.80
September 30, 2006		4.54		3.51
December 31, 2006		8.10		4.03

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As of February 28, 2007, the number of holders of record of our common stock was 93 and the approximate number of beneficial holders of our common stock was 1,700.

On February 6, 2007, we acquired 100% of the outstanding securities of Theralys, a privately held company headquartered in Lyon, France. The aggregate purchase price was 2,731,257 Euros ($3,556,097 as determined by an agreed upon exchange rate), of which 2,375,484 Euros ($3,092,881) was paid in cash and 355,773 Euros ($463,216) was paid in 57,408 shares of our common stock. In addition to the aggregate purchase price, certain stockholders of Theralys received an aggregate of 36,000 shares of our common stock at an average price of $8.06885 per share.

On March 1, 2006, in connection with his employment agreement dated March 28, 2005, we issued 14,850 shares of restricted stock to our President and Chief Executive Officer, which was net of 10,150 shares withheld for withholding taxes associated with the issuance of the shares.

We believe that the issuance of the foregoing securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as transactions not involving a public offering. Each of the recipients were sophisticated or accredited investors, acquired the securities for investment purposes only and not with a view to distribution and had adequate information about our company.

We have neither paid nor declared dividends on our common stock since our inception and do not plan to pay dividends on our common stock in the foreseeable future. We expect that any earnings which we may realize will be retained to finance our growth.

On November 9, 2005, our Compensation Committee of the Board of Directors recommended, and our Board of Directors approved, the acceleration of vesting of all out-of-the-money unvested options to purchase shares of our common stock with an exercise price greater than $7.00 held by our current employees and executive officers (but excluding any options granted to members of our Board of Directors). These options were previously awarded to our employees on February 4, 2004, pursuant to the 2002 Stock Incentive Plan, and would still have been unvested at January 1, 2006. Options to purchase 107,691 shares of common stock are subject to this acceleration. The exercise price per share for these options was $7.03, while the closing price per share on November 9, 2005 was $2.20.

The following table summarizes the options subject to acceleration:

	Aggregate Number of
	Shares Issuable
	Under Accelerated		Exercise Price
	Options		per Share		Date of Grant
Employees as a group (other than executive officers)		69,722	$	7.03		February 4, 2004
Executive officers as a group		37,969	$	7.03		February 4, 2004

The acceleration of vesting of these out-of-the money options is being undertaken primarily to eliminate any future compensation expense our company would otherwise recognize in its income statement with respect to these options with the implementation of the Financial Accounting Standard Board (FASB) statement “Share-Based Payment” (FAS 123R) effective for our company on January 1, 2006. We estimate this compensation expense, before tax, would be approximately $402,763 in aggregate future expenses based on calculations using the Black-Scholes methodology.

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STOCK PRICE PERFORMANCE GRAPH

Our common stock is listed for trading on the NASDAQ Global Market under the symbol “BITI”. The Stock Price Performance Graph set forth below compares the cumulative total stockholder return on the our common stock for the period from December 31, 2001 through December 31, 2006, with the cumulative total return of the NASDAQ U.S. Stock Index and the NASDAQ Health Services Index over the same period. The comparison assumes $100 was invested on December 31, 2001 in our common stock, in the NASDAQ U.S. Stock Index and in the NASDAQ Health Services Index and assumes reinvestment of dividends, if any.

	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	2001		2002		2003		2004		2005		2006
Bio-Imaging Technologies, Inc.	$	100.00	$	169.23	$	479.23	$	421.54	$	248.46	$	620.00
NASDAQ U.S. Stock Index	$	100.00	$	69.14	$	103.37	$	112.49	$	114.88	$	126.23
NASDAQ Health Services	$	100.00	$	86.16	$	131.76	$	166.06	$	228.23	$	227.90

The foregoing Stock Price Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate if by reference into such filing.

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Item 6.   Selected Financial Data.

The following table presents selected consolidated financial data. This data is derived from our audited consolidated financial statements and should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related footnotes included in this Form 10-K.

	For the Years Ended,
	Dec. 31,		Dec. 31,			Dec. 31,		Dec. 31,		Dec. 31,
	2006		2005			2004		2003		2002
	(Dollars in thousands, except per share data and number of employees)
OPERATIONS
Service revenue	$	31,857	$	23,712		$	25,069	$	21,748	$	17,190
Total revenue	$	40,519	$	30,486		$	29,691	$	25,211	$	20,879
Income (loss) from operations		1,115		(4,335	)		1,604		2,198		1,551
Net income (loss)		1,004		(2,545	)		949		2,338		1,140
Basic earnings (loss) per share		0.09		(0.23	)		0.09		0.25		0.14
Diluted earnings (loss) per share		0.08		(0.23	)		0.08		0.22		0.12
FINANCIAL POSITION
Cash, cash equivalents	$	16,166	$	10,554		$	9,650	$	13,289	$	2,563
Working capital		10,219		8,055			13,121		12,966		1,442
Total assets		34,108		28,791			28,374		25,907		11,440
Long-term debt		97		551			907		771		1,379
Stockholders’ equity		18,842		17,197			19,518		17,426		3,619
OTHER DATA
Purchases of property and equipment	$	2,232	$	1,871		$	1,849	$	1,641	$	992
Depreciation and amortization		2,035		2,312			1,760		1,076		738
Number of employees (not audited)		283		264			269		223		175
Weighted average shares used in computing:
Basic earnings (loss) per share		11,219		11,114			10,812		9,276		8,361
Diluted earnings (loss) per share		12,364		11,114			12,229		10,849		9,828

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Pharmaceutical Contract Services

We are a global pharmaceutical contract service organization, providing services that support the product development process of the pharmaceutical, biotechnology and medical device industries. We specialize in assisting our clients in the design and management of the medical imaging component of clinical trials for all modalities, which consist of computerized tomography (CT), magnetic resonance imaging (MRI), x-rays, dual energy x-ray absorptiometry (DXA/DEXA), positron emission tomography (PET), single photon emission computerized tomography (SPECT), quantitative coronary angiography (QCA), cardiac MRI and CT, intravascular ultrasound (IVUS), peripheral quantitative angiography (QVA) and ultrasound. We provide services that include the processing and analysis of medical images and the data-basing and regulatory submission of medical images, quantitative data and text.

Our sales cycle, referring to the period from the presentation by us to a potential client to the engagement of us by such client, has historically ranged from three to twelve months. In addition, the contracts under which we perform services typically cover a period of 12 to 60 months and the volume and type of services performed by us generally vary during the course of a project. We cannot assure you that our service revenues will remain at levels

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sufficient to maintain profitability. Service revenues were generated from 128 clients encompassing 284 distinct projects for fiscal 2006. This compares to 115 clients encompassing 270 distinct projects for fiscal 2005.

Our contracted/committed backlog, referred to as backlog, is the expected service revenue that remains to be earned and recognized on both signed and verbally agreed to contracts. Our backlog was $75.2 million as of December 31, 2006. This compares to $58.4 million as of December 31, 2005, an increase of 28.8%. This increase is primarily due to our sales and marketing efforts for fiscal 2006 and an overall market growth for medical-imaging related services for clinical trials. Contracts included in backlog are subject to termination by our clients at any time. In the event that a contract is cancelled by the client, we would be entitled to receive payment for all services performed up to the cancellation date. The duration of the projects included in our backlog range from less than three months to seven years. We believe that our backlog assists our management as an indicator of our long-term business. However, we do not believe that backlog is a reliable predictor of near-term results because service revenues may be incurred in a given period on contracts that were not included in the previous reporting period’s backlog and/or contract cancellations or project delays may occur in a given period on contracts that were included in the previous reporting period’s backlog.

We believe that demand for our services and technologies will continue to grow as the use of digital technologies for data acquisition and management increases in the radiology and drug development communities. We also believe that there is a growing recognition within the bio-pharmaceutical industry of the advantages in using an independent centralized core laboratory for analysis of medical-imaging data and compliance with the regulatory demands for the submission of such data and this may lead to a growth in our market share for these services. The FDA is also requiring more robust studies and additional data for clinical trials. In addition, the FDA continues to develop sophisticated guidelines for computerized submission of clinical trial data, including medical images. Furthermore, we believe that the increased use of digital medical images in clinical trials, especially for important drug classes such as anti-inflammatory, neurologic and oncologic therapeutics and diagnostic image agents, generate large amounts of image data from a large number of imaging sources. These studies require processing, analysis, data management and submission services best handled by vendors with scalable logistical capabilities and extensive experience working with research facilities worldwide. However, due to several factors, including, without limitation, competition from commercial competitors and academic research centers and the risk of project cancellations, slowing of patient enrollment in on-going studies or delay of future project awards, among others, we cannot assure you that demand for our services and technologies will grow, sustain growth, or that additional revenue generating opportunities will be realized by us.

CapMed Division

Our CapMed division offers the Personal Health Record software, referred to as PHR, and the patent-pending Personal HealthKey^tm technology. The PHR is a software application that enables users to manage and store personal health information, including their medical images, on the privacy of their desktop computer, while linking directly to sponsor-directed resources such as drug information, patient education, or disease guidelines. The Personal HealthKey^tm plugs into a computer’s USB port, allowing doctors and patients easy access to the patient’s medical record without the need for additional hardware or software, and it is password protected.

We intend to expand our CapMed division through partnerships and marketing efforts devoted to the PHR and Personal HealthKey^tm products. We believe that continued emphasis on improving patient care and reducing cost will contribute to the growth of the personal electronic medical records market. CapMed continues to progress towards the completion of its dot-net conversion and development of its web portal strategy, which includes a web-based PHR. Once completed, our customers will have the choice of managing their health through an on-line PHR, from their desktop PC or from our patent-pending USB Healthkey, which we believe will further enhance value in the marketplace and reduce the lengthy sales cycle typical in this space. We continue to be encouraged by the long-term prospects for this division although the adoption rate has been slower than anticipated.

Forward Looking Statements

Certain matters discussed in this Form 10-K are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking

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statements may be identified by, among other things, the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, our statements regarding: our projected financial results; growth potential for our CapMed division; the demand for our services and technologies; growing recognition for the use of independent centralized core laboratories; trends toward the outsourcing of imaging services in clinical trials; realized return from our marketing efforts; increased use of digital medical images in clinical trials; integration of our acquired companies and businesses; expansion into new business segments; the success of any potential acquisitions and the integration of current acquisitions; and the level of our backlog are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, the timing of revenues due to the variability in size, scope and duration of projects, estimates made by management with respect to our critical accounting policies, regulatory delays, clinical study results which lead to reductions or cancellations of projects, and other factors, including general economic conditions and regulatory developments, not within our control. The factors discussed in this Form 10-K and expressed from time to time in our filings with the SEC, as well as the risk factors set forth in this Form 10-K, could cause actual results and developments to be materially different from those expressed in or implied by such statements. The forward-looking statements are made only as of the date of this filing, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Critical Accounting Policies, Estimates and Risks

Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible and intangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reported period.

On an on-going basis, we evaluate our estimates. The most significant estimates relate to the recognition of revenue and profits based on the proportional performance method of accounting for fixed service contracts, allowance for doubtful accounts and income taxes.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements:

Revenue Recognition.  Service revenues are recognized over the contractual term of our customer contracts using the proportional performance method, which is based on hours incurred as a percentage of total estimated hours. Service revenues are not recognized until we have a signed contract from a customer which: (i) contains fixed or determinable fees; and (ii) collectability of such fees is reasonably assured. Any change to recognized service revenue as a result of revisions to estimated total hours are recognized in the period the estimate changes. Our revenue recognition policy entails a number of estimates including an estimate of the total hours that are expected to be incurred on a project, which is used as the basis for determining the portion of our revenue to be recognized for each period. The revenue recognized in any period might have been materially affected if different assumptions or conditions prevailed. The timing of our recognition of revenue would be revised if there were changes in the total estimated hours (other than scope changes in a project which typically result in a revision to the contract). We review our total estimated hours monthly. Provisions for losses expected to be incurred on contracts, based on our monthly estimates, are recognized in full in the period in which it is determined that a loss will result from performance of the contractual arrangement.

We enter into contracts that contain fixed or determinable fees.  The fees in the contracts are based on the scope of work we are contracted to perform. There are unitized fees per service and fixed fees with a total estimated for the contract based upon the estimated unitized service expected to be performed, as well as the service to be delivered under the fixed fee component of the contract. The units are estimated based on the information provided by the customer, and we bill the customer for actual units completed in accordance with

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the terms of the contract. In the event that a contract is cancelled by the client, we would be entitled to receive payment for all services performed up to the cancellation date.

Long-lived Assets, Intangibles and Goodwill.  Management annually evaluates the net realizable value of long-lived assets, including property and equipment, intangibles and goodwill relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. If these factors indicate that the carrying value of a long lived asset exceeds the net realizable value, the Company will record an impairment and reduce the carrying value of the asset to the net realizable value.

Capitalized Software Development.  We capitalize development costs for a software project once the preliminary project stage is completed, we have committed to fund the project and it is probable that the project will be completed and the software will be used to perform the function intended. We cease capitalization at such time as the computer software project is substantially complete and ready for its intended use. The determination that a software project is eligible for capitalization and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by us with respect to certain external factors including, but not limited to, anticipated future revenue, estimated economic life and changes in software and hardware technologies.

Income Taxes.  We evaluate the need to record a valuation allowance to reduce our deferred tax assets to an amount that is more likely than not to be realized. In assessing the need for the valuation allowance, we consider our future taxable income and on-going prudent and feasible tax planning strategies. In the event that we were to determine that, in the future, we would be able to realize our deferred tax assets in excess of its net recorded amount, an adjustment to the deferred tax asset would be made, thereby increasing net income in the period such determination was made. Likewise, should we determine that it is more likely than not that we will be unable to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged, thereby decreasing net income in the period such determination was made. We recognize contingent liabilities for any tax related exposures when those exposures are both probable and estimable.

Derivatives.  We use derivative financial instruments to reduce the risk caused by interest rate fluctuations. The derivative instruments are not held for trading purposes. Derivatives are accounted for in accordance with FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” We recognize derivative instruments as either assets or liabilities in our balance sheet and measure them at fair value. If designated as a cash flow hedge, the corresponding changes in fair value are recorded in stockholders equity (as a component of comprehensive income/expense).

Stock-based compensation costs.  Effective January 1, 2006, we account for stock-based compensation costs in accordance with SFAS 123R, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to our employees and directors. Under the fair value recognition provisions of SFAS 123R, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of the stock-based awards at the grant date requires considerable judgment. In addition, judgment is also required in estimating the amount of stock-based awards that are expected to be forfeited. If the actual experience differs significantly from the assumptions used to compute our stock-based compensation cost, or if different assumptions had been used, we may have recorded too much or too little stock-based compensation cost.

Foreign Currency Risks

Our financial statements are denominated in U.S. dollars. Fluctuations in foreign currency exchange rates could materially increase the operating costs of our facility in the Netherlands, which are primarily Euro denominated. At December 31, 2006 and December 31, 2005, a 10% increase or decrease in the Euro to U.S. dollar spot exchange rate would result in a change of $41,600 and $60,000 to our net asset position, respectively. In addition, certain of our contracts are denominated in foreign currency. We believe that any adverse fluctuation in the foreign currency markets relating to these contracts will not result in any material adverse effect on our financial condition or results of operations. In the event we derive a greater portion of our service revenues from international operations, factors associated with international operations, including changes in foreign currency exchange rates, could affect our results of operations and financial condition.

20

We do hedge our foreign currency exposure. Our foreign currency financial instruments primarily consist of cash, trade receivables, prepaid expenses, fixed assets, trade payables and accrued expenses and were in a net asset position at December 31, 2006 and December 31, 2005. An increase in the exchange rate would result in less net assets when converted to U.S. dollars. Conversely, if we were in a net liability position, a decrease in the exchange rate would result in more net liabilities when converted to U.S. dollars.

Results of Operations

The results of operations for our CapMed segment is not material to the trend of the our financials and therefore, the results of operations discussed below includes both our Pharmaceutical Contract Services and CapMed segments.

Year Ended December 31, 2006 Compared with Year Ended December 31, 2005.

				% of						% of
				Total						Total					%
	2006			Revenue			2005			Revenue			$ Change		Change
Service revenues	$	31,856,558			78.6	%	$	23,712,141			77.8	%	$	8,144,417		34.3	%
Reimbursement revenues		8,662,235			21.4	%		6,773,500			22.2	%		1,888,735		27.9	%
Total revenues		40,518,793			100.0	%		30,485,641			100.0	%		10,033,152		32.9	%
Cost and expenses:
Cost of revenues		28,156,579			69.5	%		25,087,575			82.3	%		3,069,004		12.2	%
General and administrative expenses		5,507,518			13.6	%		4,960,378			16.3	%		547,140		11.0	%
Sales and marketing expenses		5,739,303			14.2	%		4,772,223			15.7	%		967,080		20.3	%
Total cost and expenses		39,403,400			97.2	%		34,820,176			114.2	%		4,583,224		13.2	%
Income (loss) from operations		1,115,393			2.8	%		(4,334,535	)		(14.2	)%		5,449,928		(125.7	)%
Interest income		559,816			1.4	%		189,609			0.6	%		370,207		195.2	%
Interest expense		(56,338	)		(0.1	)%		(106,287	)		(0.3	)%		49,949		(47.0	)%
Income (loss) before income tax		1,618,871			4.0	%		(4,251,213	)		(13.9	)%		5,870,084		(138.1	)%
Income tax provision (benefit)		614,772			1.5	%		(1,705,841	)		(5.6	)%		2,320,613		(136.0	)%
Net income (loss)	$	1,004,099			2.5	%	$	(2,545,372	)		(8.3	)%	$	3,549,471		(139.4	)%

Service revenues were $31,856,558 for fiscal 2006 and $23,712,141 for fiscal 2005, an increase of $8,144,417, or 34.3%. The increase in service revenues was due to an increase in work performed from our increased contract signings in fiscal 2005 and 2006. Our backlog at December 31, 2006 increased to $75.2 million from $58.4 million at December 31, 2005, an increase of 28.8%. We believe this increase in backlog is an indicator that the overall market growth for medical-imaging related services for clinical trials continues to be positive, subject to project cancellations, slowing of patient enrollment in on-going studies and delays of future project awards. Service revenues were generated from 128 clients encompassing 284 distinct projects for fiscal 2006. This compares to 115 clients encompassing 270 distinct projects for fiscal 2005. Contracts with one client, Novartis Pharmaceutical, Inc., which encompassed 14 projects, represented 10.9% of our service revenues for the year ended December 31, 2006, while no one client accounted for 10% or more of our service revenues for the year ended December 31, 2005. Service revenues generated from our client base, while still concentrated as measured by the number of clients, has continued to become more dispersed over time, and we believe more diversification is evident when revenue concentration is measured by the number of individual projects. Our primary scope of work in both periods included medical-imaging core laboratory services and image-based information management services.

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Reimbursement revenues consist of payments received from the customer for reimbursable costs. Reimbursement revenues fluctuate significantly over the course of any given project and quarter to quarter variations are a reflection of this project timing. Therefore, our management believes that reimbursement revenues are not a significant indicator of our overall performance trends. At the request of our clients, we may directly pay the independent radiologists who review our client’s imaging data. In such cases, per contractual arrangement, these costs are billed to our clients and are included in Reimbursement Revenue and Cost of Revenues.

Cost of revenues was $28,156,579 for fiscal 2006 and $25,087,575 for fiscal 2005, an increase of $3,069,004, or 12.2%. Cost of revenues for fiscal 2006 and 2005 was comprised of professional salaries and benefits, allocated overhead and pass-through costs. The increase in cost of revenues is primarily due to the increase in reimbursement costs for fiscal 2006 and consulting costs associated with project related revenues. The decrease in cost of revenues as a percentage of total revenues to 69.5% for fiscal 2006 from 82.3% for fiscal 2005 is primarily attributable to the reduced revenue in 2005 as a result of the contract cancellations in 2004 and process improvement efforts during fiscal 2006. The cost of revenues as a percentage of total revenues also fluctuates due to work-flow variations in the utilization of staff and the mix of services provided by us in any given period. We expect that our cost of revenues will continue to increase in fiscal 2007 as reimbursement revenues and service revenues increase.

General and administrative expenses were $5,507,518 for fiscal 2006 and $4,960,378 for fiscal 2005, an increase of $547,140, or 11.0%. General and administrative expenses in fiscal 2006 and 2005 consisted primarily of salaries and benefits, depreciation and amortization, professional and consulting services, office rent and corporate insurance. The increase is primarily due to an increase in professional and consulting services. We expect that our general and administrative expense will increase in 2007 due to anticipated additional expenditures for compliance with the Sarbanes-Oxley Act of 2002. The decrease in general and administrative expenses as a percentage of total revenues to 13.6% for fiscal 2006 from 16.3% for fiscal 2005 is primarily due to a greater increase in our total revenues for fiscal 2006.

Sales and marketing expenses were $5,739,303 for fiscal 2006 and $4,772,223 for fiscal 2005, an increase of $967,080, or 20.3%. Sales and marketing expenses in fiscal 2006 and 2005 were comprised of direct sales and marketing costs, salaries and benefits and allocated overhead. The increase is due to an increase associated with our CapMed division of $349,000, $135,000 in expenses associated with tradeshow appearances and $479,000 in personnel costs and sales commissions due to the increase in contract signings for fiscal 2006 as compared to fiscal 2005. We expect that sales and marketing expenses will increase in fiscal 2007 as we continue to expand our market presence in the United States and Europe. The decrease in sales and marketing expenses as a percentage of total revenues to 14.2% for fiscal 2006 from 15.7% for fiscal 2005 is primarily due to a greater increase in our total revenues for fiscal 2006.

Net interest income was $503,478 for fiscal 2006 and net interest income was $83,322 for fiscal 2005, an increase of $420,156, or 504.3%. This increase is primarily due to a higher investable cash balances and higher interest rates on short term investments. Also, interest expense has decreased as our capital leases are maturing. Net interest income and expense for 2006 and 2005 is comprised of interest income earned on our cash balance and interest expense incurred on equipment lease obligations. Interest income may decrease in fiscal 2007 if we utilize cash for acquisitions.

Income before income taxes was $1,618,871 for fiscal 2006, and we had a loss before income tax of $4,251,213 for fiscal 2005, an increase of $5,870,084 or 138.1%. The increase was due to the reduction of $5,449,928 of operating loss from the prior year from greater service revenue while expenses increased at a slower rate due to our process improvement efforts during fiscal 2006.

Our income tax provision for fiscal 2006 was $614,772 versus an income tax benefit for fiscal 2005 of $1,705,841. The income tax benefit in fiscal 2005 resulted from recording a deferred tax benefit for the future tax savings anticipated from using the net operating loss carryforwards available at December 31, 2005. Our effective tax rate is approximately 37.4% for fiscal 2006 and 40% for fiscal 2005. The decrease in the effective tax rate is due to the mix of pre-tax income in the U.S. versus the Netherlands, which has a lower corporate income tax rate.

22

Year Ended December 31, 2005 Compared with Year Ended December 31, 2004.

