woraput Introduction I recently created a screener on SA for microcap stocks trading below 6x EV/EBITDA and one name that caught my attention was FONAR Corp. (NASDAQ:FONR). The company has a strong balance sheet and I think its Q2 FY24 financial results were strong as TTM EBITDA reached $22.8 million. Yet, its market capitalization has slumped by over 20% in the past month and the EV/EBITDA ratio stands at just 4.2x as of the time of writing. In my view, Fonar is starting to look oversold here, and my ratin ...

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 DECEMBER 31, 2023 Commission file number 0-10248 FONAR CORPORATION (Exact name of registrant as specified in its charter) | DELAWARE | 11-2464137 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 110 Marcus Drive Melville, New York | 11747 | | Addre ...

MFORM 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 SEPTEMBER 30, 2023 Commission file number 000-10248 FONAR CORPORATION (Exact name of registrant as specified in its charter) | DELAWARE | 11-2464137 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 110 Marcus Drive Melville, New York | 11747 | | ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) FONAR Corporation operates in medical equipment manufacturing (Upright® MRI) and diagnostic services management (HMCA) - The company's business is divided into two main segments: **Medical Equipment (FONAR)** and **Physician Management and Diagnostic Services (HMCA)**[11](index=11&type=chunk) - FONAR's primary product is the **Upright® Multi-Position™ MRI scanner**, enabling scans in various weight-bearing postures[13](index=13&type=chunk)[18](index=18&type=chunk) - HMCA manages **41 MRI scanners** across New York and Florida, with revenues increasing to **$90.4 million** in fiscal 2023[97](index=97&type=chunk) [Medical Equipment Segment](index=5&type=section&id=Medical%20Equipment%20Segment) The Medical Equipment segment focuses on the **Upright® MRI**, a unique weight-bearing scanner, with **$7.5 million** in service revenue - The primary product is the **Upright® MRI**, a whole-body scanner capable of scanning patients in various weight-bearing postures[18](index=18&type=chunk)[20](index=20&type=chunk) Medical Equipment Segment Financials (Fiscal Years 2023 vs. 2022) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Service & Maintenance Revenue | $7.5 million | $7.7 million | | R&D Expenditures | $1,567,749 | $1,494,181 | | Order Backlog (as of Sept) | $608,000 | $844,000 | - As of June 30, 2023, FONAR holds **225 issued patents** with 8 pending, including two new patents issued in fiscal 2023[48](index=48&type=chunk) - The company's MRI scanners are regulated by the **FDA as Class II medical devices**, requiring compliance with QSR and MDR regulations[60](index=60&type=chunk)[61](index=61&type=chunk) [Physician and Diagnostic Services Management Business (HMCA)](index=16&type=section&id=Physician%20and%20Diagnostic%20Services%20Management%20Business) HMCA provides non-medical management services to **41 diagnostic imaging facilities**, generating **$90.4 million** in fiscal 2023 revenue HMCA Segment Revenue (Fiscal Years 2023 vs. 2022) | Revenue Source | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Total HMCA Revenue | $90.4 million | $89.4 million | | Patient Fees (6 FL facilities) | $29,793,993 | $29,582,238 | | Aggregate Monthly Management Fees | $4,860,732 | $4,865,443 | - HMCA's client receipts are heavily reliant on **no-fault insurance (58.4%)** and **workers' compensation programs (8.6%)**[158](index=158&type=chunk) - The business is subject to significant government regulation, including the **federal Stark Law**, **Anti-kickback statutes**, and **HIPAA**[138](index=138&type=chunk)[139](index=139&type=chunk)[145](index=145&type=chunk) - As of September 12, 2023, FONAR and HMCA had approximately **561 employees**[164](index=164&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from reduced reimbursement rates, inflation, competition, and changes in Florida's insurance laws - Reduced reimbursement rates from Medicare and private insurers, coupled with inflation, negatively impact profitability and MRI scanner demand[166](index=166&type=chunk) - The company faces strong competition from larger scanner manufacturers and local hospitals in the diagnostic services market[168](index=168&type=chunk) - The business is heavily dependent on patient referrals from unaffiliated physicians, and a reduction would significantly harm revenue[168](index=168&type=chunk) - Recent changes to Florida's insurance laws (House Bill 837) are expected to negatively impact reimbursement rates and increase uncollectible billings[172](index=172&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) FONAR and HMCA lease approximately **78,000 square feet** for their principal offices in Melville, NY, with leases for other facilities - The company leases its main office and plant space of **78,000 square feet** in Melville, NY, with the lease extending to November 2026[175](index=175&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material legal proceedings currently threatened or pending against it - There are no material legal proceedings threatened or pending against the Company[176](index=176&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not