VirtualScopics Reports 2nd Quarter 2012 Results

Earnings call scheduled for 11am ET today

Aug 14, 2012, 08:00 ET from VirtualScopics, Inc.

ROCHESTER, N.Y., Aug. 14, 2012 /PRNewswire/ -- VirtualScopics, Inc. (NASDAQ: VSCP), a leading provider of quantitative imaging, today reported revenues of $3,335,861 for the second quarter of 2012 compared to revenues of $3,852,925 in the second quarter of 2011. Gross profit for the quarter ended June 30, 2012 was $1,343,937 compared to $1,821,018 for the quarter ended June 30, 2011. Operating loss for the second quarter of 2012 was $166,694 compared to operating income of $158,029 in the second quarter of 2011. Earnings before interest, taxes, depreciation and amortization, and excluding stock compensation expense and gain (loss) from derivative financial instrument ("Adjusted EBITDA") for the second quarter of 2012 was $72,973 compared to $489,234 in the comparable period in 2011.

Year to date, ending June 30, 2012 results were as follows:

  • Total revenues of $7,038,019 compared to $7,511,902 for the first six months of 2011.
  • Gross profit of $2,754,850 compared to $3,420,759 in first half of 2011.
  • Adjusted EBITDA of $155,078 compared to $882,177 in the comparable period in 2011.
  • Working capital as of June 30, 2012 was $9,406,735 compared to $6,353,054 at December 31, 2011.

"Over the past year we have experienced a slowdown in new project awards and delays in the initiation of new studies which has impacted our top line performance," said Jeff Markin, president and chief executive officer of VirtualScopics.  He stated, "As a result, we have made and continue to make significant changes to our selling and operational processes which include the appointment of a new VP of Marketing and Business Development, the hiring of 2 new sales people covering the Western United States and Europe, along with certain procedural changes that enable our sales team significantly more face to face time with customers." He added, "Although the amount of new project awards has been slower than we experienced in previous years, we have seen an increasing number of requests for proposals throughout 2012, from both the PPD channel and our direct sales efforts.  This activity was highlighted by an important multi-study program award with a top global pharmaceutical company that recently named VirtualScopics as a preferred provider." He concluded, "We believe that the changes we are making to our sales team and our overall sales process coupled with the increases we are seeing in requests for proposals and our strategic alliance with PPD, will increase the level of business activity from what we have experienced over the past year."

"In light of the softness in our revenues during 2012, we are continuing to actively monitor the necessary level of expenditures to support our current and anticipated business while also making the necessary investments in new market opportunities," stated Molly Henderson, chief business and financial officer of VirtualScopics. "I'm confident that our cash position will enable us to invest appropriately in both the core lab and the personalized medicine businesses." She added, "As such, we are working diligently toward the development of our personalized software applications and related FDA approval. We have initiated the hiring of personnel dedicated to this new business unit who will manage and accelerate our development in this emerging market." She concluded, "Specifically, with regard to our 510k application to the FDA, we recently submitted our responses to the examiner's questions and are confident as we near the final stages of the process."

Jeff Markin and Molly Henderson will provide a business and second quarter 2012 financial update during the conference call this morning 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 GAAP regarding the Company's operational performance. The Company defines Adjusted EBITDA as earnings less interest, taxes (if any), depreciation and amortization and further adjusted to exclude stock compensation expense and the unrealized gain (loss) on the change in fair value of 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 ASC 815-40 and the non-cash variable nature of stock 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 (loss)/income.

About VirtualScopics, Inc. VirtualScopics, Inc. is a leading provider of quantitative imaging solutions to accelerate drug and medical device development in addition to improving patient care.  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, 2011 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:  

Company Contact:

Tim Ryan

Molly Henderson

The Shoreham Group 

Chief Business and Financial Officer, Sr. Vice President

80 Eighth Ave, Ste 1107

500 Linden Oaks

New York, NY 10011

Rochester, New York 14625

+1 212 242.7777 Direct

+1 585 249.6231

tryan@shorehamgroupllc.com 

 

 

VirtualScopics, Inc. and Subsidiary

Condensed Consolidated Statements of Operations 

(unaudited)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2012

2011

2012

2011

Revenues

$               3,098,316

$              3,576,253

$            6,391,974

$           6,925,863

Reimbursement revenues

237,545

276,672

646,045

586,039

Total revenues

3,335,861

3,852,925

7,038,019

7,511,902

Cost of revenues

1,754,379

1,755,235

3,637,124

3,505,104

Cost of reimbursement revenues

237,545

276,672

646,045

586,039

Total cost of services

1,991,924

2,031,907

4,283,169

4,091,143

Gross profit

1,343,937

1,821,018

2,754,850

3,420,759

Operating expenses

Research and development

357,839

350,449

714,166

664,706

Sales and marketing

311,393

307,618

642,465

609,714

General and administrative

615,159

687,969

1,269,899

1,288,181

Stock-based compensation expense

119,249

203,729

295,185

437,934

Depreciation and amortization

106,991

113,224

218,610

250,448

Total operating expenses

1,510,631

1,662,989

3,140,325

3,250,983

Operating (loss) income 

(166,694)