				% of						% of
				Total						Total						%
	2005			Revenue			2004			Revenue			$ Change			Change
Service revenues	$	23,712,141			77.8	%	$	25,068,670			84.4	%	$	(1,356,529	)		(5.4	)%
Reimbursement revenues		6,773,500			22.2	%		4,622,105			15.6	%		2,151,395			46.5	%
Total revenues		30,485,641			100.0	%		29,690,775			100.0	%		794,866			2.7	%
Cost and expenses:
Cost of revenues		25,087,575			82.3	%		20,451,633			68.9	%		4,635,942			22.7	%
General and administrative expenses		4,960,378			16.3	%		4,452,535			15.0	%		507,843			11.4	%
Sales and marketing expenses		4,772,223			15.7	%		3,182,125			10.7	%		1,590,098			50.0	%
Total cost and expenses		34,820,176			114.2	%		28,086,293			94.6	%		6,733,883			24.0	%
Income (loss) from operations		(4,334,535	)		(14.2	)%		1,604,482			5.4	%		(5,939,017	)		(370.2	)%
Interest income		189,609			0.6	%		132,273			0.4	%		57,336			43.3	%
Interest expense		(106,287	)		(0.3	)%		(129,409	)		(0.4	)%		23,122			(17.9	)%
Income (loss) before income tax		(4,251,213	)		(13.9	)%		1,607,346			5.4	%		(5,858,559	)		(364.5	)%
Income tax (benefit) provision		(1,705,841	)		(5.6	)%		658,434			2.2	%		(2,364,275	)		(359.1	)%
Net income (loss)	$	(2,545,372	)		(8.3	)%	$	948,912			3.2	%	$	(3,494,284	)		(368.2	)%

Service revenues were $23,712,141 for fiscal 2005 and $25,068,670 for fiscal 2004, a decrease of $1,356,529, or 5.4%. The decrease in service revenues was due to a significantly higher than historical norm cancellation rate in the fourth quarter of fiscal 2004, which resulted in a loss of revenue from anticipated projects for fiscal 2005. The cancellations were the result of sponsors halting studies for clinical or strategic considerations. Our backlog at December 31, 2005 increased to $58.4 million from $38.5 million at December 31, 2004, an increase of 52%. Service revenues were generated from 115 clients encompassing 270 distinct projects for fiscal 2005. This compares to 84 clients encompassing 224 distinct projects for fiscal 2004. No one client accounted for 10% or more of our service revenues for fiscal 2005, while for the comparable period last year, one client, Novartis Pharmaceuticals Corp., encompassing 18 distinct projects represented 10.4% of our service revenues. No other client accounted for more than 10% of service revenues in fiscal year 2004.

Cost of revenues was $25,087,575 for fiscal 2005 and $20,451,633 for fiscal 2004, an increase of $4,635,942, or 22.7%. Cost of revenues for fiscal 2005 and 2004 was comprised of salaries and benefits, allocated overhead and pass-through costs. The increase in cost of revenues is primarily due to the increase in reimbursement revenues for fiscal 2005 of $2,151,395 and an increase of $1,900,000 attributable to the expansion of our European facility to expand our global capabilities and further develop our therapeutic expertise in the cardiovascular area, including the additional personnel and costs from the Heart Core acquisition, which occurred on December 10, 2004. The increase in cost of revenues as a percentage of total revenues to 82.2% for fiscal 2005 from 68.9% for fiscal 2004 is primarily attributable to the increase in reimbursement revenue, lower service revenues for fiscal 2005 due to cancellations from the fourth quarter of 2004 and the increase in cost from the expansion of our European facility.

General and administrative expenses were $4,960,378 for fiscal 2005 and $4,452,535 for fiscal 2004, an increase of $507,843, or 11.4%. General and administrative expenses in fiscal 2005 and 2004 consisted primarily of salaries and benefits, depreciation and amortization, professional and consulting services, office rent and corporate insurance. The increase is primarily due to an increase in professional and consulting services.

The increase in general and administrative expenses as a percentage of total revenues to 16.3% for fiscal 2005 from 15.0% for fiscal 2004 is primarily due to an increase in professional and consulting services.

23

Sales and marketing expenses were $4,772,223 for fiscal 2005 and $3,182,125 for fiscal 2004, an increase of $1,590,098, or 50.0%. Sales and marketing expenses in fiscal 2005 and 2004 were comprised of direct sales and marketing costs, salaries and benefits and allocated overhead. The increase is due to an increase associated with our CapMed division of $610,000, $207,000 in fees and expenses associated with our Scientific Advisory Board and $765,000 of other sales and marketing expenses, including an increase of $322,000 in personnel costs and sales commissions due to the increase in contract signings for fiscal 2005 as compared to fiscal 2004.

The increase in sales and marketing expenses as a percentage of total revenues to 15.7% for fiscal 2005 from 10.7% for fiscal 2004 is primarily due to increased expenses associated with our CapMed division and Scientific Advisory Board and an increase in personnel.

Net interest income was $83,322 for fiscal 2005 and net interest income was $2,864 for fiscal 2004, an increase of $80,458, or 2,809.3%. This increase is primarily due to the payment of the promissory note issued by us to Quintiles, Inc., referred to as the Quintiles Note, in November 2004, and, therefore, we did not incur this interest expense for fiscal 2005. Net interest income and expense for 2005 and 2004 is comprised of interest income earned on our cash balance and interest expense incurred on equipment lease obligations. Net interest income and expense for fiscal 2004 also included interest expense incurred on the Quintiles Note.

The loss before income taxes was $4,251,213 for fiscal 2005, and we had income before income tax of $1,607,346 for fiscal 2004, a decrease of $5,858,559, or 364.5%. This decrease is due to the loss in anticipated service revenues from contracts cancelled in the fourth quarter of 2004 resulting from a cancellation rate during that quarter that was significantly higher than historical norms. The cancellations were the result of sponsors halting studies for clinical or strategic considerations. The convergence of cancellation rates higher than historical norms, an overall slowing of patient enrollment in ongoing studies and the delay of several anticipated projects combined with the operating expense increases described above resulted in our unfavorable fiscal 2005 results.

Our income tax benefit for fiscal 2005 was $1,705,841 versus an income tax provision for fiscal 2004 of $658,434. The income tax benefit in fiscal 2005 resulted from recording a deferred tax benefit for the future tax savings anticipated from using the net operating loss carryforwards available at December 31, 2005. As a result, our effective income tax rate was 40% for fiscal 2005.

Liquidity and Capital Resources

	2006			2005
Net cash provided by operating activities	$	8,528,685		$	3,118,144
Net cash used in investing activities	$	(2,232,461	)	$	(1,870,978	)
Net cash used in financing activities	$	(683,628	)	$	(343,638	)

At December 31, 2006, we had cash and cash equivalents of $16,166,264. Working capital at December 31, 2006 was $10,218,505 as compared to working capital at December 31, 2005 of $8,055,374.

Net cash provided by operating activities for fiscal 2006 was $8,528,685 as compared to net cash provided by operating activities of $3,118,144 for fiscal 2005. This increase is primarily due to the net collection of our accounts receivable of $1,050,597 during fiscal 2006 and from the increase in our deferred revenue of $3,196,192 at December 31, 2006 from December 31, 2005 due to advance deposits received from our clients for new contract signings. In addition, we had a net income of $1,004,099 for fiscal 2006.

Net cash used in investing activities primarily represents our investment in capital and leasehold improvements of $2,232,461. We currently anticipate that capital expenditures for fiscal 2007 will be approximately $2.5 million. These expenditures primarily represent additional upgrades in our networking, data storage and core laboratory capabilities for both the United States and European operations as well as capitalization of software costs.

Net cash used in financing activities is primarily attributable to payments on capital leases of $874,267.

24

The following table lists our cash contractual obligations as of December 31, 2006:

	Payments Due by Period
			Less Than						More Than
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		5 Years
Capital lease obligations	$	731,113	$	634,077	$	97,036	$	—	$	—
Facility rent operating leases	$	4,538,640	$	1,425,461	$	2,501,098	$	612,081	$	—
Employment agreements	$	678,833	$	323,000	$	355,833	$	—	$	—
Total contractual cash obligations	$	5,948,586	$	2,382,538	$	2,953,967	$	612,081	$	—

On May 17, 2005, we renewed and amended our agreement with Wachovia Bank, N.A. The renewed and amended agreement was for an unsecured committed line of credit of $5,000,000. Interest was payable at the LIBOR Market Index Rate plus 2.0%. The agreement required us, among other things, to maintain certain financial covenants. The committed line of credit matured June 30, 2006 and because of our cash balance at that time, we decided not to incur the expense associated with renewing the line, and therefore, did not renew the credit line.

On February 6, 2007, we acquired 100% of the outstanding securities of Theralys, SA, referred to as Theralys, a privately held company headquartered in Lyon, France. The aggregate purchase price was 2,731,257 Euros ($3,556,097 as determined by an agreed upon exchange rate), of which 2,375,484 Euros ($3,092,881) was paid in cash and 355,773 Euros ($463,216) was paid in 57,408 shares of our common stock. In addition to the aggregate purchase price, certain stockholders of Theralys received an aggregate of 36,000 shares of our common stock at an average price of $8.06885 per share.

We have neither paid nor declared dividends on our common stock since our inception and do not plan to pay dividends on our common stock in the foreseeable future.

We have not entered into any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons.

We anticipate that our existing capital resources together with cash flow from operations will be sufficient to meet our foreseeable cash needs. However, we cannot assure you that our operating results will continue to achieve profitability on an annual basis in the future. The inherent operational risks associated with:

•  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

may have a material adverse affect on our future liquidity.

We may seek to raise additional capital from equity or debt sources in order to take advantage of unanticipated opportunities, such as more rapid expansion, acquisitions of complementary businesses or the development of new services. We cannot assure you that additional financing will be available, if at all, on terms acceptable to us.

Our fiscal year 2007 operating plan contains assumptions regarding revenue and expenses. The achievement of our operating plan depends heavily on the timing of work performed by us on existing projects and our ability to gain and perform work on new projects. Project cancellations or delays in the timing of work performed by us on existing projects or our inability to gain and perform work on new projects could have an adverse impact on our ability to execute our operating plan and maintain adequate cash flow. In the event actual results do not meet the operating plan, our management believes it could execute contingency plans to mitigate these effects. Considering the cash on hand and based on the achievement of the operating plan and management’s actions taken to date, management believes it has the ability to continue to generate sufficient cash to satisfy our operating requirements in the normal course of business for at least the next 12 months and the foreseeable future.

25

Recently Issued Accounting Statements

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact of its adoption on its consolidated financial statements.

In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 prescribes a “more likely than not” threshold for financial statement recognition and measurement of a tax position taken or expected to taken in a tax return. This interpretation also provides guidance on other topics related to accounting for income tax assets and liabilities, interest and penalties associated with tax positions and income taxes in interim periods as well as income tax disclosures. This interpretation is effective as of January 1, 2007. We are currently evaluating FIN 48 and the related impact on our financial position and results of operations.

Existing Contracts

As of December 31, 2006, we had entered into agreements with 79 companies, encompassing 179 projects, to provide services in the aggregate amount of $134.7 million through April 2013, of which services valued at $75.2 million remain to be completed. Such contracts are subject to termination by us or our clients at any time or for any reason. In addition, clients’ clinical trials or other projects are subject to timing and scope changes. Therefore, total service revenue generated by us during the life of these contracts may be less than initial contract values.

Item 7a.  Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We invest in high-quality financial instruments, primarily money market funds, federal agency notes, asset backed securities, corporate debt securities and United States treasury notes, with an effective duration of the portfolio of less than nine months and no security with an effective duration in excess of two years, which we believe are subject to limited credit risk. We currently do not hedge our interest rate exposure. Due to the short-term nature of our investments, we do not believe that we have any material exposure to interest rate risk arising from our investments.

Foreign Currency Risk

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Foreign Currency Risks” for a more detailed discussion of our foreign currency risks and exposures.

26

Item 8.   Financial Statements and Supplementary Data.

Index to Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm		28
Consolidated Balance Sheets as of December 31, 2006 and 2005		29
Consolidated Statements of Income for the year ended December 31, 2006, 2005 and 2004		30
Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2006, 2005 and 2004		31
Consolidated Statements of Cash Flows for the year ended December 31, 2006, 2005 and 2004		32
Notes to Consolidated Financial Statements		33

27

Report of Independent Registered Public Accounting Firm

To the Board of Directors

And Stockholders of

Bio-Imaging Technologies, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and comprehensive income, of shareholders’ equity and of cash flows, present fairly, in all material respects, the financial position of Bio-Imaging Technologies, Inc. and its subsidiaries at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 7 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based compensation in 2006.

/s/ PricewaterhouseCoopers LLP

March 29, 2007

28

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	16,166,264		$	10,553,668
Accounts receivable, net of allowance for doubtful accounts of $14,000 and $3,295, respectively		5,564,748			6,631,477
Prepaid expenses and other current assets		1,237,405			991,840
Deferred income taxes		2,210,800			715,217
Total current assets		25,179,217			18,892,202
Property and equipment, net		5,908,281			5,108,693
Intangibles and goodwill		2,227,438			2,518,812
Deferred income taxes		272,954			1,844,171
Other assets		519,821			427,055
Total Assets	$	34,107,711		$	28,790,933
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,720,481		$	1,680,922
Accrued expenses and other current liabilities		3,334,554			2,026,612
Deferred revenue		9,451,219			6,255,027
Current maturities of capital lease obligations		454,458			874,267
Total current liabilities		14,960,712			10,836,828
Long-term capital lease obligations		97,036			551,494
Other liability		208,208			205,787
Total liabilities		15,265,956			11,594,109
Commitments and Contingencies
Stockholders’ equity:
Preferred stock — $.00025 par value; authorized 3,000,000 shares, 0 issued and outstanding at December 31, 2006 and 2005		—			—
Common stock — $.00025 par value; authorized 18,000,000 shares, issued and outstanding 11,309,550 and 11,167,737 shares at December 31, 2006 and 2005, respectively		2,827			2,792
Additional paid-in capital		22,864,390			22,302,328
Accumulated deficit		(4,042,619	)		(5,046,718	)
Accumulated other comprehensive gain (loss)		17,157			(61,578	)
Stockholders’ equity		18,841,755			17,196,824
Total liabilities and stockholders’ equity	$	34,107,711		$	28,790,933

29

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	For the Year Ended December 31,
	2006			2005			2004
Service revenues	$	31,856,558		$	23,712,141		$	25,068,670
Reimbursement revenues		8,662,235			6,773,500			4,622,105
Total revenues		40,518,793			30,485,641			29,690,775
Cost and expenses:
Cost of revenues		28,156,579			25,087,575			20,451,633
General and administrative expenses		5,507,518			4,960,378			4,452,535
Sales and marketing expenses		5,739,303			4,772,223			3,182,125
Total cost and expenses		39,403,400			34,820,176			28,086,293
Income (loss) from operations		1,115,393			(4,334,535	)		1,604,482
Interest income		559,816			189,609			132,273
Interest expense		(56,338	)		(106,287	)		(129,409	)
Income (loss) before income tax		1,618,871			(4,251,213	)		1,607,346
Income tax provision (benefit)		614,772			(1,705,841	)		658,434
Net income (loss)	$	1,004,099		$	(2,545,372	)	$	948,912
Basic earnings (loss) per common share	$	0.09		$	(0.23	)	$	0.09
Weighted average number of common shares		11,219,283			11,114,483			10,812,185
Diluted earnings (loss) per common share	$	0.08		$	(0.23	)	$	0.08
Weighted average number of dilutive common equivalent shares		12,364,041			11,114,483			12,228,746

30

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

											Other
					Additional						Comprehensive
	Common Stock				Paid-In			Accumulated			Gain			Stockholders’
	Shares		Amount		Capital			Deficit			(Loss)			Equity
Balance at December 31, 2003		10,710,481	$	2,678	$	20,873,968		$	(3,450,258	)	$	—		$	17,426,388
Stock options exercised		140,986		35		129,625			—			—			129,660
Shares issued for acquisition		175,853		44		847,831			—			—			847,875
Tax benefit on exercise of stock options		—		—		164,807			—			—			164,807
Net income		—		—		—			948,912			—			948,912
Balance at December 31, 2004		11,027,320		2,757		22,016,231			(2,501,346	)		—			19,517,642
Stock options exercised		110,417		28		93,265			—			—			93,293
Restricted shares issued		30,000		7		42,245			—			—			42,252
Stock based compensation		—		—		70,587			—			—			70,587
Tax benefit on exercise of stock options		—		—		80,000			—			—			80,000
Unrealized loss on foreign currency options		—		—		—			—			(61,578	)		(61,578	)
Net loss		—		—		—			(2,545,372	)		—			(2,545,372	)
Balance at December 31, 2005		11,167,737		2,792		22,302,328			(5,046,718	)		(61,578	)		17,196,824
Stock options exercised		126,963		32		153,254			—			—			153,286
Restricted shares issued		14,850		3		(5,132	)		—			—			(5,129	)
Stock based compensation		—		—		362,510			—			—			362,510
Tax benefit on exercise of stock options		—		—		51,430			—			—			51,430
Unrealized gain on foreign currency options		—		—		—			—			78,735			78,735
Net income		—		—		—			1,004,099						1,004,099
Balance at December 31, 2006		11,309,550	$	2,827	$	22,864,390		$	(4,042,619	)	$	17,157		$	18,841,755

31

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2006			2005			2004
Cash flows from operating activities:
Net income (loss)	$	1,004,099		$	(2,545,372	)	$	948,912
Adjustments to reconcile net income (loss) to net cash provided by Operating activities, net of acquisition:
Depreciation and amortization		2,035,096			2,311,853			1,759,789
Provision (benefit) for deferred income taxes		24,203			(1,817,041	)		364,648
Sales leaseback deferred gains		—			16,518			34,018
Bad debt benefit (provision)		16,132			(10,872	)		(12,654	)
Non-cash stock based compensation expense		357,381			71,729			13,704
Loss on foreign currency options		81,513			29,100			—
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		1,050,597			1,337,131			(3,155,821	)
Increase in prepaid expenses and other current assets		(234,266	)		(91,796	)		(334,663	)
(Increase) decrease in other assets		(92,766	)		(108,835	)		82,034
(Decrease) increase in accounts payable		(271,290	)		411,067			284,857
Increase (decrease) in accrued expenses and other current liabilities		1,359,373			262,159			(297,372	)
Increase in deferred revenue		3,196,192			3,178,397			6,272
Increase in other liabilities		2,421			74,106			23,334
Net cash provided by (used in) operating activities		8,528,685			3,118,144			(282,942	)
Cash flows used in investing activities:
Purchases of property and equipment		(2,232,461	)		(1,870,978	)		(1,848,927	)
Net cash paid for acquisitions		—			—			(1,213,411	)
Net cash used in investing activities		(2,232,461	)		(1,870,978	)		(3,062,338	)
Cash flows from financing activities:
Payments under equipment lease obligations		(874,267	)		(825,778	)		(659,513	)
Payments under promissory note		—			—			(666,666	)
Premiums paid for foreign currency options		(14,077	)		(118,032	)		—
Proceeds from exercise of stock options		153,286			93,300			129,660
Excess tax benefit related to stock options		51,430			—			—
Proceeds from sales leaseback		—			506,872			902,486
Net cash used in financing activities		(683,628	)		(343,638	)		(294,033	)
Net increase (decrease) in cash and cash equivalents		5,612,596			903,528			(3,639,313	)
Cash and cash equivalents at beginning of period		10,553,668			9,650,140			13,289,453
Cash and cash equivalents at end of period	$	16,166,264		$	10,553,668		$	9,650,140
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	56,338		$	106,287		$	129,409
Cash paid during the period for income taxes	$	97,625		$	228,169		$	270,225
Supplemental schedule of noncash investing and financing activities:
Equipment purchases under capital lease obligations	$	—		$	622,531		$	902,486

32

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Organization and Summary of Significant Accounting Policies

Description of Business

Bio-Imaging Technologies, Inc. and Subsidiaries (“Bio-Imaging” or the “Company”) is a pharmaceutical contract services organization, operating in two business segments, the pharmaceutical services division and the CapMed division. The pharmaceutical services division provides services that support the product development process of the pharmaceutical, biotechnology and medical device industries. The Company specializes in assisting its clients in the design and management of the medical-imaging component of clinical trials for all modalities which consist of computerized tomography (“CT”), magnetic resonance imaging (“MRI”), x-rays, dual energy x-ray absorptiometry (“DEXA”), positron emission tomography (“PET”), single photon emission computerized tomography (“SPECT”), quantitative coronary angiography (“QCA”), cardiac MRI and CT, intravascular ultrasound (“IVUS”), peripheral quantitative angiography (“QVA”) and ultrasound. The Company provides services which include the processing and analysis of medical images and the data-basing and regulatory submission of medical images, quantitative data and text. The Company’s CapMed division includes the Personal Health Record (“PHR”) software and the patent-pending Personal HealthKey^tm technology. The PHR is a software application that enables users to manage and store personal health information, including their medical images, on the privacy of their desktop computer, while linking directly to sponsor-directed resources such as drug information, patient education, or disease guidelines. The Personal HealthKey^tm plugs into a computer’s USB port, allowing doctors and patients easy access to the patient’s medical record without the need for additional hardware or software, and it is password protected.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Oxford Bio-Imaging Research, Inc. and Bio-Imaging Technologies Holding B.V. All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying values of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued expenses approximate their fair values due to their short maturities. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of capital lease obligations approximate fair value.

Cash and Cash Equivalents

The Company maintains cash in excess of FDIC insurance limits in certain financial institutions. The Company considers cash equivalents to be highly liquid investments with a maturity at the time of purchase of three months or less.

The Company has a standby letter of credit which approximated $166,000 at December 31, 2006 and 2005. This letter of credit represents an irrevocable guarantee to fulfill the office facilities operating lease obligation.

33

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue Recognition

Service revenues are recognized over the contractual term of the Company’s customer contracts using the proportional performance method, which is based on hours incurred as a percentage of total estimated hours. Service revenues are first recognized when the Company has a signed contract from a customer which: (i) contains fixed or determinable fees; and (ii) collectability of such fees is reasonably assured. Any change to recognized service revenue as a result of revisions to estimated total hours are recognized in the period the estimate changes.

The Company enters into contracts that contain fixed or determinable fees. The fees in the contracts are based on the scope of work we are contracted to perform; there are unitized fees per service and fixed fees with a total estimated for the contract based upon the estimated unitized service expected to be performed, as well as the service to be delivered under the fixed fee component of the contract. The units are estimated based on the information provided by the customer, and the Company bills the customer for actual units completed in accordance with the terms of the contract. In the event that a contract is cancelled by the client, we would be entitled to receive payment for all services performed up to the cancellation date.

The Company’s revenue recognition policy entails a number of estimates including an estimate of the total hours that are expected to be incurred on a project, which is used as the basis for determining the portion of the Company’s revenue to be recognized for each period. The revenue recognized in any period might have been materially affected if different assumptions or conditions prevailed. The timing of the Company’s recognition of revenue would be revised if there were changes in the total estimated hours (other than scope changes in a project which typically result in a revision to the contract). The Company reviews its total estimated hours monthly. Provisions for losses expected to be incurred on contracts are recognized in full in the period in which it is determined that a loss will result from performance of the contractual arrangement.

The Company also incurs direct costs at the outset of a customer service arrangement prior to receiving a final signed contract. Accordingly, the Company defers these costs and delays the recording of any revenue until the contract is executed. If a customer does not execute the contract, the Company immediately expenses the deferred costs, offset by any deferred service revenue associated with these costs.

Unbilled services represent revenue recognized which pursuant to contractual terms have not yet been billed to the client. In general, amounts become billable pursuant to contractual milestones or in accordance with predetermined payment schedules. Unbilled services are generally billable within one year from the respective balance sheet date. Deferred revenue is recorded for cash received from clients for services that have not yet been earned at the respective balance sheet date.

34

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowance For Doubtful Accounts

The Company maintains allowances for doubtful accounts on a specific identification method for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of its customers were to deteriorate, resulting in an impairment of the customers ability to make payments, additional allowances may be required. The Company does not have any off-balance-sheet credit exposure related to its customers and the trade accounts receivable does not bear interest.

	December 31,
	2006			2005
Billed trade accounts receivable	$	4,781,682		$	5,030,642
Unbilled trade accounts receivable		771,818			1,600,155
Employee receivables		11,248			3,975
Total receivables	$	5,564,748		$	6,634,772
Allowance Rollforward:
Balance at January 1, 2005	$	14,167
Additions		10,155
Recoveries		(21,027	)
Balance at December 31, 2005		3,295
Additions		14,000
Recoveries		(3,295	)
Balance at December 31, 2006	$	14,000

Property and Equipment

Property and equipment is recorded at historical cost and depreciated over the estimated useful lives of the respective assets. Amortization of leasehold improvements is provided for over the lesser of the related lease term, or the useful lives of the related assets. The cost and related accumulated depreciation of assets fully depreciated, sold, retired or otherwise disposed of are removed from the respective accounts and any resulting gains or losses are included in the statements of income.

