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Fonar Press Releases

For Immediate Release

The Inventor of MR Scanning™

An ISO 9001 Company

Contact: Daniel Culver

110 Marcus Drive

Director of Communications

Melville, NY 11747-4292

Web site: www.fonar.com

Phone: (631) 694-2929

Email: investor @ fonar. com

Fax: (631) 390-1709

FONAR Announces Second Quarter, Fiscal 2011, Financial Results with
Net Income of $1.4 Million and Six Months Net Income of $1.8 Million

MELVILLE, NEW YORK, February 22, 2011 - FONAR Corporation (NASDAQ-FONR), today announced its financial results for the second quarter of fiscal 2011, which ended December 31, 2010. During the quarter, net income and also income from operations, was $1.4 million. This compares to the second quarter of fiscal 2010, which ended December 31, 2009 when the net loss and also the loss from operations was $1.3 million. The Company has had three consecutive quarters of positive net income, and four consecutive quarters of positive income from operations.

FONAR Net (loss) Income

For the first six months of fiscal 2011, which ended December 31, 2010, net income was $1.9 million as compared to a net loss of $2.7 million, one year earlier, for the six month period which ended December 31, 2009.

Total revenues for the second quarter of fiscal 2011 ended December 31, 2010, were $8.0 million as compared to $8.2 million for the same period last year which ended December 31, 2009. Total revenues for the six months ended December 31, 2010 were $16.7 million as compared to $15.7 million for the same period last year.

During the second quarter of fiscal 2011 for the period ended December 31, 2010, total product sales were $1.8 million, versus $3.0 million for the same period last year. Total service and repair net fees for the second fiscal quarter of 2011 for the period ended December 31, 2010 were $2.7 million versus $2.7 million for the same period last year. Management & other fees were at $3.5 million during the second quarter of fiscal 2011 for the period ended December 31, 2010 as compared to $2.6 million for the same period last year. As of December 31, 2010, FONAR had installed149 UPRIGHT® Multi-Position MRI units worldwide.

As of December 31, 2010, total cash, cash equivalents and marketable securities were approximately $2.0 million, an approximate 50% increase from $1.3 million as of June 30, 2010. Total current assets were $15.2 million, total assets were $24.1 million, total current liabilities were $24.9 million, and total long-term liabilities were $2.8 million.

NASDAQ Continued Listing

On October 14, 2010, the Company received notice from the NASDAQ Listing Qualifications Staff that based upon the Company's non-compliance with the $2.5 million stockholders' equity requirement set forth in NASDAQ Listing Rule 5550(b), the Company's securities were subject to delisting from The NASDAQ Capital Market. One day earlier, on October 13, 2010, the Company had reported its 10-K for the period ended June 30, 2010. The Company also did not meet the alternative requirements of $35 million in market capitalization for its listed securities (FONR), or net income from continuing operations of $500,000. Pursuant to the Listing Rules, the Company requested and was granted an extension, through January 7, 2011, to submit a plan of compliance. Subsequently, on January 11, 2011, the Company received a determination letter from the Listing Qualifications Staff of The NASDAQ Stock Market LLC (the "Staff Determination") notifying the Company that, unless the Company requests a hearing before the NASDAQ Listing Qualifications Panel (the "NASDAQ Panel"), that the Company’s securities would be delisted.

The Company has requested a hearing before the NASDAQ Panel, which will stay any action with respect to the Staff Determination until the Panel renders a decision subsequent to the hearing. The hearing will be held on February 24, 2011. There can be no assurance that the Panel will grant the Company's appeal for continued listing.

Raymond Damadian, president and founder of FONAR, said, “Hard work, difficult cut-backs and an outstanding product, the FONAR UPRIGHT® Multi-Position™ MRI are behind our record-setting quarterly net income of $1,363,000. The cut-backs have been particularly hard but have been offset by the enthusiasm in our recently enacted business strategy, which capitalizes on the scanning center management business. At each of the scanning centers that we manage, our UPRIGHT® Multi-Position™ MRI scanners had more patient throughput during the second quarter of fiscal 2011 than were scanned in the second quarter of fiscal 2010.”

