FONAR Corporation Announces Financial Results for First Quarter of Fiscal 2010

MELVILLE, NY--(Marketwire - November 23, 2009) - FONAR Corporation (NASDAQ: FONR), The Inventor of MR Scanning™, today announced its financial results for the first quarter of fiscal 2010, which ended September 30, 2009. The loss from operations improved 23% from a loss of $1.8 million, for the fiscal quarter ended September 30, 2008, to a loss of $1.4 million for the fiscal quarter ended September 30, 2009.

The net loss for the first fiscal 2010 quarter ended September 30, 2009 was $1.7 million including a charge of $0.4 million due to prepayment of a note receivable. This compared to the fiscal quarter one year earlier, ended September 30, 2008, which was a loss of $0.5 million but included a gain of $1.4 million from the sale of a consolidated subsidiary.

For the first three months of fiscal 2010 ended September 30, 2009, the loss per common share (basic and diluted) was $0.35, as compared to $0.09 loss per common share (basic and diluted) for the same period of fiscal 2009.

Total revenues for the three months ended September 30, 2009 were $7.5 million as compared to $6.8 million for the same period one year earlier. Service and repair revenues were $2.8 million in the first fiscal quarter of 2010 as compared to $2.6 million in the first quarter of fiscal 2009. Total management and other fees were at $2.5 million in the first fiscal quarter of 2010 as compared to $2.8 million in the first quarter of fiscal 2009.

As of September 30, 2009, there were 140 FONAR UPRIGHT® Multi-Position™ MRI units installed worldwide. During the first quarter of fiscal 2010, total product sales were at $1.6 million.

At the end of the first fiscal quarter of fiscal 2010, total current assets were $19.2 million, total assets were $27.5 million, total current liabilities were $30.0 million and total long-term liabilities were $2.1 million. Total cash and cash equivalents, and marketable securities increased 12% from $1.2 million on June 30, 2009 to $1.4 million on September 30, 2009.

On October 9, 2009, FONAR announced that the NASDAQ Stock Market notified FONAR that it complies with all NASDAQ Capital Market continued listing standards. Specifically, the Company satisfies NASDAQ Listing Rule 5550(b)(3) which requires the Company to have a minimum $500,000 of net income from continuing operations in the latest fiscal year.

This followed the announcement on October 5, 2009 of the Company’s most recent Form 10-K, whereby net income from continuing operations was $1.1 million for the fiscal year ended June 30, 2009 as compared to a net loss of $13.5 million for fiscal 2008. Total revenues for the fiscal year ended June 30, 2009 were $39.7 million as compared to $35.6 million for fiscal 2008. (Visit www.fonar.com/news/100509.htm for details.)

“The Company is planning to expand the number of FONAR UPRIGHT® Multi-Position™ MRI centers under management and to increase the scan volume at its existing centers,” said Raymond Damadian, M. D., president and chairman of FONAR. “The UPRIGHT® MRI is a unique scanner with many advantages that other recumbent-only, single-position MRI scanners can not perform. There are over one million spine surgeries performed in the United States each year and I considerate it essential from all we’ve learned from our installed base of UPRIGHT® Multi-Position™ scanners that no patient proceed to surgery without a prior, fully weight-bearing UPRIGHT® Multi-Position™ MRI examination. FBSS, the failed back surgery syndrome, is a dramatic diagnostic category that should be retired. It currently is responsible for a 0%-40% failure rate in spine surgery (The Failed Spine, 2005, p.123, M. Szpalski & R. Gunzburg, Lippincott Williams & Wilkins). The literature is now replete with publications demonstrating key changes in spine pathology that are visible only in UPRIGHT® fully weight-bearing MRI and in the full range of positions the patient normally occupies.”

Commenting on the first fiscal quarter results, Dr. Damadian said, “We had experienced three straight quarters of profit before the current quarter which had a net loss that included a loss on a note receivable. Given the medical advantages of the FONAR UPRIGHT® Multi-Position™ MRI, and its ability to provide landscape imaging of the entire spine instead of ‘snap shots,’ we are confident of the benefits our scanner brings to the public and of our future.”

For investor and other information visit: www.fonar.com.