Management annually evaluates the net realizable value of long-lived assets, including property and equipment, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. If these factors indicate that the carrying value of a long lived asset exceeds the net realizable value, the Company will record an impairment and reduce the carrying value of the asset to the net realizable value.

Capitalized Software Development

The Company capitalizes development costs for a software project once the preliminary project stage is completed, management commits to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended. The Company ceases capitalization at such time as the computer software project is substantially complete and ready for its intended use. The determination that a software project is eligible for capitalization and the ongoing assessment of recoverability of capitalized software development costs require considerable judgment by management with respect to certain external factors including, but not limited to, anticipated future revenue, estimated economic life and changes in software and hardware technologies. The Company capitalized software development costs of $1,518,684 and $849,044 for the year ended December 31, 2006, and 2005 respectively. Amortization expense related to capitalized computer software costs

35

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

amounted to $357,281, $311,458, and $196,257 at December 31, 2006, 2005, and 2004 respectively. Capitalized software development costs are included as a component of property and equipment.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes,” which utilizes the liability method. Deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities at currently enacted tax laws and rates. A valuation allowance is provided against the carrying value of deferred tax assets when management believes it is more likely than not that the deferred tax assets will not be realized. The Company recognizes contingent liabilities for any tax related exposures when those exposures are both probable and estimable.

Foreign Currency Translation

The United States Dollar is the functional currency for the Company’s foreign subsidiaries.

Earnings Per Share

SFAS No. 128 “Earnings per Share” requires the presentation of basic earnings per share and diluted earnings per share. Basic earnings per common share are calculated by dividing the net income available to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per common share is calculated by dividing net income by the weighted average number of shares of Common Stock outstanding, adjusted for the effect of potentially dilutive securities using the treasury stock method.

The computation of basic earnings per common share and diluted earnings per common share is as follows:

	For the Year Ended December 31,
	2006		2005			2004
Net income (loss) — basic	$	1,004,099	$	(2,545,372	)	$	948,912
Interest expense on convertible note		—		—			27,336
Net income (loss) — diluted		1,004,099		(2,545,372	)		976,248
Denominator — basic:
Weighted average number of common shares		11,219,283		11,114,483			10,812,185
Basic earnings (loss) per common share	$	0.09	$	(0.23	)	$	0.09
Denominator — diluted:
Weighted average number of common shares		11,219,283		11,114,483			10,812,185
Common share equivalents of outstanding stock options		967,896		—			1,284,894
Common share equivalents of unrecognized compensation expense		176,862		—			—
Common share equivalents related to the convertible promissory note		—		—			131,667
Weighted average number of dilutive common equivalent shares		12,364,041		11,114,483			12,228,746
Diluted earnings (loss) per common share	$	0.08	$	(0.23	)	$	0.08

For the year ended December 31, 2005, options to purchase 1,360,358 shares of the Company’s Common Stock have been excluded from the calculation of diluted earnings per common share as they were antidilutive.

36

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Also, we excluded options to purchase 412,450 and 205,900 shares of our common stock for the twelve months ended December 31, 2006 and 2004, respectively, since they were out-of-the-money and antidilutive.

Derivatives

The Company uses derivative financial instruments to reduce the risk caused by interest rate fluctuations. The derivative instruments are not held for trading purposes. Derivatives are accounted for in accordance with FAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The Company recognizes derivative instruments as either assets or liabilities in the balance sheet and measures them at fair value. If designated as a cash flow hedge, the corresponding changes in fair value are recorded in stockholders equity (as a component of comprehensive income/expense).

Recently Issued Accounting Statements

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.” This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of its adoption on its consolidated financial statements.

In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 prescribes a “more likely than not” threshold for financial statement recognition and measurement of a tax position taken or expected to taken in a tax return. This interpretation also provides guidance on other topics related to accounting for income tax assets and liabilities, interest and penalties associated with tax positions and income taxes in interim periods as well as income tax disclosures. This interpretation is effective as of January 1, 2007. The Company is currently evaluating FIN 48 and the related impact on its financial position and results of operations.

2.   Acquisitions

On December 10, 2004, the Company acquired 100% of the stock of Heart Core B.V. (“Heart Core”), a privately held company located in Leiden, the Netherlands. Heart Core provides centralized imaging analysis services in the field of cardiovascular, pulmonary and orthopedic clinical research. In connection with the Heart Core acquisition, the Company paid total consideration of $2,258,025, consisting of $1,410,150 and 175,853 shares of the Company’s common stock. $1,269,135 and 158,268 shares of common stock were issued directly to the sellers, and $141,015 and 17,585 shares of common stock were issued to an escrow agent pursuant to the terms of the acquisition. The escrow is being held as security for the payment of any unknown claims and will be released in December 2007. The Company also incurred acquisition costs of $275,319.

The following unaudited consolidated pro forma information has been prepared assuming Heart Core was acquired as of January 1, 2004, with pro forma adjustments for interest expense and income taxes. The pro forma information is presented for informational purposes only and is not indicative of what would have occurred if the Heart Core acquisition had been made on January 1, 2004.

	2004
Total revenue	$	30,715,877
Net income	$	1,051,519
Basic earnings per share	$	0.10
Diluted earnings per share	$	0.09

37

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.   Property and Equipment

Property and equipment, at cost, consists of the following:

	December 31,						Estimated
	2006			2005			Useful Life
Equipment	$	5,412,801		$	4,772,557			5 years
Equipment under capital leases		4,332,486			4,332,486			5 years
Furniture and fixtures		744,501			710,434			7 years
Leasehold improvements		708,826			557,939			5 years
Computer software costs		4,317,828			2,600,954			5 years
		15,516,442			12,974,370
Less: Accumulated depreciation and amortization		(9,608,161	)		(7,865,677	)
Property and equipment, net	$	5,908,281		$	5,108,693

Accumulated depreciation related to equipment acquired under capital leases amounted to $3,056,588, $2,389,076, and $1,677,758 at December 31, 2006, 2005 and 2004, respectively. Accumulated amortization related to capitalized computer software costs amounted to $904,984, $547,704, and $236,246 at December 31, 2006, 2005 and 2004, respectively. Depreciation expense for the year ended December 31, 2006, 2005 and 2004 were $1,742,484, $1,963,242, and $1,552,000, respectively.

4.   Intangible Assets

Included in other assets, the following is the acquired intangible assets:

	December 31,						Estimated
	2006			2005			Useful Life
Amortized intangible assets:
Technology	$	406,502		$	406,502			5 years
Trademarks		372,130			372,130			5 years
Customer backlog		165,900			165,900			3 years
Non-competition agreement		175,190			175,190			3 years
Non-competition agreement		76,953			76,953			2 years
		1,196,675			1,196,675
Accumulated amortization		(842,943	)		(550,330	)
	$	353,732		$	646,345
Unamortized intangible assets:
Goodwill	$	1,872,467		$	1,872,467

The Company has evaluated the goodwill and has determined that there is no impairment of the values at December 31, 2006. Amortization expense for the year ended December 31, 2006, 2005 and 2004 were $292,612, $332,343 and $201,802, respectively.

38

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future amortization of the intangible assets is as follows:

	Year Ending
	December 31,
	2006
2007	$	210,983
2008		142,749
2009		—
2010		—
2011		—
Thereafter		—
	$	353,732

5.   Accrued Expenses

Accrued expenses and other current liabilities at December 31, 2006 and 2005 consist of the following:

	December 31,
	2006		2005
Accrued compensation	$	1,825,330	$	1,538,192
Accrued consulting fees		75,932		63,025
Accrued income taxes		435,576		125,214
Accrued other		997,716		300,181
	$	3,334,554	$	2,026,612

6.   Capital Lease Obligations

Capital lease obligations consist of equipment lease obligations at December 31, 2006 and 2005. The equipment lease obligations are payable in monthly installments ranging from $400 to $15,614 for 2006 and from $400 to $24,957 for 2005. I Interest rates range from 5.35% to 7.50%, through August 2008, and are collateralized by the related equipment.

On May 17, 2005, the Company renewed and amended its agreement with Wachovia Bank, National Association. The renewed and amended agreement is for an unsecured committed line of credit of $5,000,000. Interest is payable at the LIBOR Market Index Rate plus 2.0%. The agreement requires the Company, among other things, to maintain certain financial covenants. The committed line of credit matured June 30, 2006 and the Company decided not to renew the credit line.

In June 2004, the Company entered into a $339,567 sale-leaseback transaction whereby the Company sold and leased back computer equipment and furniture. The resulting lease is being accounted for as a capital lease. There was no gain or loss recorded on the sale. The lease term is 3 years with an interest rate of 5.35%.

In September 2004, the Company entered into a $332,536 sale-leaseback transaction whereby the Company sold and leased back computer equipment and furniture. The resulting lease is being accounted for as a capital lease. There was a gain recorded on the sale in the amount of $20,964 which is being deferred over the life of the lease. The lease term is for 3 years with an interest rate of 5.87%.

In December 2004, the Company entered into a $230,384 sale-leaseback transaction whereby the Company sold and leased back computer equipment and furniture. The resulting lease is being accounted for as a capital lease. There was a gain recorded on the sale in the amount of $13,054 which is being deferred over the life of the lease. The lease term is for 3 years with an interest rate of 6.44%.

39

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In May 2005, the Company entered into a $506,872 sale-leaseback transaction whereby the Company sold and leased back computer equipment, software, and furniture. The resulting lease is being accounted for as a capital lease. There was a gain recorded on the sale in the amount of $16,518 which is being deferred over the life of the lease. The lease term is for 3 years with an interest rate of 6.10%

In August 2005, the Company entered into a $115,659 transaction whereby the Company leased media equipment. The resulting lease is being accounted for as a capital lease. The lease term is for 3 years with an interest rate of 7.50%

The following is a schedule, by year, of the future minimum payments under capital leases, together with the present value of the net minimum payments as of December 31, 2006:

2007	$	454,458
2008		97,036
2009		—
2010		—
2011 and thereafter		—
Total minimum capital lease payments		551,494
Less amount representing interest		(21,596	)
Total present value of minimum payment		529,898
Less current portion of such obligations		(435,213	)
Long-term capital lease obligations		94,685

7.   Stock Based Compensation

Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (“SFAS 123R”), which establishes the financial accounting and reporting standards for stock-based compensation plans. SFAS 123R requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors. The stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense on a straight-line basis over the requisite service period of the entire award. This period is generally the vesting period of the corresponding award. We have adopted the forfeiture rate on stock option grants issued after January 1, 2006 and the application of the forfeiture rate on unvested stock options at January 1, 2006 was immaterial to our financial statement and therefore, no cumulative gain was recognized.

At December 31, 2006, the Company has one stock-based employee compensation plan. The compensation cost that has been recorded to income under the plan for the year ended December 31, 2006 was $357,381, of which $167,079 is a result of the expensing of stock options pursuant to FAS 123R.

On November 9, 2005, the Compensation Committee of the Board of Directors of the Company recommended, and the Company’s Board of Directors approved, the acceleration of vesting of all out-of-the-money unvested options to purchase shares of common stock of the Company with an exercise price greater than $7.00 held by current employees and executive officers of the Company (but excluding any options granted to members of the Company’s Board of Directors). These options were previously awarded to employees of the Company on February 4, 2004, pursuant to the 2002 Stock Incentive Plan, and would still have been unvested at January 1, 2006. Options to purchase 107,691 shares of common stock were subject to this acceleration. The exercise price per share for these options was $7.03, while the closing price per share on November 9, 2005 was $2.20.

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BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the options subject to acceleration:

	Aggregate Number of
	Shares Issuable
	Under Accelerated		Exercise Price
	Options		per Share		Date of Grant
Employees as a group (other than executive officers)		69,722	$	7.03		February 4, 2004
Executive officers as a group		37,969	$	7.03		February 4, 2004

The acceleration of vesting of these out-of-the money options is being undertaken primarily to eliminate any future compensation expense the Company would otherwise recognize in its income statement with respect to these options with the implementation of the Financial Accounting Standard Board (FASB) statement “Share-Based Payment” (FAS 123R) effective for the Company on January 1, 2006. We estimate this compensation expense, before tax, would be approximately $402,763 in aggregate future expenses based on calculations using the Black-Scholes methodology.

Prior to January 1, 2006, we accounted for our stock-based employee compensation plan under the recognition and measurement principles of APB Opinion No. 25. No stock based employee compensation cost was reflected in net income, as all options granted under this plan had an exercise price equal to or greater than the fair market value of the underlying common stock on the date of grant. The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2005 and 2004 and illustrates the effect on net loss and loss per share as if we had applied the fair value recognition provisions of SFAS 123R to its stock plans:

	For the Year Ended December 31,
	2005			2004
Net (loss) income, as reported	$	(2,545,372	)	$	948,912
Add: Stock-based employee compensation expense included in reported net (loss) income, net of related tax effects		689			8,222
Deduct: Stock-based employee compensation expense determined under SFAS 123R, net of related tax effects		(421,407	)		(744,091	)
Pro forma	$	(2,966,090	)	$	213,043
(Loss) Earnings per share:
Basic — as reported	$	(0.23	)	$	0.09
Basic — pro forma	$	(0.27	)	$	0.02
Diluted — as reported	$	(0.23	)	$	0.08
Diluted — pro forma	$	(0.27	)	$	0.02

The following table presents the total stock-based compensation expense resulting from stock options and restricted stock unit awards:

	For the Year Ended
	December 31,
	2006
Cost of revenues	$	255,374
General and administrative		49,952
Sales and marketing		52,055
Stock-based compensation expense before income taxes	$	357,381

41

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2006			2005			2004
Risk-free interest rate (range)		4.61 - 4.94	%		3.85	%		3.50	%
Dividend yield		0.00	%		0.00	%		0.00	%
Expected volatility		58.00	%		56.00	%		67.00	%
Expected term (in years)		4.00			4.00			4.00

Expected Volatility.  Expected volatility is calculated on a weekly basis over the expected term of the option using the company’s common stock close price.

Expected Term.  The expected term is based on historical observations of employee exercise patterns during our history.

Risk-Free Interest Rate.  The interest rate used in valuing awards is based on the yield at the time of grant of a U.S. Treasury security with an equivalent remaining term.

Dividend Yield.  The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

Pre-Vesting Forfeitures.  Estimates of pre-vesting option forfeitures are based on our experience. We used a 10% forfeiture rate assumption. We will adjust our estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. The cumulative effect resulting from initially applying the provisions of SFAS 123R to nonvested equity awards was not significant.

Stock Options

Fiscal Year 2006:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
Stock Options	Shares		Price		Term		Value
Outstanding at December 31, 2005		1,831,308	$	2.34		5.33	$	1,629,864
Granted		198,100	$	4.00		7.14	$	792,886
Exercised		126,963	$	1.21		—	$	870,036
Forfeited or Expired		31,783	$	1.83		—	$	197,950
Outstanding at December 31, 2006		1,870,662	$	2.61		4.78	$	10,192,916
Unvested at December 31, 2006		180,300	$	4.05		6.13	$	723,468
Exercisable at December 31, 2006		1,690,362	$	2.46		4.55	$	9,469,448

The weighted-average grant date fair value of options granted for the years ended December 31, 2006, 2005 and 2004 was $4.06, $1.06 and $3.40, respectively. Cash received from option exercises for the years ended 2006, 2005 and 2004 was $153,285, $93,300, and $129,636, respectively.

As of December 31, 2006, there was $201,597 of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a period of 4.17 years.

In the first quarter of 2002, the Company’s Board of Directors and stockholders approved the adoption of the 2002 Bio-Imaging Technologies, Inc. Stock Option Plan and authorized the issuance of 950,000 shares of the Company’s Common Stock under the plan. In May 2005, the Company’s Board of Directors and stockholders

42

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approved an amendment to the 2002 Bio-Imaging Technologies, Inc. Stock Option Plan and authorized the issuance of an additional 750,000 shares of the Company’s Common Stock under the plan.

Each option is exercisable into one share of Common Stock. Options granted pursuant to the plan may be qualified incentive stock options, as defined in the Internal Revenue Code, or nonqualified options. The exercise price of qualified incentive stock options may not be less than the fair market value of the Company’s Common Stock at the date of grant. The term of such stock options granted under the plan shall not exceed ten years and the vesting schedule of such stock option grants varies from immediate vesting on date of grant to vesting over a period of up to five years.

The following table summarizes the transactions pursuant to the Company’s stock option plan for the year ended December 31, 2006.:

				Weighted Average
	Number of Shares			Option Grant Date
	Underlying Options			Fair Value
Non-vested at December 31, 2005		77,750			2.83
Granted		198,100			3.53
Vested		(95,550	)		3.04
Non-vested at December 31, 2006		180,300			3.49

1,690,362, 1,753,558 and 1,613,000 options are exercisable at December 31, 2006, 2005 and 2004, respectively, at a weighted average exercise price of $2.46, $2.30 and $1.51, respectively.

The intrinsic value of stock options exercised for the years ended December 31, 2006, 2005 and 2004 respectively, were $470,731, $242,476 and $708,176.

At December 31, 2006, by range of exercise prices, the number of shares represented by outstanding options with their weighted average exercise price and weighted average remaining contractual life, in years, and the number of shares represented by exercisable options with their weighted average exercise price are as follows:

Options Outstanding							Options Exercisable
				Weighted					Weighted
				Average	Weighted				Average	Weighted
				Remaining	Average				Remaining	Average
Range of Exercise		Number		Contractual	Exercise		Number		Contractual	Exercise
Prices		Outstanding		Life	Price		Exercisable		Life	Price
$	0.63-$0.88		629,687	2.77 years	$	0.70		629,687	2.77 years	$	0.70
$	1.00-$1.16		204,000	4.95 years	$	1.11		204,000	4.95 years	$	1.11
$	1.25-$1.31		188,000	1.72 years	$	1.26		188,000	1.72 years	$	1.26
$	1.85-$2.80		86,375	6.10 years	$	2.80		86,375	6.10 years	$	2.80
$	3.05-$5.10		571,800	6.96 years	$	4.19		391,500	6.96 years	$	4.26
$	7.03		190,800	7.12 years	$	7.03		190,800	7.12 years	$	7.03
$	0.63-$7.03		1,870,662	4.78 years	$	2.61		1,690,362	4.55 years	$	2.46

Restricted Stock Units:  On March 1, 2006, we entered into an employment agreement with our President and Chief Executive Officer that expires on February 28, 2009. This agreement amended and restated the prior agreement that originally expired January 31, 2007 and extended the term of service through February 28, 2009. Pursuant to this employment agreement our President and Chief Executive Officer can potentially receive up to 25,000 restricted shares of the company’s common stock for fiscal 2006. Based on management’s assumptions, we recognized the related proportionate expense of $201,500 for 25,000 shares of these restricted stock units for fiscal 2006 based on a fair value of $8.06 at December 31, 2006. These restricted shares are service and performance-based and the value is determined by its fair value (as if underlying shares were vested and issued).

43

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8.   Equity

On December 10, 2004, the Company acquired 100% of the stock of Heart Core.

In connection with the Heart Core acquisition, the Company issued 158,268 shares of common stock directly to the sellers and 17,585 shares of common stock were issued to an escrow agent pursuant to the terms of the acquisition. The market value of the Company’s common stock was $4.82 at the time of issuance.

9.   Commitments

The Company has entered into non-cancelable operating leases for office facilities which expire through June 2010.

Future minimum aggregate rental payments on the noncancelable portion of the lease are as follows:

	Year Ending
	December 31,
	2006
2007	$	1,425,462
2008		1,293,717
2009		1,207,381
2010		612,080
2011		—
Thereafter		—
	$	4,538,640

Rent expense charged to operations for the year ended December 31, 2006, 2005 and 2004 was $1,649,766, $1,590,759 and $1,364,000, respectively.

On March 1, 2006, the Company entered into an employment agreement with its President and Chief Executive Officer that expires on February 28, 2009. This agreement amended and restated the prior agreement that originally expired January 31, 2007. In addition, the Company has an employment agreement with its Chief Financial Officer that expires February 5, 2008. The aggregate amount due from January 1, 2006 through the expiration under these agreements was $1,176,317. At December 31, 2006, the Company has recorded compensation of $201,500, which we believe will be paid in stock, to its President and Chief Executive Officer pursuant to his employment agreement.

10.   Employee Benefit Plan

The Company sponsors the Bio-Imaging Technologies, Inc. Employees’ Savings Plan (the “401(k) Plan”), a defined contribution plan with a cash or deferred arrangement. Under the terms of the 401(k) Plan, eligible employees may elect to reduce their annual compensation up to the annual limit prescribed by the Internal Revenue Service. The Company may make discretionary matching contributions in cash, subject to plan limits. The Company made contributions of $54,450, $43,062 and $40,942 for the year ended December 31, 2006, 2005 and 2004, respectively.

11.   Major Customers

During fiscal 2006, Novartis Pharmaceutical, Inc., encompassing 14 projects represented 10.9% of our service revenues for the year ended December 31, 2006, while for the comparable period last year, no one client accounted for 10% or more of our service revenues for the year ended December 31, 2005. No other customers accounted for more than 10% of service revenues in fiscal year 2006.

44

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

No customer accounted for more than 10% of accounts receivable at December 31, 2006 and one customer accounted for 12% of accounts receivable at December 31, 2005. No other customers accounted for more than 10% of accounts receivable.

12.   Income Taxes

The income tax provision (benefit) consists of the following:

	For the Year Ended December 31,
	2006			2005			2004
Current:
Federal	$	121,411		$	50,414		$	18,451
State and local		207,228			9,862			135,937
Foreign		210,500			50,924			139,398
	$	539,139		$	111,200		$	293,786
Deferred:
Federal		268,717			(1,373,792	)		344,082
State and local		(129,084	)		(443,249	)		20,566
Foreign		(64,000	)		—			—
		75,633			(1,817,041	)		364,648
Income tax provision (benefit)	$	614,772		$	(1,705,841	)	$	658,434

The Company’s reconciliation of the expected federal provision (benefit) rate to the effective income tax rate is as follows:

	For the Year Ended
	December 31,
	2006			2005
Tax provision at statutory rate		34.0	%		(34.0	)%
State and local income taxes, net of federal benefit		4.4	%		(6.9	)%
Permanent differences		1.6	%		0.4	%
Foreign rate difference		(1.1	)%		(0.3	)%
Other		(1.6	)%		0.7	%
Effective income tax rate		37.3	%		(40.1	)%

The Company’s domestic and foreign income (loss) before income tax is as follows:

	For the Year Ended December 31,
	2006		2005
Domestic income (loss) before income tax	$	1,187,448	$	(4,651,156	)
Foreign income before income tax		431,423		399,943
Total income (loss) before income tax		1,618,871		(4,251,213	)

45

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net deferred tax assets consist of the following:

	For the Year Ended December 31,
	2006			2005
Deferred tax assets:
Accrued expenses	$	28,936		$	29,318
Allowance for doubtful accounts		—			1,338
AMT credit		145,376			12,847
Deferred revenue		2,381,677			998,905
Federal net operating loss carryforwards		943,760			2,761,007
Restricted stock		81,796			16,686
Stock Options		67,823			—
Total deferred tax assets		3,649,368			3,820,101
Deferred tax liabilities:
Excess of tax over book depreciation		(323,025	)		(514,096	)
Amortization of acquisition costs		(85,159	)		(7,586	)
Prepaid expenses		(349,430	)		(331,030	)
Total deferred tax liabilities		(757,614	)		(852,712	)
Valuation allowance		(408,000	)		(408,000	)
Net deferred tax assets	$	2,483,754		$	2,559,389

The Company records a valuation allowance to reduce its deferred tax assets to an amount that is more likely than not to be realized. In assessing the need for the valuation allowance, the Company considers future taxable income and on-going prudent and feasible tax planning strategies. In the event that the Company was to determine that, in the future, they would be able to realize the deferred tax assets in excess of its net recorded amount, an adjustment to the deferred tax asset would be made, thereby increasing net income in the period such determination was made. Likewise, should the Company determine that it is more likely than not that it will be unable to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged, thereby decreasing net income in the period such determination was made.

