FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended MARCH 31, 2022

Commission file number 0-10248

FONAR CORPORATION

(Exact name of registrant as specified in its charter)

delaware		11-2464137
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

110 Marcus Drive Melville, New York		11747
Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (631) 694-2929

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES _X_ NO ___

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files YES _X_ NO ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of accelerated filer, large accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer___ Accelerated filer ___ Non-accelerated filer _X_ Smaller reporting company _X_ ☒Emerging growth company ___☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ___ NO _X_

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock		FONR		NASDAQ Capital Market

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practicable date.

Class		Outstanding at May 6, 2022
Common Stock, par value $.0001		6,554,210
Class B Common Stock, par value $.0001		146
Class C Common Stock, par value $.0001		382,513
Class A Preferred Stock, par value $.0001		313,438

Page 1

FONAR CORPORATION AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION		PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 2022 (Unaudited) and June 30, 2021		3
Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2022 and March 31, 2021 (Unaudited)		6
Condensed Consolidated Statements of Income for the Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)		7
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2022 and March 31, 2021 (Unaudited)		8
Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)		9
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)		10
Notes to Condensed Consolidated Financial Statements (Unaudited)		11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		36
Item 4. Controls and Procedures		36
PART II - OTHER INFORMATION		36
Item 1. Legal Proceedings		36
Item 1A. Risk Factors		37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3. Defaults Upon Senior Securities		39
Item 4. Mine Safety Disclosures		39
Item 5. Other Information		39
Item 6. Exhibits		39
Signatures		40

Page 2

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

ASSETS


	March 31, 2022		June 30, 2021 *
Current Assets:
Cash and cash equivalents	$	46,010	$	44,460
Short term investments		32		32
Accounts receivable – net		3,943		4,526
Accounts receivable - related party		30		12
Medical receivable – net		19,548		17,901
Management and other fees receivable – net		32,804		30,948
Management and other fees receivable – related medical practices – net		8,489		7,814
Contract assets		15		—
Inventories		2,368		1,663
Prepaid expenses and other current assets		1,095		1,227
Total Current Assets		114,334		108,583

Accounts receivable – long term		2,066		2,880
Deferred income tax asset		12,475		15,959
Property and equipment – net		22,441		21,850
Right-of-use Asset – operating lease		34,792		30,133
Right-of-use Asset – financing lease		978		1,127
Goodwill		4,269		4,269
Other intangible assets – net		3,770		4,038
Other assets		524		667
Total Assets	$	195,649	$	189,506

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

Page 3

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS’ EQUITY

	March 31, 2022		June 30, 2021 *
Current Liabilities:
Current portion of long-term debt and capital leases	$	40	$	173
Accounts payable		1,011		1,866
Other current liabilities		4,916		9,162
Unearned revenue on service contracts		3,869		4,366
Unearned revenue on service contracts – related party		28		—
Contract liabilities		—		15
Operating lease liability - current portion		3,733		3,533
Financing lease liability - current portion		208		203
Customer deposits		361		731

Total Current Liabilities		14,166		20,049

Long-Term Liabilities:
Unearned revenue on service contracts		2,035		2,801
Deferred income tax liability		238		238
Due to related medical practices		93		93
Operating lease liability – net of current portion		33,659		28,975
Financing lease liability – net of current portion		892		1,049
Long-term debt and capital leases, less current portion		169		760
Other liabilities		123		171

Total Long-Term Liabilities		37,209		34,087
Total Liabilities		51,375		54,136

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

Page 4

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS’ EQUITY (Continued)

