exhibit 99.1
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FONAR CORPORATION
For Immediate Release FONAR Corporation NASDAQ-FONR
Contact: Daniel Culver 110 Marcus Drive
Director of Communications Melville, New York 11747
Web site: www.fonar.com Telephone: (631) 694-2929
Email: investor@fonar.com Fax Number: (631) 390-1709
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FONAR ANNOUNCES YEAR-END FISCAL 2011 FINANCIAL RESULTS
AND A $6.4 MILLION INCREASE IN INCOME FROM OPERATIONS TO $3.8 MILLION
MELVILLE, NEW YORK, October 3, 2011 - FONAR Corporation (NASDAQ-FONR), The
Inventor of MR Scanning(TM), has announced its financial results for the
fiscal 2011 year which ended June 30, 2011.
Raymond V. Damadian, President and Chairman of Fonar Corporation, said, "We have
worked hard in this difficult economic environment to have five straight
quarters of profitability and we are hopeful to continue. A main reason is that
the FONAR UPRIGHT(R) (STAND-UP(R)) MRI, with its many advantages, including
Correlated Slice Profile Imaging (CSP(TM)), has resulted in dramatic increases
in scans performed at the scanning centers we manage and an increase in our
management fees. We can only expect more good things to happen to FONAR."
Statement of Operations Items
Total net income for the year ended June 30, 2011 increased $6.2 million to $3.2
million, from a net loss of $3.0 million for the year ended June 30, 2010.
Income from operations increased $6.4 million to $3.8 million for the year ended
June 30, 2011, from a loss of $2.6 million for the year ended June 30, 2010.
For the year ended June 30, 2011, the basic net income per common share was
$0.56 and the diluted net income per common share was $0.55. This compares to a
basic and diluted net loss per common share of $0.61 for the year ended June 30,
2010.
For the year ended June 30, 2011, total revenues increased 4 % to $33.1 million
as compared to $31.8 million for the year ended June 30, 2010.
For the year ended June 30, 2011, total costs related to revenues decreased to
$18.5 million from $18.6 million for the year ended June 30, 2010.
Balance Sheet Items
Total assets increased 46% to $31.6 million for the year ended June 30, 2011 as
compared to the previous fiscal year with total assets of $21.6 million.
At June 30, 2011, total cash and marketable securities were $9.3 million, total
current assets were $22.5 million, total current liabilities were $23.1 million,
and total long-term liabilities were $2.6 million. Also, total stockholders'
Equity was $5.9 million, for the year ended June 30, 2011.
The increase in cash is attributable, in part, to a private placement of equity,
in May 2011, which consisted of Preferred Class A interests in a new limited
liability company, IMPERIAL Management Services, LLC ("IMPERIAL"). HMCA (Health
Management Corporation of America) contributed its assets and liabilities to
IMPERIAL and retained all of the Class B membership interests holding a 75%
equity interest in IMPERIAL. For convenience, we refer to our scanning center
management business as "HMCA-IMPERIAL."
See the accompanying tables for more details.
Management Discussion
Dr. Damadian said, "Fiscal 2011 was a big improvement over the previous fiscal
year. Fiscal 2010 had been a period of retrenchment as the Company began to
focus on its MRI center management business which is conducted through HMCA-
IMPERIAL. We have now seen FONAR become a new diverse company, one that is
profitable and successful in both of its segments.
It is especially rewarding to see the huge improvement in HMCA-IMPERIAL," said
Dr. Damadian. "During Fiscal 2011 the average number of scans per month for each
of the ten centers increased to 302 from 266 the previous fiscal year, a 14 %
increase. This helped to raise revenues for HMCA-IMPERIAL from $11.1 million for
the year ended June 30, 2010, to $15.3 million, for the year ended June 30,
2011. It is remarkable that this occurred while costs and expenses related to
revenues were flat. This trend is continuing as scans for the months of July and
August have averaged 350."
