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FONAR Corporation announced its earnings for the first quarter of fiscal 2011, ending September 30, 2010.

FONAR Corporation (FONR 1.64, +0.62, +60.78%) , The Inventor of MR Scanning(TM), announced its earnings for the first quarter of fiscal 2011, ending September 30, 2010.

Income from operations for the quarter ending September 30, 2010 was $435,000 as compared to a loss of $1,422,000 for the same period one year earlier, ending September 30, 2009. FONAR has had income from operations for three quarters in a row.

Net income for the first quarter of fiscal 2011 ending September 30, 2010 was $385,000 as compared to a net loss of $1.7 million for the same quarter one year earlier ending September 30, 2009.

Total net revenues for the quarter ending September 30, 2010 increased 16% to $8.7 million as compared to the one year earlier to the quarter ending September 30, 2009, when net revenues were $7.5 million.

Within the revenue category, the management and other fees segment (management of diagnostic imaging centers segment) increased 30% from $2.5 million for the three-month period ending September 30, 2009, to $3.3 million for the three-month period ending September 30, 2010. Total costs related to the management and other fees segment increased just 1%, from $2.0 million for the three-month period ending September 30, 2009, to $2.1 million for the three-month period ending September 30, 2010.

The service and repair net fees were at $2.7 million, for the three-month period ending September 30, 2010, as compared to the three-month period ending September 30, 2009, one year earlier, when revenues were $2.8 million.

Total product sales (FONAR UPRIGHT(R) Multi-Position(TM) MRI scanners) increased 70% from $1.6 million for the three-month period ending September 30, 2009, to $2.7 million for the three-month period ending September 30, 2010.

At the end of the first fiscal quarter of fiscal 2011 ending September 30, 2010, total current assets were $15.3 million, total assets were $22.0 million, total current liabilities were $25.0 million, total long-term liabilities were $2.2 million, and total cash, cash equivalents and marketable securities were $1.3 million.

Worldwide 147 FONAR UPRIGHT(R) Multi-Position(TM) MRI units have been installed as of September 30, 2010.

Commenting on the results of the first quarter of fiscal 2011, Raymond Damadian, M.D., president and chairman of FONAR said, "We are delighted to be able to show rising income for the first quarter of fiscal 2011. This has largely been done by cutting costs. Important savings have been made by reducing our Selling, General and Administrative expenses and our Research and Development expenses. In fact, these two categories have been reduced 31% when comparing the most recent fiscal quarter ending September 30, 2010 with the first quarter of fiscal 2010 ending September 30, 2009."

"I am also pleased to announce that during the most recent fiscal quarter, FONAR has installed its first UPRIGHT(R) Multi-Position(TM) MRI in Africa and Australia making FONAR a true global participant in the MRI world," added Dr. Damadian. We have installed 14 of our nearly 150 FONAR UPRIGHT(R) Multi-Position(TM) MRI scanners outside of the United States."

HIGHLIGHTS OF THE FIRST QUARTER OF FISCAL 2011

The peer-reviewed, medical journal "Brain Injury," in its July 2010 edition, published a very significant study of 1200 neck pain patients comparing the FONAR UPRIGHT(R) Multi-Position(TM) MRI to a conventional recumbent MRI and the ability to diagnose whiplash trauma from a motor vehicle accident. The title of the article is: 'A case-control study of cerebellar tonsillar ectopia (Chiari) and head/neck trauma (whiplash).'

The 1200 neck pain patients were divided into 4 groups, consisting of 2 control neck pain groups that did not experience whiplash trauma and 2 neck pain groups that did. The radiologists who read the study images were blinded as to which images were the patient images and which were the control images. The patients were examined in both the upright and recumbent positions. The recumbent MRI images were obtained in a conventional recumbent MRI and the upright images were obtained in the FONAR UPRIGHT(R) Multi-Position(TM) MRI.

