MONTREAL, CANADA (TSX: ARA), a Canadian medical device company
and a leader in optical molecular imaging products for the
healthcare and pharmaceutical industries, today announces its
financial results for the fourth quarter and year ended December
31, 2007. Revenues for the fourth quarter of 2007 increased by 120%
to $1,384,014, compared to $628,907 for the same quarter of 2006.
Revenues for the year ended December 31, 2007 were $2,087,920,
compared to $3,081,776 for the year ended December 31, 2006. For
the 2007 fourth quarter, the loss before financial expenses, gain
on disposal of an investment and income taxes (operating loss)
decreased by $1,000,186, or 37%, to $1,706,286 from $2,706,472 for
the same period a year ago. As for the year 2007, the operating
loss decreased by $2,311,820, or 20%, to $9,272,503 from
$11,584,323 in 2006. The net loss for the three-month period ended
December 31, 2007 was $1,683,593 or $0.02 per share, compared to a
net income of $1,354,770 or $0.03 per share for the three-month
period ended December 31, 2006. The net loss for the year ended
December 31, 2007 was $8,623,447 or $0.13 per share, compared to
$8,754,767 or $0.18 per share for the year ended December 31, 2006.
All dollar amounts referenced herein are in U.S. dollars, unless
otherwise stated.
2007 Fourth Quarter Highlights
- As the worldwide installed base for the Optix� system expands,
sales reach the 50-unit level, confirming the interest of leading
pharmaceutical and academic research labs in the Company's ultra
sensitive molecular imaging technology and products.
- As a result of the new direct distribution strategy for the
commercialization of the Optix system, the sales force now in place
significantly increased fourth quarter revenues.
- ART expands partnerships, such as the one existing with the
National Research Council of Canada's Institute for Biological
Sciences, to leverage the Optix system's unique technical
advantages to drive new application development and new system
placements and upgrades.
- ART closes a public offering from treasury at a price of
C$0.16 per common share, resulting in total gross proceeds of C$5.0
million. Proceeds are to be used for the commercialization, sale
and distribution of the Company's products.
Post Quarter Events
- 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.
- 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.
Revenues
For the three-month period ended December 31, 2007, sales
increased by 120% to $1,384,014, compared to $628,907 for the same
quarter a year ago. For the year ended December 31, 2007 revenues
were $2,087,920, compared to $3,081,776 for the year ended December
31, 2006. The decrease in sales in 2007 when compared to 2006 is
mainly due to the Company's transition to a direct distribution
model. In fact, while going through the transition, the Company
sold only one unit of its Optix system during the first half of
2007. During the third quarter, the Company completed the
implementation of its new marketing strategy, which provided
immediate results with the sale of four units during the fourth
quarter. During the year 2006, the Company had sold 11 units of the
Optix system. 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 year
ended December 31, 2007, the Company's sales from add-ons and
Fenestra products were equivalent to those in the year ended
December 31, 2006. The decrease in services and other revenues is
explained by the fact that the Company did not perform any upgrades
of single-wavelength systems to the new multiwavelength system in
2007. The nature of these revenues will change going forward as ART
now offers service and maintenance contracts. These contracts
typically offer terms of 12 to 24 months. For the year ended
December 31, 2007, the Company recognized services and other
revenues in the amount of $24,693, and $156,167 was accounted for
as deferred revenues.
Gross margin
The gross margin for the quarter ended December 31, 2007 was
$767,877 or 55% compared to $306,577 or 49% for the same quarter of
2006. For the year ended December 31, 2007, ART generated a gross
margin of $1,158,470 or 55%, and $1,301,760 or 42% the previous
year. The increase of the gross margin ratio in the year ended
December 31, 2007, compared to the year 2006, is primarily due to
the change in the Company's distribution channels. In 2007, the
Company sold 80% of its systems through direct sales channels,
which had a positive impact on the gross margin generated.
Operating expenses
The Company's research and development ("R&D") expenditures
for the three-month period ended December 31, 2007, net of
investment tax credits amounted to $734,287, compared to $1,517,747
for the same period a year ago. The R&D expenditures for the
year ended December 31, 2007, net of investment tax credits
amounted to $4,724,842, compared to $7,837,352 for the year ended
December 31, 2006. The decrease in both the 2007 fourth quarter and
year was primarily related to the medical sector given that the
SoftScan program reached important approval milestones at the end
of year 2006 and early 2007, more specifically following the Health
Canada approval in December 2006 and the CE marking received for
Europe in February 2007. Therefore the costs associated with the
achievement of these milestones did not have to be incurred again
in 2007.
Selling, general, and administrative ("SG&A") expenses for
the 2007 fourth quarter totaled $1,339,559, compared to $1,284,333
for the same quarter a year ago. SG&A expenses for the year
ended December 31, 2007, totaled $5,045,825, compared to $4,263,450
for the year ended December 31, 2006.
