Attached files
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| 8-K - VirtualScopics, Inc. | v175525_8k.htm |
EXHIBIT
99.1
500
Linden Oaks
Rochester,
New York 14625
VirtualScopics
Reports Fourth-Quarter and Full-Year 2009 Results; Net Income
Achieved
in Fourth Quarter
Full-year
gross profit grows over 80%
ROCHESTER,
NY – February 25, 2010 – VirtualScopics, Inc. (NASDAQ: VSCP), a
leading provider of quantitative imaging for clinical trials, announced today
that the company reported net income in the fourth quarter of 2009 of $373,917.
This is the first reported quarterly net income in the company’s history. Fourth
quarter 2008 reported a loss of ($304,536).
Other
highlights for the fourth quarter ended December 31, 2009 include:
|
·
|
Revenues
of $2.9 million, representing a 50% increase over prior year’s fourth
quarter.
|
|
·
|
Gross
profit of $1,505,904 compared to $973,522 in the fourth quarter of 2008,
representing a 55% increase.
|
|
·
|
Operating
income of $92,519 compared to a loss of ($313,915) in the fourth quarter
of 2008.
|
|
·
|
Earnings
before interest, taxes, depreciation and amortization, and excluding stock
compensation expense and gain/loss from derivative financial instrument
(“Adjusted EBITDA”) was $441,438 for the quarter ended December 31, 2009
compared to Adjusted EBITDA of $1,061 for the comparable period in
2008.
|
Highlights
for the full year ended December 31, 2009 include:
|
·
|
Revenues
of $10.4 million compared to $7.1 million in 2008, a 46%
increase.
|
|
·
|
Gross
profit of $5,615,354 for the full year of 2009, compared to $3,099,320 in
2008, an 81% increase.
|
|
·
|
Adjusted
EBITDA of $1,257,395 compared to ($1,096,832) for the full year of
2008.
|
|
·
|
Net
loss of ($1,011,226) compared to a net loss of ($2,628,742) in
2008.
|
|
·
|
Net
cash flow provided by operating activities was $1.2 million compared to
net cash used in operating activities of ($812,000) for the comparable
period in 2008.
|
“We
are delighted to report net income for the first time, yet we continue to
believe Adjusted EBITDA is the best measure of the company’s success,” stated
Jeff Markin, president and chief executive officer of
VirtualScopics. He added, “Adjusted EBITDA reflects the true cash
generation and profitability of the company. For the full year 2009, our
Adjusted EBITDA increased $2.4 million when compared to 2008, resulting in an
Adjusted EBITDA of nearly $1.3 million for 2009.” He further added, “To meet the
growing demand of our customers, we increased our operational staff by nearly
50% throughout 2009 while maintaining a corresponding focus on operational
efficiency, thereby enabling us to report a 54% gross profit margin last
year. We believe this will effectively position us to deliver upon
the project volume we expect in 2010.”
“Over the
past two years we’ve increased our revenues by 85% and reduced our operating
loss by 94%,” stated Molly Henderson, chief business and financial officer of
VirtualScopics. She continued, “This represents a nearly 90% net margin on new
business which not only demonstrates the strength of our business but also the
efficiency of our operations.” She added, “Of further significance during 2009
was the increase in our average contract size which ultimately demonstrates our
customers’ confidence and the value of our services. In 2009, our average
contract size increased 50% to just over $500,000 per contract.” Ms. Henderson
concluded, “2009 was the cornerstone year for us in that we exceeded $10 million
in revenues, $5.6 million in gross profit, and generated over $1 million in
cash. We fully anticipate leveraging this growth throughout 2010 and beyond. As
such, we estimate revenue growth of at least 25% for 2010 bringing our
forecasted full-year revenues over $13 million with a full-year gross margin
approximating 50% in 2010 and Adjusted EBITDA of $1.5 million.”
-1-
Jeff
Markin and Molly Henderson will provide a business and 2010 update and discuss
these results during the conference call on Thursday, February 25, 2010 at 11:00
a.m. EST. Interested participants should call 877-407-8035 when calling within
the United States or 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 as further
adjusted to exclude stock compensation expense and the loss on derivative
instrument (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 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,
2008 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.
