☐

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended SEPTEMBER 30, 2025

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 ☒ 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 and post such files). Yes ☒ No ☐

Page 1

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 ☐
Smaller reporting company ☒	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 ☒

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, $.0001 par value		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 November 5, 2025
Common Stock, par value $.0001		6,203,465
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

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FONAR CORPORATION AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION		PAGE
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets – as of September 30, 2025 and June 30, 2025		4
Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2025 and September 30, 2024		7
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended September 30, 2025 and September 30, 2024		8
Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2025 and September 30, 2024		10
Notes to Condensed Consolidated Financial Statements		11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
Item 4. Controls and Procedures		38
PART II - OTHER INFORMATION		40
Item 1. Legal Proceedings		40
Item 1A. Risk Factors		40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 3. Defaults Upon Senior Securities		43
Item 4. Mine Safety Disclosures		43
Item 5. Other Information		44
Item 6. Exhibits		44
Signatures		45

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

ASSETS


	September 30, 2025 (Unaudited)		June 30, 2025 (Note 1)
Current Assets:
Cash and cash equivalents	$	54,276	$	56,334
Short-term investments		122		120
Accounts receivable – net of allowances for credit losses of $260 and $264 at September 30, 2025 and June 30, 2025, respectively		5,146		5,305
Accounts receivable – related party		90		—
Medical receivable		24,486		24,490
Management and other fees receivable – net of allowances for credit losses of $13,866 and $14,296 at September 30, 2025 and June 30, 2025, respectively		44,719		43,401
Management and other fees receivable – related medical practices – net of allowances for credit losses of $7,666 and $7,137 at September 30, 2025 and June 30, 2025, respectively		10,027		9,748
Inventories - net		2,748		2,813
Prepaid expenses and other current assets – related party		530		411
Prepaid expenses and other current assets		1,591		2,050
Total Current Assets		143,735		144,672

Accounts receivable – long term		3,471		3,550
Deferred income tax asset		6,314		6,349
Property and equipment – net		19,449		18,532
Note receivable – related party		567		555
Right-of-use asset – operating leases		36,122		35,136
Right-of-use asset – finance lease		320		377
Goodwill		4,269		4,269
Other intangible assets – net		3,251		2,992
Other assets		854		476
Total Assets	$	218,352	$	216,908

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

LIABILITIES AND EQUITY

	September 30, 2025 (Unaudited)		June 30, 2025 (Note 1)
Current Liabilities:
Accounts payable	$	2,520	$	1,302
Other current liabilities		5,088		6,975
Unearned revenue on service contracts		4,711		4,866
Unearned revenue on service contracts – related party		83		—
Operating lease liabilities – current portion		3,668		3,383
Finance lease liability – current portion		244		244
Customer deposits		351		354
Total Current Liabilities		16,665		17,124

Long-Term Liabilities:
Unearned revenue on service contracts		3,682		3,801
Deferred income tax liability		321		321
Due to related party medical practices		93		93
Operating lease liabilities – net of current portion		35,918		35,149
Finance lease liability – net of current portion		102		142
Other liabilities		176		173

Total Long-Term Liabilities		40,292		39,679
Total Liabilities		56,957		56,803

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

LIABILITIES AND EQUITY (Continued)

EQUITY:	September 30, 2025 (Unaudited)			June 30, 2025 (Note 1)
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at September 30, 2025 and June 30, 2025, 313 issued and outstanding at September 30, 2025 and June 30, 2025	$	—		$	—
Preferred stock $.001 par value; 567 shares authorized at September 30, 2025 and June 30, 2024, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at September 30, 2025 and June 30, 2025, 6,203 issued at September 30, 2025 and June 30, 2025, 6,168 outstanding at September 30, 2025 and June 30, 2025, respectively		1			1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at September 30, 2025 and June 30, 2025, 0.146 issued and outstanding at September 30, 2025 and June 30, 2025		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at September 30, 2025 and June 30, 2025, 383 issued and outstanding at September 30, 2025 and June 30, 2025		—			—
Paid-in capital in excess of par value		178,757			178,757
Accumulated deficit		(3,025	)		(5,289	)
Treasury stock, at cost – 35 shares of common stock at September 30, 2025 and at June 30, 2025		(860	)		(860	)
Total FONAR Corporation’s Stockholders’ Equity		174,873			172,609
Noncontrolling interests		(13,478	)		(12,504	)
Total Equity		161,395			160,105
Total Liabilities and Equity	$	218,352		$	216,908