The Company has accumulated tax losses, which include allowable deductions related to exercised employee stock options, generating federal and state net operating loss (NOL) credit carryforwards of $2.8 million as of December 31, 2006 and $7.4 million as of December 31, 2005. These losses will expire, if unused, in the years 2009 through 2022. Under limitations imposed by Internal Revenue Code Section 382, certain potential changes in ownership of the Company, which may be outside the Company’s knowledge or control, may restrict future utilization of these carryforwards. Due to such ownership changes that have occurred in prior years, the Company has estimated that $1.1 million of the current federal net operating loss will likely expire unused due to Internal Revenue Code Section 382 limitations. The current and long-term deferred tax assets are comprised of the NOL carryforwards with a tax effected value of $1.1 as of December 31, 2006. Generally accepted accounting principles require that the Company establish a valuation allowance for any portion of its deferred tax assets for which management believes it is more likely than not the Company will be unable to utilize the asset to offset future taxes. The Company will continue to evaluate the potential use of its deferred tax assets and the need for a valuation allowance by considering future taxable income and on-going prudent and feasible tax planning strategies. Subsequent revisions to the estimated realizable value of the deferred tax assets could cause the provision for income taxes to vary significantly from period to period, although the cash tax payments would remain unaffected until the NOL credit carryforward is fully utilized or has expired. At December 31, 2006, management has

46

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

determined that there is sufficient future taxable income to more likely than not utilize the unlimited net operating loss carryforward at December 31, 2006.

The Company recognizes contingent liabilities for any tax related exposures when those exposures are both probable and estimable.

The tax benefit of the stock option deductions have been recorded to additional paid in capital in the amount of $51,430 and $80,000 for the year ended December 31, 2006 and 2005, respectively.

The Company has not provided for U.S. federal income and foreign withholding taxes on approximately $1.4 million of undistributed earnings from its non-U.S. operations as of December 31, 2006 because such earnings are intended to be reinvested indefinitely outside of the United States.

The Company, in the normal course of conducting business, maintains certain tax positions that may be subject to review by the Internal Revenue Service. The Company has not recorded any contingent liabilities for these tax exposures at December 31, 2006 and 2005, since they are not believed to be probable of occurring.

13.   Derivatives

All derivatives are recognized in our Consolidated Statement of Operations and in other comprehensive income on the Balance Sheet at fair value and are reported in prepaid expenses and other current assets on the Balance Sheet. To qualify for hedge accounting in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” (SFAS No. 133), we require that the instruments are effective in reducing the risk exposure that they are designated to hedge. For instruments that are associated with the hedge of cash flows, hedge effectiveness criteria also require that it be probable that the underlying transaction will occur. Instruments that meet established accounting criteria are formally designated as hedges at the inception of the contract. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in fair value or cash flows of the underlying exposure both at inception of the hedging relationship and on an ongoing basis. The assessment for effectiveness is formally documented at hedge inception and reviewed at least quarterly throughout the designated hedge period.

In accordance with our current foreign exchange rate risk management policy, since inception, we have purchased twenty monthly Euro call options. Nineteen monthly call options are in the amount of 250,000 Euros each and one call option is for 200,000 Euros for anticipated additional costs in May, 2006. The first expiration was on July 27, 2005 and the last expiration is in March 2007 with a strike price ranging from $1.26 to $1.27. These options are to hedge against the exposure to variability in our cash flows due to the Euro denominated costs for our Netherlands subsidiary. We paid a total premium of $132,109 for the options and at December 31, 2006 have recorded an Accumulated Other Comprehensive Gain of $17,157 in the stockholders’ equity section of the Balance Sheet due to changes in the value of this derivative.

During the twelve months ended December 31, 2006, we exercised seven of the thirteen options. A loss of $10,784 was recognized in the Consolidated Statement of Operations on the exercised options during fiscal 2006. During the twelve months ended December 31, 2005, no options were exercised.

Upon expiration or ineffectiveness of the derivative, we will record a gain or loss from the derivative that is deferred in stockholders’ equity to cost of revenues and general and administrative expenses in the Consolidated Statement of Operations based on the nature of the underlying cash flow hedged.

14.   Foreign Operations

Foreign customers accounted for 28% and 24% of service revenues for the year ended December 31, 2006 and 2005, respectively.

47

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15.   Business Segments

FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information,” requires companies to provide certain information about their operating segments. In November 2003, the Company acquired the intellectual property of CapMed Corporation. Accordingly, the Company now has two reportable segments: pharmaceutical contract services and the CapMed division. The pharmaceutical contract service segment provides services that support the product development process of the pharmaceutical, biotechnology and medical device industries. The CapMed segment offers a software application that enables users to manage and store personal health information, including their medical images, on the privacy of their desktop computer, while linking directly to sponsor-directed resources such as drug information, patient education, or disease guidelines. The operating segments are managed separately because each offers different services and applications to different markets. Management evaluates the performance of each segment based upon operating earnings or losses before interest and income taxes.

Summarized financial information concerning the Company’s reportable segments is shown in the following table:

	Pharmaceutical			CapMed			Consolidated
	Contract Services			Division			Total
Fiscal 2006
Total revenues		40,256,454			262,339			40,518,793
Total cost and expenses		37,586,497			1,816,903			39,403,400
Income (loss) from operations		2,669,957			(1,554,564	)		1,115,393
Total assets at December 31, 2006		32,418,588			1,689,123			34,107,711
Fiscal 2005
Total revenues	$	30,125,893		$	359,748		$	30,485,641
Total cost and expenses	$	33,352,578		$	1,467,598		$	34,820,176
Loss from operations	$	(3,226,685	)	$	(1,107,850	)	$	(4,334,535	)
Total assets at December 31, 2005	$	27,605,712		$	1,185,221		$	28,790,933
Fiscal 2004
Total revenues	$	29,579,645		$	111,130		$	29,690,775
Total cost and expenses	$	27,145,793		$	940,500		$	28,086,293
Income (loss) from operations	$	2,433,852		$	(829,370	)	$	1,604,482
Total assets at December 31, 2004	$	27,377,774		$	996,040		$	28,373,814

The Company maintains offices in Newtown, Pennsylvania and Leiden, the Netherlands. Total assets located in Newtown, Pennsylvania were $31,059,973 and $27,643,632 at December 31, 2006 and 2005, respectively. Net fixed assets located in Leiden, the Netherlands were $1,358,615 and $725,716 at December 31, 2006 and 2005, respectively.

48

BIO-IMAGING TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16.   Related Party Transactions

At December 31, 2006, Covance, Inc. owned 20.8% of the Company’s outstanding Common Shares. The Company and Covance, Inc. have entered into various services agreements, for Covance’s clients that sponsor clinical trials, in the ordinary course of business. The Company’s service revenues include $820,955, $307,016 and $804,509 for the year ended December 31, 2006, 2005 and 2004, respectively. At December 31, 2006 and 2005, the amounts due from Covance, Inc. were $212,323 and $97,834, respectively.

17.   Subsequent Event

On February 6, 2007, the Company acquired 100% of the outstanding securities of Theralys, SA (“Theralys”), a privately held company headquartered in Lyon, France. The aggregate purchase price was 2,731,257 Euros ($3,556,097 as determined by an agreed upon exchange rate), of which 2,375,484 Euros ($3,092,881) was paid in cash and 355,773 Euros ($463,216) was paid in 57,408 shares of the Company’s common stock, $0.00025 par value per share (the “Common Stock”). In addition to the aggregate purchase price, certain stockholders of Theralys received an aggregate of 36,000 shares of Common Stock at an average price of $8.06885 per share.

49

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.   Controls and Procedures.

Evaluation of disclosure controls and procedures.  Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act, as amended, or the Exchange Act) as of a date within 90 days of the filing date of this Annual Report on Form 10-K, our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are operating in an effective manner for the period covered by this report.

Changes in internal controls.  There were no changes in our internal controls over financial reporting in the fourth quarter of 2006 that has materially affect, or are reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B.   Other Information.

None.

PART III

Item 10.   Directors, Executive Officers and Corporate Governance.

The information relating to our directors, nominees for election as directors and executive officers under the headings “Election of Directors” and “Executive Officers” in our definitive proxy statement for the 2007 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.

We have adopted a written code of business conduct and ethics that applies to our principal executive officer and principal financial and accounting officer, or persons performing similar functions. We intend to disclose any amendments to, or waivers from, our code of business conduct and ethics that are required to be publicly disclosed pursuant to rules of the SEC and the NASDAQ Global Market by filing such amendment or waiver with the SEC.

Item 11.   Executive Compensation.

The discussion under the heading “Executive Compensation” in our definitive proxy statement for the 2007 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.

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

The discussion under the heading “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for the 2007 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.

Item 13.   Certain Relationships and Related Transactions, and Director Independence.

The discussion under the headings “Certain Relationships and Related Transactions” and “Election of Directors” in our definitive proxy statement for the 2007 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.

50

Item 14.   Principal Accounting Fees and Services.

The discussion under the heading “Independent Registered Public Accounting Firm Fees and Other Matters” in our definitive proxy statement for the 2007 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.

Item 15.   Exhibits, Financial Statement Schedules.

(a)(1) Financial Statements.  The financial statements filed as part of this report are listed on the Index to the Consolidated Financial Statements.

(a)(2) Financial Statement Schedules.  Schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

(a)(3) Exhibits.  Reference is made to the Exhibit Index on page 53. The exhibits are included, or incorporated by reference, in the Annual Report on Form 10-K and are numbered in accordance with Item 601 of Regulation S-K.

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 29th day of March, 2007.

BIO-IMAGING TECHNOLOGIES, INC.

By:  /s/  Mark L. Weinstein

Mark L. Weinstein, President and Chief

Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Mark L. Weinstein Mark L. Weinstein	President and Chief Executive Officer and Director (principal executive officer)	March 29th, 2007
/s/  Ted I. Kaminer Ted I. Kaminer	Senior Vice President and Chief Financial Officer (principal financial and accounting officer)	March 29th, 2007
/s/  Jeffrey H. Berg, Ph.D. Jeffrey H. Berg, Ph.D.	Director	March 29th, 2007
/s/  Richard F. Cimino Richard F. Cimino	Director	March 29th, 2007
/s/  E. Martin Davidoff, Esq., CPA E. Martin Davidoff, Esq., CPA	Director	March 29th, 2007
/s/  David E. Nowicki, D.M.D. David E. Nowicki, D.M.D.	Chairman of the Board and Director	March 29th, 2007
/s/  David Stack David Stack	Director	March 29th, 2007
/s/  James A. Taylor, Ph.D. James A. Taylor, Ph.D.	Director	March 29th, 2007
/s/  Paula B. Stafford Paula B. Stafford	Director	March 29th, 2007

52

EXHIBIT INDEX

Exhibit
No.			Description of Exhibit
	2	.1	Asset Purchase Agreement dated October 25, 2001, by and between Bio-Imaging Technologies, Inc. and Quintiles, Inc. Incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K dated October 25, 2001.
	3	.1	Restated Certificate of Incorporation of Bio-Imaging Technologies, Inc. Incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 (File Number 33-47471), which became effective on June 18, 1992. Amendments incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-K for the year ended September 30, 1993 and to Exhibit 3.1 of our Quarterly Report on Form 10-QSB for the quarter ended March 31, 1995.
	3	.2	Amended and Restated By-Laws of Bio-Imaging Technologies, Inc. Incorporated by reference to Exhibit 3.1 of our Quarterly Report on Form 10-QSB for the quarter ended June 30, 2001.
	4	.1	Specimen Common Stock Certificate. Incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-1 (File Number 33-47471), which became effective on June 18, 1992.
	4	.2	Registration Agreement dated October 13, 1994, between Bio-Imaging Technologies, Inc. and Corning Pharmaceuticals Services Inc., now Covance Inc. Incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K dated October 13, 1994.
	4	.3	Registration Rights Agreement dated as of October 25, 2001, by and between Bio-Imaging Technologies, Inc. and Quintiles, Inc. Incorporated by reference to Exhibit 2 of our Current Report on Form 8-K/A dated October 25, 2001.
	10	.1*	2002 Stock Incentive Plan, adopted by the stockholders of Bio-Imaging Technologies, Inc. on February 27, 2002, as amended and restated on April 14, 2005. Incorporated by reference to Exhibit 99.1 of our Registration Statement on Form S-8 dated December 21, 2006.
	10	.2*	401(k) Plan. Incorporated by reference to Exhibit 10.7 of our Registration Statement on Form S-1 (File Number 33-47471), which became effective on June 18, 1992.
	10	.3	Form of Employee’s Invention Assignment, Confidential Information and Non-Competition Agreement. Incorporated by reference to Exhibit 10.9 of our Annual Report on Form 10-K for the fiscal year ended September 30, 1992.
	10	.4	Stock Purchase Agreement dated October 13, 1994, between Bio-Imaging Technologies, Inc. and Covance Inc. Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K dated October 13, 1994.
	10	.5*	Invention Assignment and Confidential Information Agreement dated January 20, 2000, by and between Bio-Imaging Technologies, Inc. and Mark L. Weinstein. Incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-QSB for the quarter ended December 31, 1999.
	10	.6	Amended and Restated Employment Agreement dated March 1, 2006, by and between Bio-Imaging Technologies, Inc. and Mark L. Weinstein. Incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
	10	.7	First Modification of Office Space Lease between 826 Newtown Associates, LP and Bio-Imaging Technologies, Inc. dated January 11, 2002. Incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002.
	10	.8	Office Space Lease dated September 22, 1999, between Yardley Road Associates, L.P. and Bio-Imaging Technologies, Inc. Incorporated by reference to Exhibit 10.9 of our Annual Report on Form 10-KSB for the fiscal year ended September 30, 1999.
	10	.9	Office Space Lease dated September 11, 2000, between Angelo Investment Company and Bio-Imaging Technologies, Inc. Incorporated by reference to Exhibit 10.11 of our Annual Report on Form 10-KSB for the fiscal year ended September 30, 2000.
	10	.10*	Employment Agreement dated February 6, 2003, by and between Bio-Imaging Technologies, Inc. and Ted I. Kaminer. Incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-QSB/A for the quarter ended March 31, 2003.
	10	.11	Securities Purchase Agreement dated September 15, 2003, by and between Bio-Imaging Technologies, Inc. and certain institutional investors. Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K dated September 15, 2003.

53

Exhibit
No.			Description of Exhibit
	10	.12	Registration Rights Agreement dated September 15, 2003, by and between Bio-Imaging Technologies, Inc. and certain institutional investors. Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K dated September 15, 2003.
	10	.13*	Form of Amended Executive Retention Agreement by and between Bio-Imaging Technologies, Inc. and certain executive officers. Incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
	10	.14	Asset Purchase Agreement, dated November 20, 2003, by and between Bio-Imaging Technologies, Inc. and CapMed, Inc. Incorporated by reference to Exhibit 10.16 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
	10	.15	Stock Purchase Agreement, dated December 10, 2004, by and between Bio-Imaging Technologies, Inc. and Heart Core B.V. Incorporated by reference to Exhibit 10.17 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
	10	.16	Fourth Modification of Office Space Lease between 826 Newtown Associates, LP and Bio-Imaging Technologies, Inc. dated September 29, 2004. Incorporated by reference to Exhibit 10.18 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
	10	.17†	Stock Purchase Agreement, dated February 6, 2007, by and between Bio-Imaging Technologies, Inc. and Theralys, S.A. Incorporated herewith.
	10	.18•	Development and Supply Agreement dated June 20, 2005 between CapMed, a division of Bio-Imaging Technologies, Inc., and Medic Alert Foundation United States, Inc. (Portions of this exhibit have been omitted and have been filed separately pursuant to an application for confidential treatment filed with the Securities and Exchange Commission on August 15, 2005). Incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005.
	21		List of Subsidiaries of Registrant. Incorporated by reference to Exhibit 21.1 of our Annual Report on Form 10-KSB for the fiscal year ended September 30, 1997.
	23	.1†	Consent of PricewaterhouseCoopers LLP.
	31	.1†	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2†	Certification of principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1†	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
	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.

*	A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 13(a) of Form 10-K.
†	Included herewith.
•	Included herewith, revised confidential treatment.

54

EX-10.17

EXECUTION COPY

SHARE PURCHASE AGREEMENT

among

BIO-IMAGING TECHNOLOGIES, INC.

(Purchaser)

and

THE SHAREHOLDERS OF THERALYS SA

(Sellers)

dated February 6, 2007

Morgan Lewis

Page 2

BETWEEN THE UNDERSIGNED:

1. Mr. Chahin PACHAI, born on April 27, 1972 in Teheran, Iran, residing at 40 avenue Lacassagne, 69003 Lyon and married under the regime of separation as to property,

2. Mr. Fabrice VINCENT, born on February 1, 1972 in Lyon, residing at 8 rue Millon, 69100 Villeurbanne and married under the regime of partnership of acquests,

3. Mr. Philippe DOUEK, born on July 27, 1958 in Neuilly sur Seine, residing at 23 rue Felix Jacquier, 69006 Lyon and married under the regime of separation as to property,

4. Mr. Emmanuel OLART, born on 7, March 1978 in Villefranche sur Saône, residing at 27 bis rue de l’Egalité, residence les Bosquets, 69120 Vaulx en Velin and married under the regime of partnership of acquests,

Parties 1 to 4, acting jointly (conjointement), are hereinafter collectively referred to as the “Founders”,

AND

5. GIE VALOREZ, a French Groupement d’Intérêt Economique organized under the laws of France, with a share capital of EUR 16,000, having its registered offices at 66 bvd Niels Bohr – CEI – 69100 Villeurbanne, registered with the Registre du Commerce de Lyon Trade Registry under the number 439 787 714, represented by Gérard POSA, member of the Directoire of Ezus-Lyon 1 S.A. and Joseph GNIEWEK, member of the Directoire of Insavalor S.A., duly empowered for the purposes hereof,

6. Mr. Jean-Claude MOREL, born on February 22, 1936 in Brest, residing at Les Sabines, n°31, 69130 Ecully and married under the regime of community of property,

7. Mr. Laurent GERFAULT, born on November 8, 1970 in Angers, residing at 42A rue de la Meije, 38500 Voiron and unmarried,

8. Ms. Marcela HERNANDEZ-HOYOS, born on September 23, 1970 in Bogota, Colombia, residing at Calle 30 No. 3 A 15. Apto 401. Bogota, D.C., Colombia and divorced,

9. Mr. Nicolas ROGNIN, born on December 28, 1974 in Voiron, residing at 3 avenue de Genève, 74160 Saint Julien en Genevois and married under the regime of partnership of acquests,

10. Mr. Jérôme VINCENT, born on May 14, 1970 in Saint Vallier, residing at 51 route de Combes, 07100 Boulieu and married under the regime of partnership of acquests,

Parties 1 to 10, are hereinafter collectively referred to as the “Shareholders A”,

Page 3

AND

11. RHONE-ALPES CREATION, a French société anonyme with a share capital of 9,478,616 euros, having its registered offices at 10, Chemin du Château d’Eau — 69410 CHAMPAGNE AU MONT D’OR – registered with the Lyon Trade Registry under number 352 014 559, represented by Mr. Guy RIGAUD, Président du Directoire, himself being represented by Ms. Karine LIGNEL,

12. AMORCAGE RHONE-ALPES, société par actions simplifiée with a share capital of 5,645.580 euros having its registered offices at 10, Chemin du Château d’Eau — 69140 CHAMPAGNE AU MONT D’OR, registered with the Lyon Trade Registry under number 433 995 719, represented by Ms. Karine LIGNEL, Directeur d’Investissement, duly empowered for the purposes hereof by Mr. Guy RIGAUD, Directeur Général,

13. CREDIT AGRICOLE CREATION, a French société par actions simplifiée, with a share capital of 2,418,472 euros, having its registered offices at 1, rue Pierre de Truchis de Lays, Champagne au Mont d’Or, registered with the Lyon Trade Registry under the number 419 319 322, represented by Maurice BERNARD, duly empowered for the purposes hereof,

14. RHONE DAUPHINE DEVELOPPEMENT, a French société anonyme, with a share capital of 10,495,800 euros, having its registered offices at 2, chemin du Vieux Chêne, 38240 Meylan, registered with the Grenoble Trade Registry under the number 345 158 117, represented by Pierre JOURDAIN, duly empowered for the purposes hereof,

15. LE LANCEUR, a Fonds Commun de Placement à Risques represented by its société de gestion SOFIMAC PARTNERS, a French société anonyme with a share capital of 161,000 euros, having its registered offices at 24, avenue de l’Agriculture, Domaine de Mon Désir, 63100 Clermont Ferrand, registered with the Clermont Ferrand Trade Registry under the number 424 562 445, represented by Philippe VUAGNAT, Directeur Général, duly empowered for the purposes hereof,

Parties 11 to 15 are hereinafter collectively referred to as the “Shareholders B”,

16. Mr. Luc BRACOUD, born on March 29, 1978 in Lyon, residing at 61 rue François Peissel, 69300 Caluire and unmarried,

Parties 1 to 16 are hereinafter collectively referred to as the “Sellers”,

AND

17. Bio-Imaging Technologies Inc., a US corporation organized under the laws of Delaware, having its principal office 826, Newtown-Yardley Road, Newtown, PA 18940, United States of America, represented by M. Ted Kaminer, duly empowered for the purposes hereof,

hereinafter referred to as the “Purchaser” or “Bio-Imaging Inc.”,

The Purchaser and the Sellers are hereinafter collectively referred to as the “Parties” and individually referred to as a “Party”.

Page 4

TABLE OF CONTENTS

	Page
ARTICLE 1 – DEFINITIONS		5
ARTICLE 2 – PURCHASE AND SALE		8
ARTICLE 3 – PURCHASE PRICE – PAYMENT OF THE PURCHASE PRICE		8
ARTICLE 4 – COMPLETION		9
ARTICLE 5 – REPRESENTATIONS AND WARRANTIES		11
ARTICLE 6 – REPRESENTATIONS AND WARRANTIES OF THE OTHER SELLERS AND                          OF THE PURCHASER		20
ARTICLE 7 – COVENANTS		21
ARTICLE 8 – INDEMNIFICATION		22
ARTICLE 9 – CONFIDENTIALITY – PUBLICITY		25
ARTICLE 10 – EXPENSES		25
ARTICLE 11 – SELLERS’ REPRESENTATIVE – NOTICES		26
ARTICLE 12 – SEVERABILITY		27
ARTICLE 13 – ENTIRE AGREEMENT		27
ARTICLE 14 – SUCCESSORS AND ASSIGNS		27
ARTICLE 15 – LANGUAGE		28
ARTICLE 16 – APPLICABLE LAW – JURISDICTION		28

Page 5

WHEREAS

A. The Sellers are the owners of the Securities (as defined in Article 1 below) representing 100% of the issued and outstanding share capital and voting rights in THERALYS, a société anonyme incorporated under the laws of France, with a share capital of 72,340 euros having its registered offices at Bioparc, 60 avenue Rockfeller — 69008 Lyon (France), registered with the Lyon Trade Registry under n° 439 429 440 (hereinafter referred to as the “Company” as defined in Article 1 below). The Company’s share capital is divided into two categories of shares.

B. Exhibit A indicates the number and the category of Securities held by each Seller at the date hereof.

C. The Company is specialised in diagnostic and therapeutics image analysis in clinical trials (hereafter referred to as the “Activity”).

