FONAR Reports Fiscal 2009 Year-End Financial Results
Net Income Exceeds $1.1 Million
MELVILLE,
NEW YORK, October 5, 2009 - FONAR Corporation (NASDAQ-FONR),
The Inventor of MR Scanning™,
today announced its financial results for the fiscal year ending June 30, 2009. Total net income for the fiscal year ended June
30, 2009, was $1.1 million, as compared to a net loss of $13.5 million for fiscal 2008. The net income per share
(basic and diluted) for the fiscal year ended June 30, 2009 was $0.21, as compared to a net loss per share (basic
and diluted) of $2.76 during fiscal 2008.
Raymond V. Damadian, Chairman and President of Fonar Corporation, said, “We are very pleased
to see the Company return to profitability. We have now made a profit for three quarters straight and are hopeful
to continue this trend of profitability. A very sound reason is that the FONAR UPRIGHT® Multi-Position™ MRI
technology (Dynamic MRI) is the only participant in this unique market. The impact of FONAR’s patented
technology on net income growth can be seen in Fig. 1.”
Total revenues increased by 12% to $39.7 million for the fiscal year ended June 30, 2009 as compared
to $35.6 million for fiscal 2008.
Total costs and expenses related to operations decreased 23%, from $52.5 million in the fiscal
year ended June 30, 2008, to $40.4 million in the fiscal year ended June 30, 2009. The loss from operations decreased
96% from a loss of $16.9 million in the fiscal year ended June 30, 2008, to a loss of $0.7 million in the fiscal
year ended June 30, 2009. Dr. Damadian continued, “the Company has done well controlling costs while continuing
to produce the FONAR UPRIGHT® Multi-Position™ MRI scanner. This is the result of a cost cutting program
that we initiated over a year ago.”
Revenues from product sales of the FONAR UPRIGHT® Multi-Position™ MRI scanners increased
48% from $11.2 million in the fiscal year ended June 30, 2008 to $16.6 million one year later at fiscal 2009.
At June 30, 2009 there were 137 FONAR UPRIGHT® Multi-Position™ MRI scanners installed in the United
States and around the world. Included in net income for the year ended June 30, 2009 is a pre-tax gain on the
sale of a subsidiary of $1.4 million.
At June 30, 2009, total assets were $28.4 million, total current assets were $18.3 million, total
current liabilities were $29.1 million, and total long-term liabilities were $2.1 million. The backlog for MRI
product was $25.7 million. Total cash and marketable securities were $1.2 million.
Dr. Damadian said, “FONAR’s prospects have much improved since the country’s
financial difficulties last year and our customers’ uncertainties regarding the Deficit Reduction Act (DRA)
have eased. Over the past few years, the medical evidence continues to grow indicating that the FONAR UPRIGHT® Multi-Position™ MRI
is the best MRI for diagnosing spine problems. So as pent-up demand for MRI scanners surfaces, we can expect
rising sales.”
“Unfortunately, the outcomes of spinal surgery are less than optimal, a fact underscored
by the recent book titled ‘The Failed Spine,’published by Lippincott, Williams & Wilkins, (M.
Szpalski and R. Gunzburg, Editors, 2005). The high failure rate has resulted in the acronym, FBSS, which stands
for Failed Back Surgery Syndrome. The authors report that the ‘major identifiable causes of FBSS’ include ‘failure
to identify the structural source(s) of pain correctly,’” stated Dr. Damadian.
“Sadly, the distinguished Swedish spine surgeon, Alf Nachemson, MD, characterizes these unsatisfactory
patient outcomes as the ‘high number of multiply operated surgical cripples,’ (Nachemson, A., The
lumbar spine: An orthopaedic challenge. Spine, 1976:1, 59-71.).
