ART Advanced Research Technologies Inc. (ART) (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 second quarter
ended June 30, 2008. ART reported revenues of $1,212,860 for the
three-month period ended June 30, 2008, compared to $41,951 for the
same quarter a year ago. For the six-month period ended June 30,
2008, revenues were $2,454,781, compared to $436,165, for the
six-month period ended June 30, 2007. For the 2008 second quarter,
the operating loss decreased by $2,181,181, or 67%, to $1,090,963,
from $3,272,144 for the same period a year ago. For the six-month
period ended June 30, 2008, the operating loss was $2,425,284,
compared to $5,476,408, for the six-month period ended June 30,
2007. ART incurred a net loss for the three-month period ended June
30, 2008, of $1,101,220 or $0.01 per share, compared to $3,170,391
or $0.06 per share for the three-month period ended June 30, 2007.
For the six-month period ended June 30, 2008, the net loss was
$2,380,676 or $0.02 per share, compared to $4,739,077 or $0.08 per
share, for the six-month period ended June 30, 2007. All dollar
amounts referenced herein are in U.S. dollars, unless otherwise
stated.
2008 Second Quarter Highlights
- ART identified and secured regional distribution partners in
several key geographic areas for the distribution of its
preclinical product offering, notably Asia and Europe.
- ART announced the closing of a private placement of $1.1
million in preferred shares.
Post Quarter Events
- ART secured three orders, for a total of three Optix� units,
for which it expects to recognize the revenue over the next few
weeks for two of them and by the end of the year for the third.
- ART announced a private placement of approximately $6.0million
in preferred shares.
Revenues
For the three-month period ended June 30, 2008, revenues were
$1,212,860, compared to $41,951 for the same period ended June 30,
2007. Sales resulting from products amounted to $37,177 in the
quarter ended June 30, 2008, compared to $41,951 for the same
quarter of last year. Revenues resulting from sales of products for
the six-month period ended June 30, 2008 amounted to $1,243,389,
compared to $436,165 for the same period of last year. The increase
in product sales in 2008 when compared to 2007 is 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 quarters ended June 30, 2008
and 2007, the Company sold only Fenestra� products. There were no
Optix� or SoftScan� units sold during those periods (one SoftScan
unit and one Optix unit during the six-month period ended June 30,
2008 and one Optix unit for the six-month period ended June 30,
2007). No add-ons resulted in the conversion of Optix systems to
the MX2 version during the quarters ended June 30, 2008 and 2007
(two converted systems during the six-month period ended June 30,
2008 and no systems for the six-month period ended June 30, 2007).
During the three-month period ended June 30, 2008, the Company
recognized revenues totalling $1,075,517 from services rendered on
behalf of GE as ART is completing the transition out of the Optix
distribution agreement with GE. Revenues from service contracts in
the amount of $43,031 were also recognized over the term of the
contracts, which is between 12 to 24 months. During the same period
ended June 30, 2007, there were no sales of services.
Gross Margin
During the three and six-month periods ended June 30, 2008, ART
generated a gross margin of $32,775 or 88% and $991,194 or 80%
respectively from the sales of its products compared to $39,243 or
94% and $213,973 or 49% for the same periods in the previous year.
The gross margin generated on the sales of services and other
revenues was 97% and 95% respectively for the three-month and the
six-month periods ended June 30, 2008. The increase of the gross
margin in the six-month period ended in 2008, compared to the same
period of the previous year, is primarily due to the services and
other revenues as well as the sale of the SoftScan unit in the
first quarter of 2008, 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 June 30, 2008, net of investment
tax credits, amounted to $618,279, compared to $1,689,083 for the
same period ended June 30, 2007. For the six-month period ended
June 30, 2008, R&D expenditures, net of investment tax credits,
were $1,472,929, compared to $2,897,498 for the six-month period
ended June 30, 2007. The R&D expenditures during the
three-month and the six-month periods ended June 30, 2008,
decreased by 63% and 49% compared to the same periods 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 half of
2008.