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)
------
ASSETS

December 31,
2010
(UNAUDITED)
------------
June 30,
2010

------------
Current Assets:
   
Cash and cash equivalents      
$ 1,961
$ 1,299
Marketable securities
33
28
Accounts receivable - net
5,390
4,821
Accounts receivable - related parties - net
118
-
Medical receivables – net
4
25
Management fee receivable – net
2,428
2,569
Management fee receivable - related medical practices - net
1,751
1,922
Costs and estimated earnings in excess of billings on uncompleted contracts
273
277
Inventories
2,757
2,826
Advances and notes to related medical practices - net
-
83
Current portion of notes receivable
190
272
Prepaid expenses and other current assets
294
-------
553
-------
Total Current Assets
15,199
-------
14,675
-------

Property and equipment - net

3,827
2,109
Notes receivable - net
238
-

Other intangible assets - net

4,137
4,291

Other assets

673
----------------
554
----------------
Total Assets
$ 24,074
===========
$ 21,629
===========

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)


LIABILITIES AND STOCKHOLDERS' DEFICIENCY

December 31,
2010
(UNAUDITED)
------------

June 30,
2010

------------

Current Liabilities:
   
Current portion of long-term debt and capital leases
$ 2,231
$ 579
Current portion of long-term debt – related party
-
88
Accounts payable
2,425
3,192
Other current liabilities
8,683
8,065
Unearned revenue on service contracts
5,834
5,220
Unearned revenue on service contracts - related parties
110
-
Customer advances
4,450
4,813
Billings in excess of costs and estimated earnings on uncompleted contracts
1,132
-------
2,743
-------
Total Current Liabilities
24,865
24,700
Long-Term Liabilities:
Accounts payable
135
63
Due to related medical practices
231
528
Long-term debt and capital leases, less current portion
1,906
1,567
Long-term debt, less current portion - related party
-
72
Other liabilities
494
----------------
475
----------------
Total Long-Term Liabilities
2,766
----------------
2,705
----------------
Total Liabilities
27,631
----------------
27,405
----------------

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED, except share data)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY (continued)
December 31,
2010
(UNAUDITED)
------------
June 30,
2010

------------
Class A non-voting preferred stock $.0001 par value;
453,000 and 1,600,000 shares authorized at December 31, 2010 and June 30, 2010, respectively; 313,451 issued and outstanding at December 31, 2010 and June 30, 2010
-
-
Preferred stock $.001 par value; 567,000 and 2,000,000 shares authorized at December 31, 2010 and June 30, 2010, respectively; issued and outstanding - none
-
-
Common Stock $.0001 par value; 8,500,000 and 30,000,000 shares authorized at December 31, 2010 and June 30, 2010, respectively; 5,241,358 and 4,985,850 issued at December 31, 2010 and June 30, 2010, respectively; 5,229,715 and 4,974,207 outstanding at December 31, 2010 and June 30, 2010, respectively
1
1
Class B Common Stock $ .0001 par value; 227,000 and
800,000 shares authorized at December 31, 2010 and
June 30, 2010, respectively; (10 votes per share), 158 issued and outstanding at December 31, 2010 and June 30, 2010
-
-
Class C Common Stock $.0001 par value; 567,000 and 2,000,000 shares authorized at December 31, 2010 and June 30, 2010, respectively; (25 votes per share), 382,513 issued and outstanding at December 31, 2010 and June 30, 2010
-
-
Paid-in capital in excess of par value
172,773
172,379
Accumulated other comprehensive loss
( 14)
( 19)
Accumulated deficit
(175,523)
(177,271)
Notes receivable from employee stockholders
( 119)
( 191)
Treasury stock, at cost - 11,643 shares of common stock
at December 31, 2010 and June 30, 2010
(675 )
----------------
( 675)
----------------
Total Stockholders' Deficiency
(3,557)
----------------
( 5,776)
----------------
Total Liabilities and Stockholders' Deficiency
$ 24,074
===========
$ 21,629
===========

