ART Advanced Research Technologies Announces First Quarter 2008 Financial Results

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 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.