MONTREAL, QUEBEC (TSX: ARA), a Canadian medical device company
and a leader in optical molecular imaging products for the
healthcare and pharmaceutical industries, is pleased to announce
its financial results for the first quarter ended March 31, 2008.
ART reported revenues of $1,241,921 for the three-month period
ended March 31, 2008, compared to $394,214 for the same quarter a
year ago, an increase of 215%. For the 2008 first quarter, the
operating loss decreased by $869,943, or 40%, to $1,334,321 from
$2,204,264 for the same period a year ago. The Company posted a net
loss of $1,279,456 ($0.01 per share) for the 2008 first quarter,
compared to $1,568,686 ($0.03 per share) for the corresponding 2007
period. All dollar amounts referenced herein are in U.S. dollars,
unless otherwise stated.
2008 First Quarter Highlights
- Company maintains upward trend in revenues with over $1
million in sales through its own direct sales force, for the second
quarter in a row.
- ART secures a first breakthrough sale of SoftScan� breast
imaging device to Sunnybrook Health Sciences Centre in Toronto,
where the device is being used to measure treatment response for
breast cancer.
- ART concludes the sale of one Optix� unit and converted
systems at two sites to the new MX2 version of Optix.
- ART recruits two additional sales professionals, with strong
track records in selling imaging instrumentation and in supporting
a high technology user base, to represent the Optix product in
North America.
Post Quarter Events
- ART announced the closing of a private placement of US$1.1
million in preferred shares, resulting in cash and cash equivalents
totaling $4.1 million on a proforma basis as at March 31, 2008.
- ART announced that it has received a letter of intent (LOI) to
purchase its Optix MX2 preclinical optical molecular imaging
system, from the Southern California-based CRO firm BioLaurus.
Revenues
For the three-month period ended March 31, 2008, sales increased
by 215% to $1,241,921, compared to $394,214 for the same quarter a
year ago. During the quarter ended March 31, 2008, the Company sold
the first unit of SoftScan, one Optix unit, and add-ons that
resulted in the conversion of two Optix systems to the MX2 version.
This compares to one Optix unit during the same quarter a year ago.
The increase in product sales in 2008 when compared to 2007 is also
explained by the Company's transition to a direct distribution
model. By selling directly to its customers, the Company now
generates a higher revenue per system since it does not have to
provide discounts to an exclusive distributor. During the quarter
ended March 31, 2008, the Company's sales from add-ons and Fenestra
products were equivalent to those for the quarter ended March 31,
2007. In the first quarter of 2008, the Company recognized revenue
from service contracts in the amount of $35,709, concluded in the
last quarter of 2007.
Gross Margin
During the three-month period ended March 31, 2008, ART
generated a gross margin of 79% from the sales of its products
compared to 44% for the same period in the previous year. The
increase of the gross margin ratio for the three-month period ended
March 31, 2008, compared to the same period of the previous year,
is primarily due to the sale of the SoftScan unit, where the gross
margin represents almost 100% of the sale, given that this unit has
been sold as a prototype and therefore expensed as incurred in
previous years.
Operating Expenses
The Company's research and development ("R&D") expenditures
for the three-month period ended March 31, 2008, net of investment
tax credits amounted to $854,650, compared to $1,208,415 for the
same period a year ago. The R&D expenditures in the first
quarter of 2008 decreased by 29% compared to the same quarter in
2007. The decrease was related to the medical sector given that the
SoftScan program reached important approval milestones in the first
quarter of 2007, by obtaining the CE marking for Europe. As well,
in the preclinical sector, a decrease in R&D expenses was due
to the completion of the project leading to the new Optix MX2
system. The costs associated with the achievement of these
milestones, therefore, did not have to be incurred again in the
first quarter of 2008.
Selling, general, and administrative ("SG&A") expenses for
the 2008 first quarter totaled $1,283,254, compared to $1,084,528
for the same quarter a year ago. The increase in SG&A expenses
for the first quarter of 2008 relative to the 2007 first quarter
was mainly due to the hiring of the new direct sales force, which
was effective in the first quarter of 2008, and the direct
marketing expenses incurred to support the commercialization of the
Optix, SoftScan and Fenestra products.
Net Loss
The net loss for the quarter ended March 31, 2008 was $1,279,456
or $0.01 per share, compared to $1,568,686 or $0.03 per share for
the quarter ended March 31, 2007.
Financial Outlook
As part of its commercial strategy, the Company intends to sell
some of its existing SoftScan prototypes, which could represent
cash inflows of up to $1.5 million. Moreover, $2 to $3 million in
revenue could be generated through its Optix inventory, with
minimal investment. As at March 31, 2008, the Company had a working
capital of $3.5 million, including funded inventory. On a proforma
basis following the recent round of financing, the Company has $4.1
million in cash and cash equivalents as at March 31, 2008.
The financial statements, accompanying notes to the financial
statements, and Management's Discussion and Analysis for the
three-month period ended March 31, 2008, will be available online
at www.sedar.com, or at www.art.ca, in the "Investors" section.