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	For the Three Months Ended September 30, (Unaudited)
Revenues	2025			2024
Patient fee revenue – net of contractual allowances and discounts	$	7,572		$	7,487
Product sales		316			120
Service and repair fees		2,182			1,992
Service and repair fees – related parties		45			45
Management and other fees		12,941			12,329
Management and other fees – related medical practices		2,987			2,987
Total Revenues – Net		26,043			24,960
Cost and Expenses
Costs related to patient fee revenue		4,929			4,646
Costs related to product sales		324			221
Costs related to service and repair fees		1,059			1,091
Costs related to service and repair fees – related parties		8			67
Costs related to management and other fees		7,812			7,319
Costs related to management and other fees – related medical practices		1,464			1,573
Research and development		440			307
Selling, general and administrative expenses		6,813			5,130
Total Costs and Expenses		22,849			20,354
Income from Operations		3,194			4,606
Other income and (expenses):
Interest expense		(1	)		(8	)
Interest income – related party		12			13
Investment income		474			639
Other income (expense)		3			(1	)
Income Before Provision for Income Taxes and Noncontrolling Interests		3,682			5,249
Provision for income taxes		(1,012	)		(1,249	)
Consolidated Net Income		2,670			4,000
Net Income – Noncontrolling Interests		(406	)		(865	)
Net Income – Attributable to FONAR	$	2,264		$	3,135
Net Income Available to Common Stockholders	$	2,120		$	2,939
Net Income Available to Class A Non–Voting Preferred Stockholders	$	108		$	146
Net Income Available to Class C Common Stockholders	$	36		$	50
Basic Net Income Per Common Share Available to Common Stockholders	$	0.34		$	0.47
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.34		$	0.46
Basic and Diluted Income Per Share – Class C Common	$	0.10		$	0.13
Weighted Average Basic Shares Outstanding – Common Stockholders		6,169			6,304
Weighted Average Diluted Shares Outstanding – Common Stockholders		6,296			6,432
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		383			383

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts and shares in thousands)

(UNAUDITED)

For the Three Months Ended September 30, 2025


	Common Stock		Common Stock Outstanding (Shares)		Class A Preferred Stock (Shares)		Class C Common Stock (Shares)		Paid-in capital in excess of par value
Balance – June 30, 2025	$	1		6,203		313		383	$	178,757
Net Income		—		—		—		—		—
Distributions – Non controlling interest		—		—		—		—		—
Income – Non controlling interests		—		—		—		—		—
Balance – September 30, 2025	$	1		6,203		313		383	$	178,757


	Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)		Non Controlling Interests			Total
Balance – June 30, 2025	$	(5,289	)	$	(860	)		35	$	(12,504	)	$	160,105
Net Income		2,264			—			—		—			2,264
Distributions – Non controlling interest		—			—			—		(1,380	)		(1,380	)
Income – Non controlling interests		—			—			—		406			406
Balance – September 30, 2025	$	(3,025	)	$	(860	)		35	$	(13,478	)	$	161,395

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts and shares in thousands)
(UNAUDITED)

For the Three Months Ended September 30, 2024


	Common Stock		Common Stock Outstanding (Shares)		Class A Preferred Stock (Shares)		Class C Common Stock (Shares)		Paid-in capital in excess of par value
Balance June 30,2024	$	1		6,373		313		383	$	180,608
Net Income		—		—		—		—		—
Purchase of Treasury Stock		—		—		—		—		—
Distributions Non controlling interest		—		—		—		—		—
Income Non controlling interests		—		—		—		—		—
Balance September 30, 2024	$	1		6,373		313		383	$	180,608


	Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)		Non Controlling Interests			Total
Balance June 30, 2024	$	(13,624	)	$	(1,017	)		45	$	(9,180	)	$	156,788
Net Income		3,135						—		—			3,135
Purchase of Treasury Stock		—			(415	)		24		—			(415	)
Distributions Non controlling interest		—			—			—		(1,546	)		(1,546	)
Income Non controlling interests		—			—			—		865			865
Balance September 30, 2024	$	(10,489	)	$	(1,432	)		69	$	(9,861	)	$	158,827

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts and shares in thousands)

(UNAUDITED)