Dr. Damadian concluded, "The UPRIGHT(R) MRI is a leader in its field. It is
second to none when it comes to diagnosing the spine. CSP(TM), our new method
that displays the dynamic nature of a patient's pathology on one sheet of paper,
is being well received by physicians. Correlated Slice Profile (CSP(TM)) Imaging
can be done for most spine patients. The patient having the spine scan is
scanned in the four positions of Upright(R)-neutral, Upright(R)-flexion,
Upright(R)-extension, and traditional recumbent. At the conclusion of the scan,
the MRI technologist selects a center-slice sagittal view from each of the four
positions. The four image positions are then displayed side by side. In this
way, one can quickly comprehend how a patient's pathology changes from position
to position within the same anatomic slice. This multi- position weight-bearing
imaging of the spine enables the patient's physician to see ALL of the patient's
symptom-generating pathology so they can be CORRECTLY addressed therapeutically
or surgically (if necessary)."
Dr. Damadian exclaimed, "I believe that inevitably, an increase in the sale of
scans will result in an increase in the sale of scanners."
Significant Highlights
As of June 30, 2011, FONAR had installed 151 FONAR UPRIGHT(R) Multi-Position(TM)
MRI scanners. The most recent installation was in Greece and was the first FONAR
UPRIGHT(R) Multi- Position(TM) MRI installed in Greece.
Among new customers for the FONAR UPRIGHT(R) Multi- Position(TM) MRI was a
physician practice of radiologists and neurosurgeons located in the Northeast
section of the U.S. It will be part of a newly-constructed 75,000 sq. ft.
state-of-the-art neuroscience spine institute where it will be the hallmark of
their goal of becoming a center of excellence in spine care.
The peer-reviewed, medical journal "Brain Injury", in its July, 2010 edition,
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 title of
the article is: `A case-control study of cerebellar tonsillar ectopia (Chiari)
and head/neck trauma (whiplash).'
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-only MRI and the upright images
were obtained in the FONAR UPRIGHT(R) Multi- Position(TM) MRI.
The study, as presented in "Brain Injury", showed that the `fallen' cerebellar
tonsillar ectopia (CTE) caused by motor vehicle whiplash injuries was being
missed 60% of the time when the patient was scanned laying down in a
conventional recumbent-only MRI. The study reported that the whiplash injuries,
1,000,000 of which occur each year in the U.S., were satisfactorily detected
when the patients were scanned upright in the FONAR UPRIGHT(R)
Multi-Position(TM) MRI. As a result of this study, the medical evidence
indicates that the `fallen' cerebellar tonsillar ectopias of a whiplash injury
patient can now be reliably detected and visualized and not MISSED using the
FONAR UPRIGHT(R) Multi-Position(TM) MRI. For more details, visit:
(www.fonar.com/news/072110.htm).
Another new customer, located in Central California, purchased the FONAR
UPRIGHT(R) Multi-Position(TM) MRI because of their dedication to being a center
of excellence for the spine. One of the physicians, Hoorman M. Melamed, MD,
FAOOS, a board certified orthopaedic spine surgeon, and a principal at the
Bakersfield UPRIGHT MRI Center, said, "Selection of the FONAR UPRIGHT(R)
Multi-Position(TM) MRI for our group was a very careful and deliberate decision.
We recognize that the UPRIGHT(R) MRI offers capabilities beyond that of a
recumbent-only MRI. The UPRIGHT(R) MRI allows for scanning patients weight-
bearing and the dynamic positions of flexion and extension. This allows us to
see and evaluate the patient's spine pathology under load and thus enabling us
to avoid underestimating a patient's pathology and therefore obtaining a better
diagnosis."