158,029

(385,475)

169,776

Other income (expense)

Interest income

715

13,006

1,130

14,232

Other expense

(5,446)

(16,720)

(5,713)

(17,940)

Unrealized gain (loss) on change in 

  fair value of derivative liabilities

108,459

173,335

(286,453)

(38,799)

Total other income (expense)

103,728

169,621

(291,036)

(42,507)

Net (loss) income

(62,966)

327,650

(676,511)

127,269

Preferred stock deemed dividend

1,806,919

-

1,806,919

-

Preferred stock dividends

41,333

12,000

53,333

24,989

Net (loss) income attributable to common stockholders

$              (1,911,218)

$                  315,650

$            (2,536,763)

$               102,280

Basic and diluted net (loss) income per common share

$                      (0.06)

$                       0.01

$                    (0.09)

$                    0.00

Weighted average number of common shares outstanding

basic 

29,706,074

29,045,428

29,538,381

28,544,856

diluted

29,706,074

36,964,760

29,538,381

36,738,762

*

Cost of revenues includes non-cash stock-based compensation expense of $13,427 and $14,252 for the

three months ended June 30, 2012 and 2011, respectively and $26,758 and $24,019 for the six months ended June 30, 2012 and 2011, respectively.

 

 

VirtualScopics, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

June 30,

December 31,

2012

2011

Assets

(unaudited)

Current assets

  Cash 

$      7,778,559

$   5,737,009

  Accounts receivable, net

2,823,956

2,435,496

  Prepaid expenses and other current assets

378,923

361,376

     Total current assets

10,981,438

8,533,881

Patents, net

1,525,821

1,582,938

Property and equipment, net

468,001

514,230

Other assets

16,283

27,140

     Total assets

$    12,991,543

$ 10,658,189

Liabilities and Stockholders' Equity

Current liabilities

  Accounts payable and accrued expenses

$         648,683

$      843,275

  Accrued payroll

600,231

759,470

  Unearned revenue

287,973

421,486

  Derivative liabilities

37,816

156,596

     Total current liabilities

1,574,703

2,180,827

Commitments and Contingencies

-

-

Stockholders' Equity

Convertible preferred stock, $0.001 par value; 15,000,000 shares authorized; 

Series A 8,400 shares authorized; issued and outstanding, 2,190 at June 30, 2012 and December 31, 2011; liquidation preference $1,000 per share

2

2

Series B 6,000 shares authorized; issued and outstanding, 600 at June 30, 2012 and December 31, 2011; liquidation preference $1,000 per share

1

1

Series C-1 3,000 shares authorized; issued and outstanding, 3,000 and 0 shares at June 30, 2012 and December 31, 2011, respectively; liquidation preference $1,000 per share

3

-

Series C-2 3,000 shares authorized; issued and outstanding, 0 shares at June 30, 2012 and December 31, 2011; liquidation preference $1,000 per share

-

-

Common Stock, $0.001 par value; 85,000,000 shares authorized; issued and outstanding, 29,747,762 and 29,370,687 shares at June 30, 2012 and December 31, 2011, respectively 

29,748

29,371

Additional paid-in capital

21,498,545

17,882,936

Accumulated deficit

(10,111,459)

(9,434,948)

     Total stockholders' equity

11,416,840

8,477,362

     Total liabilities and stockholders' equity

$    12,991,543

$ 10,658,189

 

 

 

Three Months Ended

Three Months Ended

Adjusted EBITDA (non-GAAP measurement):

June 30, 2012

June 30, 2011

(unaudited)

(unaudited)

Net (loss) income

$                   (62,966)

$                    327,650

Interest income and other expenses

4,731

3,714

Depreciation and amortization

106,991

113,224

Stock-based compensation expense 

132,676

217,981

Unrealized gain on change in fair value of derivative liabilities

(108,459)

(173,335)

  Adjusted EBITDA

$                    72,973

$                    489,234

  Basic Adjusted EBITDA per common share, non-GAAP

$                        0.00

$                          0.02

  Diluted Adjusted EBITDA per common share, non-GAAP

$                        0.00

$                          0.01

Six Months Ended

Six Months Ended

Adjusted EBITDA (non-GAAP measurement):

June 30, 2012

June 30, 2011

(unaudited)

(unaudited)

Net (loss) income

$                 (676,511)

$                    127,269

Interest income and other expenses

4,583

3,708

Depreciation and amortization

218,610

250,448

Stock-based compensation expense 

321,943

461,953

Unrealized loss on change in fair value of derivative liabilities

286,453

38,799

  Adjusted EBITDA

$                  155,078

$                    882,177

  Basic Adjusted EBITDA per common share, non-GAAP

$                        0.01

$                          0.03

  Diluted Adjusted EBITDA per common share, non-GAAP

$                        0.01

$                          0.02

SOURCE VirtualScopics, Inc.



RELATED LINKS

http://www.virtualscopics.com