	For the Three Months Ended September 30,
	2025			2024
Cash Flows from Operating Activities:
Consolidated Net income	$	2,670		$	4,000
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		1,190			1,063
Net change in operating right-of-use assets and lease liabilities		125			237
Provision (Recovery) for credit losses		99			(27	)
Deferred tax expense		35			866
Changes in operating assets and liabilities, net:
Accounts, medical and management fee receivable(s)		(1,544	)		(278	)
Notes receivable – related party		(12	)		(13	)
Inventories		64			(102	)
Prepaid expenses and other current assets		340			(547	)
Other assets		(378	)		(11	)
Accounts payable		1,218			(774	)
Other current liabilities		(2,078	)		(2,625	)
Finance lease liabilities		(41	)		(37	)
Customer deposits		(3	)		(98	)
Other liabilities		4			3
Net cash provided by operating activities		1,689			1,657
Cash Flows from Investing Activities:
Purchases of property and equipment		(1,866	)		(1,805	)
Cost of non-compete contract		(500	)		—
Proceeds from short-term investments		(1	)		—
Cost of patents		—			(13	)
Net cash used in investing activities		(2,367	)		(1,818	)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations		—			(26	)
Purchase of treasury stock		—			(415	)
Distributions to noncontrolling interests		(1,380	)		(1,546	)
Net cash used in financing activities		(1,380	)		(1,987	)
Net (Decrease) in Cash and Cash Equivalents		(2,058	)		(2,148	)
Cash and Cash Equivalents - Beginning of Period		56,334			56,341
Cash and Cash Equivalents - End of Period	$	54,276		$	54,193

See accompanying notes to the unaudited condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

FONAR Corporation (the “Company” or “FONAR”) is a Delaware corporation, which was incorporated on July 17, 1978. FONAR is engaged in the research, development, production and marketing of medical scanning equipment, which uses principles of Magnetic Resonance Imaging (“MRI”) for the detection and diagnosis of human diseases. In addition to the direct sale of MRI equipment, revenue is also generated from our installed-base of customers through our service and upgrade programs.

FONAR, through its wholly-owned subsidiary Health Management Corporation of America (“HMCA”), provides comprehensive management services to diagnostic imaging facilities. The services provided by the Company include development, administration, leasing of office space, facilities and medical equipment, provision of supplies, staffing and supervision of non-medical personnel, legal services, accounting, billing and collection and the development and implementation of practice growth and marketing strategies.

On July 1, 2015, the Company reorganized the segment of our business dedicated to the management of diagnostic imaging centers. The reorganization integrated the operations of Health Management Corporation of America and Health Diagnostics Management (“HDM”). Imperial Management Services, LLC contributed all of its assets (which were utilized in the business of Health Management Corporation of America) to HDM and received a 24.2% interest in HDM. Health Management Corporation of America retained a direct ownership interest of 45.8% in HDM, and the original investors in HDM retained a 30.0% ownership interest in the newly expanded HDM. During the fiscal year ended June 30, 2025, the Company sold non-controlling interests to a minority shareholder for $132. Currently, the Company has a direct ownership interest of 70.63% and the investors have a 29.37% ownership interest. The entire management of diagnostic imaging centers business segment is now being conducted by HDM, operating under the name “Health Management Company of America”.

Proposal to Acquire All Outstanding Stock of the Company

On July 7, 2025, the Board of Directors received a non-binding proposal from a group led by Timothy Damadian, the Company’s Chief Executive Officer, and Luciano Bonanni, the Company’s Chief Operating Officer, pursuant to which proposal the group would acquire all of the outstanding common stock and other securities of the Company not currently owned by the members of the group. Members of the group have voting control of the Company’s equity securities and the group advised the Company that it was unwilling to support any alternative transaction. As proposed, the transaction, if completed, would result in the Company no longer being a publicly held company, and its Common Stock would be de-listed from the NASDAQ Stock Market. The Board of Directors has established a Special Committee of independent and disinterested directors to consider the proposal and negotiate on behalf of the Company and its stockholders. The Special Committee has retained Marshall and Stevens, Inc. to act as its financial advisor. Meister, Seelig & Fein PPLC is serving as legal counsel to the Special Committee. The group and the Special Committee are engaged in negotiations related to the proposed going private transaction. No definitive agreements or terms have been executed by the parties and there is no assurance that the transaction will be completed. Any definitive agreement and transaction will require approval by the Company’s common stock holders and will require the filing of definitive proxy materials in accordance with the SEC’s proxy rules to obtain such approval.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Basis of Presentation

These unaudited condensed consolidated financial statements for the three months ended September 30, 2025 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025, from which the accompanying condensed consolidated balance sheet at June 30, 2025 was derived. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the disclosure and reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company evaluates these estimates and judgements on an ongoing basis. The Company bases estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of operations for any interim period are not necessarily indicative of the results of operations for a full year.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Patient fee revenue