Applicable[177](index=177&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) FONAR's Common Stock trades on NASDAQ (FONR), with a policy of retaining earnings for business development and no current dividends - The Company's Common Stock is traded on the **NASDAQ Capital Market (symbol: FONR)**[179](index=179&type=chunk) - The company has a policy of retaining earnings for business expansion and does not currently pay dividends[180](index=180&type=chunk) Stock Performance Comparison (Investment of $100) | Date | FONR Common Stock | Nasdaq Composite | Nasdaq Health | Nasdaq Equipment | | :--- | :--- | :--- | :--- | :--- | | June 28, 2019 | $100 | $100 | $100 | $100 | | June 30, 2020 | $99 | $127 | $114 | $106 | | June 30, 2021 | $82 | $184 | $58 | $54 | | June 30, 2022 | $71 | $141 | $193 | $129 | | June 30, 2023 | $79 | $178 | $185 | $145 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2023, net income decreased to **$12.1 million** despite a slight revenue increase to **$98.6 million**, driven by higher costs Consolidated Results of Operations (Fiscal Years 2023 vs. 2022) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Total Revenues | $98.6 million | $97.6 million | | Net Income | $12.1 million | $17.2 million | | Operating Income | $14.8 million | $22.0 million | - Selling, general and administrative (SG&A) expenses increased by **25.0%** to **$29.4 million** in fiscal 2023, primarily due to higher reserves on receivables[218](index=218&type=chunk) - Cash and cash equivalents increased by **5.2%** to **$51.3 million** at June 30, 2023, with **$14.5 million** provided by operating activities[230](index=230&type=chunk)[231](index=231&type=chunk) - Under its stock repurchase plan, the company repurchased **103,148 shares** for **$1.8 million** during fiscal 2023[244](index=244&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has no investments in marketable securities or foreign currencies, limiting market risk as all business is in U.S. dollars - The Company does not hold investments in marketable securities or foreign currencies and transacts all business in United States dollars, minimizing market risk[247](index=247&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Consolidated financial statements for fiscal 2023 and 2022 are presented with an unqualified auditor opinion, showing **$200.6 million** in total assets [Report of Independent Registered Public Accounting Firm](index=40&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Marcum LLP issued an unqualified opinion on the financial statements, highlighting critical audit matters for accounts receivable reserves - The auditor, Marcum LLP, provided an **unqualified opinion** on the financial statements, indicating fair presentation in conformity with U.S. GAAP[249](index=249&type=chunk) - Critical Audit Matters identified were reserves for **Medical Accounts Receivable** and **Management Fee Accounts Receivable**, due to complex judgment in estimating net realizable value[255](index=255&type=chunk)[258](index=258&type=chunk) [Consolidated Financial Statements](index=43&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets of **$200.6 million** and stockholders' equity of **$150.8 million** as of June 30, 2023 Consolidated Balance Sheet Highlights (as of June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Current Assets | $125.7 million | $118.7 million | | Total Assets | $200.6 million | $199.3 million | | Total Current Liabilities | $15.6 million | $16.7 million | | Total Liabilities | $49.8 million | $53.1 million | | Total Stockholders' Equity | $150.8 million | $146.2 million | Consolidated Income Statement Highlights (for the year ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues – Net | $98,645,101 | $97,592,145 | | Income from Operations | $14,789,262 | $22,007,182 | | Net Income | $12,126,516 | $17,234,388 | | Diluted Net Income Per Common Share | $1.32 | $1.75 | Consolidated Cash Flow Highlights (for the year ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $14,467,130 | $15,301,360 | | Net Cash Used in Investing Activities | ($4,338,128) | ($5,179,323) | | Net Cash Used in Financing Activities | ($7,572,272) | ($5,859,471) | | Net Increase in Cash | $2,556,730 | $4,262,566 | [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment performance, and financial results, highlighting the **diagnostic management segment's $90.4 million** revenue - The company's revenue recognition for scanner sales uses the **percentage-of-completion method**, while service and management fee revenues are recognized straight-line or by contract[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Under a stock repurchase plan, the company purchased **103,148 shares** for **$1,759,457** in fiscal 2023[370](index=370&type=chunk)[371](index=371&type=chunk) Segment Financial Information (Fiscal 2023) | Segment | Net Revenues (External) | (Loss) Income from Operations | | :--- | :--- | :--- | | Manufacturing and Servicing | $8,260,711 | ($5,875,126) | | Management of Diagnostic Imaging | $90,384,390 | $20,664,388 | - As of June 30, 2023, the company has federal **net operating loss (NOL) carryforwards** of approximately **$9.1 million** available, expiring from 2025[384](index=384&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2023 - The Principal Executive Officer and Acting Principal Financial Officer concluded that disclosure controls and procedures were effective as of fiscal year-end[426](index=426&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2023, based on the **COSO-2013 framework**[429](index=429&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=82&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's leadership, including key executive officers and a board of directors with a majority of independent members - The key executive officers are **Timothy R. Damadian** (Chairman, President, CEO, Treasurer) and **Luciano B. Bonanni** (EVP, COO, acting PFO)[439](index=439&type=chunk)[440](index=440&type=chunk) - A majority of the board of directors is independent, including Ronald G. Lehman, Richard E. Turk, and Jessica Maher[435](index=435&type=chunk) [Executive Compensation](index=86&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for fiscal 2023 included **$152,900** for CEO Timothy R. Damadian and **$449,216** for COO Luciano Bonanni Summary Compensation Table (Fiscal 2023) | Name and Position | Salary ($) | Cash Bonuses ($) | Total Compensation ($) | | :--- | :--- | :--- | :--- | | Timothy R. Damadian (President, CEO) | 0 | 152,900 | 152,900 | | Raymond V. Damadian (Former Chairman) | 23,553 | 305,800 | 329,353 | | Luciano Bonanni (COO, acting PFO) | 143,416 | 305,800 | 449,216 | - There were no outstanding unexercised options or stock awards for the named executive officers at the end of fiscal year 2023[458](index=458&type=chunk) [Security Ownership of Certain Beneficial Owners and Management](index=88&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management) Timothy R. Damadian, as trustee, beneficially owns **99.98%** of the Class C Common Stock, holding significant voting power - Beneficial owners with over **5%** of Common Stock include **Kayne Anderson (9.75%)**, **Dimensional Fund Advisors (6.35%)**, and **The Vanguard Group (5.80%)**[464](index=464&type=chunk) - Timothy R. Damadian, as trustee, holds **99.98%** of the Class C Common Stock, which has **25 votes per share**[464](index=464&type=chunk)[364](index=364&type=chunk) - All officers and directors as a group beneficially own **1.50%** of the Common Stock and **99.98%** of the Class C Stock[466](index=466&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=90&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses related-party transactions, primarily involving CEO Timothy Damadian, including **$11.9 million** in net revenues from managed facilities - Three imaging facilities owned by CEO Timothy Damadian are managed by HMCA, paying approximately **$11.9 million** in net revenues in fiscal 2023[471](index=471&type=chunk)[472](index=472&type=chunk) - The company provided IT services to a billing company partially owned by CEO Timothy Damadian, billing **$191,072** in fiscal 2023[474](index=474&type=chunk) [Principal Accountant Fees and Services](index=91&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to independent auditor Marcum LLP, with audit fees of **$374,000** in fiscal 2023 Audit Fees Billed by Marcum LLP | Fiscal Year | Audit Fees | | :--- | :--- | | 2023 | $374,000 | | 2022 | $379,000 | - No fees were billed by Marcum LLP for audit-related, tax, or other services in fiscal years 2023 or 2022[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) Part IV [Exhibits, Financial Statement Schedules, and Reports on Form 8-K](index=92&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules%2C%20and%20Reports%20on%20Form%208-K) This section lists financial statements, schedules, and exhibits filed as part of the 10-K report, including corporate documents - The section lists all financial statements and schedules included in the report, found in Part II, Item 8[486](index=486&type=chunk) - Three Form 8-K reports were filed during the fiscal year, covering results of operations, director changes, and shareholder meeting results[488](index=488&type=chunk) - A list of exhibits is provided, including corporate governance documents, material contracts, and required CEO/CFO certifications[489](index=489&type=chunk)[501](index=501&type=chunk)[504](index=504&type=chunk)

FORM 10-Q SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended MARCH 31, 2023 Commission file number 0-10248 FONAR CORPORATION (Exact name of registrant as specified in its charter) | DELAWARE | 11-2464137 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 110 Marcus Drive Melville, New York | 11747 | | Address of principal executive offices) | (Zip Code) | Registrant's telephone number, including area code: (631) 69 ...

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 DECEMBER 31, 2022 Commission file number 0-10248 FONAR CORPORATION (Exact name of registrant as specified in its charter) | DELAWARE | | 11-2464137 | | --- | --- | --- | | (State or jurisdiction of | other | (I.R.S. Employer | | incorporation organization) | or | Identification No.) | | 110 Marcus Melville, New York | Drive | ...

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 SEPTEMBER 30, 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 | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 110 Marcus Drive Melville, New York | 11747 | | Ad ...

