FONAR Announces Third Quarter and Nine-Month Financial Results for Fiscal 2007
May 11 2007 - 9:08PM
Business Wire
FONAR Corporation (NASDAQ-FONRD), The Inventor of MR Scanning�,
announced its financial results for the third quarter of fiscal
2007, which ended March 31, 2007. For the nine-month period ended
March 31, 2007, we reported a net loss of $17.0 million on revenues
of $24.2 million as compared to net loss of $21.0 million on
revenues of $27.8 million for the nine-month period ended March 31,
2006. For the three month period ended March 31, 2007 we reported a
net loss of $5.4 million on revenues of $8.8 million as compared to
net loss of $7.4 million on revenues of $7.1 million for the
three-month period ended March 31, 2006. Net loss and revenue for
the quarter ending March 31, 2007 as compared to the quarter ended
March 31, 2006. Net losses improved by 26.6%, ($5.4 million) as
compared to ($7.4 million), on a revenue increase of 23.6% to $8.8
million from $7.1 million. Particularly noteworthy was that the
revenues for the quarter ending March 31, 2007 accounted for 36.2%
of the revenues of the nine-month period ending March 31, 2007.
There was recent increased sales activity which management believes
is attributable to a general increase in the utilization of MRI and
the increase in demand for UPRIGHT� MRI scans, and the reduction of
uncertainty of the impact of the Deficit Reduction Act (�DRA�). A
recent survey of FONAR UPRIGHT� MRI customers shows the DRA has not
had a substantial impact on revenues and has been more than offset
by an increase in utilization of MRI and the UPRIGHT� imaging
technology. During the third fiscal 2007 quarter, total product
sale revenues were $3.2 million, an increase of 91% from $1.7
million one year earlier. The nine-month total product sales for
the quarter ending March 31, 2007 was $7.8 million as compared to
$10.0 million for the same period one year earlier. Service and
repair revenues for the third fiscal 2007 quarter increased 10% to
$2.6 million from $2.3 million during the same quarter of fiscal
2006. For the nine-month period ending March 31, 2007 there was a
18% increase to $7.5 million from $6.3 million for the same period
one year earlier. These increases are due to the result and
initiation of service contract agreements from recent installations
of FONAR UPRIGHT � Multi-Position� MRI units. During the third
fiscal quarter total costs related to service and repair fees were
$1.3 million as compared to $1.4 million one year earlier. Also for
the nine-month period total costs related to service and repair
fees were $3.9 million as compared to $4.2 million one year
earlier. As of March 31, 2007, there were 118 FONAR UPRIGHT�
Multi-Position� MRI units installed worldwide. At March 31, 2007,
total assets were $48.5 million, total current assets were $30.2
million, total cash and marketable securities were $5.8 million,
total current liabilities were $29.2 million, and total long-term
liabilities were $1.3 million. Dr. Raymond Damadian, president and
chairman of FONAR, said, �the future of UPRIGHT� Multi-Position�
Full Range of Motion� MRI is more exciting than ever. Unique
medical applications for UPRIGHT� Multi-Position� imaging arise
continuously. A very important example is FONAR�s new development
of scanning protocols for scoliosis. According to a National Cancer
Institute study published in 2000, women with scoliosis have a 90%
higher incidence of developing breast cancer than non-scoliotic
women, the apparent cause being the repeated multiple chest X-rays
over many years required for scoliosis treatment and treatment
monitoring. Upright, full weight-bearing chest X-rays are mandatory
to evaluate scoliosis. UPRIGHT� MRI meets the scoliosis need for
upright imaging without the radiation and without the risk of
engendering breast cancers. The estimated number of children in
North America with scoliosis is 1.5 million, a number which does
not include scoliosis patients above age 18, which raise the number
with scoliosis to 3.0 million.� "MRI scans for the detection of
silicone breast implant leaks is another new application of
UPRIGHT� MRI,� continued Dr. Damadian. �Silicon implants for breast
augmentation were only recently reinstated by the FDA in November
2006. The FDA recommends that MRI scans be performed for leakage
detection at year 1 and year 2, and alternate years thereafter for
8 more years. Cosmetic surgeons deem it important that these scans
be done upright to optimize the detection of implant leaks. Pooling
of implant material when the breast is gravity-dependent and
pendant is perceived to be the most sensitive means for image
detection of leakage. There is concern that when the breast is
recumbent redistribution of leakage material may undermine
detection. There are currently in excess of 1.65 million women in
the U.S. with breast implants. Under the new FDA leakage monitoring
recommendations, 1.65 million women would require MRI examinations
annually for each of the first two years and then every other year
thereafter.� �The current installed base of FONAR UPRIGHT� MRI
scanners (118) operating at maximum capacity,� added Dr. Damadian,
�can accomplish only 614,000 of the needed 1.65 million MRI scans
in each of the first two years recommended by the FDA and of the
needed 1.65 million scans on alternate years thereafter, even if
these scanners were performing MRI breast examinations
exclusively.� �Whiplash injuries of the neck also require UPRIGHT�
Multi-Position� Full Range of Motion� evaluation of the disks,
ligaments, neck musculature, vertebra and spinal cord for a
satisfactory assessment of the neck injury,� said Dr. Damadian.