The Company’s revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients and annual management contracts with related and unrelated parties to which the Company provides comprehensive management services. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. The Company’s performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than the Company’s standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

The Company’s patient fee revenue, net of contractual allowances and discounts for the three months ended September 30, 2025 and 2024 are summarized in the following table:


	For the Three Months Ended September 30,
	2025		2024
Commercial Insurance/Managed Care	$	1,280	$	1,204
Medicare/Medicaid		285		261
Workers’ Compensation/Personal Injury		4,826		4,699
Other		1,181		1,323
Net Patient Fee Revenue	$	7,572	$	7,487

Medical Receivable

Medical receivables are due under fee-for-service contracts from third-party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. Medical receivables are recorded at net realizable value based on the estimated amounts the Company expects to receive from patients and third-party payers. The medical receivable is reduced by an allowance for contractual adjustments based on the historical experience with each payor class at each location.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Management and other fees revenue

HMCA generates management and other fees revenues (including management and other fees revenue from related parties) from providing comprehensive management services, including development, administration, accounting, billing and collection services, together with office space, medical equipment, supplies and non-medical personnel to its clients. Revenues are in the form of fees which are earned under annual management contracts with HMCA clients. Management and other fees revenue are recognized ratably over time as the services are provided throughout the term of the contract.

Revenue on sales contracts for scanners, included in “product sales” is recognized under the percentage-of-completion method in accordance with FASB ASC 606 “Revenue Recognition – Construction-Type and Production-Type Contracts”. The Company manufactures its scanners under specific contracts that provide for progress payments. Production and installation takes approximately three to six months.

Revenue on scanner service contracts is recognized on the straight-line method over the related contract period, usually one year.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC Topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the converted method in calculating diluted income per share for the three months ended September 30, 2025 and 2024.

Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2025 and 2024, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings per share (Continued)

Schedule of Earnings per share
	Three months ended September 30, 2025								Three months ended September 30, 2024
	Total		Common Stock		Class C Common Stock		Class A Preferred Stock		Total		Common Stock		Class C Common Stock		Class A Preferred Stock
Basic
Numerator:
Net income available to common stockholders	$	2,264	$	2,120	$	36	$	108	$	3,135	$	2.939	$	50	$	146
Denominator:
Weighted average shares outstanding		6,865		6,169		383		313		6,304		6,304		383		313
Basic income per common share	$	0.33	$	0.34	$	0.10	$	0.34	$	0.50	$	0.47	$	0.13	$	0.46

Diluted
Denominator:
Weighted average shares outstanding				6,168		383						6,304		383
Convertible Class C Stock				128		—						128		—
Total Denominator for diluted earnings per share				6,296		383						6,432		383
Diluted income per common share			$	0.34	$	0.10					$	0.46	$	0.13

Recent Accounting Standards or Updates Not Yet Adopted

Income Taxes

In December 2023, The Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (740): “Improvements to Income Tax Disclosures”, which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures. The ASU will be effective for our annual financial statements starting in fiscal 2026 and interim periods beginning in the first quarter of fiscal 2027, with early adoption permitted. We are currently evaluating the impact of this accounting standard, but do not expect it to have a material impact on our income tax disclosures.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Standards

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280)”, which is intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments require disclosure of significant segment expenses regularly provided to the chief operating decision maker (“CODM”) as well as other segment items, extended certain annual disclosures to interim periods, clarify the applicability to single reportable segment entities, permit more than one measure of profit or loss to be reported under certain conditions, and require disclosure of the title and position of the CODM. The effective date for public entities is for fiscal years beginning after December 15, 2023 and interim periods with fiscal years beginning after December 15, 2024. The Company adopted ASU during the year ended June 30, 2025 and it impacts only our disclosures with no impacts to our financial condition or results of operations.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” (Subtopic 220-40): Disaggregation of Income Statement Expenses”. This ASU requires disaggregation of certain income statement expense captions into specified categories to be disclosed within the notes to the condensed consolidated financial statements, but does not change the expense captions on the income statement. The amendments in this ASU are to be applied prospectively, although retrospective application is permitted, and is effective for annual financial statements starting in fiscal 2028 and interim periods starting in fiscal 2029, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2024-03 will have on our disclosures.

