Fonar funds sufficient through December 2007, but not beyond

By Lisa Kerner

Charlotte, N.C., Feb. 9 - Fonar Corp. said its existing capital resources, funds generated from operations and funds from expected note repayments will be sufficient to satisfy its cash flow requirements through Dec. 31, 2007.

To operate beyond that date, Fonar believes it will need to increase sales, reduce expenses or seek other funding sources, according to a 10-Q report filed with the Securities and Exchange Commission on Friday.

Cash flow from operations, Fonar's principal source of liquidity, is expected to continue. The company reported working capital of $6.1 million on Dec. 31, 2006 and a net loss of $11.6 million.

To conserve capital, Fonar said it will from time to time issue common stock and stock options to compensate employees.

The company expects that increased advertising and marketing efforts will increase demand for its products. However, if these efforts fail, Fonar said it could experience a cash shortfall that impacts operations.

Fonar is an MRI scanner manufacturer based in Melville, N.Y.

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