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VirtualScopics Reports Second Quarter 2013 Results



              VirtualScopics Reports Second Quarter 2013 Results

14% Increase in Second Quarter 2013 Revenues

PR Newswire

ROCHESTER, N.Y., Aug. 13, 2013

ROCHESTER, N.Y., Aug. 13, 2013 /PRNewswire/ -- VirtualScopics, Inc. (NASDAQ:
VSCP), a leading provider of quantitative imaging, today announced revenues of
$3,706,677 for the quarter ended June 30, 2013 compared to $3,335,861 for the
quarter ended June 30, 2012. Net income for the three months ended June 30,
2013 was $134,286 compared to a net loss of $62,966 for the three months ended
June 30, 2012. Year to date 2013 new project awards totaled $15.9 million as
compared to $4.6 million during the same period in 2012, a 246% increase.

Other second quarter ended June 30, 2013 results were:

  o Gross profit of $1,770,083 compared to $1,343,937 in the second quarter of
    2012.
  o Gross margin of 48% compared to 40% in the second quarter of 2012.
  o Operating income of $131,371 compared to an operating loss of $166,694 in
    the second quarter of 2012.
  o Adjusted EBITDA of $333,445 compared to $72,973 for the second quarter of
    2012.

Jeff Markin, president and chief executive officer of VirtualScopics stated,
"We are very pleased with our performance in the second quarter which
exhibited a 14% growth in revenue, a rebound in gross margins to 48%,
resulting in a significant improvement in our operating performance and cash
generation as compared to the first quarter of 2013." He continued, "We are
also pleased with the amount of new project awards that we have received so
far in 2013.  New project awards are up more than 240% versus the similar
period last year, and exceed the amount of new awards received during the full
year of 2012." He concluded, "We are especially encouraged that more than 40%
of our new study awards in 2013 are through our alliance with PPD which
visibly validates the significant client benefits offered by our joint
clinical and imaging solution."

"Aside from the second quarter 2013 growth in revenues, one of the strongest
financial accomplishments during the quarter was our gross margin
performance," stated Molly Henderson, chief business and financial officer of
VirtualScopics. She added, "By reporting margins approaching 50% we gained
greater confidence in the productivity of our enhanced Phase III analysis
tools." She continued, "Additionally, we are pleased to return to a quarter of
generating cash as reported in our positive Adjusted EBITDA." She concluded,
"During the second quarter of 2013, a single accelerated project represented a
significant portion of the quarterly revenues. We do not anticipate a project
of this magnitude recurring in a similar condensed time period during the
remainder of this year.  As a result, we estimate that our full year 2013
revenues will range between $10.5 million and 11 million."

Jeff Markin and Molly Henderson will provide a business update and discuss
these results during the Annual Stockholders' Meeting today at 11:00 am ET at
the Country Club of Rochester in Rochester, New York. For those not able to
attend in person, the script of the meeting will be available on the U.S.
Securities and Exchange Commission's website at www.sec.gov. Additionally, the
Company's management will hold a question and answer call at 11:00 am ET on
Wednesday, August 14, 2013, for stockholders not able to attend the Annual
Meeting in person. Interested participants should call 877-407-8035 when
calling within the United States or +1 201 689 8035 when calling
internationally.

The Company provides Adjusted EBITDA as a supplemental measure to Generally
Accepted Accounting Principles ("GAAP") regarding the Company's operational
performance. The Company defines Adjusted EBITDA as earnings less interest,
taxes (if any), depreciation and amortization as further adjusted to exclude
stock-based compensation expense and the loss/gain on derivative liabilities
(mark to market adjustment for warrants).  This financial measure excludes the
impact of certain items and, therefore, has not been calculated in accordance
with GAAP. The Company's method of calculating Adjusted EBITDA, however, may
differ from methods used by other companies, and, as a result, Adjusted EBITDA
measures disclosed herein may not be comparable to other similarly titled
measures used by other companies. The Company continues to provide information
in accordance with GAAP, however, with the adoption of Accounting Standards
Codification ("ASC") 815-40 and the non-cash variable nature of stock-based
compensation expense and their very substantial impact on the overall reported
net income/loss, the Company believes it is also helpful for investors to
receive additional information relating more specifically to the Company's
operating results. Accordingly, the Company has presented Adjusted EBITDA
which excludes the non-cash effects of ASC 815-40 and ASC 718 on its financial
results. Management uses Adjusted EBITDA (a) to evaluate the Company's
financial performance, (b) to set internal spending budgets, and (c) to
measure operational profitability. In addition, investors have requested these
non-GAAP financial measures as a means of providing consistent and comparable
information with past reports of financial results. Pursuant to the
requirements of Regulation G, the Company has provided a reconciliation of
Adjusted EBITDA to the most directly comparable GAAP financial measure, net
income/(loss), below.

