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VirtualScopics Reports Third Quarter 2013 Results and the Doubling of YTD Awards and Bookings



  VirtualScopics Reports Third Quarter 2013 Results and the Doubling of YTD
                             Awards and Bookings

PR Newswire

ROCHESTER, N.Y., Nov. 14, 2013

ROCHESTER, N.Y., Nov. 14, 2013 /PRNewswire/ -- VirtualScopics, Inc.
(NASDAQ: VSCP), a leading provider of quantitative imaging, today announced
revenues of $2,227,877 for the quarter ended September 30, 2013 compared to
$3,328,217 for the quarter ended September 30, 2012. Net loss for the three
months ended September 30, 2013 was $751,322 compared to a net loss of $79,249
for the three months ended September 30, 2012. Year to date 2013 new project
awards and bookings exceed $19 million which is more than double the amount of
new project awards and bookings when compared to the same period in 2012.

"From a financial results perspective, this was a challenging quarter for
VirtualScopics," said Eric Converse, interim Chief Executive Officer. "While
we have demonstrated remarkable improvement in our new project awards in 2013,
our revenues are impacted by the slowdown in project awards we experienced in
2012. We are encouraged by our bookings in 2013, and believe that this
positive trajectory will continue."

Other third quarter ended September 30, 2013 results were:

  o Gross profit of $816,129 compared to $1,462,056 in the third quarter of
    2012.
  o Gross margin of 37% compared to 44% in the third quarter of 2012.
  o Operating loss of $745,014 compared to an operating loss of $53,293 in the
    third quarter of 2012.
  o Adjusted EBITDA loss of $619,147 compared to Adjusted EBITDA of $192,045
    for the third quarter of 2012.

Year to date September 30, 2013 results were:

  o Revenues of $8,467,141 compared to $10,366,236 for the same period in
    2012.
  o Gross profit of $3,371,504 compared to $4,216,907 in the first three
    quarters of 2012.
  o Gross margin of 40% compared to 41% in the first three quarters of 2012.
  o Operating loss of $1,731,098 compared to an operating loss of $438,767 in
    the first nine months of 2012.
  o Adjusted EBITDA loss of $1,166,057 compared to Adjusted EBITDA of $347,124
    for the first three quarters of 2012.

The company expects that full year 2013 revenues will be in line with previous
guidance of $10.5 million - $11.0 million.

Mr. Converse continued, "I am very pleased with our sales and marketing effort
which has resulted in greatly improved year to date awards and bookings when
compared to 2012. The team is employing smart strategies, such as
complementing our early phase capabilities with late phase capabilities and
further leveraging our core technology to strengthen relationships with
customers. I believe that actions like these, along with our continued
investment in both research and talent, have positioned us quite well to
generate value for our customers, stockholders and employees. I look forward
to working with the team to continue improving our operational quality and
productivity, and as a result, improving our bottom line."

The Company's management will hold a question and answer call today at 11:00
a.m. ET. Interested participants should call 877-407-8035 when calling within
the United States or +1 201 689 8035 when calling internationally.  This call
can also be accessed at www.virtualscopics.com and will be available for 30
days after the call.

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 new project awards and bookings, the expected
benefits of the Company's sales and marketing efforts 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-

CONTACT: 
Investor Relations: 
Nicole Schoenberg
FleishmanHillard
212-453-2445
nicole.schoenberg@fleishman.com

 

VirtualScopics, Inc. and Subsidiary
Condensed Consolidated Statements of Operations 
(unaudited)
                         For the Three Months   For the Nine Months

