For Immediate Release
Contact:
Daniel Culver
FONAR Corporation
Tel: 631-694-2929
Fax: 631-390-1709
http://www.fonar.com
investor@fonar.com
FONAR Announces Financial Results for Fiscal 2010
MELVILLE, NEW YORK, October 13, 2010 - FONAR Corporation (NASDAQ-FONR), The
Inventor of MR Scanning(TM), today announced its financial results for the
fiscal year ending June 30, 2010. Total revenues were $31.8 million for the
fiscal year ended June 30, 2010 as compared to $39.7 million for fiscal 2009.
The net loss for the fiscal year ended June 30, 2010, was $3.0 million, as
compared to a net income of $1.1 million for fiscal 2009. The net loss per share
(basic and diluted) for the fiscal year ended June 30, 2010 was $0.61, as
compared to a net income per share (basic and diluted) of $0.21 for the fiscal
year ended June 30, 2009.
Revenues from the management of the UPRIGHT(R) Multi-Position(TM) MRI Centers
was at $11.1 million for the year ended June 30, 2010 as compared to $10.3
million one year earlier.
Revenues from UPRIGHT(R) MRI service and repair fees increased to $11.1 million
for the fiscal year ended June 30, 2010 as compared to $10.5 million one year
earlier.
Revenues from product sales of the FONAR UPRIGHT(R) Multi-Position(TM) MRI
scanners were $9.1 million in the fiscal year ended June 30, 2010, as compared
to $17.2 million in the fiscal year ended June 30, 2009. On June 30, 2010 there
were 143 FONAR UPRIGHT(R) Multi- Position(TM) MRI scanners installed in the
United States and around the world.
"Total costs and expenses related to operations decreased 15%, from $40.4
million in the fiscal year ended June 30, 2009, to $34.4 million in the fiscal
year ended June 30, 2010," said Raymond Damadian, M.D., Chairman and President
of Fonar Corporation. "The Company has taken strenuous steps to controlling
costs while continuing to run its business including producing the FONAR
UPRIGHT(R) Multi-Position(TM) MRI scanner. These cost cutting programs were
first begun over two years ago."
At June 30, 2010, total assets were $21.6 million, total current assets were
$14.7 million, total current liabilities were $24.7 million, total stockholders'
deficiency was $5.8 million and total long-term liabilities were $2.7 million.
Total cash and marketable securities were $1.3 million. The backlog for MRI
product was $14.9 million.
Dr. Damadian remarked, "FONAR has been faced with an ongoing recession and
uncertainty with regard to reimbursement and health care reform. Perhaps most
significant is the prevention of FONAR customers to obtain credit in this
difficult banking environment. Subsequently, FONAR has had to make a massive
amount of cost cuts. Reductions have been made in many categories most
significantly in research and development (R&D), and selling, general and
administrative (S, G & A) areas. Overall, R&D and S, G &A expenses were reduced
over 15% to $14.4 million for the fiscal year ending June 30, 2010 as compared
to $17.0 million during the fiscal year ending at June 30, 2009."
Dr. Damadian said, "FONAR's prospects have much improved since our nation'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(R)
Multi-Position(TM) MRI is the best MRI for diagnosing spinal problems such as
low back pain or motor vehicle whiplash injuries of the neck as well as symptoms
in other weight-bearing structures of the human body (e.g. knee, hip, ankle,
foot, shoulder, etc.). So as pent-up demand for MRI scanners surfaces, we look
forward to rising sales."
Fiscal Year Highlights
Dr. Damadian said, "Many of the 2010 fiscal year highlights included UPRIGHT(R)
MRI installations, an important journal research paper and significant increases
in the patient scan totals among the 9 UPRIGHT(R) Multi-Position(TM)
(STAND-UP(R) MRI) imaging centers managed by FONAR's subsidiary Health
Management Corporation of America (HMCA). In fact for fiscal 2010, the scanning
centers are now performing collectively approximately 300 scans per month at
each of the nine centers, a 16% increase over that of the previous year."