“Since the FONAR UPRIGHT® Multi-Position™ MRI can place the patient in the exact
position that generates his or her symptoms, the MRI picture can be taken in that position. This unique capability
assures that the degenerative spinal change responsible for the patient’s pain is correctly identified
and operated on, instead of surgery being performed on another spinal change that is not responsible for the
patient’s symptoms. Unfortunately, surgery on the wrong spinal segment can generate additional symptoms
post-operatively, while the patient continues to suffer with the symptoms not addressed by surgery on the wrong
segment,” remarked Dr. Damadian.
“FONAR’s position in medical imaging is immeasurably enhanced by the fact that FONAR
is the leader in UPRIGHT® Multi-Position™ MRI technology,” concluded Dr. Damadian.
RECENT HIGHLIGHTS AND ACCOMPLISHMENTS
On November 17, 2008, The Company held its annual shareholder
meeting for the combined fiscal years ending June 30, 2009 and 2008. All proposals before the shareholders
passed.
In February 2009, Dr. Damadian was the recipient of the 2009 AIMBE Honorary Fellow Award (American
Institute for Medical and Biological Engineering) for his discovery of MRI. Dr. Damadian is the originator of
the concept of magnetic resonance (MR) scanning of the human body (1969). The AIMBE Award was presented at the
annual meeting of AIMBE, held February 11-13 in Washington, D.C.
The award says: “In 1970, Raymond Damadian, M.D., made the discovery that is the basis for
magnetic resonance (MR) scanning that there is a marked difference in relaxation times between normal and abnormal
tissues of the same type, as well as between different types of normal tissues. This seminal discovery, which
remains the basis for the making of every MRI image ever produced, is the foundation of the MRI industry. Dr.
Damadian published his discovery in his milestone 1971 paper in the journal Science (Science 171:1151, 1971)
and filed the pioneer patent for the practical use of his discovery in 1972.” (www.fonar.com/news/022409.htm).
During the past fiscal year, FONAR also expanded its global reach with a sale in Libya, marking
the first sale of an UPRIGHT® MRI in Africa and additional sales in the Middle East.
On February 18, 2009 the Company made an earnings announcement titled: FONAR Reports Profit and
2nd Quarter Fiscal 2009 Financial Results; FONAR’s Innovative ‘Made In America’ UPRIGHT MRI
Adds Product Revenues. Within the release, Dr. Damadian said, “In this era of jobs being exported to other
countries, 82% of the components that create The FONAR UPRIGHT® Multi-Position™ MRI are purchased from
26 American States. So FONAR can truly say, ‘Made in America.’
This past June, Dr. Damadian attended grand openings for three UPRIGHT® Multi-Position™ MRI
customers who spanned the world. First he attended a grand opening in Kamloops, Canada, for the installation
of the first UPRIGHT® Multi-Position™ MRI in Canada. Then he participated in a grand opening in South
Dakota. Finally, Dr. Damadian attended a grand opening in Munich, Germany. All of these ceremonies featured Dr.
Damadian as the inventor of the MRI.