                         Ended September 30,    Ended September 30,
                         2013        2012       2013         2012
                         $           $          $            $          
Revenues                                                        9,487,055
                         2,144,535   3,095,080  7,973,973
Reimbursement revenues   83,342      233,137    493,168      879,181
      Total revenues     2,227,877   3,328,217  8,467,141    10,366,236
Cost of revenues*        1,328,406   1,633,024  4,602,469    5,270,148
Cost of reimbursement    83,342      233,137    493,168      879,181
revenues
      Total cost of      1,411,748   1,866,161  5,095,637    6,149,329
      services
          Gross profit   816,129     1,462,056  3,371,504    4,216,907
Operating expenses
  Research and           364,204     397,803    1,131,472    1,111,967
  development
  Sales and marketing    345,188     312,140    1,127,170    954,605
  General and            738,793     578,107    2,317,042    1,848,007
  administrative
  Stock-based            24,095      125,906    251,188      421,092
  compensation expense
  Depreciation and       88,863      101,393    275,730      320,003
  amortization
          Total
          operating      1,561,143   1,515,349  5,102,602    4,655,674
          expenses
Operating loss           (745,014)   (53,293)   (1,731,098)  (438,767)
Other income (expense)
  Interest income        1,030       1,044      5,381        2,174
  Other expense          (6,680)     (7,206)    (17,561)     (12,920)
  Unrealized (loss)
  gain on change in 
    fair value of
  derivative             (658)       (19,794)   13,295       (306,247)
  liabilities
Total other (expense)    (6,308)     (25,956)   1,115        (316,993)
income
  Net loss               (751,322)   (79,249)   (1,729,983)  (755,760)
Preferred stock deemed   -           -          -            1,806,919
dividend
Preferred stock          42,000      42,000     126,000      95,333
dividends
Net loss attributable    $           $          $            $          
to common stockholders                                        
                         (793,322)   (121,249)  (1,855,983)  (2,658,012)
                         $           $          $            $          
Basic and diluted loss                                                
per share                                        (0.62)       (0.90)
                         (0.27)      (0.04)
Weighted average number
of common shares
outstanding
  basic and diluted      2,979,952   2,974,776  2,979,952    2,960,868
  Cost of revenues includes non-cash stock-based compensation expense of
* $12,909 and $18,039 for the three months ended

  September 30, 2013 and 2012, respectively and $38,123 and $44,796 for
  the nine months ended September 30, 2013 and 2012, respectively.

 

VirtualScopics, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
                                             September 30,      December 31,
                                             2013               2012
Assets                                       (unaudited)
Current assets
Cash                                         $      7,003,656   $   8,523,807
Accounts receivable, net                     2,264,488          1,762,507
Prepaid expenses and other current assets    420,572            437,698
Total current assets                         9,688,716          10,724,012
Patents, net                                 1,364,688          1,470,436
Property and equipment, net                  226,530            399,569
Other assets                                 -                  5,428
Total assets                                 $    11,279,934    $ 12,599,445
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses        $         673,131  $      872,652
Accrued payroll                              569,309            481,661
Unearned revenue                             505,543            272,509
Dividends payable                            251,333            125,333
Total current liabilities                    1,999,316          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 September   3                  3
30, 2013 and December 31, 2012; liquidation
preference $1,000 per share
Series B 6,000 shares authorized; issued and
outstanding, 600 at September 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 September 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 September 30,   -                  -
2013 and December 31, 2012; liquidation
preference $1,000 per share
Common Stock, $0.001 par value; 85,000,000
shares authorized; issued 2,992,928 and
2,979,952 shares at September 30, 2013 and
December 31, 2012, respectively;             2,980              2,980
outstanding, 2,979,952 shares at September
30, 2013 and December 31, 2012,
respectively 
Additional paid-in capital                   21,971,215         21,807,904
Accumulated deficit                          (12,693,583)       (10,963,600)
Total stockholders' equity                   9,280,618          10,847,290
Total liabilities and stockholders' equity   $    11,279,934    $ 12,599,445

 

                                 Three Months Ended      Three Months Ended
Adjusted EBITDA (non-GAAP        September 30, 2013      September 30, 2012
measurement):
                                 (unaudited)             (unaudited)
Net loss                         $                       $                  
                                 (751,322)                (79,249)
Interest income and other        5,650                   6,162
expenses
Depreciation and amortization    88,863                  101,393
Stock-based compensation         37,004                  143,945
expense 
Unrealized loss on change in
fair value of derivative         658                     19,794
liabilities
  Adjusted EBITDA                $                       $                  
                                 (619,147)               192,045
  Basic and Diluted Adjusted     $                       $                    
EBITDA per common share,         (0.21)                      0.06
non-GAAP
                                 Nine Months Ended       Nine Months Ended
Adjusted EBITDA (non-GAAP        September 30, 2013      September 30, 2012
measurement):
                                 (unaudited)             (unaudited)
Net loss                         $                       $                  
                                  (1,729,983)            (755,760)
Interest income and other        12,180                  10,746
expenses
Depreciation and amortization    275,730                 320,003
Stock-based compensation         289,311                 465,888
expense 
Unrealized (gain) loss on
change in fair value of          (13,295)                306,247
derivative liabilities
  Adjusted EBITDA                $                       $                  
                                  (1,166,057)            347,124
  Basic and Diluted Adjusted     $                       $                    
EBITDA per common share,         (0.39)                      0.12
non-GAAP

 

SOURCE VirtualScopics, Inc.

Website: http://www.virtualscopics.com
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