STOCKHOLDERS' EQUITY:	March 31, 2022			June 30, 2021 *
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2022 and June 30, 2021, 313 issued and outstanding at March 31, 2022 and June 30, 2021	$	—		$	—
Preferred stock $.001 par value; 567 shares authorized at March 31, 2022 and June 30, 2021, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2022 and June 30, 2021, 6,566 issued at March 31, 2022 and June 30, 2021, 6,554 outstanding at March 31, 2022 and June 30, 2021		1			1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at March 31, 2022 and June 30, 2021; .146 issued and outstanding at March 31, 2022 and June 30, 2021		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2022 and June 30, 2021, 383 issued and outstanding at March 31, 2022 and June 30, 2021		—			—
Paid-in capital in excess of par value		184,531			185,101
Accumulated deficit		(35,810	)		(46,008	)
Treasury stock, at cost - 12 shares of common stock at March 31, 2022 and June 30, 2021		(675	)		(675	)
Total Fonar Corporation’s Stockholders’ Equity		148,047			138,419
Noncontrolling interests		(3,773	)		(3,049	)
Total Stockholders' Equity		144,274			135,370
Total Liabilities and Stockholders' Equity	$	195,649		$	189,506

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

Page 5

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)


	FOR THE THREE MONTHS ENDED MARCH 31,
REVENUES	2022			2021
Patient fee revenue – net of contractual allowances and discounts	$	7,641		$	6,043
Product sales – net		135			503
Service and repair fees – net		1,876			1,914
Service and repair fees - related parties – net		28			28
Management and other fees – net		11,904			11,808
Management and other fees - related medical practices – net		2,987			2,794
Total Revenues – Net		24,571			23,090
COSTS AND EXPENSES
Costs related to patient fee revenue		3,306			2,828
Costs related to product sales		53			152
Costs related to service and repair fees		747			627
Costs related to service and repair fees - related parties		11			9
Costs related to management and other fees		6,696			7,073
Costs related to management and other fees – related medical practices		1,698			1,746
Research and development		354			419
Selling, general and administrative		6,068			6,114
Total Costs and Expenses		18,933			18,968
Income From Operations		5,638			4,122
Other Income		—			144
Interest Expense		31			(19	)
Investment Income		58			64
Income Before Provision for Income Taxes and Noncontrolling Interests		5,727			4,311
Provision for Income Taxes		(2,465	)		(12	)
Net Income		3,262			4,299
Net Income - Noncontrolling Interests		(971	)		(431	)
Net Income – Attributable to FONAR	$	2,291		$	3,868
Net Income Available to Common Stockholders	$	2,153		$	3,634
Net Income Available to Class A Non-Voting Preferred Stockholders	$	103		$	174
Net Income Available to Class C Common Stockholders	$	35		$	60
Basic Net Income Per Common Share Available to Common Stockholders	$	0.33		$	0.55
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.32		$	0.54
Basic and Diluted Income Per Share – Class C Common	$	0.09		$	0.16
Weighted Average Basic Shares Outstanding – Common Stockholders		6,554			6,554
Weighted Average Diluted Shares Outstanding - Common Stockholders		6,682			6,682
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		383			383

See accompanying notes to condensed consolidated financial statements.

Page 6

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)


	FOR THE NINE MONTHS ENDED MARCH 31,
REVENUES	2022			2021
Patient fee revenue – net of contractual allowances and discounts	$	21,935		$	16,372
Product sales – net		481			534
Service and repair fees – net		5,720			5,702
Service and repair fees - related parties – net		83			83
Management and other fees – net		35,985			34,362
Management and other fees - related medical practices – net		8,576			8,181
Total Revenues – Net		72,780			65,234
COSTS AND EXPENSES
Costs related to patient fee revenue		9,785			7,997
Costs related to product sales		352			477
Costs related to service and repair fees		2,190			1,861
Costs related to service and repair fees - related parties		32			27
Costs related to management and other fees		20,497			18,861
Costs related to management and other fees – related medical practices		5,024			4,696
Research and development		1,109			1,243
Selling, general and administrative		15,928			16,818
Total Costs and Expenses		54,917			51,980
Income From Operations		17,863			13,254
Other Income/(Expense)		858			4
Interest Expense		(9	)		(57	)
Investment Income		180			251
Income Before Provision for Income Taxes and Noncontrolling Interests		18,892			13,452
Provision for Income Taxes		(5,311	)		(1,974	)
Net Income		13,581			11,478
Net Income - Noncontrolling Interests		(3,383	)		(1,991	)
Net Income – Attributable to FONAR	$	10,198		$	9,487
Net Income Available to Common Stockholders	$

SEC Form 10-Q filed by Fonar Corporation