D. The Sellers desire to sell the Sold Shares and the Purchaser desires to buy the Sold Shares from the Sellers. The purpose of the Agreement is to set forth the terms and conditions of such sale and purchase of the Sold Shares (hereinafter referred to as the “Sale”).

E. Simultaneously to the Sale, the Founders shall contribute the Contributed Shares to Bio-Imaging Inc. by a separate agreement. In return, the Founders shall receive 36,000 newly issued restricted shares of Bio-Imaging Inc. common stock.

NOW THEREFORE IT HAS BEEN AGREED AS FOLLOWS:

ARTICLE 1      DEFINITIONS

The following words shall have the meanings set out hereafter but only when the corresponding words begin with capital letters.

“Affiliate”	of any person shall mean (i) any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person, or (ii) any other person with whom such person or an entity controlling, controlled by, or under common control with such person entered into a shareholders agreement, joint venture agreement or any agreement with similar effects; a person shall be deemed to control another person if such first mentioned person owns, directly or indirectly, fifty percent (50%) or more of the voting rights of the second mentioned person;
“Agreement”	This sale and purchase agreement;
“Balance Sheet Date”	means December 31, 2006;

Page 6

“Bio-Imaging Inc.”	Bio-Imaging Technologies Inc., a US corporation having its principal office 826, Newtown-Yardley Road, Newtown, PA 18940 United States of America and registered under the laws of Delaware (USA);
“Business Day(s)”	Any day(s) on which banks are open for business in France or in the United States of America;
“Category A Shares”	The 4,000 Category A shares of the Company held by the Shareholders A in the proportions mentioned in Exhibit A;
“Category B Shares”	The 3,234 Category B shares of the Company held by the Shareholders B in the proportions mentioned in Exhibit A;
“Company”	THERALYS, a société anonyme incorporated under the laws of France, with a share capital of € 72,340, having its registered offices at Bioparc, 60 avenue Rockfeller — 69008 Lyon (France), registered with the Lyon Trade Registry under n° 439 429 440;
“Completion Date”	The date of completion of the transfer of the Securities as per section 4.1 hereafter;
“Contribution Agreement”	The Share Contribution Agreement among the Purchaser and the Founders, dated February 6, 2007, executed simultaneously to the Agreement;
“Contributed Shares”	400 Category A shares of the Company, with a par value of ten (10) euros each held by the Founders in the proportions mentioned in Exhibit A and contributed to Bio-Imaging Inc. under a separate Contribution Agreement;
“Exhibit(s)”	Any exhibit attached to this Agreement, it being specified that each time that the Representations contained in a section of this Agreement need to be documented, this is done via an Exhibit carrying the same number as the relevant representation;
“Founders”	means collectively MM Chahin Pachai, Fabrice Vincent, Philippe Douek and Emmanuel Olart;
“Governmental Entity”	means any state, authority or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, including but not limited to any court, administrative agency, commission or other organ of the European Union or the United States of America;

Page 7

“Lien”	means any mortgage, lien, pledge, charge, encumbrance or any other security interest;
“Representations and Warranties”	The representations and warranties to be delivered by each of the Founders on a joint basis (conjointement) to the Purchaser, as per Article 5 below;
“Restricted Shares”	means newly issued unregistered shares of Bio-Imaging Technologies Inc., regulated under the Securities Act of 1933, and in particular by the Rule 144 promulgated thereunder, permitting those Restricted Shares to be sold after the one-year holding period; provided, however, the number of shares that may be sold during any three-month period cannot exceed the greater of (i) 1% of the shares of common stock outstanding at that time, or (ii) the average reported weekly trading volume during the four weeks preceding the filing a notice of the sale on Form 144. Bio-Imaging shall accomplished all relevant formalities in the interest of a holder of Restricted Shares allowing them to sell their Restricted Shares as soon as possible in respect of US securities law, and will bear all reasonable expenses relating to a transfer or sale of such Restricted Shares pursuant to Rule 144 so long as the holder of such Restricted Shares provides Bio-Imaging with all documentation reasonably requested by Bio-Imaging;
“Shareholders Agreement”	The agreement entered into between the Sellers on December 16, 2002 in respect of the Company;
“Share(s)”	Any share(s) issued by the Company;
“Securities”	means collectively the Sold Shares, the Contributed Shares and the Warrants, representing on Completion Date 100% of the issued and outstanding share capital and voting rights of the Company, together granting the Purchaser a direct and indirect ownership of 100% of the Company’s issued and outstanding share capital and voting rights;
“Sold Shares”	means collectively (i) 3,600 Category A Shares of the Company with a par value of ten (10) euros each held by the Shareholders A and (ii) 3,234 Category B Shares of the Company with a par value of ten (10) euros each held by the Shareholders B, and sold to the Purchaser in the proportions mentioned in Exhibit A;

Page 8

“Warrants”

means the 412 warrants in form of "bons de souscription de parts de créateur d’entreprise” (BSPCE) held by the Warrants Holders as defined below and to be exercised until April 26, 2009 pursuant to the decisions of the Company’s shareholders meeting held on April 26, 2004. The Warrants give right to subscribe to one (1) Category A Shares of the Company in consideration of a subscription price of 170 euros each;

“Warrants Holders”

means collectively MM Chahin Pachai, Fabrice Vincent, Luc Bracoud and Emmanuel Olart.

ARTICLE 2 PURCHASE AND SALE

2.1.1 Subject to the terms and conditions hereof, the Sellers agree to sell the Sold Shares to the Purchaser and the Purchaser agrees to purchase the Sold Shares from the Sellers. The detailed allocation of the Sold Shares (together with the sub-allocation between the Sellers) is set forth in Exhibit B.

2.1.2 Subject to the terms and conditions hereof, the Warrant Holders agree to waive their rights attached to the Warrants and the Purchaser agrees to indemnify the Warrants Holders from such waiver. The detailed allocation of the Warrants (together with the sub-allocation between the Warrant Holders) is set forth in Exhibit C.

2.1.3 The Sold Shares shall be transferred free and clear of all Liens and with all dividend rights now and then attaching thereto, including the right to all dividends for the 2006 fiscal year.

ARTICLE 3 PURCHASE PRICE — PAYMENT OF THE PURCHASE PRICE

3.1 Purchase Price

The aggregate purchase price for the Sold Shares and for the indemnification for the waiver of the rights attached to the Warrants by the Warrants Holders (hereinafter referred to as the “Purchase Price”) shall be allocated among the Sellers as follows:

- 1,344,515 euros for the 3,600 Category A Shares held by the Shareholders A; and

- 1,304,448 euros for all the Category B Shares held by the Shareholders B, payable in cash and by issuance of Restricted Shares of Bio-Imaging Inc. common stock in accordance with Article 3.2 (v) below; and

- 82,294 euros for the Warrants held by the Warrants Holders in consideration of the waiver of their rights to exercise the Warrants.

Details of the allocation of the Purchase Price between the Sellers and their respective categories are set forth in Exhibits B and C.

Page 9

3.2 Closing Payment and Escrow

On Completion Date, the Purchaser shall:

(i)	pay in cash to the Shareholders A an aggregate amount of 1,204,515 euros by means of bank checks;
(ii)	deposit 140,000 euros (the “Escrow Amount”) which constitute part of the Purchase Price to be paid to the Founders into one or more escrow accounts to be held and disbursed by US Bank National Association as escrow agent (the “Escrow Agent”). The Escrow Amount shall be held by the Escrow Agent until August 6, 2008 pursuant to the escrow agreement(s) set forth as Exhibit D hereto (the “Escrow Agreement”). The Escrow Amount will be subject to set-off for any indemnification claims notified by the Purchaser to the Founders pursuant to Article 8 below. The Purchaser shall bear the fees and expenses related to the setting up of the escrow.
(iii)	pay in cash to the Warrant Holders an aggregate amount of 82,294 euros by means of bank checks;
(iv)	pay in cash to the Shareholders B an aggregate amount of 948,689 euros corresponding to 2,352 Category B Shares, by means of bank checks;
(v)	issue 57,408 newly issued Restricted Shares of Bio-Imaging Inc. common stock (the “Purchaser’s Common Stock”) in exchange of 882 Category B Shares. The Purchaser’s Common Stock will be subject to US securities laws. This payment shall be allocated among the concerned Shareholders B as set forth in Exhibit 3.2 (v).

ARTICLE 4 COMPLETION

4.1 Date and place

Transfer of ownership of the Sold Shares and payment of the Purchase Price shall take place at the date hereof (the “Completion Date”).

4.2 Instruments to be signed and delivered on Completion Date

4.2.1 At the date hereof, the Sellers shall deliver to the Purchaser:

- original executed copies of share transfer forms (ordres de mouvement) selling, assigning and delivering to the Purchaser all of the Sold Shares free and clear from all Liens together with duly related executed tax forms n° 2759;

- the updated stock transfer register (registres des mouvements de titres) and stockholders’ individual accounts (comptes d’actionnaires), the shareholders’ decisions book (registre des procès-verbaux des assemblées générales) the board of directors’ decisions book (registre des procès-verbaux du conseil d’administration) and all attendance sheets to the shareholders’ and board of directors’ meetings of the Company;

Page 10

- the original executed copies of the resignation letters effective as of the Completion Date from the Company’ s members of the board of directors, the names of which are set out in Exhibit 4.2.1, said letters specifying that the resigning members have no claim whatsoever against the Company;

- the original executed copy of the resignation letter effective as of the Completion Date from Mr. Fabrice Vincent concerning its functions of Directeur Général Délégué, said letter specifying that Mr. Fabrice Vincent has no claim whatsoever against the Company;

- the original executed copies of the relevant minutes evidencing that the persons listed in Exhibit 4.2.1 (or such other persons as the Purchaser may designate replacement therefore) shall have been elected or designated directors, effective as of Completion Date;

- the irrevocable and unconditional waiver by each and all Sellers of all rights under the Shareholders Agreements including the acknowledgment that said agreement will cease to be of any effect as from the Completion Date;

- the irrevocable and unconditional waiver by each and all Warrant Holders of their rights to exercise any and all of the Warrants and that all the Warrants will become null and void as from as from the Completion Date;

4.2.2 Following delivery of the documents referred to in section 4.2.1 above, the Purchaser shall deliver:

- bank checks to each Seller for the amounts set forth in Exhibit 4.2.2.

- any documents evidencing the issuance of the Purchaser’s Common Stock, such as a copy of an instruction letter and/or a legal opinion of Morgan, Lewis & Bockius LLP to the transfer agent, effective as from the Completion Date. The original stock certificates of the Purchaser’s Common Stock will be delivered to the beneficiaries within ten (10) days as from the Completion Date.

4.2.3 Related Agreements:

- The Founders, the Purchaser and the Escrow Agent shall execute the Escrow Agreement in the form attached hereto as Exhibit D;

- The Company and the Founders at the date hereof and the Company and other Employees within five (5) days following the Completion Date shall execute new employment agreements in the forms attached hereto as Exhibit E;

- The Founders and the Purchaser shall execute the Contribution Agreement related to the Contributed Shares in the form attached hereto as Exhibit F.

Page 11

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

The Founders, acting jointly (conjointement), represent and warrant to the Purchaser as of the date hereof as follows.

The representations and warranties made by the Founders in this Article 5 (the “Representations and Warranties”) shall be construed subject to the facts or information which are disclosed in the Agreement or its applicable Exhibits.

Conversely, for the avoidance of doubt, the Representations and Warranties made by the Founders shall not be limited by documents or information provided to Bio-Imaging Inc. or its advisers prior to the date hereof that are not explicitly and clearly restated in the Agreement or its Exhibits.

5.1 Authority

The Founders have the full corporate power and authority required to enter into the Agreement and to transfer and deliver the Sold Shares they own as provided in the Agreement and to waive all their rights under the Warrants they own.

5.2	Corporate Status
5.2.1	The Company is a société anonyme duly organized and validly existing under the laws of France and in compliance with the French commercial code and French decree n° 67-236 of March 23, 1967 on commercial companies. The Company’s by-laws as set forth in Exhibit 5.2.1 are accurate as at the date hereof.
5.2.2	The Company has never been in a state of insolvency or suspension of payments, nor have they made a voluntary or court–ordered arrangement or similar agreement with some or all of their creditors. They are not subject to any administration, insolvency, reorganization, winding–up, bankruptcy or similar proceedings (procédure et sauvegarde, règlement amiable, redressement ou liquidation judiciaire).
5.2.3	The Company has all requisite corporate power to own its properties and carry on its business as now conducted. All corporate laws and regulations applicable to the Company have been complied with. All corporate formalities and compulsory disclosure requirements have been duly fulfilled. The Company’s business (fonds de commerce) is not the object of any leasing agreement (contrat de location-gérance).
5.2.4	The Company has never had any subsidiaries and has never owned directly or indirectly any capital stock of, or other equity interests in, any corporation, partnership, or other entity. The Company has never been a member of or a participant in any partnership, joint venture or similar enterprise. The Company has no set up any branch (succursale) or secondary office (établissement secondaire).
5.3	Capital Stock and Ownership
5.3.1	The Company’s issued share capital amounts to 72,340 euros divided into 7,234 shares of a nominal value of 10 euros each. All the shares have been duly and validly issued and are fully paid up. The shares are divided into two (2) categories as follows:

- 4,000 of Category A, and

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- 3,234 of Category B,

Exhibit 5.3.1 sets forth the amount of the Company’s share capital, detailing all the Securities issued by the Company, the categories and respective rights thereof and holders thereof. The Securities represent 100% of the issued and outstanding capital and voting rights of the Company, on a fully diluted basis and are freely transferable.

5.3.2 The Company has not issued any securities or other rights (including options de souscription d’actions or bons de souscription de parts de créateurs d’entreprise) entitling their holders to acquire, immediately or at a future date, a fraction (quotité) of the Company’s share capital other than the Warrants and being specified that all the outstanding convertible bonds issued by the Company have been converted into Category B Shares prior to the date hereof.

No authorization voted by the general shareholders’ meeting to issue securities or other rights to a fraction (quotité) of the Company’s share capital is in effect.

5.3.3 No shareholders’ agreement has been entered into relating to the Company other than the Shareholders Agreement, which will terminate at Completion Date.

5.3.4 At Completion Date, the Sellers will have, and will transfer, good and marketable title to the Sold Shares and to all of the rights afforded thereby, free of any Lien, and upon consummation of the transactions contemplated hereby, the Purchaser will hold 100% of the Securities of the Company following the simultaneous realization of both the Agreement and the Contribution Agreement.

5.4 Financial Statements

5.4.1 Exhibit 5.4.1 contains the audited annual balance sheet and profit and loss statement of the Company together with the notes and annexes thereto as of December 31, 2005 (the “2005 Accounts”), which, as well as for the preceeding four years, were certified without qualifications by the Company’s statutory auditors and approved by the Company’s annual shareholders’ meeting without reserves.

5.4.2 Exhibit 5.4.2 contains the interim balance sheet and profit and loss statement (bilan et comptes de résultat intermédiaires) of the Company as of the Balance Sheet Date, which were prepared by the Company and perused by the Company’s statutory auditors (the “Interim Accounts”).

5.4.3 The 2005 Accounts and the Interim Accounts have been prepared in accordance with the accounting principles generally accepted in France and in particular with those described in Exhibit 5.4.3 applied consistently with past practice and present a true and fair view (une image fidèle et sincère) of the financial condition and results of operations of the Company as at their respective date.

5.4.4 The Company is not bound by any off balance sheet liability (engagements hors bilan) except as clearly disclosed in the notes to the Interim Accounts or in Exhibit 5.4.4.

5.4.5 The Interim Accounts reflect all liabilities (whether absolute, accrued, contingent or otherwise) of the Company required to be recorded thereon or in the annexes or notes thereto in accordance with the accounting principles as at the respective date thereof.

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5.4.6 The Interim Accounts reflect all accrued and unpaid wages, compensation and other obligation of the Company with respect to their employees as of the date of the Interim Accounts.

5.5 Interim Period

Since the Balance Sheet Date, the Company has been managed in the ordinary course of business consistent with past practice and with a reasonable degree of care (en bon père de famille), the Company has sufficient working capital to manage its activities at the current level and no change has occurred which adversely affects the assets or the condition (financial or otherwise), results of operations or prospects of the business of the Company. In particular and except as set forth in Exhibit 5.5, it has not:

(i.)	sold or transferred any of its assets or committed to do so, except in the ordinary course of business consistent with past practice;
(ii.)	acquired any other business or entered into any lease agreement, licensing arrangement or joint venture, other than leases or licenses in favor of the Company pertaining to Movable Property having an individual value of no more than 6,000 euros and an aggregate value of no more than 20,000 euros, or software used in the ordinary course of business of the Company consistent with past practice;
(iii.)	authorized, declared, set aside, made or paid any dividend or other distribution in respect of its capital stock or otherwise purchased or redeemed, directly or indirectly, any shares of its capital stock;
(iv.)	issued or sold any Shares of any class of its capital stock, or any securities convertible into or exchangeable for any such shares, or issued, sold, granted or entered into any subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings of any kind, contingently or otherwise, to purchase or otherwise acquire any such shares or any securities convertible into or exchangeable for any such shares;
(v.)	incurred any indebtedness for borrowed money, issued or sold any debt securities or prepaid any debt (including, without limitation, any borrowings from or prepayments to the Sellers), except for borrowings and repayments in the ordinary course of business;
(vi.)	mortgaged, pledged or otherwise subjected to any Lien, any of its assets, tangible or intangible;
(vii.)	forgiven, canceled, compromised, waived or released any debts, claims or rights, except for debts, claims and rights forgiven, canceled, compromised, waived or released in the ordinary course of business;
(viii.)	modified any existing contract or entered into (x) any agreement, commitment or other transaction, other than agreements entered into in the ordinary course of business and involving an expenditure by the Company of more than 30,000 euros in each case and 50,000 euros in the aggregate,

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	or (y) any agreement or commitment that, pursuant to its terms, may not be terminated without penalty on less than 30 days’ notice;
(ix.)	increased the compensation of its officers or employees, or modified the terms and conditions of their offices or contracts of employment, or permitted any such modification, except pursuant to collective bargaining agreements, nor paid any bonus to any officer, director, or employee, except as otherwise agreed in written with the Purchaser;
(x.)	amended its statuts, articles of association, by-laws or any other organizational documents;
(xi.)	changed in any respect its accounting practices, policies or principles;
(xii.)	transferred or granted any rights or licenses under, or entered into any settlement regarding the infringement of intellectual property or entered into any licensing or similar agreements or arrangements;
(xiii.)	taken any action or omitted to take any action that would result in the occurrence of any of the foregoing.

5.6 Litigation

There is no lawsuit, arbitration or proceeding pending or threatened against the Company before any court, arbitration tribunal or governmental authority and there is no outstanding judgment, order, decree, award or injunction against the Company.

5.7 Real Property

The Company does not own any real property. The only lease entered into by the Company with respect to real property (the “Real Property”) is a lease of premises located at Bioparc, 60 avenue Rockfeller, 69008 Lyon (France) which will expire on February 15, 2006 (the “Current Lease”). Constructions on the Real Property are structurally sound with no material defects, subject to normal wear and tear. The parties to the Current Lease have complied with all their respective obligations contained therein and the Real Property has been regularly maintained.

The Company has concluded prior to Completion Date a new short-term lease (the “New Lease”) set forth in Exhibit 5.7. The New Lease has been concluded in compliance with French law (and in particular with Article L. 145-5 of the French Commercial Code) and zoning and internal building regulations (including the Laennec building’s selection criteria and the decision of the specific committee of the Communauté Urbaine de Lyon). The New Lease will start on February 16, 2007 and will expire on January 15, 2009.

5.8 Movable Property

The Company does not own any movable property the net book value of which is in excess of 3,000 euros (the “Movable Property”). The Movable Property is structurally sound, adequate for the conduct of the business of the Company as it has been and is proposed to be conducted, subject to normal wear and tear.

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5.9 Environment

The activities of the Company have been conducted in compliance with all applicable environmental laws and regulations.

5.10 Taxes, customs and social security contributions

5.10.1 The Company has duly and timely filed with the appropriate Governmental Entities all tax, customs and social security returns and reports required to be filed in respect of the activities of the Company and has timely and fully paid all taxes, customs or social security contributions due by it prior to the date hereof.

5.10.2 The amounts of the tax loss carry forwards and deferred depreciation (amortissements réputés différés) declared by the Company in its tax returns are accurate and such tax loss carry forwards and deferred depreciation are offsetable against future taxable profits. The Company has kept the documentation required to justify the existence of these tax loss carry forwards and deferred depreciation.

Losses shall be equal to the product of the corporate income tax rate in force at the time of the reassessment and the global amount of the tax losses carry forwards and deferred depreciation, the deduction of which is challenged by the tax authorities.

5.10.3 The Company is neither a party to any action or proceeding by any Governmental Entity for assessment and collection of taxes, customs or social security contributions, nor has received notice of any claim for such assessment and collection of taxes, customs or social security contributions in respect of its activities.

5.10.4 Apart from those expounded in 5.10.5 and 5.10.6 below, the Company has not benefited from any favorable regime in terms of taxes, customs and social security contributions.

5.10.5 The Company had not unduly benefited from the tax and social advantages deriving from the Young Innovative Enterprise status (Jeunes Entreprises Innovantes). The loss of the Young Innovative Enterprise status as a result of the sale of the Securities will not trigger any refund obligation for the Company. According to that status, the Company’s changes of control will generate that it will no longer be allowed to keep that status from January 1, 2007.

5.10.6 The Company had not unduly benefited from the advantages and deriving from the research tax credit (Crédit d’impôt recherche).

5.10.7 The Company has been duly authorized for years 2006, 2007 and 2008 by the Research and Innovation Department (Direction Générale de la Recherche et de l’Innovation) of the Ministry of Education and Research (Ministère de l’Education Nationale, de l’Enseignement Supérieur et de la Recherche) as a research entity (organisme de recherche privé) thereby entitling its customers to benefit from the research tax credit regime for the research works carried out by the Company on behalf of said customers.

5.10.8 There are no outstanding adjustments for purposes of taxes or social charges applicable to the Company required as a result of changes in methods of accounting. There are no material elections or requests for rulings for purposes of taxes or social

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charges made by the Company that are currently in force or by which the Company or is bound. The Company has never been a member of any tax consolidated group.

5.11 Intellectual Property

5.11.1 The Company has full, exclusive and valid title, through direct ownership or a license, to the use of all invention, patent, patent application, know-how, trade secret, trademark, trademark application, trade name, company name, logo, domain name, copyright, copyright application, design, software (including all documentation relating to the computer systems and application software and the latest revisions of all related object and source codes therefor) and other intellectual property rights used, held for use in connection with, or necessary to the daily operation or development of its business (the “Intellectual Property Rights”). Exhibit 5.11.1 provides a list of such Intellectual Property Rights, which specifies for each such item whether it is owned or licensed and, if licensed, indicates the full title, the parties thereto and the expiration date of the relevant license agreement. Each of such licenses is in full force and effect, the Company is in compliance with each of such licenses and no default exists by any other party thereto. The consummation of the transactions contemplated hereby will neither violate nor result in the breach, modification, cancellation, termination or suspension of such licenses

5.11.2 Neither the Sellers, nor any current or former employee nor any manager or officer of the Company nor any of their former employers holds any rights in the Intellectual Property Rights. Further, no contractual or other obligation or restriction of any nature whatsoever prevents any employee, manager or officer of the Company from using for the benefit of the Company the experience and skills acquired by him while employed by any other company or entity.

5.11.3 All Intellectual Property Rights owned by the Company have been properly registered and maintained and are duly opposable to third parties.

5.11.4 There is no outstanding claim or threat thereof relating to the Intellectual Property Rights against the Company with respect to facts having occurred prior to the date of this Agreement, and the operation of the Company as at the date hereof does not infringe the intellectual property rights of any third party. Conversely, the Founders are unaware of the violation or infringement by any third party of the Intellectual Property Rights.