#
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 AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
|
| |
June 30,
----------------------------------------- |
|
2009
------------------
|
2008
------------------ |
| Current Assets: |
|
|
Cash and cash equivalents
|
$ 1,225,619 |
$ 1,325,512 |
| Marketable securities |
22,652 |
1,068,168 |
Accounts receivable - net of allowances for doubtful accounts of $2,393,326 and $2,020,208
at June 30, 2009 and 2008, respectively
|
5,391,822 |
5,157,594 |
Medical receivables - net of allowances for doubtful accounts of $1,343,500 and $769,000 at
June 30, 2009 and 2008, respectively
|
374,225 |
1,227,858 |
Management fee receivable - net of allowances for doubtful accounts of $5,093,345 and $3,958,733
at June 30, 2009 and 2008, respectively
|
3,273,756 |
5,040,523 |
Management fee receivable - related medical practices - net of allowances
for doubtful accounts of $1,094,818 and $2,413,483 at
June 30, 2009 and 2008, respectively
|
2,196,580 |
1,372,261 |
Costs and estimated earnings in excess of billings on uncompleted contracts
|
1,475,706 |
6,285 |
| Inventories |
3,172,397 |
3,255,915 |
Current portion of advances and notes to related medical practices
|
164,611 |
155,423 |
| Current portion of note receivable |
517,934 |
2,508,306 |
| Prepaid expenses and other current assets |
472,397 |
869,353 |
| |
---------------- |
---------------- |
Total Current Assets |
18,287,699 |
21,987,198 |
| Property and Equipment - Net |
2,892,380 |
3,932,533 |
Advances and Notes to Related Medical Practices -
net of allowances for doubtful accounts of
$264,791 at June 30, 2009 and at June 30, 2008
|
89,032 |
263,363 |
Notes Receivable - net of allowance for doubtful accounts of $65,000 at June 30, 2009
and at June 30, 2008
|
1,778,626 |
2,296,560 |
| Other Intangible Assets - Net |
4,920,241 |
4,809,564 |
| Other Assets |
391,237 |
1,936,415 |
| |
---------------- |
---------------- |
Total Assets |
$28,359,215
=========== |
$35,225,633
=========== |
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES
|
| |
June 30,
----------------------------------------- |
| |
2009
------------------
|
2008
------------------ |
| Current Liabilities: |
|
|
Current portion of long-term debt and capital Leases
|
$ 277,494 |
$ 372,722 |
| Current portion of long-term debt - related party |
79,509 |
- |
| Accounts payable |
3,518,609 |
4,019,993 |
| Other current liabilities |
8,460,042 |
8,316,263 |
| Unearned revenue on service contracts |
5,526,006 |
5,193,645 |
| Customer advances |
9,237,921 |
14,276,311 |
Billings in excess of costs and estimated earnings on uncompleted contracts
|
2,026,441 |
5,773,286 |
Total Current Liabilities
|
---------------
29,126,022 |
---------------
37,952,220 |
| |
---------------- |
---------------- |
| Long-Term Liabilities: |
|
|
| Accounts payable |
184,168 |
- |
| Due to related medical practices |
643,135 |
97,663 |
Long-term debt and capital leases, less current portion
|
759,211 |
756,976 |
Long-term debt, less current portion - related party
|
160,176 |
- |
| Other liabilities |
363,550 |
496,837 |
| |
---------------- |
---------------- |
Total Long-Term Liabilities
|
2,110,240
---------------- |
1,351,476
---------------- |
Total Liabilities
|
31,236,262
---------------- |
39,303,696
---------------- |
| Commitments, Contingencies and Other Matters |
|
|
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
STOCKHOLDERS' DEFICIENCY
|
| |
June 30,
-----------------------------------------
|
| |
2009
---------------- |
2008
---------------- |
| Minority Interest |
$ 63,815 |
$ 166,966 |
Stockholders' Deficiency:
Class A non-voting preferred stock - $.0001 par value; authorized - 1,600,000 shares; issued and outstanding - 313,451 shares
at June 30, 2009 and 2008
|
31 |
31 |
Preferred stock - $.001 par value; authorized - 2,000,000 shares;
issued and outstanding - none
|
- |
- |
Common stock - $.0001 par value; authorized - 30,000,000 shares at June 30, 2009 and 2008,
respectively; issued - 4,917,918 and 4,915,918 shares at June 30, 2009 and 2008, respectively; outstanding