The increase of the SG&A expenses in both the 2007 fourth
quarter and year was mainly due to the recruitment of the direct
sales force, the commissions, and direct marketing expenses
incurred to support the commercialization of the Optix, SoftScan
and Fenestra products.
Therefore, the operating expenses for the 2007 fourth quarter
decreased by $538,886 or 18% to $2,474,163, from $3,013,049 for the
same quarter a year ago. For the 2007 year-end, the operating
expenses were $10,430,973 compared to $12,886,083 for the year
ended December 31, 2006.
As a result, the operating loss for the 2007 fourth quarter
decreased by $1,000,186 or 37%, to $1,706,286 from $2,706,472 for
the same period a year ago. As for the year 2007, the operating
loss decreased by $2,311,820, or 20%, to $9,272,503 from
$11,584,323 in 2006.
During the fourth quarter of 2007, the interest income and the
gain on foreign exchange exceeded the financial expenses which
resulted as income totaling $22,693, compared to financial expenses
of $1,002,506 for the same quarter a year ago. The financial
expenses for the year ended December 31, 2007 totaled $162,249
compared to $2,234,192 for the year ended December 31, 2006. The
financial expenses decreased during the year ended December 31,
2007, due to the fact that the convertible debentures were
repurchased in the fourth quarter of 2006. Consequently, no related
interest and amortization of financing fees were accounted for in
2007.
For the year December 31, 2006, a non-recurring gain in the
amount of $5,888,981 resulted from the disposal of an investment on
November 27, 2006. Therefore, no such gain has been recognized in
2007.
The current income taxes recovery for the quarter ended December
31, 2007 totaled $811,305 compared to a current income tax expense
of $825,233 during the same quarter a year ago. The current income
tax expense was primarily attributable to the tax impact resulting
from the gain on the disposal of an investment in the last quarter
of 2006 recovered following the utilization of the tax losses in
2007.
Net Loss
As a result, the net loss for the quarter ended December 31,
2007 was $1,683,593 or $0.02 per share, compared to a net income of
$1,354,770 or $0.03 per share for the three-month period ended
December 31, 2006. The net loss for the year ended December 31,
2007 was $8,623,447 or $0.13 per share, compared to $8,754,767 or
$0.18 per share for the year ended December 31, 2006.
As at December 31, 2007, the Company had a working capital of
$5.1 million, which includes inventories that could generate $2 to
3 million in revenues.
The financial statements, accompanying notes to the financial
statements, and Management's Discussion and Analysis for the
three-month period ended December 31, 2007, 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.
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 April 8,
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 3254231#.
A detailed list of the risks and uncertainties affecting the
Company can be found in the Company's Annual Information Form.
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. ART is commercializing
these products in a global strategic alliance with GE Healthcare, a
world leader in mammography and imaging. Finally, the Fenestra�
line of molecular imaging contrast products provide 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'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)
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
December 31, December 31,
2007 2006
--------------------------------------------------------------------------
ASSETS
Current assets
Cash $561,325 $6,546,936
Term deposits, 4.05%, maturing in
January 2008 3,026,329 -
Accounts receivable 1,768,146 625,189
Investment tax credits receivable 1,558,709 353,583
Inventories 1,510,499 1,715,592
Prepaid expenses 260,199 331,782
--------------------------------------------------------------------------
8,685,207 9,573,082
Property and equipment 551,210 504,426
Patents 2,135,855 1,962,038
Deferred development costs 1,268,438 459,488
--------------------------------------------------------------------------
$12,640,710 $12,499,034
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loan $605,266 $-
Accounts payable and
accrued liabilities 2,652,219 3,256,756
Deferred revenues 156,167 -
Deferred grant 152,305 129,552
Income taxes payable - 806,751
--------------------------------------------------------------------------
3,565,957 4,193,059
SHAREHOLDERS' EQUITY
Share capital and share purchase
warrants 32,217,942 24,126,432
Contributed surplus 4,537,336 3,586,059
Deficit (31,007,264) (21,247,643)
Accumulated other comprehensive income 3,326,739 1,841,127
--------------------------------------------------------------------------
9,074,753 8,305,975
--------------------------------------------------------------------------
$12,640,710 $12,499,034
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month Twelve-month
periods ended periods ended
December 31 December 31
2007 2006 2007 2006
--------------------------------------------------------------------------
Sales
Products $1,359,321 $628,907 $2,063,227 $2,917,159
Services and
other revenues 24,693 - 24,693 164,617
--------------------------------------------------------------------------
1,384,014 628,907 2,087,920 3,081,776
--------------------------------------------------------------------------
Cost of sales
Products 602,034 322,330 915,347 1,642,181
Services and
other revenues 14,103 - 14,103 137,835