5.11.5 Except as set forth in Exhibit 5.11.5, the Company has not granted to any third party any option, license, pledge or other restrictions, user rights, or other rights whatsoever, whether or not for compensation, with respect to the Intellectual Property Rights, nor formed, directly or indirectly, any agreement with any third parties in relation to the same other than licenses granted to customers or resellers in the ordinary course of business.

5.11.6 All of the Company’s employment and/or sub-contractor agreements contain the provisions necessary to ensure, to the fullest extent permitted by applicable laws, that all intellectual property rights on the work carried out by its employees and/or subcontractors as from the date of their hiring belong to the Company. The Company has timely compensated its employees for their inventions developed and used by the

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Company before the date hereof, in accordance with the requirements of French law and the collective bargaining agreement applicable to the employees of the Company.

5.11.7 Immediately after the Completion Date, the Company will own all of the Intellectual Property Rights owned by the Company immediately prior to the Completion Date and will have a right to use all other Intellectual Property Rights on the same contractual terms and conditions as in effect prior to the Completion Date, free and clear of all Liens, except as set forth in Exhibit 5.11.5, and on the same terms and conditions as in effect prior to the Completion Date.

5.12 Contracts

5.12.1 Exhibit 5.12.1 contains a list of all outstanding, oral or written contracts or agreements entered into by the Company which (i) provide for payments or guarantees for payment by or to the Company in excess of 10,000 euros over any 12-month period, (ii) has a term equal to one year or more from the date hereof (not including any optional or tacit renewal period), (iii) has been entered into by the Company with any of its top 10 customers or suppliers, (iv) guarantees the indebtedness of another person, (v) restricts its ability to develop its business or compete with any person, (vi) grants exclusive rights to any third party, or (vii) is a convention réglementée within the meaning of article L. 225-86 of the French commercial code or has been entered into by the Company with any of the Sellers or any of their Affiliates (the “Material Contracts”). As an exception to the foregoing, Exhibit 5.12.1 does not list the employment agreements of the Company with its Employees.

5.12.2 The Material Contracts are valid and enforceable by the Company. The Company and its co-contractors thereunder have performed all their obligations required to be performed thereunder.

5.12.3 There are no facts or information indicating, nor any other reason to believe, that any of the customers or suppliers of the Company will not continue to be respectively customers or suppliers of the Company after Completion Date at the same level as heretofore.

5.12.4 Except as set forth in Exhibit 5.12.4, the Company is not a party to any contract or agreement under the terms of which, as a result of the Company’s change of control or any other transaction contemplated in this Agreement:

(i.)	such contract would terminate at an earlier date than the stated date of termination in the absence of such change;
(ii.)	the Company’s commitments would become due and payable prior to the normal term thereof as a result of such change;
(iii.)	less favorable terms than those the Company would have benefited from in the absence of such change would apply as a result of such change; or
(iv.)	any other party to such contract or agreement would be entitled to terminate such contract or agreement earlier than it would have been entitled to do so in the absence of such change, or would be entitled to make the Company’s commitments become due and payable prior to the stated term thereof or to

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require the application of less favorable terms than those the Company would have benefited from in the absence of such change.

5.13 Insurance

Exhibit 5.13 contains all insurance policies entered into by the Company (the “Insurance Policies”). The Insurance Policies provide for a coverage that is customary in connection with the business, assets and liabilities of the Company and are subject to deductible and exclusions set forth in the Insurance Policies. The Insurance Policies held by the Company are in full force and effect and corresponding premiums have been paid when due. The Company has not experienced over the last 3 years any suspension of coverage or cancellation of insurance policies relating to its respective business, assets and liabilities.

5.14 Accounts Receivables and payables — Cash balance

All debts owed by third parties to the Company as of the Balance Sheet Date are reflected in the Interim Accounts. Such debts are good and collectable, 70% of them shall be recoverable within a maximum six-month (6) period from Completion Date and the remaining 30% shall be recoverable within a maximum ten-month (10) period from Completion Date and so without litigation or resort to any other methods of recovery and without set-offs, counterclaims or other deductions or, in the opposite case, are sufficiently reserved against in the Interim Accounts. Exhibit 5.14 sets forth each and all of the accounts receivables as of the Balance Sheet Date.

The Company has no outstanding obligation, debt or liability, fixed or contingent, which is not specifically referred to in the Interim Accounts and all accounting debts have been properly paid on the relevant due date and the Company is not liable as a result for any interest for late payment, penalty or indemnity of any sort. Exhibit 5.14bis sets forth each and all of the accounts payables and each and all of other payables as of the Balance Sheet Date.

Further, the cash balance (trésorerie nette) of the Company as of the Balance Sheet Date is at least of 100,000 euros.

5.15 Loans — Borrowings

Exhibit 5.15 contains a true and complete list of the outstanding bank loans, credit lines, discount facilities and other short and long term indebtedness. The Company has not guaranteed repayment of the debt or amount owed by any other person, and has no obligation, fixed or contingent, as a surety or otherwise, to pay any such debt or amount.

The Company is under the benefits of 400.000 € of reimbursable support (contrat ANVAR), as set forth in Exhibit 5.15 arising 280.000 € of potential debt outstanding.

5.16 Governmental permits – Compliance with laws

No permit or authorization is necessary to conduct the business of the Company. The Company is not in violation in any material respect of any applicable law or

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regulation. No agreement, permit or authorization prevents the consummation by the Company or the Founders of any of the transactions contemplated by this Agreement.

5.17 Employees

5.17.1 The Company has complied with all statutory or regulatory requirements with respect to its managers and employees (the “Employees”), including without limitation, working time requirements, working conditions, health and safety, social security, personnel representation laws and regulations.

5.17.2 All the employment contracts entered into between the Company and its Employees and in force at the date hereof are set forth in Exhibit 5.17.2. There are no pension or retirement benefits, bonus, profit sharing, stock purchase or stock option plans, company savings plans or employee funds of the Company other than those which are mandatory under French law or the applicable collective bargaining agreement.

5.17.3 The Founders and the Employees other than the Founders are entirely free from any non-compete or similar clause which may impair in whole or in part their ability to contribute to the Company’s business and operations.

5.17.4 The Company has not entered into any employment contracts providing for a termination notice greater than the minimum provided by French law or the applicable collective bargaining agreement, or for the payment of a termination or retirement indemnity exceeding that provided by law or the applicable collective bargaining agreement.

5.17.5 The Company has no pending obligations to any of its corporate officers (mandataires sociaux), whether current or former, or its current or former managers and employees, in particular in the form of immediate or deferred compensation, including pension, retirement supplement, or surviving spouse pension, salaries, salary ancillaries, indemnities of any nature whatsoever or any other sum which may arise out of or be due in respect of the performance or termination of an employment agreement, other than the obligations which are mandatory and compulsory pursuant to French laws and regulations and the applicable collective bargaining agreement.

5.17.6 No Employee will be entitled to receive any payment or benefit directly as a consequence of the completion of the transactions contemplated herein. No Employee is entitled to receive compensation proportional to profits or turnover other than as a result of mandatory legal provisions (including the applicable collective bargaining agreement)

5.17.7 No consultation of any Employees’ representatives is required to be made in connection with the transaction contemplated hereby.

5.18 Product warranties

Except as set forth in Exhibit 5.18, (a) there are no warranties express or implied, written or oral, with respect to the business of the Company and (b) there are no pending or threatened claims with respect to any such warranty, and the Company has no liability with respect to any such warranty accrued and due.

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5.19 Inventory

At the Completion Date, the inventory of the Company will only consist of items which are useable and saleable in the normal course of business of the Company, as conducted on or prior to the date hereof. The Company does not have any commitment to purchase inventories in amounts greater than required in the ordinary course of business consistent with past practices.

5.20 No Broker

The Sellers have not used the services of any broker, finder, financial advisor or other person, firm or corporation who would be entitled to receive any brokerage or finder’s or financial advisory fee from the Purchaser or the Company in connection with the transactions contemplated by the Agreement.

5.21 Transactions with Affiliates

With the exception of the Shareholders Agreement, there are no agreements between the Company and its executive officers or shareholders.

5.22 Full disclosure

Any fact the disclosure of which would be material in the context of the transactions contemplated herein, or which would be necessary to not make the above representations misleading, has been disclosed in the Agreement.

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE OTHER SELLERS AND OF THE PURCHASER

6.1 Representations and warranties of each Seller other than the Founders (the “Other Sellers”)

Each Other Seller represents and warrants to the Purchaser as of the date hereof, and covenants to the Purchaser, as follows:

6.1.1 Each of the Other Sellers has, and will transfer to the Purchaser pursuant to this Agreement, good and marketable title to the number of Sold Shares set forth next to his/her/its name in Exhibit 6.1.1 and to all of the rights afforded thereby, free and clear of all Liens.

6.1.2 The Other Sellers which are individuals and their respective representatives for the purpose hereof have the full capacity and authority required to enter into this Agreement and any other documents contemplated hereby and to transfer, assign and deliver the Sold Shares they own as provided in the Agreement. Mr. Bracoud has the full capacity and authority required to waive all the rights attached to the Warrants he owns.

6.1.3 The Other Sellers which are legal entities or investment funds have the full corporate power and authority required to enter into this Agreement and to transfer, assign and deliver the Sold Shares they own as provided in the Agreement. The execution and delivery of the Agreement and the consummation by them of the transactions

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contemplated hereby have been duly authorized by their respective competent corporate bodies.

6.1.4 The Agreement constitutes a valid obligation of each of the Other Sellers enforceable against him/her/it in accordance with its terms.

6.1.5 The Other Sellers as listed in Exhibit 6.1.5 have been advised that the Purchaser’s Common Stock they will receive will be deemed to be Restricted Shares under the Securities Act of 1933, as amended and that a restrictive legend in substantially the following form shall be placed on the certificates representing such shares:

“The Securities represented hereby have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or the Securities Act of any State and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until registered under the 1933 Act or applicable State Securities Acts or, in the opinion of counsel in form and substance satisfactory to the issuer of these securities, such offer, sale or transfer, pledge or hypothecation is in compliance therewith”

6.2 Representations and warranties of the Purchaser

6.2.1 The Purchaser has the full corporate power and authority required to enter into and perform the Agreement. The execution and delivery of the Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its competent corporate bodies.

6.2.2 The Agreement constitutes a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.

ARTICLE 7 COVENANTS

The Sellers acknowledge that the foregoing covenants are made by them in consequence of and as an inducement to Bio-Imaging Inc. to acquire the Securities and to protect and preserve to Bio-Imaging Inc. the benefit of its bargain in the acquisition of the Securities; that each of the foregoing covenants is reasonable and necessary to protect and preserve the benefits of such purchase; and that irreparable loss and injury would result should the Sellers breach any of the foregoing covenants.

7.1 Conduct of Business

Except as consented to by the Purchaser in writing, from the date hereof to the Completion Date, the Sellers shall cause the Company to conduct its business and operations only in the ordinary course consistent with past practice. The Sellers shall promptly notify the Purchaser of any event, condition or circumstance that, individually or in the aggregate, would have or result in an adverse effect on the finance or perspectives of the Company.

7.2 Access to Information

The Sellers shall (i) afford, and shall cause the Company to afford, the Purchaser and its representatives access to all the facilities and books and records of the Company,

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(ii) furnish the Purchaser and its representatives with all the financial and operating data and other information with respect to the business and operations of the Company that the Sellers have in their possession, (iii) instruct the employees of the Sellers, the Company, and counsel, financial advisors and accountants of the foregoing, to cooperate with the Purchaser and its representatives with their investigation of the Company, and (iv) keep, and shall cause the Company to keep, the Purchaser generally informed as to the business and operations of the Company. Any investigation pursuant to this section 7.2 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business and operations of Company.

7.3 Non-Competition

The Founders and Luc Bracoud agree that for a period of (i) three (3) years after the Completion Date for Mr. Pachai and (ii) two (2) years after the Completion Date for Luc Bracoud and the other Founders, none of them will in France, United States of America, United Kingdom, Germany, The Netherlands and Switzerland at the date hereof manage, become engaged or financially interested, either as employee, shareholder, director, manager or consultant or in any manner whatsoever, in businesses or activities directly competing with those conducted by the Company and/or Bio-Imaging at the date hereof, which are contractually defined for the purposes hereof as diagnostic and therapeutics image analysis in clinical trials.

Each of the Sellers irrevocably undertakes not to use to its own profit or disclose to any third party any tradename or logo owned or used by the Company (including the use of the name “Theralys” or any abbreviation thereof or any combination including name and/or logo), any commercial secret, know-how or other non-public information belonging to the Company or acquired by it/his/her in the course of their employment, office or investment with the Company until such time as such commercial secret, know-how or confidential information has fallen into the public domain.

7.4 Non-Solicitation

From the date hereof until (i) three (3) years for Mr. Pachai and (ii) two (2) years for Luc Bracoud and the other Founders, the Founders and Luc Bracoud shall not directly or indirectly through any person, enterprise or entity, for their own account or for any other person, enterprise or entity, in association with or in the employment of any other person, firm, company or organization, interfere with, solicit or endeavor to entice away from the Company, any person, firm, company or organization currently employed by the Company.

ARTICLE 8 INDEMNIFICATION

8.1 Indemnification by the Founders

Subject to the conditions and limitations set forth below, the Founders (the “Indemnifying Parties”) agree to indemnify by way of a price reduction and hold the Purchaser harmless from any and all liabilities, obligations, damages, deficiencies, losses, claims, actions, lawsuits, proceedings, judgments, demands and costs

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(including penalties, late interest, majorations) (“Losses”) suffered or incurred by the Purchaser or the Company as a result of, in connection with or relating to any breach or inaccuracy of any Representation or Warranty or covenants of the Founders contained herein. The Founders and the Purchaser take for it granted that, for the purposes of assessing the Losses (if any), any Loss incurred by the Company will lead to corresponding decrease in value of the Shares in the Company, so that any such Loss will therefore lead to a corresponding reduction of the Purchase Price according to the provisions set forth below.

The Founders shall be jointly (conjointement) liable for 100 % of the Losses and each Founder shall be jointly (conjointement) liable for the percentage of Losses set forth next to his name in Exhibit 8.1,

8.2 When payable

For the purpose of the indemnification provision, Mr. Chahin Pachai, who accepts, is hereby appointed by each of the Founders in order to act on their behalf to send or receive any notice pursuant to this Article 8 and to take on their behalf any further actions that are necessary, proper or advisable to carry out the conditions of this Article 8.2 and, generally, do whatever may be necessary (the “Founders’ Representative”).

Indemnification under this Article 8 shall be payable with respect to any claim concerning a Loss upon the earlier of (a) the resolution of such claim by mutual agreement between the Founders’ Representative and the Purchaser, (b) the issuance of a final judgment, award, order or other ruling (which is not subject to appeal or with respect to which the time for appeal has elapsed) by a court or arbitral tribunal having jurisdiction over the parties and the subject matter of such claim or to which such claim was submitted for resolution by joint agreement between the Founders’ Representative and the Purchaser or (c) the final settlement of such claim with a third party pursuant to mutual authorization by the Founders’ Representative and the Purchaser. Any sum due by the Founders pursuant to a claim for indemnification will be paid to the Purchaser within thirty (30) days from the date when such claim for indemnification becomes final and payable, being specified that any sum due pursuant to this indemnification provision shall be set off against any part of the Escrow Amount.

8.3 Limitations on Indemnification

8.3.1 The indemnification obligations of the Founders under Article 8.1 above for Losses shall not exceed the total sum of 280,000 euros, breakdown between the Founders as follows:

- 190,400 euros for Mr. Pachai;

- 33,600 euros for Mr. Vincent;

- 28,000 euros for Mr. Olart; and

- 28,000 euros for Mr. Douek.

8.3.2 The Founders’ obligation hereunder is subject to a deductible (franchise) of 50,000 euros. If this deductible is reached, only the excess shall be payable.

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8.3.3 The amount of any indemnity payable hereunder on account of a Loss shall be reduced by any insurance proceeds received by the Indemnified Party with respect thereto.

8.3.4 The Purchaser shall not be entitled to make a claim for indemnification for Losses against the Founders in respect of any assessment for taxes which merely modifies the tax period during which a deductible charge or amortization may be taken or in respect of any VAT assessment (except if such VAT is not recoverable and cannot be recharged to the customers).

8.3.5 The Purchaser shall not be entitled to make a claim for indemnification against the Founders in respect of any Loss for which a specific provision or reserve (provision) has been made in the limit of that Loss, as a line item in, or in the notes to, the Interim Accounts. If the Loss is superior to the amount of the specific provision or reserve, the Purchaser shall be entitled to make a claim for indemnification against the Founders only for the difference between the amount of such specific provision of reserve and the noted Loss.

8.3.6 The limitations set forth in this Article 8.3 shall however not apply to any Losses resulting from events or circumstances which the Founders failed to disclose to the Purchaser in the Agreement or its Exhibits. They shall further not apply to any legal or other expenses, such as attorneys’ or other experts’ fees reasonably incurred by the Purchaser or the Company in pursuing a claim against the Founders on the ground of a Loss, nor shall they apply to any interest which might be due by the Founders on the amount of indemnification.

8.4 Notification of Claims; Third Party Claims

8.4.1 In order for the Purchaser (the “Indemnified Party”) to be entitled to the indemnification of any Loss under the Agreement, the Indemnified Party must send a notification (the “Claim Notice”) to the Founders’ Representative in writing within thirty (30) days from the date on which the Purchaser shall have knowledge of a matter which could give rise to indemnification, except in case of a Third Party Claim which requires a response in a shorter period where such time frame shall be reduced to fifteen (15) days.

For the purposes of the Agreement, a “Third Party Claim” shall mean a claim which a third party has assessed in writing against the Purchaser and/or the Company.

8.4.2 The Claim Notice shall specify (a) the grounds for the possible claim and (b) an estimate of the amounts claimed in respect of the Loss if readily assessable.

In the event the claim by the Indemnified Party involves or arises out of a Third Party Claim, the Claim Notice shall include copies of such Third Party Claim as well as of any documents attached thereto; provided that for the purpose of the Agreement, any tax reassessment notice shall be considered as a Third Party Claim.

8.4.3 The Founders Representative shall, within thirty (30) days (reduced to ten (10) days in case of a Third Party Claim which requires a response in a shorter period) following the Claim Notice, either agree or refuse, in whole or in part, to indemnify the Purchaser (the “Response”). In the event of partial or total refusal, the Founders Representative shall notify the Purchaser of its decision within the above mentioned periods, and indicate the grounds for such refusal.

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8.4.4 If a Third Party Claim is made against the Indemnified Party or the Company, the following provisions shall apply:

(i)

as long as the amount of any Third Party Claim does not exceed the Escrow Amount and subject to paragraph (ii) below, the Founders will have the option (and the Founders Representative shall indicate such option in the Response mentioned in Article 8.4.3) to assume control of the procedure at its sole cost and expense, provided that the Purchaser will be entitled to participate in such defense with counsel of its choice and at their own expense; and

(ii)

as soon as the amount of any Third Party Claim reaches or exceeds the Escrow Amount, the Purchaser may, at its option and through counsel of its choice, assume control of such defense provided that the Founders shall be entitled to participate in such defense with counsel of its choice and at their own expense,

it being specified that the Founders and/or the Purchaser shall assume the defense of the Company exclusively within the Company’s corporate interest.

8.5 Survival of indemnification

The right of the Purchaser to make a claim for a breach of the Founders’ Representations or Warranties under the Agreement shall survive for a period of eighteen (18) months as from the Completion Date except that (i) claims for indemnification based on Article 5.10 shall survive until January 31, 2010 and (ii) claims for indemnification based on Article 5.11 shall survive until December 31, 2010.

Any limitation period with respect to a claim shall be interrupted by a notification of such claim pursuant to Article 8.4; in this case, the provisions of this Article 8 shall remain in force with respect to such claim until it is finally determined as set forth in Article 8.2 above.

ARTICLE 9 CONFIDENTIALITY — PUBLICITY

Each of the Parties hereto shall treat the contents of the Agreement as well as any information obtained from the other parties as confidential and shall refrain from disclosing this Agreement, in whole or in part, to any third party, except as required by law or the rules or regulations of any Governmental Entity in which case the disclosing party shall give prior notice to the other Parties.

The Sellers and the Purchaser agree that no public release or announcement concerning the transactions contemplated herein shall be issued by either Party without the prior consent of the Purchaser and the Sellers’ Representative (which consent shall not be unreasonably withheld), except as such release or announcement may be required by law or the rules or regulations of any Governmental Entity, in which case the party required to make the release or announcement shall give prior notice to the other parties.

ARTICLE 10 EXPENSES

Save as otherwise expressly provided herein, the Parties hereto shall bear their own respective expenses (if any) incurred in connection with the preparation and execution of the Agreement

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and the consummation of the transactions contemplated herein provided that all transfer taxes and stamp duties in connection with the purchase of the Sold Shares shall be borne by the Purchaser.

ARTICLE 11 SELLERS’ REPRESENTATIVE — NOTICES

11.1 Representative of the Sellers

For the purpose of the Agreement, Mr. Chahin Pachai, who accepts, is hereby appointed by each of the Sellers in order to act on their behalf to send or receive any notice pursuant to the Agreement and to take on their behalf any further actions that are necessary, proper or advisable to carry out the purposes of the Agreement and, generally, do whatever may be necessary (the “Sellers’ Representative”). If for any reason the Sellers’ Representative shall cease to be the representative of the Sellers, then within one month commencing from the date of termination of the Sellers’ Representative’s functions, the Sellers shall appoint another representative. Failing appointment of a new agent within said period, all notices and requests hereunder shall be validly given or made to any of the Sellers.

11.2 Notices

All notices and other communications required or authorized hereunder shall be in writing and validly made if either delivered via courier or sent by registered letter (return receipt requested), e-mail or facsimile (provided that it be confirmed by same day registered letter, return receipt requested or courier on an expedited basis for notices sent across international boundaries, in case of an e-mail or facsimile) addressed as follows:

if to the Purchaser:	Bio Imaging Inc, Inc.
	Attn:	Mr. Ted Kaminer,
	Address:	826, Newtown-Yardley Road,
		Newtown, PA 18940 (USA)
	Facsimile:	00 1 267 757 31 89
	E-mail:	tkaminer@bioimaging.com
with a copy to:	Pierre-Antoine Dubecq
	Morgan Lewis
	68, rue du Faubourg St Honoré
	75008 Paris (France)
	Facsimile:	(33) 1 53 30 43 01
	E-mail:	pdubecq@morganlewis.com
if to the Sellers:	Mr. Chahin Pachai
	Sellers’ Representative
	Address:	40 avenue Lacassagne,
		69003 Lyon (France),
	E-mail:	cpachai@gmail.com
with a copy to:	Eric Baroin
	Lamy & Associés
	6, square de l’Opéra Louis-Jouvet

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75009 Paris (France)
Facsimile:	(33) 1 53 05 91 99
E-mail:	eric.baroin@lamy-associes.com

Any change in address or representative for the purposes hereof shall be notified by the concerned Party to the other Parties as provided above.

Notices and other communications delivered via courier shall be effective as of their date of delivery, as evidenced by the delivery receipt, or as of the next Business Day if the date of delivery is not a Business Day.

Notices and other communications sent by registered mail, return receipt requested, shall be effective as of their date of first presentation to the addressee.

Notices and other communications sent by e-mail or facsimile shall be deemed effective as of the date thereof, or as of the next Business Day if such e-mail or facsimile is sent other than on a Business Day, provided that they be confirmed by same day registered mail, return receipt requested, or courier on an expedited basis for notices sent across international boundaries.

ARTICLE 12 SEVERABILITY

Should any of the provisions of the Agreement be held null and void or unenforceable for any reason whatsoever, the Parties undertake to consult each other to remedy the causes of such nullity, so that the Agreement remain in force without any discontinuity to the full possible extent.