- 4,906,275 and 4,904,275 shares at June 30, 2009 and 2008, respectively
|
491 |
490 |
Class B common stock (10 votes per share) - $.0001 par value; authorized
- 800,000 shares; issued and outstanding - 158
shares at June 30, 2009 and 2008
|
- |
- |
Class C common stock (25 votes per share) - $.0001 par value; authorized - 2,000,000 shares;
issued and outstanding - 382,513
shares at June 30, 2009 and 2008 Paid-in capital in excess of par value Accumulated other comprehensive loss
|
38 |
38 |
| Accumulated deficit |
172,280,600 |
172,276,540 |
| Notes receivable from employee stockholders |
(20,995) |
(72,723) |
| Treasury stock, at cost - 11,643 shares |
(174,258,607) |
(175,379,874) |
| of common stock at June 30, 2009 and 2008 |
(267,030) |
(394,141) |
| |
|
|
Total Stockholders' Deficiency
|
(675,390) |
(675,390) |
| |
---------------- |
---------------- |
Total Liabilities and Stockholders' Deficiency
|
(2,940,862) |
(4,245,029) |
| |
---------------- |
---------------- |
| |
$ 28,359,215 |
$ 35,225,633 |
| |
=========== |
=========== |
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS |
| |
For the Years Ended June 30,
----------------------------------------- |
| Revenues |
2009
---------------- |
2008
---------------- |
| Product sales - net |
$ 17,175,417 |
$ 11,326,388 |
| Service and repair fees - net |
10,345,091 |
10,930,331 |
Service and repair fees - related parties - net
|
192,500 |
110,000 |
| Management and other fees |
7,342,614 |
8,337,000 |
Management and other fees - related medical practices - net
|
2,911,318 |
3,706,636 |
| License fees and royalties |
1,755,493 |
1,158,478 |
| |
---------------- |
---------------- |
Total Revenues - Net
|
39,722,433 |
35,568,833 |
| |
---------------- |
---------------- |
| Costs and Expenses |
|
|
| Costs related to product sales |
10,758,201 |
11,143,826 |
| Costs related to service and repair fees |
3,992,557 |
5,107,802 |
Costs related to service and repair fees - related parties
|
74,293 |
51,404 |
| Costs related to management and other fees |
4,507,587 |
5,548,605 |
Costs related to management and other fees - related medical practices
|
2,790,745 |
3,041,828 |
| Research and development |
3,593,470 |
5,006,591 |
Selling, general and administrative, inclusive of compensatory element of stock issuances of $4,061 and
$360 for the years ended June 30, 2009 and 2008, respectively
|
13,423,066 |
20,386,748 |
| Provision for bad debts |
1,286,451 |
2,208,820 |
| |
---------------- |
---------------- |
Total Costs and Expenses
|
40,426,370 |
52,495,624 |
| |
---------------- |
---------------- |
Loss from Operations
|
( 703,937) |
(16,926,791) |
| |
|
|
| Other Income and (Expenses): |
|
|
| Interest expense |
(333,229) |
(535,322) |
| Investment income |
325,688 |
694,910 |
| Interest income - related parties |
20,818 |
33,801 |
| Other income - net |
410,657 |
129,368 |
| Minority interests in income of partnerships |
( 10,995) |
( 219,058) |
| Gain on sale of investment |
- |
571,161 |
| Gain on sale of consolidated subsidiary |
1,448,196 |
3,394,975 |
| Loss on note receivable |
- |
( 658,351) |
| |
---------------- |
---------------- |
Income (Loss) Before Provision For (Benefit From) Income Taxes
|
1,157,198 |
(13,515,307) |
| Provision for (Benefit from) Income Taxes |
35,931
---------------- |
(6,940)
---------------- |
Net Income (Loss)
|
$ 1,121,267
=========== |
$(13,508,367)
=========== |
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| |
For the Years Ended June 30,
-----------------------------------------
|
| |
2009
----------------
|
2008
----------------
|
Net Income (Loss) Available to Common and Class C Common Stockholders
|
$ 1,053,898
=========== |
$(13,508,367)
=========== |
Basic and Diluted Net Income (Loss) Per Common Share
Available to Common Stockholders
|
$ 0.21
=========== |
$(2.76)
=========== |
| Basic Net Income Per Share - Common C |
$ 0.06
=========== |
N/A
=========== |
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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