FONAR Corporation Reports Profit and 2nd Quarter Fiscal 2009 Financial Results
MELVILLE, NY--(Marketwire - February 18, 2009) - FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, today announced its financial results for the second quarter of fiscal 2009 which ended December 31, 2008. For the second fiscal quarter of 2009 it reported a net income of $781,000 as compared to one year earlier when it had a loss of $3.8 million. Also, the net income for the six months period ending December 31, 2008 was $331,000 as compared to the six month period one year earlier when it had a loss of $4.0 million.
Raymond Damadian, M.D., president and chairman of FONAR 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.'
"We understand that American innovation is an important answer to America's financial woes and FONAR hopes to provide that technical innovation with several new MRI products that we are working on," continued Dr. Damadian.
For the second fiscal quarter ending December 31, 2008 the net income per common share (basic and diluted) was $0.16, as compared to a loss of ($0.78) per common share (basic and diluted) for the same period of fiscal 2008. For the six months ending December 31, 2008, the net income per common share (basic and diluted) was $0.07 as compared to a loss of ($0.83) per common share (basic and diluted) for the same period one year earlier.
Total revenues for the three months ended December 31, 2008 showed an increase of 6% to $11.3 million as compared to $10.7 million for the same period one year earlier. For the six months ended December 31, 2008 total revenues were $18.1 million versus $19.4 million one year earlier.
As of December 31, 2008, there were 131 FONAR UPRIGHT® Multi-Position™ MRI units installed worldwide. During the second quarter of fiscal 2009 total product sales were at $4.4 million, a 10% gain over the corresponding quarter one year earlier.
At the end of the second fiscal quarter of fiscal 2009, total current assets were $20.5 million, total assets were $32.9 million, total current liabilities were $35.3 million and total long-term liabilities were $1.3 million. Total cash and cash equivalents, and marketable securities were $2.6 million on December 31, 2008, a modest increase as compared to $2.4 million on June 30, 2008.
On November 17, 2008, The Company held its annual shareholder meeting for the combined fiscal years ending June 30, 2009 and 2008. All votes before shareholders passed. The Company had previously been non-compliant with NASDAQ's proxy solicitation and annual meeting requirements, as set forth in Marketplace Rules 4350(g) and 4350(e), respectively, and this annual shareholder meeting satisfied those requirements.
On October 9, 2008, the Company received a notice of non-compliance from The NASDAQ Stock Market based upon the Company's non-compliance with the minimum stockholders' equity requirement of $2.5 million at June 30, 2008, for continued listing on The NASDAQ Capital Market, as set forth in NASDAQ Marketplace Rule 4310(c)(3) (the "Stockholders' Equity Requirement"). They said it could serve as a basis for delisting of the Company's securities from The NASDAQ Capital Market.
On February 3, 2009, The Company announced that the NASDAQ Listing Qualifications Panel ("NASDAQ Panel") has granted the Company's request for continued listing on The NASDAQ Capital Market, subject to the condition that, on or before April 6, 2009, the Company file a Current Report on Form 8-K with the Securities and Exchange Commission, evidencing the Company's compliance with the NASDAQ shareholders' equity requirement of $2.5 million, or demonstrating its compliance with one of the alternative listing criteria. While the Company is taking steps to comply with the terms of the NASDAQ Panel decision, there can be no assurance that the Company will be able to do so.
A Company spokesman said, "The NASDAQ Capital Market Continued Listing Requirements require one of three standards for a company to meet, one being a shareholders' equity requirement of $2.5 million. One alternative standard would be a $35 million market cap and curiously the Company had easily topped that level during most of its nearly 30-year history as a public company. Recent times are the exception. (www.fonar.com/market_cap.htm)."
"Another alternative standard," continued The Company spokesman, "would be to have a minimum of $500,000 net income for a fiscal year. Since our net income at six months is $331,000, we are two-thirds of the way there. In normal times, this would probably not be significant enough to persuade the NASDAQ Panel to grant FONAR's continued listing in the Capital Market. However, given the present state of the economy, these are not normal times and we are hopeful."