The July 2010 issue of the medical journal "Brain Injury"
(www.fonar.com/news/072110.htm) published a very significant study of 1200 neck
pain patients comparing the FONAR UPRIGHT(R) Multi- Position(TM) MRI to a
conventional recumbent MRI and the ability to diagnose whiplash trauma from a
motor vehicle accident. The 1200 neck pain patients were divided into 4 groups,
consisting of 2 control neck pain groups that did not experience whiplash trauma
and 2 neck pain groups that did. The radiologists who read the study images were
blinded as to which images were the patient images and which were the control
images. The patients were examined in both the upright and recumbent positions.
The recumbent MRI images were obtained in a conventional recumbent MRI and the
upright images were obtained in the FONAR UPRIGHT(R) MRI. The "Brain Injury"
study showed that the fallen cerebellar tonsils (CTE) caused by motor vehicle
whiplash injuries were being missed 60% of the time where the patient was
scanned recumbent-only in a conventional "lie-down MRI" and not scanned upright.
As a result of this study, the medical evidence indicated that the fallen
cerebellar tonsils of a whiplash injury patient can now be reliably visualized
by using the FONAR UPRIGHT(R) Multi-Position(TM) MRI. In fact a customer who
recently purchased the FONAR UPRIGHT(R) MRI said that `From our point of view,
here in Germany, the newly published 1200 patient study in "Brain Injury" sets a
"new standard of care" for whiplash injury patients.'
(www.fonar.com/news/080310.htm)
During the fiscal year ended June 30, 2010, FONAR added to its world-wide
installed base of FONAR UPRIGHT(R) Multi-Position(TM) MRIs. Among them was an
installation at Hospital ZorgSaam Zeeuws-Vlaanderen, Terneuzen, The Netherlands.
This 340-bed hospital performs a significant amount of orthopedic and spine
surgery. In addition, it is one of the biggest centers in The Netherlands for
the treatment of bariatric patients. The UPRIGHT(R) MRI was sold by Tecserena
GmbH, FONAR's European distributor since 2006. At the time of the sale,
radiologists at Hospital ZorgSaam Zeeuws-Vlaanderen said they sought the
advanced technology provided by the FONAR UPRIGHT(R) Multi-Position(TM) MRI to
increase the diagnostic precision of the images of weight-bearing anatomy,
establishing for their hospital a new standard of excellence throughout Europe
for orthopedic surgical outcomes.
The year was also a big year for North Carolina installations. Prior to this
year there were no FONAR UPRIGHT(R) Multi-Position(TM) MRIs in the state. This
year UPRIGHT(R) MRIs were installed in Charlotte and Durham. Introducing the
FONAR UPRIGHT(R) Multi- Position(TM) MRI in North Carolina was a lengthy process
as that state has certificate of need laws designed to limit the number of
advanced medical equipment units entering the state.
Pocatella, Idaho, Las Vegas, Nevada, and Duluth, Minnesota were also recipients
of the UPRIGHT(R) MRI scanner. For Minnesota, this is the third scanner
purchased by the Center for Diagnostic Imaging (CDI), one of the nation's
premier diagnostic center businesses. In addition, as the fiscal year ended,
installation of the first UPRIGHT(R) MRI scanner in Africa was nearing
completion.
Dr. Damadian said, "We are delighted with the results of our efforts on `selling
scans' at the nine UPRIGHT(R) Multi-Position(TM) MRI, aka STAND-UP(R) MRI,
managed sites. Currently, the Company manages nine STAND-UP(R) MRIs and an
earlier model FONAR QUAD(TM) MRI through its wholly-owned subsidiary, HMCA
(Health Management Corporation of America; www.hmca.com). The centers'
performance improved steadily monthly. In fact, the nine STAND-UP(R) MRIs
performed a record 3,183 scans during the month of March, 2010, an average of
354 per scanner. This is a 35% increase as compared to 2,354 scans done during
the month of March 2009, one year earlier."