Selling, general, and administrative ("SG&A") expenses for
the three-month period ended June 30, 2008, totaled $1,468,810,
compared to $1,533,667 for the same period ended June 30, 2007. For
the six-month period ended June 30, 2008, SG&A expenses were
$2,752,064, compared to $2,618,195 for the six-month period ended
June 30, 2007. The SG&A expenses decreased by $64,857 during
the three-month period ended June 2008 while they increased by
$133,869 in the six-month period ended June 30, 2008, compared to
the same periods of 2007. The decrease was mainly due to a decrease
in professional fees, while the increase is explained by 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 three-month period ended June 30, 2008 was
$1,101,220 or $0.01 per share, compared to $3,170,391 or $0.06 per
share for the three-month period ended June 30, 2007. For the
six-month period ended June 30, 2008, the net loss was $2,380,676
or $0.02 per share, compared to $4,739,077 or $0.08 per share, for
the six-month period ended June 30, 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. On a proforma basis following the $6.0 million
round of financing, the Company has in cash and cash equivalents
$7.1 million, a working capital of $9.2 million.
The financial statements, accompanying notes to the financial
statements, and Management's Discussion and Analysis for the
three-month period ended June 30, 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 August 26,
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 3267501#.
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)
June 30, 2008 December 31, 2007
(unaudited)
--------------------------------------------------------------------------
ASSETS
Current assets
Cash $537,291 $561,325
Term deposits, 2.4%
maturing in July 2008 589,044 3,026,329
Accounts receivable 2,055,490 1,768,146
Investment tax credits receivable 627,510 1,558,709
Inventories 1,668,130 1,510,499
Prepaid expenses 803,212 260,199
--------------------------------------------------------------------------
6,280,677 8,685,207
Property and equipment 571,895 551,210
Patents 1,936,689 2,135,855
Deferred development costs 1,989,832 1,268,438
--------------------------------------------------------------------------
$10,779,093 $12,640,710
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loan 589,044 605,266
Accounts payable and
accrued liabilities 2,156,652 2,652,219
Deferred revenues 199,314 156,167
Deferred grant 153,961 152,305
Current portion of obligations
under capital leases 19,968 -
--------------------------------------------------------------------------
3,118,939 3,565,957
Obligations under capital leases 89,784 -
SHAREHOLDERS' EQUITY
Share capital and share
purchase warrants 33,317,942 32,217,942
Contributed surplus 4,611,496 4,537,336
Deficit (33,470,133) (31,007,264)
Accumulated other comprehensive income 3,111,065 3,326,739
--------------------------------------------------------------------------
7,570,370 9,074,753
--------------------------------------------------------------------------
$10,779,093 $12,640,710
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Shareholders's Equity
As at June 30, 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
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(unaudited)
Balance as at
January 1, 2008 94,540,592 $23,030,023 8,341,982 $7,907,043
Net loss
Translation adjustment
--------------------------------------------------------------------------
Comprehensive income
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Issue of shares for cash 7,008,868 1,100,000
Share issue expenses
Stock-based compensation
Expired warrants
--------------------------------------------------------------------------
Balance as at
June 30, 2008 94,540,592 $23,030,023 15,350,850 $9,007,043
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Share Capital
and Share
Warrants Purchase
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
--------------------------------------------------------------------------
(unaudited)
Balance as at January 1, 2008 4,855,791 $1,280,876 $32,217,942
Net loss
Translation adjustment
--------------------------------------------------------------------------
Comprehensive income
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Issue of shares for cash 1,100,000
Share issue expenses
Stock-based compensation
Expired warrants
--------------------------------------------------------------------------
Balance as at June 30, 2008 4,855,791 $1,280,876 $33,317,942
--------------------------------------------------------------------------
--------------------------------------------------------------------------
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
--------------------------------------------------------------------------
(unaudited)
Balance as at
January 1, 2008 4,537,336 $(31,007,264) $3,326,739 $9,074,753
Net loss (2,380,676) (2,380,676)
Translation adjustment (215,674) (215,674)
--------------------------------------------------------------------------
Comprehensive income (2,380,676) (215,674) (2,596,350)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Issue of shares
for cash 1,100,000
Share issue expenses (82,193) (82,193)
Stock-based
compensation 74,160 74,160
Expired warrants
--------------------------------------------------------------------------
Balance as at
June 30, 2008 $4,611,496 $(33,470,133) $3,111,065 $7,570,370
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(Unaudited)