Dr. Damadian said, "FONAR has achieved its goal of becoming profitable again. The current quarter results were the result of careful cost-cutting of R&D, and selling, general and administrative costs (S, G & A). Subsequently, we have decreased S, G & A, the bulk of FONAR's overhead, by 40% for the six month period ending December 31, 2008 as compared to the same six month period one year earlier, from $11.2 million to $6.7 million."
Dr. Damadian continued, "Our R&D expenditures have also declined 27% to $1.8 million during the past six month time period from $2.5 million one year earlier. Despite the decline, The Company is working on various new innovative projects which will be very meaningful in the MRI world. Notwithstanding the present nationwide financial pressures, FONAR looks forward only with optimism and enthusiasm as FONAR's patented UPRIGHT® weight-bearing MRI technology ultimately becomes a mandatory new standard of care in spine medicine, particularly for those facing surgery. In addition we are developing new applications for the UPRIGHT® MRI such as radiation-free monitoring of scoliosis patients. Another exciting project is the non-invasive diagnosis of pelvic floor dysfunction (PFD) and urinary incontinence that affects 10 million women. As the U.S. economy improves, and medical equipment sales improve, we expect a pent-up demand for the benefits of UPRIGHT® Multi-Position MRI technology to emerge."
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)
ASSETS
December 31, June 30,
2008 2008
Current Assets: (UNAUDITED)
--------- --------
Cash and cash equivalents $ 2,583 $ 1,326
Marketable securities 19 1,068
Accounts receivable - net 5,642 4,689
Accounts receivable - related parties - net 817 469
Medical receivables - net 606 1,228
Management fee receivable - net 3,855 5,040
Management fee receivable - related medical
practices - net 1,325 1,372
Costs and estimated earnings in excess of
Billings on uncompleted contracts 218 6
Inventories 3,856 3,256
Current portion of advances and notes to related
medical practices 176 214
Current portion of notes receivable less discount
for below market interest 499 2,508
Prepaid expenses and other current assets 921 811
--------- --------
Total Current Assets 20,517 21,987
Property and equipment - net 3,408 3,933
Advances and notes to related medical practices - net 176 263
Notes receivable less discount for below market
interest 2,042 2,297
Other intangible assets - net 4,869 4,810
Other assets 1,919 1,936
--------- --------
Total Assets $ 32,931 $ 35,226
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FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY December 31, June 30,
2008 2008
(UNAUDITED)
--------- ---------
Current portion of long-term debt and capital
leases $ 144 $ 373
Accounts payable 4,260 4,020
Other current liabilities 7,992 8,316
Unearned revenue on service contracts 5,375 4,732
Unearned revenue on service contracts - related
parties 780 462
Customer advances 11,793 12,804
Customer advance - related party 1,041 1,472
Billings in excess of costs and estimated
earnings on uncompleted contracts 3,924 5,773
--------- ---------
Total Current Liabilities 35,309 37,952
Long-Term Liabilities:
Due to related medical practices 95 98
Long-term debt and capital leases,
less current portion 780 757
Other liabilities 425 497
--------- ---------
Total Long-Term Liabilities 1,300 1,352
--------- ---------
Total Liabilities 36,609 39,304
--------- ---------
Minority interest 64 167
--------- ---------
STOCKHOLDERS' DEFICIENCY:
Class A non-voting preferred stock $.0001 par value;
1,600,000 authorized, 313,451 issued and outstanding
at December 31, 2008 and June 30, 2008 - -
Common Stock $.0001 par value; 30,000,000 shares
authorized at December 31, 2008 and June 30, 2008,
4,915,918 issued at December 31, 2008 and June 30,
2008 4,904,275 outstanding at December 31, 2008
and June 30, 2008 1 1
Class B Common Stock $.0001 par value; 800,000
shares authorized, (10 votes per share), 158 issued
and outstanding at December 31, 2008 and June 30,
2008 - -
Class C Common Stock $.0001 par value; 2,000,000