ARTICLE 13 ENTIRE AGREEMENT

This Agreement, the recitals and the Exhibits attached hereto represent the entire understanding and agreement of the parties and supersede all prior agreements, understandings or arrangements among the parties hereto with respect to the subject matter hereof including, in particular, the letter of intent sent by the Purchaser to the Sellers and the Company on December 15, 2006. It can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to the Agreement signed by each Party against whom enforcement of such amendment, supplement, modification or waiver is sought.

ARTICLE 14 SUCCESSORS AND ASSIGNS

The Purchaser may freely transfer the Securities and all of their rights and obligations hereunder to any of its Affiliates at any time, in which case the transferee shall be subrogated in all of the Purchaser’s rights and obligations hereunder. The rights resulting from the Representations and Warranties set forth in Article 5 above are not transferable by the Purchaser (or its assignees), except to an Affiliate.

All rights and obligations of the Parties shall be binding upon and inure to the benefit of their respective successors and assigns, jointly and indivisibly with the Party concerned and among themselves.

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ARTICLE 15 LANGUAGE

The Purchaser and the Sellers acknowledge that the French translation of the Agreement has been prepared solely for information purposes and that only the English version of the Agreement shall be the contractually-binding agreement entered into between the Parties, in particular in case of a difference in the interpretation of the terms used in the two versions.

ARTICLE 16 APPLICABLE LAW — JURISDICTION

This Agreement shall be governed by and construed in accordance with the laws of France.

Any dispute arising in connection with the Agreement or as a result or consequence thereof and not otherwise settled shall be subject to the exclusive jurisdiction of the Commercial Court (tribunal de commerce) of Paris.

[Remainder of Page Intentionally Left Blank]

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Executed in 8 original copies

In Lyon

On February 6, 2007

/s/ Mr. Chahin Pachai	/s/ Mr. Fabrice Vincent
Mr Chahin PACHAI	Mr Fabrice VINCENT
/s/ Mr. Philippe Douek	/s/ Mr. Emmanuel Olart
Mr Philippe DOUEK	Mr Emmanuel OLART
/s/ Mr. Joseph Gniewek	/s/ Mr. Jean Claude Morel
GIE VALOREZ	Mr Jean Claude MOREL
By [     ]
/s/ Mr. Laurent Gerfault	/s/ Ms. Marcela Hernadez-Hoyos
Mr Laurent GERFAULT	Ms Marcela HERNADEZ-HOYOS
/s/ Mr. Nicolas Rognin	/s/ Mr. Jérôme Vincent
Mr Nicolas ROGNIN	Mr Jérôme VINCENT
/s/ Mr. Luc Bracoud	/s/ Ted Kaminer
Mr Luc BRACOUD	BIO IMAGING Inc
	Ted Kaminer

Page 30

RHÔNE-ALPES CRÉATION
By:	/s/ Ms. Karine Lignel
	Name: Ms. Karine Lignel
	Title:
AMORÇAGE RHÔNE ALPES
By:	/s/ Ms. Karine Lignel
	Name: Ms. Karine Lignel
	Title:
CRÉDIT AGRICOLE CRÉATION
By:	/s/ Mr. Maurice Bernard
	Name: Mr. Maurice Bernard
	Title:
RHÔNE-DAUPHINÉ DÉVELOPPEMENT
By:	/s/ Mr. Pierre Jourdain
	Name: Mr. Pierre Jourdain
	Title:
SOFIMAC PARTNERS / LE LANCEUR
By:	/s/ Mr. Philippe Vuagnat
	Name: Mr. Philippe Vuagnat
	Title:

Page 31

EXHIBITS

EX-10.18

Confidential Treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as “**”. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

MEDICALERT® PHR SYSTEM
DEVELOPMENT AND SUPPLY AGREEMENT

     This MEDICALERT® PHR SYSTEM DEVELOPMENT AND SUPPLY AGREEMENT (“Agreement”) is made and entered to be effective as of June 16, 2005, by and between CapMed, a division of Bio-Imaging Technologies, Inc., a Delaware corporation (“CapMed”), with its principal place of business located at 826 Newton-Yardley Road, Newtown, Pennsylvania 18940, and Medic Alert Foundation United States, Inc., a California nonprofit public benefit corporation doing business as MedicAlert Foundation International (“MedicAlert”), with its principal place of business located at 2323 Colorado Avenue, Turlock, California 95382.

     WHEREAS, CapMed has developed the proprietary CapMed PHR System for locally storing, managing, transporting and communicating personal health records and medical information on a personal computer and portable flash memory device;

     WHEREAS, MedicAlert desires that CapMed develop the MedicAlert® PHR Software that will incorporate all of the features and functions of the CapMed PHR System with the additional features and functions of storing, managing, and bi-directional synchronizing of multiple users’ personal health records and medical information on both the MedicAlert remote server and each discrete user’s local computer and portable flash memory device;

     WHEREAS, the parties desire that CapMed be the exclusive United States OEM supplier and nonexclusive worldwide OEM supplier of the MedicAlert PHR Software and the Documents and the nonexclusive worldwide OEM supplier of portable flash memory devices for the MedicAlert® PHR System, and that MedicAlert have the exclusive, worldwide right and license to use and resell the MedicAlert® PHR System as a MedicAlert® branded product and service; and,

     WHEREAS, the parties desire to cross-market their respective goods and services.

     NOW, THEREFORE, in consideration of these premises, of the covenants and conditions in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are acknowledged, CapMed and MedicAlert covenant and agree as follows:

1. Definitions.

(a) “CapMed PHR Software” means one or more client, server, or portable flash memory device resident personal health records management computer programs or program modules, and all embedded computer programs or program modules, and all compilations and derivative works thereof, which secure or manage the data stored on the device, including, without limitation, the partitioning, data-encryption, password protection, auto launching of user designated information, and data importation, and includes the CapMed server resident “hub” programs or program modules required for each discrete remote user to upgrade the CapMed PHR Software or to access the embedded third party content

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	on each discrete user’s remote computer or portable flash memory device as may be necessary to make the CapMed PHR System fully functional, whether developed as an original, derivative or compilation work by CapMed under this Agreement and whether integrated with existing software or embedded computer programs or program modules in the CapMed PHR Software and all related source code, machine code, schematics, updates, modifications, bug fixes, update enhancements or other modifications, compilations or derivative works, but excludes the MedicAlert® Software.
(b)	“CapMed PHR System” means the integrated data base management system designed to store, manage, transport and communicate personal health and medical information described in the Patent Application or the Copyright, including the CapMed PHR Software, the HealthKey, and all related intellectual property, including, without limitation, software, trade secrets and know-how.
(c)	“Copyright” means the United States Copyright Registration Number TXu-905-251 entitled Personal Health Record for a computer program, and all compilations or derivative works thereof.
(d)	“CPT” means “carriage paid to” and as more fully defined by the International Chamber of Commerce as an Incoterm.
(e)	“Documentation” means all instructions, manuals, diagrams or other written materials, in printed or binary formats, that describe the functionality or assist in the use of the CapMed PHR Software, the CapMed PHR System, the HealthKey, the MedicAlert® PHR System and the MedicAlert PHR Software.
(f)	“HealthKey” means CapMed’s proprietary portable flash memory device trademarked as the Personal HealthKey™.
(g)	“machine code” means computer programs or program modules assembled or compiled in binary form on software media that are readable and usable by machines, but not generally readable by humans without reverse-assembly, reverse-compiling, or reverse-engineering techniques.
(h)	“MedicAlert® enabled offer” means the joint promotional effort of the parties to modify the packaging and the CapMed PHR System to promote MedicAlert® membership and the MedicAlert® PHR System. Users of the MedicAlert® enabled CapMed PHR System will be able to subscribe to become a MedicAlert® member and convert to the MedicAlert® PHR System through various means, including, without limitation, printing out a form and mailing to MedicAlert, calling a toll-free telephone number or by accessing the MedicAlert Internet server through the CapMed PHR Software via an Internet connection.
(i)	“MedicAlert® PHR Software” means the fully functional personal health records data base management software that is modified in order to integrate all of the features, functions, and specifications of the CapMed PHR Software, the CapMed PHR System and the HealthKey with the MedicAlert® Software, in order to support the MedicAlert PHR System.

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(j)	“MedicAlert® PHR System” means the fully functional personal health records data base management system that integrates all of the features, functions, and specifications of the CapMed PHR System, the MedicAlert® Software and the MedicAlert PHR Software.
(k)	“MedicAlert® Software” means one or more server resident programs or program modules required to verify the remote user’s identity and to process and synchronize incoming and outgoing user personal health and medical information on a local MedicAlert server with a remote client computer or portable flash memory device as may be necessary to make the MedicAlert® PHR System fully functional, whether developed as an original, derivative or compilation work by MedicAlert or CapMed under this Agreement and whether integrated with existing software or embedded computer programs or program modules in the CapMed PHR Software and all related source code, machine code, schematics, updates, modifications, bug fixes, update enhancements or other modifications, compilations or derivative works.
(l)	“OEM” means the original equipment manufacturer and supplier of goods or services for use and resale as a MedicAlert® branded product.
(m)	“Patent Application” means the United States Patent Application 10/393,751 entitled “System, apparatus and method for storage and transportation of personal health records;” all issued patents thereon; all divisions, reissues, continuations and continuation-in-part patents and patent applications; all corresponding foreign patents and patent applications; and all related foreign patents and patent applications owned by Bio-Imaging Technologies, Inc., or its parent or affiliate companies.
(n)	“Portable flash memory device” or “portable flash memory device” means a portable nonvolatile electrically erasable programmable read-only memory device that can be repeatedly erased and written to and from a personal computer via an industry standard Universal Serial Bus (USB) port, which has been approved by CapMed, such approval not to be unreasonably withheld.
(o)	“Software” or “software” means computer program or program modules in source code or machine code, schematics, updates, modifications, bug fixes, update enhancements, or other modifications, and all related compilations and derivative works.
(p)	“Source code” or “source code” means computer programs or program modules on software media that are human readable without reverse-assembly, reverse-compiling, or reverse-engineering techniques, and includes, the compiler/assembler/linker.

2. Description of Goods and Services.

(a) This Agreement is for the development and OEM supply of the MedicAlert® PHR Software. On MedicAlert’s acceptance of the fully functional commercial version of the MedicAlert® PHR Software, CapMed will become the exclusive United States and nonexclusive worldwide OEM supplier of client or portable flash memory device personal health records management computer programs or program modules that integrates all of the features, functions, and specifications of the CapMed PHR System as it may be modified to perform the functions and meet the specifications of the MedicAlert® PHR System, and the nonexclusive worldwide OEM supplier of portable flash memory devices, and MedicAlert will have the exclusive, worldwide right and

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license to use and resell the MedicAlert® PHR System as a MedicAlert® branded product and service (provided, however, such nonexclusive worldwide OEM suppliers shall not be permitted to supply a personal health record system to MedicAlert outside the United States for sale or distribution in the United States). CapMed will supply MedicAlert with individual commercial units of the MedicAlert PHR Software on CD-ROM with and subject to CapMed’s standard end-user shrink-wrap software license, and individual commercial units of the HealthKey in such quantities and packaging as MedicAlert may from time to time specify.

(b)

During the term of this Agreement, the parties may, from time to time, desire that CapMed supply additional goods developed or manufactured by CapMed. The terms and conditions of the parties agreement governing such additional goods, including, without limitation, product specifications, manufacturing, delivery, terms of payment, warranties, default, and remedies upon default, will be governed by the parties separate agreement and will not be incorporated in this Agreement without the parties express written consent.

3. MedicAlert Development.

(a)

MedicAlert intends to launch publicly the MedicAlert® PHR System as a MedicAlert® branded product on July 25, 2005. MedicAlert is, by this Agreement, reasonably relying upon CapMed’s technical skills and expertise for the technical success of the MedicAlert® PHR System as a MedicAlert® branded product. To the extent that the MedicAlert® PHR System will be a MedicAlert® branded product, CapMed acknowledges that the development, improvements, and maintenance of the MedicAlert® PHR Software will be tied directly to the goodwill associated with the MedicAlert® trademark and trade name, and will ensure that the MedicAlert® PHR Software will meet MedicAlert’s high standards for quality and that it charges MedicAlert its most competitive pricing for all finished goods.

(b)

CapMed will be the exclusive United States developer and nonexclusive worldwide developer, and MedicAlert will be the exclusive worldwide licensee, user, and reseller of the MedicAlert® PHR Software as a MedicAlert® branded product and service. CapMed will promptly use its best efforts as a high priority matter to develop, to maintain and to integrate seamlessly all of the features, functions and specifications of its most current version of the CapMed PHR Software and the CapMed PHR System, with the MedicAlert® Software to allow generally, among other things:

(i)

A user to enter, update, or manage his or her personal health or health care information on the user’s local computer, to cause the local computer to automatically and transparently upload and synchronize such information with the user’s personal health and health care information stored on the user’s local portable flash memory device, and to cause the local computer to automatically and transparently upload and synchronize such information via an Internet connection with the user’s personal health and health care information stored in the user’s account on a remote server;

(ii)

A remote server operator to enter, update, or manage a user’s personal health or health care information to the user’s account on the remote server, to cause the

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remote server to automatically and transparently upload and synchronize such information via an Internet connection with the user’s personal health and health care information stored on the user’s local computer, and to cause the user’s local computer to automatically and transparently upload and synchronize such information with the user’s personal health and health care information stored on the user’s local portable flash memory device; and,

(iii)

Such other customizations as MedicAlert may reasonably request or require that are generally available to the CapMed PHR System, including, without limitation, Profile Customizations, Profile Element Customizations, Pick List Customizations, Web Link customizations, and Field Level Links customizations. Any additional customizations or unique product upgrades and/or improvements as MedicAlert may reasonably request may be provided by CapMed; provided, however, CapMed shall reserve the right to charge an additional fee to be mutually agreed upon for such customizations.

(c)

Within forty-five (45) days of the effective date of this Agreement, CapMed and MedicAlert will exercise their good faith and best commercial efforts to make and enter a software escrow agreement pursuant to Section 18 below, and within five (5) days of the effective date of this Agreement will finalize and execute the attached Schedule A to this Agreement that will define the scope, project requirements and development responsibilities to develop, implement and commercially launch a robust, stable and fully functional commercial version of the MedicAlert® PHR System. The Schedule A will also set forth an objective milestone driven development, field test, acceptance, implementation and product launch schedule. All of the terms, conditions and schedules set forth in software escrow agreement and Schedule A shall be incorporated as material terms and conditions of this Agreement.

(d)

If for any reason either party is unable to meet any of the development or performance milestones of Schedule A, such party shall be in material breach of this Agreement and the other party may, but is not obligated to, terminate this Agreement with no further duty or obligation except as may be expressly set forth in this Agreement. In the event either party waives this provision as to any specified development or performance milestone, such waiver will not affect such party’s right to terminate this Agreement on the other party’s failure to meet any subsequently specified development or performance milestone.

4. Upgrades and Improvements.

(a)

CapMed will continually **. CapMed will make **.

(b)

Any maintenance, including error correction, debugging or other technical assistance required to remedy any defects in or other malfunctions of the CapMed PHR System which have a material impact on the MedicAlert® PHR System will be undertaken by CapMed immediately, commencing ** hours of notification by MedicAlert, and CapMed will ensure that all personnel necessary to commence and complete as quickly as possible such maintenance are made available for these purposes. CapMed will **.

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(c) CapMed will make available all version upgrades and improvements as soon as they are commercially available to all MedicAlert® PHR System users of the CapMed PHR Software in machine code via Internet download from the “Check for Updates” and “Update Now” tabs on the “Tools” menu in the drop down navigation bar of the CapMed PHR Software . For purposes of this Agreement, “version upgrade” shall include all CapMed versions, updates, modifications, bug fixes, enhancements, improvements and other modifications to the CapMed PHR Software or the MedicAlert PHR Software that are not exclusively developed for the unique requirements of any other CapMed licensee.

5. Support.

(a)	CapMed will promptly upon delivery of each version or version upgrade of the CapMed PHR Software provide to MedicAlert, at a designated MedicAlert facility, the technical assistance, training and know-how necessary for MedicAlert to use and maintain the client and portable flash memory device versions of the MedicAlert® PHR System. MedicAlert will reimburse CapMed for all reasonable costs associated with such training.
(b)	MedicAlert will, at its sole cost and expense, provide primary call center customer service and support to the user’s of the MedicAlert® PHR System.
(c)	CapMed will provide secondary call center customer service and support to MedicAlert’s customer service representatives during normal business hours (EST/EDT), and will provide secondary twenty-four (24) hour call center customer service and support on one hundred twenty (120) day notice after predetermined minimum subscription volumes are achieved.

6. MedicAlert® PHR System Cross-Licenses.

(a)	CapMed hereby grants to MedicAlert the exclusive, worldwide right and license to undertake, or authorize others to undertake on MedicAlert’s behalf, the use and sale of the MedicAlert® PHR Software, and all corresponding rights under all patent, copyright, trademark, trade secret and other laws necessary or appropriate for the full enjoyment of the rights granted hereby.
(b)	MedicAlert hereby grants to CapMed the exclusive United States and nonexclusive worldwide right and license to undertake, or authorize others to undertake on MedicAlert’s behalf, the use of the MedicAlert® Software to the extent it may be integrated in the MedicAlert® PHR System, and all corresponding rights under all patent, copyright, trademark, trade secret and other laws necessary or appropriate for the full enjoyment of the rights granted hereby. CapMed will not, directly or indirectly (such as through authorization of third parties by way of license or otherwise) distribute or otherwise exploit the MedicAlert® Software.
(c)	The licensed rights granted by each party to the other include the rights:

(i)	To reproduce and authorize others to reproduce the MedicAlert® PHR Software;
(ii)	To publicly distribute and authorize others to publicly distribute machine code copies of the MedicAlert® PHR Software;

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(iii)	To grant sublicenses authorizing others to publicly distribute machine code copies of the MedicAlert® PHR Software;
(iv)	To publicly display and perform and authorize others to publicly display and perform portions of the MedicAlert® PHR System for the purpose of promoting the distribution and sale of the MedicAlert® PHR System and to reproduce and publicly distribute machine code copies of the MedicAlert® PHR Software for such purposes.

(d)

Notwithstanding the foregoing, and subject to the restrain against assignment as set forth more fully in Section 20, below, nothing in this Agreement shall be interpreted or construed to allow either party to sub-license or assign any of the licensee right granted herein to any third party; provide, however, that either party may delegate their licensee rights of Section 6(c) above to their agents or employees, and, provided further, that upon such delegation the delegating licensee shall remain liable to the other party for the act of its agents or employees under the terms of this Agreement.

(e)

Notwithstanding the foregoing, nothing in this Agreement will otherwise limit or restrict CapMed from selling or licensing all or any part of the CapMed PHR Software, the HealthKey, or CapMed PHR System to any third party, and nothing in this Agreement will otherwise limit or restrict MedicAlert from selling or licensing all or any part of the MedicAlert® Software to any third party.

7. Proprietary Rights

(a)	Title to the CapMed PHR System, including any enhancements, modifications or derivatives thereto, other than the MedicAlert® PHR Software, (including all intellectual property rights pertaining thereto) shall at all times remain and vest solely with CapMed. MedicAlert agrees that it will not claim or assert title to any such materials or attempt to transfer any title to End-Users or any third parties.
(b)	Title to the MedicAlert® Software, whether as an original, compilation or derivative work, and any enhancements, modifications or derivatives thereto, (including all intellectual property rights pertaining thereto) shall at all times remain and vest solely with MedicAlert. CapMed agrees that it will not claim or assert title to any such materials or attempt to transfer any title to End-Users or any third parties.
(c)	The MedicAlert® PHR System and the MedicAlert PHR Software is a collective, compilation or derivative work. Title to the MedicAlert® PHR System and the MedicAlert PHR Software shall at all times remain and vest with MedicAlert; provided however, that title to the MedicAlert® PHR System and the MedicAlert PHR Software shall not extend to the separate property contributed by the parties under this cross-license for the sole and limited purpose of creating the collective, compilation or derivative work. CapMed agrees that it will not claim or assert title to any such materials or attempt to transfer any title to End-Users or any third parties.
(d)	Each party’s proprietary and intellectual property rights (including patent, trademark, copyright, trade secret and other rights) not expressly licensed to the other party under this agreement shall remain the separate property of such party.

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(e) The CapMed PHR Software, either as a stand alone product or as incorporated into the MedicAlert® PHR System, shall be marked with such copyright, patent or other notices, proprietary legends, or restrictions as CapMed requires in this agreement or subsequent written notice by CapMed to MedicAlert. CapMed shall place CapMed’s proprietary notices on each copy of the CapMed PHR Software media and between the title and table of contents in each copy of the Documentation. In addition to the foregoing, MedicAlert will ensure that any portable flash memory device that includes the embedded MedicAlert PHR Software and is covered within the scope of CapMed’s pending Patent Application will be marked as patent pending and, when such patent is actually issued, will be marked as patented with the patent number.

8. Trademark and Trade Name License.

(a)	CapMed hereby grants to MedicAlert, and MedicAlert hereby grants to CapMed, the nonexclusive, worldwide, right and license to use, publicly display, and publicly distribute each other’s trademarks, service marks, trade names or trade dress in their individual and joint marketing and sales promotional material in connection with the MedicAlert® PHR systems; provided, however, that neither party will have the right to use the other’s names or marks without having first obtained the other’s express written approval, which will be in such party’s sole and absolute discretion, to the nature and content of the marketing or sales promotional materials, the use of such party’s trademarks or trade names in such materials, and the conformity of the trademarks or trade names to the standardized marks and names used by such party.
(b)	Subject to the pre-release approval provisions of subparagraph (a), MedicAlert hereby grants to CapMed the nonexclusive, worldwide, right and license to modify the CapMed PHR Software and packaging to promote and include the MedicAlert® enabled offer in all CapMed branded copies of the CapMed PHR Software.
(c)	Each party represents and warrants that all trademarks, service marks, trade names, or trade dress designated by such party to be used on or in any product packaging or labeling, or in any sales or marketing promotional materials have been properly authorized for such use by the owner of such rights, and that the other’s use of such marks or dress will not infringe the rights of any third party.
(d)	Each party will defend, indemnify, and hold the other party harmless against any and all claims, demands, or liability, including attorney fees and costs, arising out of or relating to its breach of any representation or warranty set forth in this section.

9. Contract Price.

(a) The MedicAlert® PHR System

(i) The MedicAlert® PHR System will be priced on ** basis and will include access to all version upgrades and improvements during the subscription term. The initial ** will be in an amount not to exceed ** on ** subject to ** up to ** on **. Beginning in the second year, the ** price will be in an amount equal to ** of the MedicAlert ** charged by MedicAlert to the **. Based upon the current pricing model, the ** would be equal to **.

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(ii)	The hardware component of the HealthKey will be priced on a ** basis in an amount not to exceed **. CapMed will use reasonable commercial efforts to work with its OEM suppliers to reduce the HealthKey costs and increase performance. Notwithstanding the forgoing, nothing in this Agreement shall prohibit or restrict MedicAlert from purchasing portable flash memory devices direct from any OEM, including, without limitation, any OEM that CapMed may be purchasing its HealthKey.
(iii)	In the event MedicAlert desires to purchase portable flash memory devices directly from an OEM, MedicAlert shall notify CapMed at least thirty (30) days in advance and shall provide CapMed with a sample unit of the portable flash memory device. CapMed will promptly use good faith and its best efforts as a high priority matter to qualify the portable flash memory device as compatible with the CapMed PHR Software and the MedicAlert® PHR System, and MedicAlert will pay CapMed the reasonable cost associated with qualifying such portable flash memory device.
(iv)	MedicAlert pay CapMed a ** fee in an amount equal to ** for ** to ** other than a ** in Section 9(a)(i) ** of the product.

