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


February 22, 2011 - Melville, NY

FONAR Corporation (NASDAQ: FONR) todayannounced its financial results for the second quarter of fiscal 2011,which ended December 31, 2010. During the quarter, net income and alsoincome from operations, was $1.4 million. This compares to the secondquarter of fiscal 2010, which ended December 31, 2009, when the net lossand also the loss from operations was $1.3 million. The Company has hadthree consecutive quarters of positive net income, and four consecutivequarters of positive income from operations.

A graph of the Net (Loss) Income for the past six quarters can be found at:www.fonar.com/news/022211.htm

For the first six months of fiscal 2011, which ended December 31, 2010, netincome was $1.9 million as compared to a net loss of $2.7 million, one yearearlier, 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 periodlast year which ended December 31, 2009. Total revenues for the six monthsended December 31, 2010 were $16.7 million as compared to $15.7 million forthe 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 thesame period last year. Total service and repair net fees for the secondfiscal quarter of 2011 for the period ended December 31, 2010 were $2.7million versus $2.7 million for the same period last year. Management &other fees were at $3.5 million during the second quarter of fiscal 2011for the period ended December 31, 2010 as compared to $2.6 million for thesame period last year. As of December 31, 2010, FONAR had installed 149UPRIGHT® Multi-Position™ MRI units worldwide.

As of December 31, 2010, total cash, cash equivalents and marketablesecurities were approximately $2.0 million, an approximate 50% increasefrom $1.3 million as of June 30, 2010. Total current assets were $15.2million, 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 ListingQualifications Staff that based upon the Company's non-compliance with the$2.5 million stockholders' equity requirement set forth in NASDAQ ListingRule 5550(b), the Company's securities were subject to delisting from TheNASDAQ Capital Market. One day earlier, on October 13, 2010, the Companyhad reported its 10-K for the period ended June 30, 2010. The Company alsodid not meet the alternative requirements of $35 million in marketcapitalization for its listed securities (FONR), or net income fromcontinuing operations of $500,000. Pursuant to the Listing Rules, theCompany requested and was granted an extension, through January 7, 2011, tosubmit a plan of compliance. Subsequently, on January 11, 2011, theCompany received a determination letter from the Listing QualificationsStaff of The NASDAQ Stock Market LLC (the "Staff Determination") notifyingthe Company that, unless the Company requests a hearing before the NASDAQListing Qualifications Panel (the "NASDAQ Panel"), that the Company'ssecurities would be delisted.

The Company has requested a hearing before the NASDAQ Panel, which willstay any action with respect to the Staff Determination until the Panelrenders a decision subsequent to the hearing. The hearing will be held onFebruary 24, 2011. There can be no assurance that the Panel will grant theCompany'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 incomeof $1,363,000. The cut-backs have been particularly hard but have beenoffset by the enthusiasm in our recently enacted business strategy, whichcapitalizes on the scanning center management business. At each of thescanning centers that we manage, our UPRIGHT® Multi-Position™ MRIscanners had more patient throughput during the second quarter of fiscal2011 than were scanned in the second quarter of fiscal 2010."


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

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


December 31, June 30,
LIABILITIES AND STOCKHOLDERS' DEFICIENCY 2010 2010
(UNAUDITED)
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)


December 31, June 30,
LIABILITIES AND STOCKHOLDERS' DEFICIENCY 2010 2010
(continued) (UNAUDITED)
----------- --------
STOCKHOLDERS' DEFICIENCY:

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 Party - (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
License fees and royalties - 585
--------- ---------
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 Party (4) (19)
Investment Income 96 153
Interest Income - Related Party 1 6
Other 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 Basic 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 MRScanning™, Full Range of Motion™, pMRI™, Dynamic™, Multi-Position™, True Flow™, The Proof is in the Picture™,Spondylography™ Spondylometry™ and Upright Radiology™ aretrademarks of FONAR Corporation.

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

Image Available: http://www2.marketwire.com/mw/frame_mw?attachid=1515956

Contact:
Daniel Culver
FONAR Corporation
Tel: 631-694-2929
Fax: 631-390-1709
http://www.fonar.com
Email Contact

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