Three-month Periods Six-month Periods
ended June 30 ended June 30
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------
Sales
Products $37,177 $41,951 $1,243,389 $436,165
Services and other
revenues 1,175,683 - 1,211,392 -
--------------------------------------------------------------------------
1,212,860 41,951 2,454,781 436,165
--------------------------------------------------------------------------
Cost of sales
Products 4,402 2,708 252,195 222,192
Services and other
revenues 38,995 - 57,100 -
--------------------------------------------------------------------------
43,397 2,708 309,295 222,192
--------------------------------------------------------------------------
Gross margin 1,169,463 39,243 2,145,486 213,973
--------------------------------------------------------------------------
Operating expenses
Research and
development, net
of investment tax
credits 618,279 1,689,083 1,472,929 2,897,498
Selling, general
and administrative 1,468,810 1,533,667 2,752,064 2,618,195
Amortization 173,337 88,637 345,777 174,688
--------------------------------------------------------------------------
2,260,426 3,311,387 4,570,770 5,690,381
--------------------------------------------------------------------------
Operating loss 1,090,963 3,272,144 2,425,284 5,476,408
Other expenses
(revenues) 10,257 38,878 (44,608) 73,974
--------------------------------------------------------------------------
Loss from operations
before income taxes 1,101,220 3,311,022 2,380,676 5,550,382
Current income taxes
(recovery) - (140,631) - (811,305)
--------------------------------------------------------------------------
Net loss $1,101,220 $3,170,391 $2,380,676 $4,739,077
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted net
loss per share $0.01 $0.06 $0.02 $0.08
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
weighted average
number of common
shares
outstanding 94,540,592 54,016,714 94,540,592 58,551,176
--------------------------------------------------------------------------
Number of common
shares outstanding,
end of period 94,540,592 63,290,592 94,540,592 63,290,592
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Cash Flows
(In U.S. dollars)
(Unaudited)
Three-month Periods Six-month Periods
ended June 30 ended June 30
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss $(1,101,220) $(3,170,391) $(2,380,676) $(4,739,077)
Items not
affecting cash
Amortization 173,337 88,637 345,777 174,688
Stock-based
compensation 37,080 43,682 74,160 101,134
Gain on disposal
of fixed assets (26,707) - (26,707) -
Net changes in
working capital
items
Accounts receivable (731,199) 178,309 (335,270) (139,584)
Investment tax
credits receivable (236,413) (176,379) 903,656 (282,353)
Inventories (254,966) (23,308) (199,477) 61
Prepaid expenses 282,647 29,339 (559,589) 15,135
Accounts payable
and accrued
liabilities (666,239) 631,743 (426,700) (931,069)
Deferred revenues 83,236 - 47,527 -
Deferred grant - - 5,821 -
Income taxes
payable - (140,630) - (811,304)
--------------------------------------------------------------------------
Cash flows from
operating
activities (2,440,444) (2,538,998) (2,551,478) (6,612,369)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term investments - (369,565) - (2,759,459)
Additions of fixed
assets (9,745) (74,176) (9,745) (96,151)
Proceed from
disposal of
fixed assets 33,481 - 59,172 -
Patents (42,668) - (131,843) -
Deferred development
costs (468,375) (88,255) (763,546) (241,807)
--------------------------------------------------------------------------
Cash flows from
investing
activities (487,307) (531,996) (845,962) (3,097,417)
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan - 546,398 - 546,398
Repayment of
obligations under
capital leases (12,456) - (17,995) -
Issue of
convertible
preferred shares 1,100,000 - 1,100,000 -
Issue of common
shares and share
purchase warrants - - - 3,887,999
Equity issue
expenses (82,193) (124,728) (82,193) (195,403)
--------------------------------------------------------------------------
Cash flows from
financing
activities 1,005,351 421,670 999,812 4,238,994
Effect of foreign
currency translation
adjustments 53,047 226,596 (63,691) 256,448
--------------------------------------------------------------------------
1,058,398 648,266 936,121 4,495,442
--------------------------------------------------------------------------
Net decrease in
cash and cash
equivalents (1,869,353) (2,422,728) (2,461,319) (5,214,344)
Cash and cash
equivalents,
beginning of
period 2,995,688 3,755,320 3,587,654 6,546,936
--------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $1,126,335 $1,332,592 $1,126,335 $1,332,592
--------------------------------------------------------------------------
--------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS
Cash $537,291 $816,090 $537,291 $816,090
Term deposits 589,044 516,502 589,044 516,502
--------------------------------------------------------------------------
$1,126,335 $1,332,592 $1,126,335 $1,332,592
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Supplemental
disclosure
of cash flow
information
Interest paid $24,382 $1,305 $33,016 $25,573
Interest received 9,720 18,362 30,109 23,333
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Contacts: ART Advanced Research Technologies Inc. Jacques Bedard
Chief Financial Officer 514-832-0777 jbedard@art.ca www.art.ca
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