ART Advanced Research Technologies Inc. (ART), a diagnostic imaging company, has reported revenues of $4.95 million for the full year of 2008, compared with the revenues of $2.08 million in the previous year-end. It has also reported a net loss of $4.8 million, or $0.05 per share, for the full year of 2008, compared with the net loss of $8.6 million, or $0.13 per share, in the previous year-end.

ART reported revenues of $1,145,682 for the fourth quarter of 2008, compared to $1,384,014 for the same quarter of 2007. Revenues for the year ended December 31, 2008 increased by 137% to $4,954,828, compared to $2,087,920 for the year ended December 31, 2007. For the 2008 fourth quarter, the operating loss decreased by $331,346, or 19%, to $1,374,940 from $1,706,286 for the same period a year ago. As for the year ended December 31, 2008, the operating loss decreased by $3,746,797, or 40%, to $5,525,706 from $9,272,503 for the same period ended in 2007. ART incurred a net loss of $892,615 or $0.01 per share for the three-month period ended December 31, 2008, compared to a net loss of $1,683,593 or $0.02 per share for the three-month period ended December 31, 2007.

2008 Fourth Quarter Highlights

Final scans using the SoftScan® device were completed for the treatment monitoring study at the Sunnybrook Health Sciences Centre in Toronto and, given how significant these results are, the team at Sunnybrook will be submitting them for publication in a peer-reviewed journal.

An experimental probe being tested using the SoftScan device at Stanford University, displayed a high optical contrast ratio which means they could eventually be used for clinical applications in breast cancer diagnosis.

ART added an additional three units to the worldwide installed base of Optix® systems, now standing at close to 60 units.

Post Quarter Event

In January 2009, ART further reduced expenses and streamlined the Company, in response to the deteriorating global economic climate.

Gross Margin

During the three-month period ended December 31, 2008, ART generated a total gross margin of $662,940 or 62% from the sale of its products, compared to $757,287 or 56% for the same quarter of 2007. The gross margin generated on the sales of services and other revenues was $64,668 or 77% for the three-month period ended December 31, 2008, compared to $10,590 or 43% for the same quarter in 2007. During the year ended December 31, 2008, ART generated a gross margin of $2,203,185 or 62% from the sales of its products, compared to $1,147,880 or 56% for the year ended December 31, 2007. The gross margin generated on the sales of services and other revenues was $1,340,838 or 94% for the year ended December 31, 2008, compared to $10,590 or 43% for the year ended December 31, 2007. The increase of the product gross margin ratio for the three-month period ended December 31, 2008, compared to the same quarter of the previous year, is primarily due to a different sales product mix whereas the Company sold more of the Fenestra® product. The increase in the product gross margin during the year ended December 31, 2008, compared to the year ended December 31, 2007, mainly resulted from the implementation of a direct sales force, as well as the sale of a SoftScan unit in the first quarter of 2008, where the gross margin on this unit represented almost 100% of the sale, given that this unit was sold as a prototype and therefore expensed as incurred in previous years. The gross margin of 94% on the sales of services and other revenues includes the amounts invoiced to the previous distributor as the majority of the costs associated to these services were incurred in previous years.

Operating Expenses

The Company’s research and development (“R&D”) expenditures for the three-month period ended December 31, 2008, net of investment tax credits, amounted to $594,040, compared to $734,287 for the same period ended December 31, 2007. For the year ended December 31, 2008, R&D expenditures, net of investment tax credits, were $2,704,682, compared to $4,724,842 for the year ended December 31, 2007. The R&D expenditures during the three-month and the twelve-month periods ended December 31, 2008, decreased by $140,247 or 19% and $2,020,160 or 43% respectively, compared to the same periods in 2007. The decrease was related to the medical sector given that the SoftScan product 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 research 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 2008. In 2008, the R&D team continued to support the Optix system and collaborated with clients for the development of applications using the new MX2 version of the system in order to demonstrate the utility of the system in applications such as oncology, cardiology and neurology.

Selling, general, and administrative (“SG&A”) expenses for the three-month period ended December 31, 2008, totaled $1,261,085, compared to $1,339,559 for the same period ended December 31, 2007. SG&A expenses for the year ended December 31, 2008, totalled $5,536,464, compared to $5,045,825 for the year ended December 31, 2007. The SG&A expenses decreased by $78,474 or 6% during the three-month period ended December 31, 2008, and increased by $490,639 or 10% in the year ended December 31, 2008, compared to the same periods of 2007. The decrease of SG&A expenses in the fourth quarter of 2008 compared to 2007 was mainly due to the higher commissions and other direct marketing expenses incurred in 2007. The increase of the SG&A expenses during the year ended December 31, 2008 was mainly due to the hiring of the new direct sales force during the first quarter of 2008, the direct marketing expenses incurred to support the commercialization initiatives, and the estimated costs expected in relation with the transition out of the Company’s exclusive distribution agreement.

The increase of the amortization in the year ended December 31, 2008, is primarily due to the amortization of patents and of deferred development.

The operating expenses for the 2008 fourth quarter decreased by $371,615?or 15% to $2,102,548, from $2,474,163 for the same quarter a year ago. For the 2008 year-end, the operating expenses decreased by $1,361,244 or 13% to $9,069,729 from $10,430,973 for the year ended December 31, 2007. As a result, the operating loss for the 2008 fourth quarter decreased by $331,346 or 19%, to $1,374,940 from $1,706,286 for the same period a year ago. For the 2008 year-end, the operating loss decreased by $3,746,797, or 40%, to $5,525,706 from $9,272,503 compared to the same period in 2007.

For the fourth quarter of 2008, the financial revenues totalled $482,326, compared to financial expenses of $22,693 for the same quarter in 2007. For the year ended December 31, 2008, the Company realized a net financial revenue of $706,476, compared to a financial expense of $162,249 in 2007. The increase in the financial revenues in 2008 compared to 2007 mainly resulted from a foreign exchange gain, as a result of the trend of the fluctuations in value of the U.S. dollar against the Canadian dollar.

There were no current income taxes for the quarters ended December 31, 2008 and 2007, as well as for the year ended December 31, 2008, while there were current income taxes of $811,305 recovered for the year ended December 31, 2007. Income tax recovery in 2007 resulted from the utilization of tax losses to recover income taxes on a gain realized on the disposal of an investment in 2006.

Net Loss

The net loss for the three-month period ended December 31, 2008, was $892,615 or $0.01 per share, compared to $1,683,593 or $0.02 per share for the quarter ended December 31, 2007.

Financial Position

As at December 31, 2008, ART had $3,146,086 in cash and cash equivalents, and a working capital of $4,479,304, compared to a cash and cash equivalent of $3,587,654 and a working capital of $5,119,250 as of December 31, 2007.