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
 
FOR THE THREE MONTHS ENDED
DECEMBER 31,
---------------------------
 
2010
----------------
2009
----------------
REVENUES
Product sales - net
$ 1,789
$ 2,961
Service and repair fees - net
2,653
2,629
Service and repair fees - related parties - net
55
55
Management and other fees - net
2,380
1,738
Management and other fees - related medical practices - net
1,142
830
Total Revenues - Net
8,019
----------------
8,213
----------------
COSTS AND EXPENSES
Costs related to product sales
1,368
2,279
Costs related to service and repair fees
700
978
Costs related to service and repair fees - related parties
15
20
Costs related to management and other fees
1,707
1,384
Costs related to management and other fees - related medical practices
633
745
Research and development
153
777
Selling, general and administrative
1,745
3,100
Provision for bad debts
255
----------------
197
----------------
Total Costs and Expenses
6,576
----------------
9,480
----------------
Income (Loss) from Operations
1,443
(1,267)
Interest Expense
(137)
(90)
Interest Expense – Related Parties
-
(5)
Investment Income
58
66

Interest Income - Related Party

-
3

Other (Expense) Income

(1)
1

NET INCOME (LOSS)

$ 1,363
===========
$ ( 1,292)
===========

Net Income Available to Class C Common Stockholders

$ 25
===========
N/A
===========

Net Income (Loss) Available to Common Stockholders

$ 1,261
===========
$ (1,292)
===========
Basic Net Income (Loss) Per Common Share
$ 0.25
===========
$ (0.26)
===========

Diluted Net Income (Loss) Per Common Share

$ 0.24
===========
$ (0.26)
===========
Basic and Diluted Income Per Share-Common C
$ 0.06
===========
N/A
===========
Weighted Average Basis Shares Outstanding
5,149,499
===========
4,916,275
===========
Weighted Average Diluted Shares Outstanding
5,277,003
===========
4,916,275
===========

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
 
FOR THE SIX MONTHS ENDED
DECEMBER 31,
---------------------------
 
2010
----------------
2009
----------------
REVENUES
Product sales - net
$ 4,448
$ 4,524
Service and repair fees - net
5,342
5,386
Service and repair fees - related parties - net
110
110
Management and other fees - net
4,469
3,473
Management and other fees - related medical practices - net
2,335
1,625
Total Revenues - Net
16,704
----------------
15,703
----------------
COSTS AND EXPENSES
Costs related to product sales
3,873
3,936
Costs related to service and repair fees
1,366
1,919
Costs related to service and repair fees - related parties
28
39
Costs related to management and other fees
3,021
2,651
Costs related to management and other fees - related medical practices
1,372
1,505
Research and development
607
1,631
Selling, general and administrative
4,128
6,333
Provision for bad debts
431
----------------
377
----------------
Total Costs and Expenses
14,826
----------------
18,391
----------------
Income (Loss) from Operations
1,878
( 2,688)
Interest Expense
( 231)
( 169)
Interest Expense – Related Parties
( 4)
( 19)
Investment Income
96
153

Interest Income - Related Party

1
6

Other (Expense) Income

8
34
Loss on Note Receivable
-
( 350)

NET INCOME (LOSS)

$ 1,748
===========
$ ( 3,033)
===========

Net Income Available to Class C Common Stockholders

$ 32
===========
N/A
===========

Net Income (Loss) Available to Common Stockholders

1,618
===========
$ ( 3,033)
===========
Basic Net Income (Loss) Per Common Share
$ 0.32
===========
$ (0.62)
===========

Diluted Net Income (Loss) Per Common Share

$ 0.31
===========
$ (0.62)
===========
Basic and Diluted Income Per Share-Common C
$ 0.08
===========
N/A
===========
Weighted Average Basis Shares Outstanding
5,080,872
===========
4,912,108
===========
Weighted Average Diluted Shares Outstanding
5,208,376
===========
4,912,108
===========

 

#

For investor and other information visit: www.fonar.com.

UPRIGHT® and STAND-UP® are registered trademarks and The Inventor of MR Scanning™, Full Range of Motion™, pMRI™, Dynamic™, Multi-Position™, True Flow™, The Proof is in the Picture™, Spondylography™ Spondylometry™ and Upright Radiology™ are trademarks of FONAR Corporation.

This release may include forward-looking statements from the company that may or may not materialize. Additional information on factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.

###

 

FONAR™ Corporation
110 Marcus Drive
Melville, N.Y. 11747
Tel. 631-694-2929
Fax. 631-390-9540
Email sales@FONAR.com
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