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 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.”

91005_FONAR_chart

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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