Summary financial tables are provided below. A detailed list of the
risks and uncertainties affecting the Company can be found in the
Management's Discussion and Analysis for the year ended December
31, 2007, and in the Company's most recent Annual Information Form,
available on SEDAR at www.sedar.com.
Conference Call
ART will host a conference call today at 5:00 PM (EDT). The
telephone number to access the conference call is (514) 861-1531
when dialing within the Montreal area, or (877) 667-7766 for the
rest of North America. Outside of North America, please dial (514)
861-1531. A replay of the call will be available until May 27,
2008. To listen to the replay from the Montreal area, please dial
(514) 861-2272, or, (800) 408-3053 for the rest of North America.
From outside of North America, please dial (514) 861-2272. The
access code for the replay is 3260568#.
About ART
ART Advanced Research Technologies Inc. is a leader in molecular
imaging products for the healthcare and pharmaceutical industries.
ART has developed products in medical imaging, medical diagnostics,
disease research, and drug discovery with the goal of bringing new
and better treatments to patients faster. The Optix� optical
molecular imaging system, designed for monitoring physiological
changes in living systems at the preclinical study phases of new
drugs, is used by industry and academic leaders worldwide. The
SoftScan� optical medical imaging device is designed to improve the
diagnosis and treatment of breast cancer. Finally, the Fenestra�
line of molecular imaging contrast products provides image
enhancement for a wide range of preclinical Micro CT applications
allowing scientists to see greater detail in their imaging studies,
with potential extension into other major imaging modalities. ART
is commercializing some of these products in a global strategic
alliance with GE Healthcare, a world leader in mammography and
imaging. ART's shares are listed on the TSX under the ticker symbol
ARA. For more information on ART, visit our website at
www.art.ca.
This press release may contain forward-looking statements
subject to risks and uncertainties that would cause actual events
to differ materially from expectations. These risks and
uncertainties are described in the most recent Annual Information
Form and the financial statements for the year ended December 31,
2007, available on SEDAR (www.sedar.com).
Financial Statements (in U.S. dollars)
ART Advanced Research Technologies Inc.
Balance sheets
(In U.S. dollars)
March 31, 2008 December 31, 2007
(unaudited)
-------------------------------------------------------------------------
ASSETS
Current assets
Cash $1,001,331 $561,325
Term deposits, 3,25% maturing in
April 2008 1,994,357 3,026,329
Accounts receivable 1,318,427 1,768,146
Investment tax credits receivable 389,537 1,558,709
Inventories 1,402,511 1,510,499
Prepaid expenses 1,073,670 260,199
-------------------------------------------------------------------------
7,179,833 8,685,207
Property and equipment 598,249 551,210
Patents 2,013,113 2,135,855
Deferred development costs 1,511,610 1,268,438
-------------------------------------------------------------------------
$11,302,805 $12,640,710
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loan 583,714 605,266
Accounts payable and accrued
liabilities 2,791,776 2,652,219
Deferred revenues 115,725 156,167
Deferred grant 152,569 152,305
Current portion of obligations under
capital leases 29,557 -
-------------------------------------------------------------------------
3,673,341 3,565,957
Obligations under capital leases 91,441 -
SHAREHOLDERS' EQUITY
Share capital and share purchase
warrants 32,217,942 32,217,942
Contributed surplus 4,574,416 4,537,336
Deficit (32,286,720) (31,007,264)
Accumulated other comprehensive income 3,032,385 3,326,739
-------------------------------------------------------------------------
7,538,023 9,074,753
-------------------------------------------------------------------------
$11,302,805 $12,640,710
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Shareholders's Equity
As at March 31, 2008
(In U.S. dollars)
Common Shares Preferred Shares
-------------------------------------------------------------------------
Number Amount Number Amount
-------------------------------------------------------------------------
Balance as at
January 1, 2007 52,248,981 $14,561,504 8,341,982 $7,907,043
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Issue of shares for
business acquisition 162,369 95,262
Issue of shares for
cash 42,129,242 8,373,257
Issue of share
purchase warrants
Share and share
purchase warrant
issue expenses
Stock-based
compensation
Expired warrants
-------------------------------------------------------------------------
Balance as at
December 31, 2007 94,540,592 23,030,023 8,341,982 7,907,043
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
January 1, 2008 94,540,592 23,030,023 8,341,982 7,907,043
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Stock-based
compensation
-------------------------------------------------------------------------
Balance as at
March 31, 2008 94,540,592 $23,030,023 8,341,982 $7,907,043
-------------------------------------------------------------------------
Share Capital
and Share
Purchase
Warrants Warrants
-------------------------------------------------------------------------
Number Amount Total
-------------------------------------------------------------------------
Balance as at January 1, 2007 3,958,523 $1,562,623 $24,031,170
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
Issue of shares for business
acquisition 95,262
Issue of shares for cash 8,373,257
Issue of share purchase warrants 2,175,841 497,288 497,288
Share and share purchase warrant
issue expenses
Stock-based compensation
Expired warrants (1,278,573) (779,035) (779,035)
-------------------------------------------------------------------------
Balance as at December 31, 2007 4,855,791 1,280,876 32,217,942
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at January 1, 2008 4,855,791 1,280,876 32,217,942
Net loss
Translation adjustment
-------------------------------------------------------------------------
Comprehensive loss
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Stock-based compensation