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of September 30, 2025 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2025 or 2024, and it does not believe that any of those standards will have a significant impact on our unaudited consolidated condensed financial statements at the time they become effective.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE

Receivables, net are comprised of the following at September 30, 2025 and June 30, 2025:


	September 30, 2025
	Gross Receivable		Allowance for credit losses		Net
Accounts receivable	$	5,406	$	260	$	5,146
Accounts receivable - related party	$	90	$	—	$	90
Medical receivable	$	24,486	$	—	$	24,486
Management and other fees receivable	$	58,585	$	13,866	$	44,719
Management and other fees receivable from related medical practices (“PC’s”)	$	17,693	$	7,666	$	10,027

	June 30, 2025
	Gross Receivable		Allowance for credit losses		Net
Accounts receivable	$	5,569	$	264	$	5,305
Medical receivable	$	24,490	$	—	$	24,490
Management and other fees receivable	$	57,697	$	14,296	$	43,401
Management and other fees receivable from related medical practices (“PC’s”)	$	16,885	$	7,137	$	9,748

The Company’s customers are concentrated in the healthcare industry.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)

Accounts Receivable

Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company has established a current expected credit loss (“CECL”) to address the risk that a portion of these fees will not be paid. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided.

The following tables presents information related to the allowance for credit losses that relate to accounts and management and other fees receivable:


Summary of Allowance For Credit Losses
Description	Balance June 30, 2025		Additions (Recovery)			Deductions			Balance Sept. 30, 2025
Accounts receivable	$	264	$	—		$	(4	)	$	260
Management and other fees receivable		14,296		(430	)		—			13,866
Management and other fees receivable - related medical practices		7,137		529			—			7,666

	Balance							Balance
Description	June 30, 2024		Additions (Recovery)		Deductions			June 30, 2025
Accounts receivable	$	166	$	107	$	(9	)	$	264
Management and other fees receivable		12,370		2,052		(126	)		14,296
Management and other fees receivable - related medical practices		6,110		1,027		—			7,137

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)

Long Term-Accounts Receivable

Long term-accounts receivable balances at September 30, 2025 and June 30, 2025 amounted to approximately $3,471 and $3,550, respectively. The Company will generate revenue from long-term, non-cancellable contracts to provide service and repair services. Future revenue to be recognized over the following four years as of September 30, 2025 is as follows:

Schedule of future revenue
2026	$	1,550
2027		1,012
2028		893
2029		227
Total	$	3,682

Medical Receivables

Medical receivables are due under fee-for-service contracts from third-party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. Medical receivables are recorded at net realizable value based on the estimated amounts the Company expects to receive from patients and third-party payors. The medical receivable is reduced by contractual adjustments based on the historical experience with each payor class at each location.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)

Management and Other Fees Receivable

Management fees receivable is related to management fees outstanding from the related and non-related centers under management agreements. The Company has established a CECL reserve to address the risk that a portion of the contractually obligated management fees receivable from the PCs may not be paid. The PCs may be limited in their ability to pay the full management fee receivable if they do not collect sufficient expected fees from third-party payers and patients. The Company’s management fees are collateralized, individually and collectively, by the assets of the PCs. The CECL reserve is determined based on the difference between the management fee receivable and the current amount of outstanding fees estimated to be collected by the PCs.

The Company’s considerations into the estimate of the PCs’ fee collection is based on a combination of factors. As each management agreement specifies the Company’s ultimate collateral for unpaid management fees are the patient fee receivables owned by each PC, the Company considers the historical loss rates to pools of receivables with similar risks characteristics, aging of the patient fee receivables, and the financial condition of each PC. In addition, the Company subjectively adjusts its estimated expected credit losses for current and forward-looking economic conditions which would include trends seen within the industry and newly enacted regulations. The Company also incorporates qualitative factors, such as changes in the nature and volume of receivables, regulatory changes, and other relevant factors. Specifically, insurance carriers covering automobile no-fault and workers’ compensation claims incur longer payment cycles, rigorous informational requirements and certain other disallowed claims.

The Company combines an objective and subjective loss-rate methodology to estimate expected credit losses based on the collateral owned by each PC. This involves objectively using historical loss rates to pools of receivables with similar risk characteristics (i.e., various insurance payors) and then subjectively adjusting for current and forward-looking economic conditions which would include trends seen within the industry and newly enacted regulations. The Company also incorporates qualitative factors, such as changes in the nature and volume of the receivables, regulatory changes, and other relevant factors. Additional Company managed entities also operate under a guaranty agreement, pursuant to which management fees are payable to the Company.