shares authorized, (25 votes per share), 382,513
issued and outstanding at December 31, 2008 and June
30, 2008 - -
Paid-in capital in excess of par value 172,276 172,276
Accumulated other comprehensive loss (24) (73)
Accumulated deficit (175,049) (175,380)
Notes receivable from employee stockholders (271) (394)
Treasury stock, at cost - 11,643 shares of common
stock at December 31, 2008 and June 30, 2008 (675) (675)
--------- ---------
Total Stockholders' Deficiency (3,742) (4,245)
--------- ---------
Total Liabilities and Stockholders' Deficiency $ 32,931 $ 35,226
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FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
FOR THE THREE MONTHS ENDED
DECEMBER 31,
---------------------
REVENUES 2008 2007
--------- ---------
Product sales - net $ 4,407 $ 4,003
Service and repair fees - net 2,314 2,463
Service and repair fees - related parties - net 365 262
Management and other fees - net 1,735 2,047
Management and other fees - related medical
practices - net 714 747
License fees and royalties 1,755 1,158
--------- ---------
Total Revenues - Net 11,290 10,680
--------- ---------
COSTS AND EXPENSES
Costs related to product sales 2,824 3,518
Costs related to service and repair fees 906 1,208
Costs related to service and repair
fees - related parties 143 129
Costs related to management and other fees 1,074 1,466
Costs related to management and other
fees - related medical practices 698 543
Research and development 928 1,323
Selling, general and administrative 3,471 5,945
Provision for bad debts 545 424
--------- ---------
Total Costs and Expenses 10,589 14,556
--------- ---------
Income (Loss) From Operations 701 (3,876)
Interest Expense (40) (156)
Investment Income 113 195
Interest Income - Related Parties 6 10
Other Income 1 1
Minority Interest in Income of Partnerships (-) (12)
--------- ---------
NET INCOME (LOSS) $ 781 $ (3,838)
========= =========
Basic Net Income (Loss) Per Common Share $ 0.16 $ (0.78)
========= =========
Diluted Net Income (Loss) Per Common Share $ 0.16 $ (0.78)
========= =========
Weighted Average Basic Shares Outstanding 4,904,275 4,899,252
========= =========
Weighted Average Diluted Shares Outstanding 4,904,275 4,899,252
========= =========
FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
FOR THE SIX MONTHS ENDED
DECEMBER 31,
---------------------
REVENUES 2008 2007
--------- ---------
Product sales - net $ 5,819 $ 6,592
Service and repair fees - net 4,645 4,928
Service and repair fees - related parties - net 635 516
Management and other fees - net 3,782 4,244
Management and other fees - related medical
practices - net 1,439 1,912
License fees and royalties 1,755 1,158
--------- ---------
Total Revenues - Net 18,075 19,350
--------- ---------
COSTS AND EXPENSES
Costs related to product sales 4,265 6,330
Costs related to service and repair fees 1,831 2,398
Costs related to service and repair
fees - related parties 250 251
Costs related to management and other fees 2,277 2,556
Costs related to management and other
fees - related medical practices 1,354 1,490
Research and development 1,809 2,486
Selling, general and administrative 6,735 11,232
Provision for bad debts 700 589
--------- ---------
Total Costs and Expenses 19,221 27,332
--------- ---------
Loss From Operations (1,146) (7,982)
Interest Expense (119) (258)
Investment Income 145 375
Interest Income - Related Parties 12 19
Other Income 2 7
Minority Interest in Income of Partnerships (11) (174)
Gain on Sale of Investment - 571
Gain on Sale of Consolidated Subsidiary 1,448 3,395
--------- ---------
NET INCOME (LOSS) $ 331 $ (4,047)
========= =========
Basic Net Income (Loss) Per Common Share $ 0.07 $ (0.83)
========= =========
Diluted Net Income (Loss) Per Common Share $ 0.07 $ (0.83)
========= =========
Weighted Average Basic Shares Outstanding 4,904,275 4,891,730
========= =========
Weighted Average Diluted Shares Outstanding 4,904,275 4,891,730
========= =========
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™ and Spondylometry™ 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.