About VirtualScopics, Inc.
VirtualScopics, Inc. is a leading provider of imaging solutions to accelerate
drug and medical device development.  VirtualScopics has developed a robust
software platform for analysis and modeling of both structural and functional
medical images.  In combination with VirtualScopics' industry-leading
experience and expertise in advanced imaging biomarker measurement, this
platform provides a uniquely clear window into the biological activity of
drugs and devices in clinical trial patients, allowing sponsors to make better
decisions faster.  For more information about VirtualScopics, visit
www.virtualscopics.com.

Forward-Looking Statements
The statements contained in this press release that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended, and are intended to be covered by the safe harbors
created thereby. These forward-looking statements include, but are not limited
to, statements regarding the expected benefits of the Company's investment in
infrastructure and new customer contract signings and awards and/or statements
preceded by, followed by or that include the words "believes," "could,"
"expects," "anticipates," "estimates," "intends," "plans," "projects,"
"seeks," or similar expressions. Forward-looking statements deal with the
Company's current plans, intentions, beliefs and expectations. Investors are
cautioned that all forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements.  Many of these risks and uncertainties are
discussed in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2012 filed with the Securities and Exchange Commission (the
"SEC"), and in any subsequent reports filed with the SEC, all of which are
available at the SEC's website at www.sec.gov. These include without
limitation: the risk of cancellation or delay of customer contracts or
specifically as it relates to contact awards, the risk that they may not get
signed.  Other risks include the company's dependence on its largest customers
and risks of contract performance, protection of our intellectual property and
the risks of infringement of the intellectual property rights of others. All
forward-looking statements speak only as of the date of this press release and
the Company undertakes no obligation to update such forward-looking
statements.

-Financial tables to follow-

CONTACTS:          Company Contact:
                   Molly Henderson
                   Chief Business and Financial Officer, Sr. Vice President
                   500 Linden Oaks
                   Rochester, New York 14625
                   +1 585 249.6231

 

VirtualScopics, Inc. and Subsidiary
Condensed Consolidated Statements of Operations 
(unaudited)
                        For the Three Months Ended  For the Six Months Ended
                        June 30,                    June 30,
                        2013         2012           2013           2012
                        $            $              $              $          
Revenues                              3,098,316      5,829,438     6,391,974
                        3,546,607
Reimbursement revenues  160,070      237,545        409,826        646,045
       Total revenues   3,706,677    3,335,861      6,239,264      7,038,019
Cost of revenues*       1,776,524    1,754,379      3,274,063      3,637,124
Cost of reimbursement   160,070      237,545        409,826        646,045
revenues
       Total cost of    1,936,594    1,991,924      3,683,889      4,283,169
       services
          Gross profit  1,770,083    1,343,937      2,555,375      2,754,850
Operating expenses
   Research and         333,423      357,839        767,268        714,166
   development
   Sales and marketing  427,373      311,393        781,982        642,465
   General and          688,213      615,159        1,578,249      1,269,899
   administrative
   Stock-based
   compensation         99,149       119,249        227,093        295,185
   expense
   Depreciation and     90,554       106,991        186,867        218,610
   amortization
          Total
          operating     1,638,712    1,510,631      3,541,459      3,140,325
          expenses
Operating income        131,371      (166,694)      (986,084)      (385,475)
(loss)
Other income (expense)
   Interest income      3,342        715            4,351          1,130
   Other expense        (9,510)      (5,446)        (10,881)       (5,713)
   Unrealized loss on
   change in 
     fair value of
   derivative           9,083        108,459        13,953         (286,453)
   liabilities
Total other income      2,915        103,728        7,423          (291,036)
(expense)
   Net income (loss)    134,286      (62,966)       (978,661)      (676,511)
Preferred stock deemed  -            1,806,919      -              1,806,919
dividend
Preferred stock         42,000       41,333         84,000         53,333
dividends
Net income (loss)       $            $              $              $          
attributable to common                (1,911,218)    (1,062,661)   (2,536,763)
stockholders            92,286
Basic and diluted       $            $              $              $          
earnings (loss) per                                                       
share                     0.00       (0.06)         (0.04)         (0.09)
Weighted average number
of common shares
outstanding
   basic                29,799,523   29,706,074     29,799,523     29,538,381
   diluted              34,671,384   29,706,074     29,799,523     29,538,381
*  Cost of revenues includes non-cash stock-based compensation expense of
   $12,371 and $13,427 for the three months ended 
    June 30, 2013 and 2012, respectively and $25,214 and $26,758 for the six
   months ended June 30, 2013 and 2012, respectively.