�There are currently 1,000,000 motor vehicle whiplash injuries of
the neck occurring annually.� Dr. Damadian continued, �Patients
with Chiari syndrome, in which the brain, for lack of sufficient
connective tissue support, descends into the foramen magnum
(opening) at the base of the skull when the patient is upright,
require UPRIGHT� MR imaging. The �drop attacks� that occur in this
syndrome are characterized by a sudden episode of muscular
paralysis and a concurrent �falling to the ground� when the patient
is upright. The actual pathology initiating the �drop attack� can
only therefore be visualized with the patient in the same posture
that prompts the �attack�. Consequently, Chiari patients require
examination in the FONAR UPRIGHT� MRI to achieve the images
necessary to assess the extent of Chiari malformation. The current
estimate of the number of Chiari cases in the U.S. is 300,000. This
number is believed to be underestimated by as much as 200,000
Chiari 1 malformations now thought to occur annually, secondary to
motor vehicle whiplash injuries.� �Such applications continue to
arise without limit. Moreover, they are in addition to the already
existing extensive musculoskeletal applications in the spine
wherein 1,000,000 spine surgeries are performed annually and where
UPRIGHT� weight-bearing Multi-Position� imaging prior to surgery
will ultimately be mandatory to prevent incorrect surgery.
Additionally, there are 9,000,000 MRI scans of the spine performed
annually in the U.S. that are destined to become UPRIGHT�
Multi-Position� MRI scans so that accurate identification of the
patient�s symptom generating spine pathology can be achieved. And
ultimately the extensive cardio-vascular applications of UPRIGHT�
Multi-Position� imaging are destined to come into use, e.g.
UPRIGHT� imaging of cerebral blood flow prior to surgical vascular
repair, and UPRIGHT� imaging of lower extremities varicosities
prior to surgery. Additionally, a little over 1,000,000 cardiac
surgeries are performed annually in the U.S. Such patients will
benefit substantially from UPRIGHT� MRI imaging of coronary blood
flow prior to deciding between the various corrective alternatives,
e.g. bypass, stents, and angioplasty,� said Dr. Damadian. �These
are but a few of the clinical conditions that are undiagnosable
without upright scanning that have been brought to FONAR�s
attention since the introduction to the medical community by FONAR
of UPRIGHT� Multi-Position� MRI technology.� CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS � For the Three Months For the Nine Months
Ended March 31, Ended March 31, � 2007� � 2006� � 2007� � 2006�
Revenues $ 8,782,000� $ 7,103,000� $ 24,237,000� $ 27,797,000� Net
Loss $ (5,401,000) $ (7,357,000) $ (16,976,000) $ (21,031,000)
Basic & Diluted Loss per Common Share $ (1.11) $ (1.65) $
(3.52) $ (4.80) The Inventor of MR Scanning�, Full Range of
Motion�, STAND-UP�, UPRIGHT�, Multi-Position�, pMRI�, True Flow�,
and The Proof is in the Picture� are trademarks of FONAR
Corporation. Be sure to visit FONAR�s Web site for Company product
and investor information: www.fonar.com 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 filings with the Securities and Exchange Commission.
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