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VirtualScopics Reports Record Third Quarter 2008 Revenue and Gross Profit

Gross profit grows by nearly 100%, operating loss reduced by 44%

ROCHESTER, N.Y., Nov. 4 /PRNewswire-FirstCall/ -- VirtualScopics, Inc. (Nasdaq: VSCP), a leading provider of quantitative imaging for clinical trials, announced today that revenues for the third quarter of 2008 were over $1.8 million, a 33% increase over prior year's third quarter. Revenues for the nine months ended September 30, 2008 were approximately $5.2 million compared to nearly $4.2 million in the comparable period in 2007. The gross profit for the third quarter of 2008 was $809,916 compared to $406,945 in the third quarter of 2007, representing a 99% increase. Gross margin increased to 45%, in the third quarter ended September 30, 2008 compared to 30% in the third quarter of 2007, a 50% improvement. The Company's operating loss for the quarter ended September 30, 2008 was reduced by $431,470, or 44%, to $553,968 compared to $985,438 for the prior year's comparable period.

"We are proud to report the significant financial accomplishments made during the third quarter and for the first nine months of this year," stated Jeff Markin, president and chief executive officer of VirtualScopics. "The 33% increase in revenues coupled with the nearly doubling of our gross profit, and our good cost control, positions us very well to achieve our financial targets for this year." He further added, "Of equal importance was the significant reduction in operating cash outflow during the third quarter of 2008. Our cash outflow from operations (operating loss less depreciation, amortization and stock compensation expense) was reduced by 64% or $362,000 when compared to the comparable quarter of 2007." Mr. Markin concluded, "We are extremely pleased that the plan we put in place nearly a year ago has positioned us very well from a competitive, operational and financial perspective. We are looking forward to a solid close to the year."

Jeff Markin and Chief Business and Financial Officer, Molly Henderson will provide a business update and discuss these results during the conference call on Wednesday, November 5, 2008 at 11:00 a.m. EST. Interested participants should call 877-407-0778 when calling within the United States or 201-689-8565 when calling internationally. There will be a playback available until December 5, 2008. To listen to the playback, please call 877-660-6853 when calling within the United States or 201-612-7415 when calling internationally. For the replay, please use account number: 286, conference ID number: 301146.

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

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 in 2008 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-KSB for the fiscal year ended December 31, 2007 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 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: Company Contact:

Molly Henderson

Chief Business and Financial Officer

500 Linden Oaks

Rochester, New York 14625

(585) 249.6231

VirtualScopics, Inc.

Condensed Consolidated Balance Sheets

September 30, December 31,

2008 2007

Assets (unaudited)

Current assets

Cash and cash equivalents $3,058,561 $3,955,835

Restricted cash 102,429 455,583

Accounts receivable 831,376 648,300

Prepaid expenses and other current assets 292,477 306,301

Total current assets 4,284,843 5,366,019

Patents, net 1,920,666 1,948,785

Property and equipment, net 402,660 542,679

Other assets 187,670 323,533

Total assets $6,795,839 $8,181,016

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable and accrued expenses $584,153 $626,693

Accrued payroll 390,756 221,013

Unearned revenue 297,272 279,275

Total current liabilities 1,272,181 1,126,981

Commitments and Contingencies - -

Stockholders' Equity

Convertible preferred stock, $0.001

par value; 15,000,000 shares


8,400 series A shares; issued and

outstanding: 3,976 at September 30,

2008, 4,001 at December 31, 2007 4 4

6,000 series B shares; issued and

outstanding: 4,226 at September 30,

2008, 4,230 at December 31, 2007 4 4

Common Stock, $0.001 par value;

85,000,000 shares authorized; issued

and outstanding: 23,459,852 at

September 30, 2008 and 23,225,664 at

December 31, 2007 23,460 23,226

Additional paid-in capital 16,409,721 15,616,124

Accumulated deficit (10,909,531) (8,585,323)

Total stockholders' equity 5,523,658 7,054,035

Total liabilities and stockholders'

equity $6,795,839 $8,181,016

VirtualScopics, Inc.

Condensed Consolidated Statements of Operations (unaudited)

For the Three Months For the Nine Months

Ended September 30, Ended September 30,

2008 2007 2008 2007

Revenues $1,815,616 $1,370,021 $5,183,017 $4,184,713

Cost of services 1,005,700 963,076 3,057,220 2,731,434

Gross profit 809,916 406,945 2,125,797 1,453,279

Gross margin 45% 30% 41% 35%

Operating expenses

Research and

development 232,986 336,687 697,640 1,124,606

Sales and marketing 263,917 150,504 937,028 555,783

General and

administrative 514,147 482,545 1,589,023 1,688,178

Stock based

compensation expense 236,600 295,974 923,891 1,041,456

Depreciation and

amortization 116,234 126,673 350,565 362,878

Total operating

expenses 1,363,884 1,392,383 4,498,147 4,772,901

Operating loss (553,968) (985,438) (2,372,350) (3,319,622)

Total other income 5,383 16,409 48,142 105,714

Net Loss $(548,585) $(969,029) $(2,324,208) $(3,213,908)

Series B preferred stock

cash dividend 84,547 - 254,307 -

Net loss attributable to

common stockholders $(633,132) $(969,029) $(2,578,515) $(3,213,908)

Net loss per share

Basic and diluted $(0.03) $(0.04) $(0.11) $(0.14)

Weighted average number

of common shares

Basic and diluted 23,459,853 23,111,021 23,355,232 23,028,715

SOURCE VirtualScopics, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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