"We are delighted with the response of referring physicians to the STAND- UP(R)
MRI. It is becoming increasingly obvious to referring physicians that scanning
patients without the force of gravity, which is the case with all
single-position, recumbent-only MRI scanners, results in missed, critical
pathology," said Dr. Damadian. "These physicians are now referring their
patients to the scanner and experiencing more accurate diagnoses and better
outcomes for their patients as a result of scanning them upright and fully
weight-bearing in the exact position that generates their symptoms, which the
FONAR UPRIGHT(R) Multi-Position(TM) MRI makes possible. Additionally, patients
themselves appreciate the spacious, non-claustrophobic process of being seated
comfortably while watching television throughout their scan. Mothers can enter
the scanner with their infant on their laps. The infant watching his favorite
television cartoon throughout the scan, remains motionless thereby avoiding the
need for anesthesia which currently is required for scanning the vast majority
of children under the age of seven when they are scanned in a conventional
lie-down MRI."
Matters concerning holders of FONAR Corporation stock certificates
Recently, many of our shareholders have received letters from CST (Computer
Share Trust), www.computershare.com, telephone 800-962-4284. It is very
important for investors to respond to these letters or else risk of being
subject to state escheatment laws. Essentially, shareholders holding older,
pre-reverse stock-split certificates must exchange their old certificates for
new ones.
In addition, investors may have changed addresses or appeared to have abandoned
their stock. If this could possibly be you, we urge you to contact CST to update
your information.
Again please call CST at 800-962-4284. For more information on FONAR stock
please visit: www.fonar.com/invest_faq.htm
#
For investor and other information visit: www.fonar.com.
UPRIGHT(R) and STAND-UP(R) are registered trademarks and The Inventor of MR
Scanning(TM), Full Range of Motion(TM), pMRI(TM), Dynamic(TM),
Multi-Position(TM), True Flow(TM), The Proof is in the Picture(TM),
Spondylography(TM) Spondylometry(TM) and Upright Radiology(TM) 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,
--------------------------
2010 2009
------------ ------------
Current Assets:
Cash and cash equivalents $ 1,299,493 $ 1,225,619
Marketable securities 27,613 22,652
Accounts receivable - net of allowances for
Doubtful accounts of $2,289,049 and $2,393,326
at June 30, 2010 and 2009, respectively 4,820,541 5,391,822
Medical receivables - net of allowances for
Doubtful accounts of $1,622,000 and $1,343,500
at June 30, 2010 and 2009, respectively 25,225 374,225
Management fee receivable - net of allowances for
Doubtful accounts of $5,808,345 and $5,093,345
at June 30, 2010 and 2009, respectively 2,568,526 3,273,756
Management fee receivable - related medical
Practices - net of allowances for doubtful
Accounts of $1,129,818 and $1,094,818 at
June 30, 2010 and 2009, respectively 1,921,983 2,196,580
Costs and estimated earnings in excess of
billings on uncompleted contracts 277,384 1,475,706
Inventories 2,826,211 3,172,397
Current portion of advances and notes to related
medical practices 83,423 164,611
Current portion of note receivable - net of
allowances for doubtful accounts of $115,000
and $65,000 at June 30, 2010 and at
June 30, 2009, respectively 271,796 517,934
Prepaid expenses and other current assets 552,800 472,397
----------- -----------
Total Current Assets 14,674,995 18,287,699
Property and Equipment - Net 2,108,556 2,892,380
Advances and Notes to Related Medical Practices -
net of allowances for doubtful accounts of
$264,791 at June 30, 2010 and at June 30, 2009 - 89,032
Notes Receivable - 1,778,626
Other Intangible Assets - Net 4,291,419 4,920,241
Other Assets 553,875 391,237
------------ ------------
Total Assets $ 21,628,845 $ 28,359,215
============ ============
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES
-----------
June 30,
--------------------------
2010 2009
------------ ------------
Current Liabilities:
Current portion of long-term debt and capital
Leases $ 579,436 $ 277,494
Current portion of long-term debt - related party 87,835 79,509
Accounts payable 3,191,960 3,518,609
Other current liabilities 8,065,069 8,460,042
Unearned revenue on service contracts 5,219,547 5,526,006
Customer advances 4,813,327 9,237,921
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,743,398 2,026,441
------------ ------------
Total Current Liabilities 24,700,572 29,126,022
------------ ------------
Long-Term Liabilities:
Accounts payable 62,622 184,168
Due to related medical practices 527,891 643,135
Long-term debt and capital leases, less
current portion 1,566,622 759,211
Long-term debt, less current
portion - related party 72,341 160,176
Other liabilities 474,763 427,365
------------ ------------
Total Long-Term Liabilities 2,704,239 2,174,055
------------ ------------
Total Liabilities 27,404,811 31,300,077
------------ ------------
Commitments, Contingencies and Other Matters
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
STOCKHOLDERS' DEFICIENCY
------------------------
June 30,
--------------------------
2010 2009
------------ ------------
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, 2010 and 2009 $ 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, 2010 and 2009, respectively;
issued - 4,985,850 and 4,917,918 shares
at June 30, 2010 and 2009, respectively;
outstanding - 4,974,207 and 4,906,275
shares at June 30, 2010 and 2009, respectively 497 491
Class B common stock (10 votes per share) -
$.0001 par value; authorized - 800,000
shares; issued and outstanding - 158 shares
at June 30, 2010 and 2009 - -
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, 2010 and 2009 38 38
Paid-in capital in excess of par value 172,379,863 172,280,600
Accumulated other comprehensive loss (18,489)
(20,995)
Accumulated deficit (177,271,349)
(174,258,607)
Notes receivable from employee stockholders (191,167)
(267,030)
Treasury stock, at cost - 11,643 shares
of common stock at June 30, 2010 and 2009 (675,390)
(675,390)
------------ ------------
Total Stockholders' Deficiency (5,775,966)
(2,940,862)
------------ ------------
Total Liabilities and Stockholders'
Deficiency $ 21,628,845 $ 28,359,215
============ ============
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended June
30,
---------------------------
2010 2009
------------ ------------
Revenues
Product sales - net $ 9,056,307 $ 17,175,417
Service and repair fees - net 10,864,927 10,345,091
Service and repair fees - related parties - net 220,000 192,500
Management and other fees 7,302,216 7,342,614
Management and other fees - related
medical practices - net 3,786,612 2,911,318
License fees and royalties 585,493 1,755,493
------------ ------------
Total Revenues - Net 31,815,555 39,722,433
------------ ------------
Costs and Expenses
Costs related to product sales 7,248,756 10,758,201
Costs related to service and repair fees 3,026,598 3,992,557
Costs related to service and repair fees
- related parties 61,284 74,293
Costs related to management and other fees 5,320,756 4,507,587
Costs related to management and other fees
- related medical practices 2,962,826 2,790,745
Research and development 2,458,342 3,593,470
Selling, general and administrative,
inclusive of compensatory element of
stock issuances of $99,269 and $4,061
for the years ended June 30,
2010 and 2009, respectively 11,939,223 13,423,066
Provision for bad debts 1,378,500 1,286,451
------------ ------------
Total Costs and Expenses 34,396,285 40,426,370
------------ ------------
Loss from Operations (2,580,730)
(703,937)
Other Income and (Expenses):
Interest expense (313,416)
(333,229)
Interest expense - related parties (74,486) -
Investment income 249,290 325,688
Interest income - related parties 10,926 20,818
Other income - net 45,674 399,662
Loss on note receivable (350,000) -
Gain on sale of consolidated subsidiary - 1,448,196
------------ ------------
(Loss) Income Before Provision For
Income Taxes (3,012,742) 1,157,198
Provision for Income Taxes - 35,931
------------ ------------
Net (Loss) Income $ (3,012,742) $ 1,121,267
============ ============