For LLCs owned by the Company, approximately 63.7% and 68.3% of net revenues were derived from no-fault and personal injury protection for the three months ended September 30, 2025 and 2024, respectively.

Net revenues from management and other fees charged to the related PCs accounted for approximately 11% and 12.0% of the consolidated net revenues for the three months ended September 30, 2025 and 2024, respectively.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 4 – OPERATING AND FINANCING LEASES

The Company accounts for its various operating leases in accordance with Accounting Standards Codification (ASC) 842 – “Leases”, as updated by ASU 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured at present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. The Company most common initial term varies in length from 2 to 19 years. Including renewal options negotiated with the landlord, we have a total span of 2 to 16 years at the facilities we lease. The Company reviewed its contracts with vendors and customers, determining that its right-of-use lease assets consisted of only office space operating leases. In determining the right-of-use lease assets and liabilities, the Company did recognize lease extension options which the Company feels would be reasonably exercised. Our incremental borrowing rate (“IBR”) used to discount the stream of operating lease payments is closely related to the interest rates available to the Company.

A reconciliation of operating and financing lease payments undiscounted cash flows to lease liabilities recognized as of September 30, 2025 is as follows:


12 Months Ending September 30,		Operating Lease Payments			Financing Lease Payments
	2026	$	6,118		$	244
	2027		6,004			102
	2028		5,762			—
	2029		5,464			—
	2030		5,226			—
	Thereafter		25,570			—
	Present value discount		(14,558	)		—
	Total lease liability	$	39,586		$	346

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 4 – OPERATING AND FINANCING LEASES (CONTINUED)

Weighted Average Remaining Lease Term


	For the three months ended Sept. 30,
	2025			2024
Operating leases - years		10.0			10.8
Finance lease - years		1.3			2.3
Weighted Average Discount Rate
Operating leases		6.6	%		6.5	%
Finance lease		3.6	%		3.6	%

The components of lease expense were as follows:

Schedule of components of lease expense
Components of lease expense
	For the three months ended Sept. 30,
	2025		2024
Operating lease cost	$	1,583	$	1,503
Finance lease cost:
Depreciation of leased equipment	$	77	$	50
Interest on lease liabilities		—		4
Total finance lease cost	$	77	$	54

Supplemental cash flow information related to leases was as follows:


Supplemental cash flow information related to leases
	For the three months ended Sept. 30,
Cash paid for amounts included in the measurement of lease liabilities:	2025		2024
Operating cash flows from operating leases	$	1,492	$	1,138
Financing cash flows from financing leases	$	61	$	41
Right-of-use and equipment assets obtained in exchange for lease obligations:
Operating leases	$	1,901	$	359

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment, at cost, less accumulated depreciation and amortization included in the accompanying condensed consolidated balance sheets is comprised of:

Schedule of Property and equipment
	September 30, 2025		June 30, 2025
Diagnostic equipment	$	36,999	$	35,277
Research, development and demonstration equipment		6,499		6,491
Machinery and equipment		2,128		2,128
Furniture and fixtures		3,760		3,756
Leasehold improvements		17,839		17,707
Building		940		940
		68,165		66,299
Less: Accumulated depreciation and amortization		48,716		47,767
	$	19,449	$	18,532

Depreciation of property and equipment for the three months ended September 30, 2025 and 2024 was $949 and $1,063, respectively.

NOTE 6 - INVENTORIES

Inventories included in the accompanying condensed consolidated balance sheets consist of the following:

Schedule of inventories
	September 30, 2025		June 30, 2025
Purchased parts, components and supplies	$	2,573	$	2,631
Work-in-process		175		182
Total Inventories	$	2,748	$	2,813

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2025 and 2024

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

(UNAUDITED)

NOTE 7 – OTHER INTANGIBLE ASSETS

Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following:


	Weighted average useful lives		Gross carrying amount – September 30, 2025		Accumulated amortization – September 30, 2025			Net carrying amount – September 30, 2025
Capitalized software development costs		5 years	$	7,005	$	(7,005	)	$	—
Software License		3 years		1,260		(850	)		410
Patents and copy rights		15 years		5,229		(4,290	)		939
Non-compete		2-7 years		4,650		(4,212	)		438
Customer relationships		20 years		3,900		(2,436	)		1,464
Total			$	22,044	$	(18,793	)	$	3,251

Weighted average useful lives

Gross carrying amount – June 30, 2025

Accumulated amortization – June 30, 2025

Net carrying amount – June 30, 2025

Capitalized software development costs

5 years

SEC Form 10-Q filed by Fonar Corporation