(b) The MedicAlert® enabled offer

(i)	The MedicAlert® enabled offer will be priced on a ** basis in an amount equal to ** who becomes **.
(ii)	In the event of a conversion through the “MedicAlert® enabled” offer, ** will be **. Beginning in **, the ** will be ** as ** under Section 9(a)(i), above.

(c)

All prices exclude packaging. Packaging will be priced in an amount not to exceed **.

(d)

In the event a MedicAlert® PHR System user terminates their subscription, MedicAlert will promptly notify CapMed of such termination and the parties shall block such terminated subscriber’s ability to access the MedicAlert server and the CapMed server. In the event such terminated subscriber resubscribes to the MedicAlert® PHR System, MedicAlert will promptly notify CapMed of such resubscription and the parties shall again allow the resubscribed user to access the MedicAlert server and the CapMed server. Notwithstanding the foregoing, if any subscriber remains inactive for at least two (2) years, then such subscriber shall be deemed to be a new subscriber for purposes of this Agreement. All resubscriptions will be priced, and royalties paid, as a renewal subscription.

10. Packaging.

(a) MedicAlert will provide CapMed with the packaging specifications and any necessary artwork no later than sixty (60) days in advance of the earliest scheduled shipping date. If such special packaging will delay the scheduled shipping date, or increase CapMed’s cost to manufacture and/or ship, CapMed will, within fifteen (15) days of receipt of MedicAlert’s notice, provide MedicAlert with notice of any shipping delay or cost increase. Within ten (10) days of receipt of CapMed’s notice, MedicAlert will provide CapMed with written notice of its acceptance or rejection of any such shipping delay or

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	cost increase. In the event MedicAlert rejects any such shipping delay or cost increase, CapMed will be under no obligation to include such special packaging in the order. Unless otherwise agreed to by the parties, MedicAlert bear all of the costs and expenses related to packaging.
(b)	CapMed will place such MedicAlert or MedicAlert health insurance marketing partner notices, trademarks, symbols and/or legends on or with respect to all copies and all components of the MedicAlert® PHR System as MedicAlert may reasonably designate in writing, including, without limitation, in a manner which will cause such material to appear on an initial screen display upon activation of the MedicAlert® PHR System client software.
(c)	CapMed will place such CapMed copyright or patent notices, symbols and/or legends on or with respect to all copies and all components of the MedicAlert® PHR System as MedicAlert may reasonably consent in writing, including, without limitation, in a manner which will cause such material to appear on the “About” screen from the “Help” menu of the drop down navigation bar of the MedicAlert® PHR System client software; provided, however, that CapMed will not place any CapMed trademark, service mark, symbol and/or legend to brand any such copy or component as a CapMed product or to otherwise designate the origin of any such copy or component as other than MedicAlert.

11. Product Order and Confirmation.

	(a)	All orders will be made in accordance with forms agreed by both parties. Each order will indicate the goods and quantity of each of the goods to be purchased, as well as the desired schedule of delivery date(s).
	(b)	Within 3 business days of receipt of such purchase order, CapMed will provide MedicAlert with a written confirmation of such order, which confirm the goods and quantity of each of the goods, and fix a schedule of delivery dates(s) as close as commercially practicable to the desired schedule of delivery date(s).
12.   Delivery and Terms of Payment.
	(a)	CapMed will use its best efforts to meet MedicAlert’s orders, and will give such orders first priority in distributing its available stock and in manufacturing new stock, regardless of whether the terms and conditions for MedicAlert’s purchase is on less favorable terms than other customers of CapMed. If CapMed for any reason is not able to ship on the scheduled shipping date, CapMed will notify MedicAlert in writing at least five (5) business days before the scheduled shipping date, such written notification will also include an estimate of the rescheduled shipping quantities and dates.
	(b)	The delivery of all goods under this Agreement will be CPT MedicAlert’s principal place of business.
	(c)	Payments:

(i)	All payments under this Agreement are due net of any relevant taxes within **.
(ii)	All payments under this Agreement for HealthKeys are due, net of any relevant taxes as follows:

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(1)	** due at **; and
(2)	** due within **.

13. Inspection on Receipt and Replacements. MedicAlert will, within seven (7) business days of delivery receipt, inspect the goods and packaging and inform CapMed in writing of any nonconformance with the specification or any express CapMed warranty hereunder. Such written notice will include the method of inspection, the details and nature of the discovered defects, and request replacements. MedicAlert will, at CapMed’s expense, return the defective goods to CapMed, and within a commercially reasonable time for the first priority manufacturing of new goods from CapMed’s receipt of the returns, CapMed will deliver replacements to MedicAlert. Any replacements will also be subject to these inspection and acceptance procedures.

14. Warranties.

(a) As a material inducement to this Agreement, CapMed represents and warrants to MedicAlert that:

(i)	the MedicAlert® PHR System will strictly comply with the descriptions (including performance capabilities, completeness, specifications, configurations, and function) in this Agreement;
(ii)	all computer programs or program modules will operate in conformance with the specifications;
(iii)	all Documents will be functional and comprehensible for their intended users;
(iv)	all delivered goods will be merchantable and will be fit for their intended purpose, and will be free from defects in materials and manufacturing for a period of twelve (12) months of normal use from the date of each individual user’s subscription;
(v)	CapMed has good title to the CapMed PHR System;
(vi)	the CapMed PHR System is free and clear of any and all third party liens, judgments, or encumbrances;
(vii)	the CapMed PHR System will not violate or in any way infringe upon the rights of third parties, including property, contractual, employment, fiduciary, trade secrets, proprietary information and nondisclosure rights, or any trademark, service mark, trade name, trade dress, copyright, or issued patent rights;.
(viii)	MedicAlert’s intended use or resale of all delivered goods will not violate or in any way infringe upon the rights of third parties, including, without limitation, property, contractual, employment, trade secret, proprietary information and nondisclosure rights, or trademark, copyright or patent rights.

(b) As a material inducement to this Agreement, MedicAlert represents and warrants to CapMed that:

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(i)	the MedicAlert® Software will strictly comply with the descriptions (including performance capabilities, completeness, specifications, configurations, and function) in this Agreement;
(ii)	it has good title to the MedicAlert® Software;
(iii)	the MedicAlert® Software is free and clear of any and all third party liens, judgments, or encumbrances;
(iv)	the MedicAlert® Software will not violate or in any way infringe upon the rights of third parties, including property, contractual, employment, fiduciary, trade secrets, proprietary information and nondisclosure rights, or any trademark, service mark, trade name, trade dress, copyright, or patent rights;

(c) CapMed will provide MedicAlert with repaired or replacement units free of charge for all defective goods during the warranty period. All costs and expenses arising out of or related to any such warranty repair or replacement will be borne by CapMed.

15. Defense and Indemnification.

(a)	Each party (the “Indemnifying Party”) will defend, indemnify and hold harmless the other party (the “Indemnified Party”) from and against any claims, demands, or liability, including attorney fees and costs, of any nature, whether accrued, absolute, contingent or otherwise, arising from or relating to the failure or breach of any of the warranties, covenants or agreements made by the Indemnifying Party in this Agreement.
(b)	CapMed (the “Indemnifying Party”) will defend, indemnify and hold harmless MedicAlert (the “Indemnified Party”) from and against any claims, demands, or liability, including attorney fees and costs, of any nature, whether accrued, absolute, contingent or otherwise, arising from or relating to any allegation that the MedicAlert® PHR System or any CapMed component thereof (excluding only the MedicAlert developed MedicAlert® Software) or that any activity involving the MedicAlert® PHR System or any CapMed component thereof (excluding only the MedicAlert developed MedicAlert® Software) violates or in any way infringes upon the patent rights of third parties. Notwithstanding the foregoing, CapMed will have no obligation to indemnify MedicAlert against any ** damages as a result of conduct by MedicAlert which has been finally determined ** to have been ** CapMed will ** MedicAlert **, CapMed will ** as may be necessary **. The defense and indemnity obligations of this subparagraph are a material inducement to this Agreement, are made after review and consultation with legal counsel, and constitute the bargained for allocation of risk between the parties.
(c)	Within a reasonable time after the written assertion against the Indemnified Party by a third person of a claim or liability which would entitle the Indemnified Party to a defense and indemnification under this Agreement, the Indemnified Party will give the Indemnifying Party written notice of the claim. The failure or delay of any such notice that is materially prejudicial to the Indemnifying Party’s ability to defend or indemnify against such claim or liability shall relieve the Indemnifying Party of any obligation of defense or indemnification with respect to such claim or liability.

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(d)	Upon receipt of timely notice, the Indemnifying Party shall undertake the responsibility for the defense of such claim, at its own cost and expense. If, within fifteen (15) days after delivery of the notice of claim by the Indemnified Party, the Indemnifying Party fails to advise the Indemnified Party of its agreement to contest and defend against any such claim or if the Indemnifying Party does not participate in such litigation, proceeding or settlement negotiations, for any reason, then the Indemnified Party shall have the right, at the Indemnifying Party’s cost and expense, to take such action as the Indemnified Party deems appropriate to defend, contest, settle or compromise any such claim or liability, and the Indemnifying Party agrees to be bound by any and all rulings, judgments, compromises, and settlements reached by the Indemnified Party in good faith, in the same manner as if the Indemnifying Party participated therein. In addition, in the event that the use or sale of all or any part of the MedicAlert PHR System, other than the MedicAlert PHR Software, is enjoined, or is likely to be enjoined as a result of a suit based on alleged infringement or misappropriation of third party intellectual property rights, MedicAlert agrees that CapMed shall have the option at CapMed’s sole cost and expense to either: (i) procure for itself and MedicAlert the right to continue to use the MedicAlert PHR System, or (ii) replace or modify the infringing or misappropriating software so that it becomes non-infringing provided that the replaced or modified software shall conform in all respects with the specifications required by this Agreement and shall be subject to all of the terms and conditions of this Agreement, including, without limitation, all of the express and implied CapMed representations and warranties.
(e)	The Indemnified Party shall have the right to participate at its own expense and through counsel of its own choosing in contesting and defending against any such claim and in any litigation, proceedings or settlement negotiations with respect thereto. If, upon advice of the Indemnified Party’s counsel, the Indemnified Party would not be adequately represented by the Indemnifying Party’s counsel because of a conflict of interest, inability to present a defense that would otherwise be available to the Indemnified Party , or lack of experience or expertise in matters similar to the underlying claim, the Indemnified Party shall have the right to be represented by counsel of its own choosing at its own expense.
(f)	Without the written consent of the Indemnified Party, the Indemnifying Party may not consent to the entry of any judgment with respect to the matter or enter into any settlement that does not include a provision by which the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect to the matter; provided, however, that in the event that a plaintiff or claimant refuses to release the Indemnified Party from all liability with respect to the matter after the Indemnifying Party has exercised its best commercial efforts to obtain a negotiated settlement or consensual judgment that includes such release, the Indemnifying Party may consent to an entry of judgment or enter a settlement that does not release the Indemnified Party if prior to the entry of any such judgment or settlement the Indemnifying Party reasonably establishes to the Indemnified Party that it can immediately satisfy the judgment or settlement on entry and irrevocably provides for the immediate satisfaction of the judgment or settlement on entry.

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(g) The Indemnifying Party will reimburse the Indemnified Party within thirty (30) days after presentation of an itemized statement of costs and/or damages for such indemnification claim as set forth above.

16. Limitation of Liability.

(a) CAPMED DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES AS TO THE SUITABILITY OR MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE MEDICALERT® SOFTWARE OR ANY PORTABLE FLASH MEMORY DEVICE OTHER THAN A HEALTHKEY. IN NO EVENT SHALL CAPMED BE LIABLE TO MEDICALERT FOR ANY MEDICALERT LOST OR ANTICIPATED PROFITS, OR ANY INCIDENTAL, EXEMPLARY, SPECIAL, OR CONSEQUENTIAL DAMAGES, REGARDLESS OF WHETHER IT WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN CONNECTION WITH THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, EITHER THE MEDICALERT PHR SYSTEM OR MEDICALERT PHR SOFTWARE. THE LIMITATION OF LIABILITY CONTAINED HEREIN REFLECTS AN ALLOCATION OF RISK BETWEEN THE PARTIES AND WILL SURVIVE AND APPLY EVEN IF ANY LIMITED REMEDY FAILS OF ITS ESSENTIAL PURPOSE.

17. Confidentiality.

(a)	All intellectual property, knowledge, information, documents, materials, or such other proprietary information, received by a party from the other party, whether or not it is designated as confidential or proprietary will, except as specified below, be considered confidential information. Confidential information includes, without limitation, the CapMed PHR System, the MedicAlert PHR Software, the identity, personal health records, and medical information of MedicAlert® members and MedicAlert® PHR System subscribers. The party receiving such information will refrain from directly or indirectly taking any action that would constitute or facilitate the unauthorized use or disclosure of such information, will take any and all lawful measures to prevent the unauthorized use and disclosure of such information, and will prevent unauthorized persons or entities from obtaining or using such information.
(b)	The provisions of this Section do not apply to any knowledge, information, documents, materials, or the like, which the receiving party can conclusively establish: (i) has entered the public domain without the receiving party’s breach of any obligation owed to the disclosing party; (ii) has become known from a source other than the disclosing party and other than by breach of an obligation of confidentiality owed to the disclosing party or a third party; (iii) is disclosed by the disclosing party to a third party without restrictions on its disclosure; or, (iv) is independently developed by the receiving party without breach of this Agreement.
(c)	Notwithstanding the foregoing, nothing in this Agreement will be construed to limit either party’s right to independently develop or acquire one or more goods or services that are similar to or competitive with the goods or services contemplated by or embodied in the other party’s confidential or proprietary information, or to acquire, by purchase or license, any rights, organizations or assets thereof, provided that the developing party

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	does not use the other party’s confidential or proprietary information in violation of this Agreement; including, without limitation, MedicAlert’s pre-existing right to include a one page summary of its individual member’s critical personal health information substantially in the same form and content as the existing MedicAlert® MED Software (including, without limitation, name, date of birth, address, health insurance provider and policy number, drug allergies, and known medical conditions) on a portable flash memory device that is not integrated in the MedicAlert® PHR System. Each party understands that the other party evaluates, designs, develops and acquires software and other goods or services, and that the existing or planned goods or services independently developed, evaluated, designed, developed or acquired by the other party may contain ideas and concepts similar to those contained in the goods or services received by the other party. Nothing in this Agreement will preclude the other party from marketing such developed, designed or acquired goods or services to others. Each party reserves the right to deal with any other vendor, supplier, or purchaser on any terms and with respect to any subject matter.
(d)	Promptly upon the request of a party, the other party will deliver all copies, notes, packages, diagrams, computer memory media, and all other materials containing any confidential or proprietary information of the other party, and destroy all compilations, analyses and other materials which contain any such confidential information; provided, however, that the destroying party may retain one copy of the confidential information in a file accessible only to legal counsel for the sole purpose, in the event of a future dispute, of proving what information it did or did not receive.
(e)	Neither party shall disclose the commercial and financial terms of this Agreement without the consent of the other party, which consent shall not be unreasonably withheld; provided, however, if required by law, upon advice from its counsel, CapMed shall be permitted to disclose the terms of this Agreement upon notice to MedicAlert but without the consent of MedicAlert; provided, further, that CapMed shall use its commercially reasonable efforts to keep such confidential information as confidential as possible.
(f)	The provisions of this Section will survive the term of this Agreement.

18. Term and Termination.

(a) The term of this Agreement and any licenses related thereto will be five (5) years from the effective date of this Agreement, and will automatically renew for successive one (1) year terms, unless terminated earlier

(i)	by the mutual consent of both parties;
(ii)	by either party for any reason upon one year written notice prior to termination;
(iii)	by a party ceasing to do business with no successor assuming all of such party’s obligations under this Agreement;
(iv)	by the insolvency of a party, however such insolvency is evidenced, including, without limitation, by a general assignment for the benefit of its creditors, or by a voluntarily or involuntarily filing of a petition in bankruptcy;

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(v)	by the dissolution or liquidation of a party, unless such dissolution or liquidation is the result of a merger or consolidation with a controlling or affiliated company;
(vi)	by either party on thirty (30) days written notice of the other party’s material breach of a substantive term of this Agreement if such breach is curable within thirty (30) days and is not cured within such time; or,
(vii)	by either party on commercially reasonable written notice of the other party’s material breach of a substantive term of this Agreement if such breach is not curable within thirty (30) days and the party declared in breach is not then using its best efforts and acting in good faith to cure such breach as promptly as practicable within such commercially reasonable notice period.

(b)	During the ** period immediately following the termination date, MedicAlert and the MedicAlert® PHR System subscribers will have the limited exclusive, worldwide right and license to use all and any component of the MedicAlert® PHR Software, and all corresponding rights under all patent, copyright, trademark, trade secret and other laws as may be necessary or appropriate for the sole and limited purpose of transferring the MedicAlert® PHR System subscribers to alternative goods or services that may be competitive with the CapMed PHR System or the MedicAlert® PHR System and that were not developed in violation of this Agreement.
(c)	In the event that this Agreement is terminated by CapMed without cause, or by MedicAlert on the insolvency, dissolution or uncured material breach of CapMed, MedicAlert shall have the irrevocable right and option to purchase an irrevocable, fully paid up, royalty free, worldwide license to make, use, modify, enhance, further develop, sell, and sublicense all and any component of the MedicAlert® PHR Software, and all corresponding rights under all patent, copyright, trademark, trade secret and other laws as may be necessary or appropriate for the full enjoyment of the rights otherwise granted under this Agreement.
(d)	If the parties are unable to agree on the purchase price within thirty (30) calendar days of the termination date, each party shall appoint, within thirty (30) calendar days thereafter, one appraiser and the two appraisers shall within a period of five (5) additional days, agree on and appoint an additional appraiser. The appraisers shall be experienced in valuing licenses. The three appraisers shall, within sixty (60) calendar days after the appointment of the third appraiser, determine the fair market value of the license in writing and submit their report to all the parties. The fair market value shall be determined by taking the arithmetic mean of the two closest appraisers’ valuations, shall be final, and shall not be subject to appeal. Each party shall pay for the services of the appraiser selected by it, plus one-half of the fee charged by the third appraiser. MedicAlert shall have five (5) days from the appraisal determination of fair market value to give CapMed written notice of its intent to exercise or waive its rights to exercise the option. In the event that MedicAlert elects to exercise its option, the purchase price may be paid by a promissory note secured by the license over a period not to exceed five (5) years with interest at a rate equal to the Prime Rate.
(e)	On completion of all Schedule A milestones and pursuant to the software escrow agreement, CapMed will deposit with a reputable escrow company previously agreed to

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by the parties, the Patent, the Copyright, the full and complete CapMed PHR Software in source code and all related computer files (such as executable program files, compiler, linker, third-party libraries, etc.), and all Documentation agreed to between the parties as may be necessary to develop, utilize and understand the CapMed PHR System, and thereafter shall promptly deposit full and complete documents and source code for any new version, upgrade, or bug fix. In the event this agreement is terminated for any reason, the escrow company will deliver all materials held in escrow to MedicAlert under the terms and conditions of the escrow agreement for MedicAlert’s post-termination licensed use under this Section

19. Warranty of Corporate Authority. Each party represents and warrants to the other that it is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of formation, and has all requisite corporate power and authority to make and enter this Agreement.

20. Non-Assignability. Neither party may assign, transfer, or otherwise dispose of this Agreement in whole or in part to any person, firm, or corporation without the prior written consent of the other party, unless such assignment or transfer is to a parent, subsidiary, or affiliate company.

21. No Special Relationship Between Parties. Nothing in this Agreement creates an agency relationship, partnership, joint-venture or any other form of special relationship between the parties.

22. Severability. If any provision of this Agreement is held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision will be of no force or effect, and the court will restructure or amend such provision to the minimum extent possible to be enforceable according to the parties intent as set forth herein. The illegality or unenforceability of such provision will have no effect upon and will not impair the enforceability of any other provision of this Agreement.

23. Integration. This Agreement, together with all attached exhibits and schedules and all ancillary agreements between the parties hereto, represent the complete agreement and understanding of the parties relating to the subject matter hereof and supersede any prior or contemporaneous agreements, understandings, or representations of the parties, whether oral or in writing. This Agreement may not be amended or modified except by a writing signed by both parties.

24. Notices. All commercial notices for the order, manufacture, and delivery of goods or services will be in a commercially reasonable manner consistent with industry standards. All notices, requests, demands and other communications regarding any party’s default under or the termination of this Agreement will be in writing and will be sufficient in all respects (a) if delivered personally or by telecopy or email transmission when so delivered, or (b) if given by an internationally reputable overnight air courier service, two (2) business days after the date delivered to such courier, delivery charges prepaid.

25. Entire Agreement. This Agreement represent the complete agreement and understanding of the parties relating to the subject matter hereof and supersede any prior or contemporaneous

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agreements, understandings, or representations of the parties, whether oral or written. This Agreement may not be amended or modified except by a writing signed by both parties.

26. Governing Law & Jurisdiction. This Agreement is made in Turlock, California, and shall in all respects be deemed a contract of such State governed by the laws of the United States of America and the State of California. The parties expressly agree to use their best efforts to informally, among themselves, resolve any dispute arising from or relating to this Agreement before initiating any litigation.

27. Counterparts. This Agreement may be executed in two or more original or telecopy counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same document.

28. Captions. Captions are for the convenience of the parties and shall not be used in interpreting the provisions of this Agreement.

          IN WITNESS WHEREOF, the parties hereto have made and entered this Agreement as of the date and year last set forth below to be effective as of the date and year first set forth above.

Bio-Imaging Technologies, Inc.			Medic Alert Foundation United States, Inc.
By:	/s/ Mark L. Weinstein		By:	/s/ Paul Kortschak
	Mark L. Weinstein President and CEO Bio-Imaging Technologies, Inc.			Paul Kortschak President and CEO Medic Alert Foundation United States, Inc.
	Date:	June 20, 2005		Date:	June 20, 2005

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SCHEDULE A
TO
MEDICALERT® PHR SYSTEM
DEVELOPMENT AND SUPPLY AGREEMENT

MedicAlert E-HealthKey Product Development
MedicAlert Development Team
Responsibilities and Milestones
Field Test Milestones and Implementation Schedule

**

Bio-Imaging Technologies, Inc.			Medic Alert Foundation United States, Inc.
By:	/s/ Mark L. Weinstein		By:	/s/ Paul Kortschak
	Mark L. Weinstein President and CEO Bio-Imaging Technologies, Inc.			Paul Kortschak President and CEO Medic Alert Foundation United States, Inc.
	Date:	June 20, 2005		Date:	June 20, 2005

Page 19 of 19

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-109702) and Form S-8 (No. 333-85394) of Bio-Imaging Technologies, Inc. and its subsidiaries of our report dated March 29, 2007 relating to the financial statements and financial statement schedules, which appears in this Form 10-K.

/s/  PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

March 29, 2007

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Mark L. Weinstein, President and Chief Executive Officer of Bio-Imaging Technologies, Inc., certify that:

1. I have reviewed this Annual Report on Form 10-K of Bio-Imaging Technologies, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986]

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Mark L. Weinstein

Mark L. Weinstein, President and Chief

Executive Officer

(Principal Executive Officer)

Dated: March 29, 2007

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ted I. Kaminer, certify that:

1. I have reviewed this Annual Report on Form 10-K of Bio-Imaging Technologies, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986]

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Ted I. Kaminer

Ted I. Kaminer, Senior Vice President

and Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: March 29, 2007

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Bio-Imaging Technologies, Inc. (the “Company”) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Mark L. Weinstein, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Mark L. Weinstein*

Mark L. Weinstein, President and Chief

Executive Officer

(Principal Executive Officer)

Dated: March 29, 2007

*  A signed original of this written statement required by section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Bio-Imaging Technologies, Inc. (the “Company”) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Ted I. Kaminer, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Ted I. Kaminer*

Ted I. Kaminer, Senior Vice President

and Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: March 29, 2007

*  A signed original of this written statement required by section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.