About FONAR
FONAR (NASDAQ:FONR) was incorporated in 1978, making it the first, oldest and
most experienced MRI company in the industry. FONAR introduced the world's first
commercial MRI in 1980, and went public in 1981. Since its inception, nearly 300
recumbent-OPEN MRIs and 151 UPRIGHT(R) Multi- Position(TM) MRI scanners have
been installed worldwide. FONAR's stellar product line includes the UPRIGHT(R)
MRI (also known as the STAND- UP(R) MRI), the only whole-body MRI that performs
Position(TM) imaging (pMRI(TM)) and scans patients in numerous weight-bearing
positions, i.e. standing, sitting, in flexion and extension, as well as the
conventional lie-down position. The FONAR UPRIGHT(R) MRI often sees the
patient's problem that other scanners cannot because they are lie-down only. The
patient-friendly UPRIGHT(R) MRI has a near zero claustrophobic rejection rate by
patients. As a FONAR customer states, "If the patient is claustrophobic in this
scanner, they'll be claustrophobic in my parking lot." Approximately 85% of
patients are scanned sitting while they watch a 42" flat screen TV. FONAR is
headquartered on Long Island, New York.
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), Multi-Position(TM), pMRI(TM), Dynamic(TM), Full Range of
Motion(TM), True Flow(TM), The Proof is in the Picture(TM), Spondylography(TM),
Spondylometry(TM) Landscape(TM), CSP(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.
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FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
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June 30,
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2011 2010
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Current Assets:
Cash and cash equivalents $ 9,251,244 $ 1,299,493
Marketable securities 32,531 27,613
Accounts receivable - net of allowances for
doubtful accounts of $1,777,794 and $2,289,049
at June 30, 2011 and 2010, respectively 5,263,903 4,820,541
Medical receivables - net of allowances for
doubtful accounts of $1,622,000
at June 30, 2011 and at June 30, 2010 - 25,225
Management and other fees receivable - net of
allowances for doubtful accounts of $6,508,345
and $5,808,345 at June 30, 2011 and 2010,
respectively 3,308,456 2,568,526
Management and other fees receivable - related
medical practices - net of allowances for
doubtful accounts of $403,047 and $1,129,818 at
June 30, 2011 and 2010, respectively 1,668,880 1,921,983
Costs and estimated earnings in excess of
billings on uncompleted contracts 169,443 277,384
Inventories 2,400,240 2,826,211
Current portion of advances and notes to related
medical practices - net of allowance for
doubtful accounts of $264,791 at June 30, 2011
and at June 30, 2010 - 83,423
Current portion of note receivable - net of
allowances for doubtful accounts of
$65,000 and $115,000 at June 30, 2011 and at
June 30, 2010, respectively 114,058 271,796
Prepaid expenses and other current assets 351,906 552,800
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Total Current Assets 22,560,661 14,674,995
Property and Equipment - Net 3,769,424 2,108,556
Notes Receivable 358,769 -
Other Intangible Assets - Net 4,318,311 4,291,419
Other Assets 573,509 553,875
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Total Assets $31,580,674 $21,628,845
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FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES
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June 30,
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2011 2010
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Current Liabilities:
Current portion of long-term debt and
capital leases $ 2,025,836 $ 579,436
Current portion of long-term debt - related
party - 87,835
Accounts payable 2,187,115 3,191,960
Other current liabilities 8,236,105 8,065,069
Unearned revenue on service contracts 5,762,394 5,219,547
Customer advances 4,845,794 4,813,327
Billings in excess of costs and estimated
earnings on uncompleted contracts 4,045 2,743,398
Income tax payable 75,000 -
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Total Current Liabilities 23,136,289 24,700,572
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Long-Term Liabilities:
Accounts payable 102,000 62,622
Due to related medical practices 228,267 527,891
Long-term debt and capital leases, less
current portion 1,746,286 1,566,622
Long-term debt, less current
portion - related party - 72,341
Other liabilities 502,018 474,763
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Total Long-Term Liabilities 2,578,571 2,704,239
