8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) November 9, 2007 (November 8, 2007)

VIRTUALSCOPICS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-52018	04-3007151
(Commission File Number)	(IRS Employer Identification No.)
500 Linden Oaks, Rochester, New York	14625
(Address of Principal Executive Offices)	(Zip Code)

(585) 249-6231

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 2Financial Information

Item 2.02Results of Operations and Financial Condition

On November 8, 2007, VirtualScopics, Inc. issued a press release announcing the financial results for the third quarter ended September 30, 2007. A copy of VirtualScopics, Inc.’s press release is attached as Exhibit 99.1 to this current report on Form 8-K.

The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Section 9Financial Statements and Exhibits

Item 9.01Financial Statement and Exhibits

(d)Exhibits

99.1Press Release dated November 8, 2007

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VIRTUALSCOPICS, INC.
Date: November 9, 2007	By:	/s/ Molly Henderson
		Name:Molly Henderson
		Title:Chief Financial Officer

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EXHIBIT INDEX

Exhibit No. Description

99.1 Press Release dated November 8, 2007

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EX-99.1

EXHIBIT 99.1

500 Linden Oaks

Rochester, New York 14625

FOR IMMEDIATE RELEASE

CONTACT:
Tracy Bagatelle-Black	Tim Ryan
Bagatelle-Black Public Relations	Trout Group Investor Relations
661/263-1842	646/378-2924
tracy@bagatelleblack.com	tryan@troutgroup.com

VIRTUALSCOPICS REPORTS THIRD QUARTER 2007 RESULTS

First Nine Months of 2007 Revenues Increased 17% over Comparable Period in 2006

ROCHESTER, NY - November 8, 2007 - VirtualScopics, Inc. (VSCP), a leading developer of image-based biomarker solutions for the pharmaceutical, biotechnology and medical device industries, today announced that revenues for the first nine months of 2007 rose to nearly $4.2 million, a 17% increase over the prior year’s comparable period. Revenues for the quarter ended September 30, 2007 were nearly $1.4 million, compared to less than $1.3 million in the third quarter ended September 30, 2006.

Gross margin was 35% for the first nine months of 2007 compared to 43% in 2006. Net loss for the first three quarters of 2007 was $3,213,908 compared to a loss of $3,183,368 in the first three quarters of 2006. The loss per share was $0.14 for the nine months ended September 30, 2007 and 2006.

“While we delivered double digit year-over-year revenue growth in the first nine months of 2007, the third quarter was impacted by two large contracts that were cancelled earlier in the year due to technical and business issues unrelated to our offerings,” said Jeff Markin, president and CEO of VirtualScopics. “Although we planned for stronger revenue growth in the third quarter, we are very encouraged by the demand we’ve experienced recently from new and existing customers, as evidenced by our announcement related to 2007 contract signings and awards earlier this week. We are focused on expanding our sales team to allow for continued expansion of our customer base and sales pipeline which we believe will deliver strong revenue growth into the foreseeable future.”

The company will hold a conference call on Friday, November 9, 2007 at 11 a.m. EDT to discuss these results. Interested participants should call 877-407-8031 when calling within the United States or 201-689-8031 when calling internationally. There will be a playback available until December 9, 2007. 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: 261052.

About VirtualScopics, Inc.

VirtualScopics, Inc. is a provider of advanced medical image analysis services.  The company evolved from research first carried out at the University of Rochester Medical Center and School of Engineering.  VirtualScopics has created a suite of image analysis tools used in detecting and analyzing specific structures in volumetric medical images, as well as characterizing minute changes in structures over time, providing vital information to support clinical trials and diagnostic applications.  The firm’s proprietary software algorithms can assemble hundreds of separate medical images taken during an MRI session into a single, three-dimensional model, bringing a new and previously unobtainable source of data to clinical researchers.  For more information about VirtualScopics, visit www.virtualscopics.com.

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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 in 2007, awards of anticipated contracts 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, 2006 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 such that the Company will not realize any or all of the revenue provided for under such contracts; the risk that the Company may not reach final agreement with customers for awards of anticipated contracts; the risk that the Company’s services may not achieve market acceptance; and, risks of contract performance. 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-

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VirtualScopics, Inc. and Subsidiary

Condensed Consolidated Balance Sheet (unaudited)

	September 30, 2007
Assets
Current assets
Cash and cash equivalents	$	2,672,366
Restricted cash		337,500
Accounts receivable		831,291
Prepaid expenses and other assets		268,931
Total current assets		4,110,088
Restricted cash		80,000
Patents, net		1,958,161
Property and equipment, net		584,602
Other assets		311,199
Total assets	$	7,044,050
Liabilities and Stockholders' Equity
Current liabilities
Notes payable, current portion	$	20,544
Dividends payable		12,567
Accounts payable and accrued expenses		554,380
Accrued payroll		382,874
Unearned revenue		247,291
Total current liabilities		1,217,656
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.001 par value; 15,000,000 shares authorized;
8,400 shares designated Series A; 4,001 issued and outstanding;
liquidation preference $1,000 per share		4
6,000 shares designated Series B; 4,350 issued and 2,175 outstanding;
liquidation preference $1,000 per share		2
Common Stock, $0.001 par value; 85,000,000 shares authorized;
23,126,021 shares issued and outstanding		23,126
Additional paid-in capital		13,281,109
Accumulated deficit		(7,477,847	)
Total stockholders' equity		5,826,394
Total liabilities and stockholders' equity	$	7,044,050

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VirtualScopics, Inc. and Subsidiary

Condensed Consolidated Statements of Operations (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Revenues	$	1,370,021		$	1,275,705		$	4,184,713		$	3,561,969
Cost of services		963,076			695,095			2,731,434			2,022,391
Gross profit		406,945			580,610			1,453,279			1,539,578
Operating expenses:
Research and development		336,687			251,526			1,124,606			795,115
Sales and marketing		150,504			150,774			555,783			539,496
General and administrative		778,519			1,060,575			2,729,634			3,167,509
Depreciation and amortization		126,673			121,412			362,878			344,612
Total operating expenses		1,392,383			1,584,287			4,772,901			4,846,732
Operating loss		(985,438	)		(1,003,677	)		(3,319,622	)		(3,307,154	)
Other income (expense)
Interest income		22,108			54,760			114,644			135,876
Other expense		(5,699	)		(1,710	)		(8,930	)		(12,090	)
Total other income		16,409			53,050			105,714			123,786
Net Loss	$	(969,029	)	$	(950,627	)	$	(3,213,908	)	$	(3,183,368	)
Net loss per share
Basic and diluted	$	(0.04	)	$	(0.04	)	$	(0.14	)	$	(0.14	)
Weighted average shares used in computing net loss per share
Basic and diluted		23,111,021			22,449,433			23,028,715			22,079,452

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