Fonar(FONR) - 2021 Q1 - Quarterly Report

Financial Performance - For the three-month period ended September 30, 2020, the company reported a net income of $3.3 million on revenues of $21.0 million, compared to a net income of $4.5 million on revenues of $21.7 million for the same period in 2019, indicating a revenue decrease of 3.2%[87][88] - Operating income decreased from $5.5 million for the three months ended September 30, 2019, to $4.2 million for the same period in 2020, reflecting a decline of 23.6%[89] - HMCA's revenues decreased by 2.4% to $19.0 million in the first three months of fiscal 2021 from $19.5 million in fiscal 2020[104] - Consolidated net revenues decreased by 3.5% to $21.0 million from $21.7 million for the first three months of fiscal 2020, while total costs and expenses increased by 3.5% to $16.8 million[112] - Selling, general and administrative expenses increased to $6.2 million in the first three months of fiscal 2021 from $4.3 million in the same period of fiscal 2020, an increase of 44.2%[113] - Research and development expenses decreased by 18% to $400,000 for the first three months of fiscal 2021 from $472,000 in the same period of fiscal 2020[114] - Foreign revenues decreased by 33.9% to approximately $121,000 in the first three months of fiscal 2021 from approximately $183,000 in fiscal 2020[100] Cash and Liabilities - The company reported a 5.3% increase in cash and cash equivalents, rising from $36.8 million at June 30, 2020 to $38.8 million at September 30, 2020[140] - Cash provided by operating activities for the first three months of fiscal 2021 was $3.8 million, primarily driven by net income of $3.3 million[141] - Total liabilities decreased by 1.5% to $53.2 million at September 30, 2020, down from $54.0 million at June 30, 2020[145] - Working capital increased to $80.5 million at September 30, 2020, up from $77.2 million at June 30, 2020, due to an increase in current assets[147] Technological Advancements - FONAR's Upright® MRI technology allows for scanning patients in multiple positions, significantly improving visualization of spinal abnormalities and treatment outcomes[124] - The Upright® MRI has shown a 250% increase in the visualization of cerebellar tonsil ectopia in patients scanned upright compared to lying down[131] - The UCLA study indicated that static single position MRI missed 35.1% of spondylolistheses and 23.75% of cervical disc bulges, emphasizing the importance of the Upright® MRI[136] - The company has developed a scanning protocol that allows scoliosis patients to obtain diagnostic images without the risks associated with x-rays, impacting over 3 million American women[132] Business Strategy and Future Outlook - The Company entered into a $701,000 loan agreement under the Paycheck Protection Program (PPP) to support Florida locations during COVID-19, with the expectation that most of the loan will be forgiven[155] - The Company has not committed to significant capital expenditures for the remainder of the 2021 fiscal year, except for placing additional scanners at 3 facilities in New York[156] - The business plan focuses on improving and expanding MRI facilities managed or owned by HMCA and increasing the number of scans performed[157] - Management aims to promote wider market recognition of Fonar's scanner products and increase demand for Upright® scanning despite market uncertainties[158] - The Company has achieved profitability for eight consecutive fiscal years and believes its capital resources will support operations through at least September 30, 2021[161] - The future effects of healthcare legislation, COVID-19, and economic conditions on the business are uncertain, but the Company has adequate revenues and cash reserves[161] - The Company maintains its funds in liquid accounts and does not invest in fixed rate instruments[162] - All revenue, expense, and capital purchasing activities are conducted in United States dollars[163]