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Total Liabilities 25,714,860 27,404,811
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Commitments, Contingencies and Other Matters
FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
STOCKHOLDERS' EQUITY (DEFICIENCY)
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June 30,
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2011 2010
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Stockholders' Equity (Deficiency):
Class A non-voting preferred stock - $.0001
par value; authorized - 453,000 and 1,600,000
shares at June 30, 2011 and 2010, respectively;
issued and outstanding - 313,451 shares
at June 30, 2011 and 2010 $ 31 $ 31
Preferred stock - $.001 par value;
authorized - 567,000 and 2,000,000 shares
at June 30, 2011 and 2010, respectively;
issued and outstanding - none - -
Common stock - $.0001 par value; authorized -
8,500,000 and 30,000,000 shares at
June 30, 2011 and 2010, respectively;
issued - 5,636,571 and 4,985,850 shares
at June 30, 2011 and 2010, respectively;
outstanding - 5,624,928 and 4,974,207
shares at June 30, 2011 and 2010, respectively 562 497
Class B common stock (10 votes per share) -
$.0001 par value; authorized - 227,000 and
800,000 shares at June 30, 2011 and 2010,
respectively; issued and outstanding - 158
shares at June 30, 2011 and 2010 - -
Class C common stock (25 votes per share) -
$.0001 par value; authorized - 567,000 and
2,000,000 shares at June 30, 2011 and 2010,
respectively; issued and outstanding -
382,513 shares at June 30, 2011 and 2010 38 38
Paid-in capital in excess of par value 173,476,059 172,379,863
Accumulated other comprehensive loss (16,179) (18,489)
Accumulated deficit (174,110,439) (177,271,349)
Notes receivable from employee stockholders (115,305) (191,167)
Treasury stock, at cost - 11,643 shares
of common stock at June 30, 2011 and 2010 (675,390) (675,390)
Non controlling interests 7,306,437 -
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Total Stockholders' Equity (Deficiency) 5,865,814 (5,775,966)
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Total Liabilities and Stockholders'
Equity (Deficiency) $31,580,674 $21,628,845
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FONAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS/INCOME
June 30,
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2011 2010
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Revenues
Product sales - net $ 6,682,297 $ 9,056,307
Service and repair fees - net 10,936,839 10,864,927
Service and repair fees - related
parties - net 192,500 220,000
Management and other fees 10,170,086 7,302,216
Management and other fees - related
medical practices - net 5,154,673 3,786,612
License fees and royalties - 585,493
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Total Revenues - Net 33,136,395 31,815,555
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Costs and Expenses
Costs related to product sales 5,768,601 7,248,756
Costs related to service and repair fees 2,936,435 3,026,598
Costs related to service and repair fees
- related parties 51,684 61,284
Costs related to management and other fees 6,781,638 5,320,756
Costs related to management and other fees
- related medical practices 2,941,192 2,962,826
Research and development 1,440,032 2,458,342
Selling, general and administrative, inclusive of
compensatory element of stock issuances of
$204,486 and $99,269 for the years ended
June 30, 2011 and 2010, respectively 8,462,335 11,939,223
Provision for bad debts 963,009 1,378,500
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Total Costs and Expenses 29,344,926 34,396,285
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Income (Loss) from Operations 3,791,469 (2,580,730)
Other Income and (Expenses):
Interest expense (514,703) (313,416)
Interest expense - related parties ( 3,829) (74,486)
Investment income 226,610 249,290
Interest income - related parties 1,564 10,926
Other (expense) income - net (116,617) 45,674
Loss on note receivable - (350,000)
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Income (Loss) Before Provision For
Income Taxes and Non Controlling Interests 3,384,494 (3,012,742)
Provision for Income Taxes 75,475 -
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Net Income (Loss) $ 3,309,019 $(3,012,742)
Net Income - Non Controlling Interests (148,109) -
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Net Income (Loss) - Controlling Interests $ 3,160,910 $(3,012,742)
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