-2-
-Financial
tables to follow-
|
CONTACT:
|
Company
Contact:
|
Molly
Henderson
Chief Business and Financial
Officer
500 Linden Oaks
Rochester, New York 14625
(585)249.6231
-3-
VirtualScopics,
Inc. and Subsidiary
Consolidated
Statements of Operations
|
For
the Three Months Ended
December
31,
|
For
the Year Ended
December
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(unaudited)
|
||||||||||||||||
|
Revenues
|
$ | 2,919,459 | $ | 1,947,501 | $ | 10,392,825 | $ | 7,130,518 | ||||||||
|
Cost
of services
|
1,413,555 | 973,979 | 4,777,471 | 4,031,198 | ||||||||||||
|
Gross
profit
|
1,505,904 | 973,522 | 5,615,354 | 3,099,320 | ||||||||||||
|
Gross
margin
|
52 | % | 50 | % | 54 | % | 43 | % | ||||||||
|
Operating
expenses
|
||||||||||||||||
|
Research
and development
|
225,821 | 243,553 | 975,311 | 941,193 | ||||||||||||
|
Sales
and marketing
|
362,521 | 282,854 | 1,240,309 | 1,219,882 | ||||||||||||
|
General
and administrative
|
476,124 | 446,054 | 2,142,339 | 2,035,076 | ||||||||||||
|
Stock-based
compensation expense
|
230,677 | 199,392 | 1,067,080 | 1,123,283 | ||||||||||||
|
Depreciation
and amortization
|
118,242 | 115,584 | 469,585 | 466,150 | ||||||||||||
|
Total
operating expenses
|
1,413,385 | 1,287,437 | 5,894,624 | 5,785,584 | ||||||||||||
|
Operating
income (loss)
|
92,519 | (313,915 | ) | (279,270 | ) | (2,686,264 | ) | |||||||||
|
Other
income (expense)
|
||||||||||||||||
|
Interest
income
|
3,169 | 13,920 | 7,116 | 73,599 | ||||||||||||
|
Other
expense
|
(9,724 | ) | (4,541 | ) | (22,027 | ) | (16,077 | ) | ||||||||
|
Gain
(Loss) on derivative financial instrument
|
287,953 | - | (717,045 | ) | - | |||||||||||
|
Total
other income (expense)
|
281,398 | 9,379 | (731,956 | ) | 57,522 | |||||||||||
|
Net
Income (Loss)
|
$ | 373,917 | $ | (304,536 | ) | $ | (1,011,226 | ) | $ | (2,628,742 | ) | |||||
|
Series
B preferred stock cash dividend
|
59,802 | 84,520 | 304,318 | 338,827 | ||||||||||||
|
Net
income (loss) attributable to common stockholders
|
$ | 314,115 | $ | (389,056 | ) | $ | (1,315,544 | ) | $ | (2,967,569 | ) | |||||
|
Basic
and diluted net income (loss) per common share
|
$ | 0.01 | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.13 | ) | |||||
|
Weighted
average number of common shares outstanding
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||||||||||||||||
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Basic
|
24,990,515 | 23,492,651 | 24,102,126 | 23,389,705 | ||||||||||||
|
Diluted
|
30,789,084 | 23,492,651 | 24,102,126 | 23,389,705 | ||||||||||||
-4-
VirtualScopics,
Inc. and Subsidiary
Consolidated
Balance Sheets
|
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash
|
$ | 4,327,410 | $ | 3,143,904 | ||||
|
Accounts
receivable
|
1,481,381 | 1,021,110 | ||||||
|
Prepaid
expenses and other current assets
|
387,247 | 263,297 | ||||||
|
Total
current assets
|
6,196,038 | 4,428,311 | ||||||
|
Patents,
net
|
1,832,560 | 1,920,446 | ||||||
|
Property
and equipment, net
|
456,169 | 355,479 | ||||||
|
Other
assets
|
33,258 | 156,788 | ||||||
|
Total
assets
|
$ | 8,518,025 | $ | 6,861,024 | ||||