UPRIGHT® and STAND-UP® are registered trademarks and The Inventor of MR Scanning™, Full Range of Motion™, Multi-Position™, True Flow™, The Proof is in the Picture™, Spondylography™ Spondylometry™ Upright Radiology™, Landscape™, pMRI™, Dynamic™, and CSP™ and 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 CONDENSED CONSOLIDATED BALANCE SHEETS (000’s OMITTED) ASSETS September 30, June 30, 2009 2009 (UNAUDITED) ----------- ----------- Current Assets: Cash and cash equivalents $ 1,372 $ 1,226 Marketable securities 27 23 Accounts receivable - net 5,156 5,392 Accounts receivable - related parties - net 179 - Medical receivables - net 316 374 Management fee receivable - net 3,304 3,274 Management fee receivable - related medical practices - net 2,020 2,196 Costs and estimated earnings in excess of billings on uncompleted contracts 1,212 1,476 Inventories 3,452 3,172 Current portion of advances and notes to related medical practices 166 165 Current portion of notes receivable 1,664 518 Prepaid expenses and other current assets 345 472 ----------- ----------- Total Current Assets 19,213 18,288 ----------- ----------- Property and equipment - net 2,696 2,892 Advances and notes to related medical practices - net 45 89 Notes receivable - net 156 1,779 Other intangible assets - net 4,951 4,920 Other assets 391 391 ----------- ----------- Total Assets $ 27,452 $ 28,359 =========== =========== FONAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000’s OMITTED) LIABILITIES AND STOCKHOLDERS’ DEFICIENCY September 30, June 30, 2009 2009 (UNAUDITED) ----------- ----------- Current Liabilities: Current portion of long-term debt and capital leases $ 267 $ 277 Current portion of long-term debt-related party 82 80 Accounts payable 3,816 3,519 Other current liabilities 8,429 8,460 Unearned revenue on service contracts 5,423 5,526 Unearned revenue on service contracts - related parties 165 - Customer advances 9,264 9,238 Billings in excess of costs and estimated earnings on uncompleted contracts 2,536 2,026 ----------- ----------- Total Current Liabilities 29,982 29,126 Long-Term Liabilities: Accounts payable 156 184 Due to related medical practices 658 643 Long-term debt and capital leases, less current portion 731 759 Long-term debt less current portion-related party 139 160 Other liabilities 379 364 ----------- ----------- Total Long-Term Liabilities 2,063 2,110 ----------- ----------- Total Liabilities 32,045 31,236 Minority interest 64 64 ----------- ----------- FONAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000’s OMITTED, except share data) LIABILITIES AND STOCKHOLDERS’ DEFICIENCY September 30, June 30, (continued) 2009 2009 (UNAUDITED) ----------- ----------- STOCKHOLDERS’ DEFICIENCY: Class A non-voting preferred stock $.0001 par value; 1,600,000 authorized, 313,451 issued and outstanding at September 30, 2009 and June 30, 2009 - - Preferred stock $.001 par value; 2,000,000 shares authorized, issued and outstanding none - - Common Stock $.0001 par value; 30,000,000 shares authorized at September 30, 2009 and June 30, 2009, 4,927,918 and 4,917,918 issued at September 30, 2009 and June 30, 2009, respectively; 4,916,275 and 4,906,275 outstanding at September 30, 2009 and June 30, 2009, respectively 1 1 Class B Common Stock $.0001 par value; 800,000 shares authorized, (10 votes per share), 158 issued and outstanding at September 30, 2009 and June 30, 2009 - - Class C Common Stock $.0001 par value; 2,000,000 shares authorized, (25 votes per share), 382,513 issued and outstanding at September 30, 2009 and June 30, 2009 - - Paid-in capital in excess of par value 172,299 172,280 Accumulated other comprehensive loss (17) (21) Accumulated deficit (176,000) (174,259) Notes receivable from employee stockholders (265) (267) Treasury stock, at cost - 11,643 shares of common stock at September 30, 2009 and June 30, 2009 (675) (675) ----------- ----------- Total Stockholders’ Deficiency (4,657) (2,941) ----------- ----------- Total Liabilities and Stockholders’ Deficiency $ 27,452 $ 28,359 =========== =========== FONAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (000’s OMITTED, except per share data) FOR THE THREE MONTHS ENDED SEPTEMBER 30, ------------------------ 2009 2008 ----------- ----------- REVENUES Product sales - net $ 1,563 $ 1,413 Service and repair fees - net 2,757 2,545 Service and repair fees - related parties - net 55 55 Management and other fees - net 1,736 2,047 Management and other fees - related medical practices - net 795 724 License fees and royalties 585 - ----------- ----------- Total Revenues - Net 7,491 6,784 ----------- ----------- COSTS AND EXPENSES Costs related to product sales 1,657 1,442 Costs related to service and repair fees 941 1,010 Costs related to service and repair fees - related parties 19 22 Costs related to management and other fees 1,268 1,203 Costs related to management and other fees - related medical practices 761 656 Research and development 854 880 Selling, general and administrative 3,233 3,265 Provision for bad debts 180 154 ----------- ----------- Total Costs and Expenses 8,913 8,632 ----------- ----------- Loss From Operations (1,422) (1,848) Interest Expense (79) (79) Interest Expense - Related Party (14) - Investment Income 87 33 Interest Income - Related Party 4 6 Other Income 33 1 Minority Interest in Income of Partnerships - (11) Gain on Sale of Consolidated Subsidiary - 1,448 Loss on Note Receivable (350) - ----------- ----------- NET LOSS $ (1,741) $ (450) =========== =========== Basic and Diluted Loss Per Common Share $ (0.35) $ (0.09) =========== =========== Weighted Average Number of Common Shares Outstanding 4,907,942 4,904,275 =========== ===========