The study, as presented in "Brain Injury," showed that the 'fallen' cerebellar tonsillar ectopia (CTE) caused by motor vehicle whiplash injuries was being missed 60% of the time when the patient was scanned laying down in a conventional recumbent-only MRI. The study reported that the whiplash injuries were found when scanned upright in the FONAR UPRIGHT(R) Multi-Position(TM) MRI. As a result of this study, the medical evidence indicates that the 'fallen' cerebellar tonsillar ectopias of a whiplash injury patient can now be reliably visualized by using the FONAR UPRIGHT(R) Multi-Position(TM) MRI.

For more details, visit: (www.fonar.com/news/072110.htm). To obtain a copy of the article published in the peer-reviewed journal, "Brain Injury," please contact FONAR or use a Web search engine.

Soon after the publication in "Brain Injury," the Company announced the fourth purchase of a FONAR UPRIGHT(R) Multi-Position(TM) MRI by Medserena, of Germany. The CEO of Medserena, Matthias Schulz, said, "From our point of view, here in Germany, the newly published 1200 patient study in 'Brain Injury' sets a 'new standard of care' for whiplash injury patients."

Mr. Schulz continued, "The first three UPRIGHT(R) MRI centers have had great success. With physicians all over Germany asking about this technology, it has become imperative for us to expand and install a fourth UPRIGHT(R) scanner. This is in spite of an intensely active MRI market in Germany, where there are already many conventional lie-down MRIs installed. The large number of requests coming from our physicians in Germany are arising because of the special medical need for FONAR's unique technology."

"The German people have a long history in science and technology innovation," Mr. Schulz reported, "so we tend to recognize the potential of any new technology quickly. We have been very successful in Germany with the FONAR UPRIGHT(R) Multi-Position(TM) MRI and its power for scanning patients in multiple upright and recumbent positions because our physicians have quickly appreciated the benefits of this new technology and want their patients to have access to those benefits as soon as possible. With 50% of MRIs being of the spine, it is self-evident that to make a satisfactory imaging diagnosis of the spine, the spine needs to be supporting its normal weight load which the conventional lie-down MRI does not permit."

Mr. Schulz also said, "Automobile whiplash injuries are just as much a problem in Germany as they are in any other industrialized nation. It was with great pleasure that we learned of the July 2010 article in "Brain Injury," that will now make it possible for physicians to visualize these injuries so that the most expedient medical treatment can be provided. This is a huge advantage for the FONAR UPRIGHT(R) Multi-Position(TM) MRI when it competes with other MRI scanners."

NASDAQ NOTICE

On October 14, 2010, the Company received a notice of non-compliance from The NASDAQ Stock Market, LLC., based upon the Company's non-compliance with the minimum stockholders' equity requirement of $2.5 million for continued listing on The NASDAQ Capital Market, as set forth in NASDAQ Marketplace Listing Rule 5550(b)(1) (the "Rule") (the "Stockholders' Equity Requirement"). The deficiency was noted after the Company filed its Form 10-K on October 13, 2010, for the Fiscal year ended June 30, 2010. In addition, the Company did not meet the alternatives of market value of listed securities or net income from continuing operations.

Under the Rules, the Company has 45 calendar days to submit a plan to regain compliance. If the plan is accepted the NASDAQ Panel will grant an extension of up to 180 calendar days from the date of the letter (October 14, 2010) to evidence compliance. While the Company is hopeful that the Panel will grant its request for continued listing on NASDAQ, there can be no assurance that the Panel will do so.

MATTERS CONCERNING HOLDERS OF FONAR CORPORATION STOCK CERTIFICATES

Recently, many of our shareholders have received letters from CST (Computer Share Trust), www.computershare.com, telephone 800-962-4284. It is very important for investors to respond to these letters or else risk of being subject to state escheatment laws. Essentially, shareholders holding older, pre-reverse stock-split certificates must exchange their old certificates for new ones.

In addition, investors may have changed addresses or appeared to have abandoned their stock. If this could possibly be you, we urge you to contact CST to update your information.

Again please call CST at 800-962-4284. For more information on FONAR stock please visit: www.fonar.com/invest_faq.htm

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

Source: FONAR Corporation