|
Liabilities
and Stockholders' Equity
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 658,430 | $ | 659,009 | ||||
|
Accrued
payroll
|
837,177 | 554,425 | ||||||
|
Unearned
revenue
|
1,011,498 | 291,594 | ||||||
|
Derivative
liability
|
1,139,953 | - | ||||||
|
Total
current liabilities
|
3,647,058 | 1,505,028 | ||||||
|
Commitments
and Contingencies
|
- | - | ||||||
|
Stockholders'
Equity
|
||||||||
|
Convertible
preferred stock, $0.001 par value; 15,000,000 shares authorized; 8,400
shares designated Series A; issued and outstanding: 3,438 and 3,976 shares
at December 31, 2009 and December 31, 2008, respectively; liquidation
preference $1,000 per share
|
3 | 4 | ||||||
|
6,000
shares designated Series B; issued and outstanding: 2,910 and 4,226 shares
at December 31, 2009 and December 31, 2008 respectively; liquidation
preference $1,000 per share
|
3 | 4 | ||||||
|
Common
Stock, $0.001 par value; 85,000,000 shares authorized; issued and
outstanding, 25,233,255 shares at December 31, 2009 and 23,502,352 shares
at December 31, 2008
|
25,233 | 23,503 | ||||||
|
Additional
paid-in capital
|
14,354,929 | 16,546,550 | ||||||
|
Accumulated
deficit
|
(9,509,201 | ) | (11,214,065 | ) | ||||
|
Total
stockholders' equity
|
4,870,967 | 5,355,996 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 8,518,025 | $ | 6,861,024 | ||||
-5-
|
Three
Months Ended
|
Three
Months Ended
|
|||||||
|
Adjusted
EBITDA (non-GAAP measurement):
|
December
31, 2009
|
December
31, 2008
|
||||||
|
Net
income (loss)
|
$ | 373,917 | $ | (304,536 | ) | |||
|
Interest
income and other expenses
|
6,555 | (9,379 | ) | |||||
|
Depreciation
and amortization
|
118,242 | 115,584 | ||||||
|
Stock-based
compensation expense
|
230,677 | 199,392 | ||||||
|
Gain
on derivative financial instrument
|
(287,953 | ) | - | |||||
|
Adjusted
EBITDA
|
$ | 441,438 | $ | 1,061 | ||||
|
Basic
Adjusted EBITDA per common share, non-GAAP
|
$ | 0.02 | $ | 0.00 | ||||
|
Diluted
Adjusted EBITDA per common share, non-GAAP
|
$ | 0.01 | $ | 0.00 | ||||
|
Year
Ended
|
Year
Ended
|
|||||||
|
December
31, 2009
|
December
31, 2008
|
|||||||
|
Net
loss
|
$ | (1,011,226 | ) | $ | (2,628,742 | ) | ||
|
Interest
income and other expenses
|
14,911 | (57,522 | ) | |||||
|
Depreciation
and amortization
|
469,585 | 466,150 | ||||||
|
Stock-based
compensation expense
|
1,067,080 | 1,123,283 | ||||||
|
Loss
on derivative financial instrument
|
717,045 | - | ||||||
|
Adjusted
EBITDA
|
$ | 1,257,395 | $ | (1,096,831 | ) | |||
|
Basic
and diluted Adjusted EBITDA per common share, non-GAAP
|
$ | 0.05 | $ | (0.05 | ) | |||
|
For
the Twelve Months Ended
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
cash flows provided by (used in):
|
||||||||
|
Operating
activities
|
$ | 1,849,587 | $ | (845,697 | ) | |||
|
Investing
activities
|
(361,763 | ) | (127,082 | ) | ||||
|
Financing
activities
|
(304,318 | ) | 160,848 | |||||
|
Increase
(decrease) in cash
|
1,183,506 | (811,931 | ) | |||||
|
Cash
- beginning of period
|
3,143,904 | 3,955,835 | ||||||
|
Cash
- end of period
|
$ | 4,327,410 | $ | 3,143,904 | ||||
-6-