 

VirtualScopics, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
                                             June 30,           December 31,
                                             2013               2012
Assets                                       (unaudited)
Current assets
Cash                                         $      7,145,743   $   8,523,807
Accounts receivable, net                     2,968,997          1,762,507
Prepaid expenses and other current assets    311,685            437,698
Total current assets                         10,426,425         10,724,012
Patents, net                                 1,396,844          1,470,436
Property and equipment, net                  280,007            399,569
Other assets                                 -                  5,428
Total assets                                 $    12,103,276    $ 12,599,445
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses        $         746,042  $      872,652
Accrued payroll                              664,251            481,661
Unearned revenue                             446,714            272,509
Dividends payable                            209,333            125,333
Total current liabilities                    2,066,340          1,752,155
Commitments and Contingencies
Stockholders' Equity
Convertible preferred stock, $0.001 par value; 15,000,000
shares authorized; 
Series C-1 3,000 shares authorized; issued
and outstanding, 3,000 shares at June 30,    3                  3
2013 and December 31, 2012; liquidation
preference $1,000 per share
Series B 6,000 shares authorized; issued and
outstanding, 600 at June 30, 2013 and        1                  1
December 31, 2012; liquidation preference
$1,000 per share
Series A 8,400 shares authorized; issued and
outstanding, 2,190 at June 30, 2013 and      2                  2
December 31, 2012; liquidation preference
$1,000 per share
Series C-2 3,000 shares authorized; issued
and outstanding, 0 shares at June 30, 2013   -                  -
and December 31, 2012; liquidation
preference $1,000 per share
Common Stock, $0.001 par value; 85,000,000
shares authorized; issued 29,958,795 and
29,799,523 shares at June 30, 2013 and       29,800             29,800
December 31, 2012, respectively;
outstanding, 29,799,523 shares at June 30,
2013 and December 31, 2012, respectively 
Additional paid-in capital                   21,949,391         21,781,084
Accumulated deficit                          (11,942,261)       (10,963,600)
Total stockholders' equity                   10,036,936         10,847,290
Total liabilities and stockholders' equity   $    12,103,276    $ 12,599,445

 

                                   Three Months Ended    Three Months Ended
Adjusted EBITDA (non-GAAP          June 30, 2013         June 30, 2012
measurement):
                                   (unaudited)           (unaudited)
Net income (loss)                  $                     $                  
                                    134,286               (62,966)
Interest income and other          6,168                 4,731
expenses
Depreciation and amortization      90,554                106,991
Stock-based compensation expense   111,520               132,676
Unrealized gain on change in fair  (9,083)               (108,459)
value of derivative liabilities
  Adjusted EBITDA                  $                     $                    
                                   333,445               72,973
  Basic Adjusted EBITDA per        $                     $                    
common share, non-GAAP               0.01                    0.00
  Diluted Adjusted EBITDA per      $                     $                    
common share, non-GAAP               0.01                    0.00
                                   Six Months Ended      Six Months Ended
Adjusted EBITDA (non-GAAP          June 30, 2013         June 30, 2012
measurement):
                                   (unaudited)           (unaudited)
Net loss                           $                     $                  
                                   (978,661)             (676,511)
Interest income and other          6,530                 4,583
expenses
Depreciation and amortization      186,867               218,610
Stock-based compensation expense   252,307               321,943
Unrealized (gain) loss on change
in fair value of derivative        (13,953)              286,453
liabilities
  Adjusted EBITDA                  $                     $                  
                                    (546,910)            155,078
  Basic Adjusted EBITDA per        $                     $                    
common share, non-GAAP              (0.02)                   0.01
  Diluted Adjusted EBITDA per      $                     $                    
common share, non-GAAP              (0.02)                   0.01

 

SOURCE VirtualScopics, Inc.

Website: http://www.virtualscopics.com
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