--------------------------------------------------------------------------
616,137 322,330 929,450 1,780,016
--------------------------------------------------------------------------
Gross margin 767,877 306,577 1,158,470 1,301,760
--------------------------------------------------------------------------
Operating expenses
Research and
development, net
of investment
tax credits 734,287 1,517,747 4,724,842 7,837,352
Selling, general
and administrative 1,339,559 1,284,333 5,045,825 4,263,450
Severance and
related costs - - - 361,118
Amortization 400,317 210,969 660,306 424,163
--------------------------------------------------------------------------
2,474,163 3,013,049 10,430,973 12,886,083
--------------------------------------------------------------------------
Operating loss 1,706,286 2,706,472 9,272,503 11,584,323
Financial expenses
(revenues) (22,693) 1,002,506 162,249 2,234,192
Gain on disposal
of an investment - (5,888,981) - (5,888,981)
--------------------------------------------------------------------------
Loss (income) from
operations before
income taxes 1,683,593 (2,180,003) 9,434,752 7,929,534
Current income
taxes (Recovery) - 825,233 (811,305) 825,233
--------------------------------------------------------------------------
Net loss (income) $1,683,593 $(1,354,770) $8,623,447 $8,754,767
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
net loss (income)
per share $0.02 $(0.03) $0.13 $0.18
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
weighted average
number of
common shares
outstanding 75,179,179 52,248,981 63,967,183 48,775,554
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Number of common
shares outstanding,
end of period 94,540,592 52,411,350 94,540,592 52,411,350
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Cash Flows
(In U.S. dollars)
(Unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month Twelve-month
periods ended periods ended
December 31 December 31
2007 2006 2007 2006
--------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss $(1,683,593) $1,354,770 $(8,623,447) $(8,754,767)
Items not
affecting cash
Amortization 400,317 210,969 660,306 424,163
Amortization of
deferred financing
costs - 118,826 - 118,826
Stock-based
compensation 42,834 57,452 172,242 268,206
Interest on
convertible
debentures - 16,143 - 942,375
Gain on disposal
of an investment - (5,888,981) - (5,888,981)
Convertible
debentures
settlement - 793,930 - 793,930
Net changes in working
capital items
Accounts receivable (860,155) 149,863 (1,010,929) 463,129
Investment tax
credits receivable (640,106) (13,139) (1,101,184) 350,802
Inventories 488,399 (570,008) 508,265 (551,082)
Prepaid expenses 56,094 97,443 126,797 82,610
Accounts payable and
accrued liabilities 240,002 1,576,570 (935,991) 1,192,822
Deferred revenues 157,678 - 157,678 -
Deferred grant - - - 40,190
Income taxes payable - 806,751 (811,304) 806,751
--------------------------------------------------------------------------
Cash flows from
operating activities (1,798,530) (1,289,411) (10,857,567) (9,711,026)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Business acquisition - 118,700 - (333,755)
Short-term investments 1,118,039 1,001,464 - 4,272,571
Property and equipment (12,323) (7,093) (125,104) (7,825)
Patents (192,320) (18,939) (192,320) (18,939)
Deferred development
costs (332,234) 6,994 (825,869) (50,034)
--------------------------------------------------------------------------
Cash flows from
investing activities 581,162 1,101,126 (1,143,293) 3,862,018
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Credit facility - - 546,398 -
Repayment of senior
convertible debentures - (625,000) - (2,500,000)
Convertible debenture
settlement - (2,928,866) - (2,928,866)
Disposal of an investment - 5,888,981 - 5,888,981
Issue of convertible
preferred shares - (24,317) - 2,007,043
Common shares and share
purchase warrants 4,982,561 - 8,870,545 6,283,708
Equity issue expenses (940,771) (43,484) (1,136,174) (953,440)
--------------------------------------------------------------------------
Cash flows from
financing activities 4,041,790 2,267,314 8,280,769 7,797,426
Effect of foreign
currency translation
adjustments 68,626 (288,286) 760,809 (260,624)
--------------------------------------------------------------------------
4,110,416 1,979,028 9,041,578 7,536,802
--------------------------------------------------------------------------
Net decrease in cash
and cash equivalents 2,893,048 1,790,743 (2,959,282) 1,687,794
Cash and cash
equivalents,
beginning of period 694,606 4,756,193 6,546,936 4,859,142
--------------------------------------------------------------------------
Cash and cash
equivalents, end
of period $3,587,654 $6,546,936 $3,587,654 $6,546,936
--------------------------------------------------------------------------
--------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS
Cash $561,325 $6,546,936 $561,325 $6,546,936
Term deposit 3,026,329 - 3,026,329 -
--------------------------------------------------------------------------
$3,587,654 $6,546,936 $3,587,654 $6,546,936
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Supplemental
Disclosure of cash
flow information
Interest received $36,160 $(38,623) $57,512 $(340,646)
Interest paid 13,320 14,103 129,504 156,953
Transfer of finished
goods inventory to
property and equipment - 180,001 - 180,001
Contacts: ART Advanced Research Technologies Inc. Jacques Bedard
Chief Financial Officer 514-832-0777 jbedard@art.ca www.art.ca
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