2009 First Quarter Highlights

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

Post Quarter Events

ART secured the sale of SoftScan breast imaging device to Göttingen University in Germany, where the device will be used to measure treatment response for breast cancer.

Göttingen has also committed to purchase a second SoftScan system, fully upgraded for use in screening with molecular probes, subject to grant funding.

ART participated in the American Association of Cancer Research (AACR) conference in Denver, Colorado, which was well attended and generated a number of important leads for ART, further consolidating our sales funnel.

Gross Margin

During the three-month period ended March 31, 2009, ART generated a gross margin ratio of 96% from the sales of its products, compared to 79% for the same period in the previous year. The gross margin ratio generated on the sales of services and other revenues was 69% for the three-month period ended March 31, 2009 compared to 49% for the three-month period ended March 31, 2008. The increase in the product gross margin ratio during the three-month period ended March 31, 2009, resulted from a different sales product mix compared to the three-month period ended March 31, 2008. During the first quarter of 2009, most of the sales resulted from the Fenestra product line which explains the higher gross margin ratio as compared to the first quarter in 2008, during which the company sold more of its other product lines, namely Optix and SoftScan.

Operating Expenses

The company’s research and development (R&D) expenditures for the three-month period ended March 31, 2009, net of investment tax credits, amounted to $635,910, compared to $854,650 for the same period a year ago. The decrease of the R&D during the quarter ended March 31, 2009, compared to the same quarter of last year mainly resulted from the cost reduction plan which was put in place during the first days of 2009. As a result, the R&D headcount decreased by approximately 15% compared to the R&D headcount at the end of the first quarter of 2008. During the first quarter of 2009, the R&D team pursued the development of the next generation of the Optix system and continued to support Optix users, while collaborating with clients for the development of applications to demonstrate the utility of the system in research areas such as oncology, cardiology and neurology.

Selling, general, and administrative (SG&A) expenses for the 2009 first quarter totaled $868,946, compared to $1,283,254 for the same quarter a year ago. The decrease of the SG&A expenses during the quarter ended March 31, 2009, compared to the same quarter last year mainly resulted from the cost reduction plan which took effect during the first days of 2009. In fact, the company reduced its workforce and implemented a four day shared workweek schedule for about 20% of the workforce. Senior management has taken at least a 10% salary cut.

Financial Outlook

As at March 31, 2009, ART had $ 1,450,037 in cash and cash equivalents, and a working capital of $2,742,886. ART is also considering financing options, such as assistance programs for businesses offered by the different levels of government, to strengthen the company’s financial situation.