-------------------------------------------------------------------------
Balance as at March 31, 2008 4,855,791 $1,280,876 $32,217,942
-------------------------------------------------------------------------
Accumulated
Other
Contributed Comprehensive
Surplus Deficit Income Total
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Balance as at
January 1, 2007 $3,586,059 $(21,247,643) $1,841,127 $8,210,713
Net loss (8,623,447) (8,623,447)
Translation
adjustment 1,485,612 1,485,612
--------------------------------------------------------------------------
Comprehensive
loss (8,623,447) 1,485,612 (7,137,835)
--------------------------------------------------------------------------
-------------------------------------------------------------------------
Issue of shares
for business
acquisition 95,262
Issue of shares
for cash 8,373,257
Issue of share
purchase
warrants 497,288
Share and share
purchase warrant
issue expenses (1,136,174) (1,136,174)
Stock-based
compensation 172,242 172,242
Expired warrants 779,035
--------------------------------------------------------------------------
Balance as at
December 31, 2007 4,537,336 (31,007,264) 3,326,739 9,074,753
--------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance as at
January 1, 2008 4,537,336 (31,007,264) 3,326,739 9,074,753
Net loss (1,279,456) (1,279,456)
Translation
adjustment (294,354) (294,354)
--------------------------------------------------------------------------
Comprehensive loss (1,279,456) (294,354) (1,573,810)
--------------------------------------------------------------------------
-------------------------------------------------------------------------
Stock-based
compensation 37,080 37,080
--------------------------------------------------------------------------
Balance as at
March 31, 2008 $4,574,416 $(32,286,720) $3,032,385 $7,538,023
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(Unaudited)
Three-month Periods ended March 31
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
Sales
Products $1,206,212 $394,214
Services and other revenues 35,709 -
-------------------------------------------------------------------------
1,241,921 394,214
-------------------------------------------------------------------------
Cost of sales
Products 247,793 219,484
Services and other revenues 18,105
-------------------------------------------------------------------------
265,898 219,484
-------------------------------------------------------------------------
Gross margin 976,023 174,730
-------------------------------------------------------------------------
Operating expenses
Research and development, net of
investment tax credits 854,650 1,208,415
Selling, general and administrative 1,283,254 1,084,528
Amortization 172,440 86,051
-------------------------------------------------------------------------
2,310,344 2,378,994
-------------------------------------------------------------------------
Operating loss 1,334,321 2,204,264
Financial expenses (revenues) (54,865) 35,096
-------------------------------------------------------------------------
Loss from operations before income taxes 1,279,456 2,239,360
Current income taxes (recovery) - (670,674)
-------------------------------------------------------------------------
Net loss $1,279,456 $1,568,686
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net loss per share $0.01 $0.03
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted weighted average
number of common shares outstanding 94,540,592 53,759,082
-------------------------------------------------------------------------
-------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Cash Flows
(In U.S. dollars)
(Unaudited)
Three-month Periods ended March 31
-------------------------------------------------------------------------
2008 2007
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss $(1,279,456) $(1,568,686)
Items not affecting cash 86,051
Amortization 172,440
Stock-based compensation 37,080 57,452
Net changes in working capital items
Accounts receivable 395,929 (317,893)
Investment tax credits receivable 1,140,069 (105,974)
Inventories 55,489 23,370
Prepaid expenses (842,236) (14,204)
Accounts payable and accrued liabilities 239,539 (1,562,812)
Deferred revenues (35,709) -
Deferred grant 5,821 -
Income taxes payable - (670,674)
-------------------------------------------------------------------------
Cash flows from operating activities (111,034) (4,073,370)
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term investments - (2,389,894)
Property and equipment - (21,975)
Proceeds from disposal of property and
equipment 25,691 -
Patents (89,175) -
Deferred development costs (295,171) (153,552)
-------------------------------------------------------------------------
Cash flows from investing activities (358,655) (2,565,421)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Repayment of obligations under capital
leases (5,538) -
Common shares and share purchase
warrants - 3,887,999
Equity and debt issue expenses - (70,675)
-------------------------------------------------------------------------
Cash flows from financing activities (5,538) 3,817,324
Effect of foreign currency translation
adjustments (116,739) 29,851
-------------------------------------------------------------------------
(122,277) 3,847,175
-------------------------------------------------------------------------
Net decrease in cash and cash equivalents (591,966) (2,791,616)
Cash and cash equivalents, beginning
of period 3,587,654 6,546,936
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $2,995,688 $3,755,320
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Cash $1,001,331 $620,888
Term deposits 1,994,357 3,134,432
-------------------------------------------------------------------------
$2,995,688 $3,755,320
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental disclosure of cash flow
information
Interest paid $8,634 $25,573
Interest received 23,750 4,971
Fixed assets acquired by means of
capital leases 129,403 -
-------------------------------------------------------------------------
Contacts: ART Advanced Research Technologies Inc. Jacques Bedard
Chief Financial Officer 514-832-0777 jbedard@art.ca www.art.ca
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