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2022 OR (Exact name of registrant as specified in its charter) DELAWARE 11-2464137 110 Marcus Drive, Melville, New York 11747 (Address of principal executive offices) (Zip Code) (State of incorporation) (IRS Employer Identification Number) (631) 694-2929 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITI ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) FONAR Corporation's unaudited condensed consolidated financial statements for March 31, 2022, detail asset growth, revenue increases, and positive net income [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets and stockholders' equity increased, while total liabilities decreased | Balance Sheet Items | March 31, 2022 ($ thousands) | June 30, 2021 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 114,334 | 108,583 | | **Total Assets** | **195,649** | **189,506** | | **Total Current Liabilities** | 14,166 | 20,049 | | **Total Liabilities** | **51,375** | **54,136** | | **Total Stockholders' Equity** | **144,274** | **135,370** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the nine months ended March 31, 2022, total revenues and net income increased, with mixed results for the third quarter | Metric (in thousands, except EPS) | Nine Months Ended Mar 31, 2022 | Nine Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Total Revenues – Net | $ 72,780 | $ 65,234 | | Income From Operations | $ 17,863 | $ 13,254 | | Net Income – Attributable to FONAR | $ 10,198 | $ 9,487 | | Diluted EPS (Common) | $ 1.43 | $ 1.35 | | Metric (in thousands, except EPS) | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Total Revenues – Net | $ 24,571 | $ 23,090 | | Income From Operations | $ 5,638 | $ 4,122 | | Net Income – Attributable to FONAR | $ 2,291 | $ 3,868 | | Diluted EPS (Common) | $ 0.32 | $ 0.54 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2022, operating cash flow decreased, with net cash increasing due to investing and financing activities | Cash Flow Activity (in thousands) | Nine Months Ended Mar 31, 2022 | Nine Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 10,117 | $ 13,140 | | Net cash used in investing activities | $ (4,413) | $ (4,173) | | Net cash used in financing activities | $ (4,154) | $ (4,960) | | **Net Increase in Cash** | **$ 1,550** | **$ 4,007** | | **Cash and Cash Equivalents - End of Period** | **$ 46,010** | **$ 40,809** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business segments, accounting policies, COVID-19 impact, and financial specifics including segment performance and a recent acquisition - The company's business is organized into two main segments: manufacturing and servicing of medical equipment, and the management of diagnostic imaging centers, with the latter being the **larger segment**[34](index=34&type=chunk)[70](index=70&type=chunk) - The COVID-19 pandemic has impacted the company through workforce disruptions and fluctuating scan volumes, but positive cash flows and low debt are expected to sustain operations[36](index=36&type=chunk) - On March 29, 2021, the company acquired certain assets of Rockland Management Group for a total purchase consideration of **$1.123 million**, recorded as a business combination[90](index=90&type=chunk) | Segment Performance (Nine Months Ended Mar 31, 2022) | Medical Equipment ($ thousands) | Management of Diagnostic Imaging Centers ($ thousands) | | :--- | :--- | :--- | | Net revenues from external customers | 6,284 | 66,496 | | (Loss) Income from operations | (1,054) | 18,917 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results for the periods ended March 31, 2022, highlighting revenue growth from diagnostic services, COVID-19 operational impacts, and strong liquidity - For the nine months ended March 31, 2022, revenues increased **11.6% to $72.8 million**, and operating income grew to **$17.9 million** from **$13.3 million** year-over-year[94](index=94&type=chunk)[97](index=97&type=chunk) - The Diagnostic Facilities Management Services (HMCA) segment is the primary growth driver, with revenues increasing **12.9% to $66.5 million** for the nine-month period, accounting for **91.4% of total revenues**[113](index=113&type=chunk)[128](index=128&type=chunk) - Despite challenges from COVID-19 variants and vaccine mandates affecting staffing, scan volumes increased from approximately **131,000 to 141,000** in the first nine months of fiscal 2022 compared to the prior year[103](index=103&type=chunk)[118](index=118&type=chunk) - The company maintains a strong liquidity position with **$46.0 million in cash and cash equivalents** and working capital of **$100.2 million** as of March 31, 2022[151](index=151&type=chunk)[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports minimal market risk exposure, with funds in liquid accounts and all transactions in U.S. dollars, mitigating foreign currency risk - The company's funds are maintained in liquid accounts, and it does not invest in fixed-rate instruments[171](index=171&type=chunk) - All revenue, expense, and capital purchasing activities are transacted in United States dollars, mitigating foreign currency risk[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[172](index=172&type=chunk) - No changes were made to the internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[173](index=173&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material changes in litigation since its previous annual and quarterly reports - There were no material changes in litigation from that reported in the company's previous annual and quarterly reports[174](index=174&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details significant business risks, including reduced reimbursement rates, intense competition, referral dependence, COVID-19 impacts, and cybersecurity threats - **Reduced Reimbursement Rates:** Lower rates from Medicare and private insurers negatively affect revenues for both the scanning center business and demand for MRI scanners[178](index=178&type=chunk)[179](index=179&type=chunk) - **Competition:** The company faces significant competition from larger, better-resourced scanner manufacturers (e.g., GE, Siemens) and from other diagnostic imaging service providers[180](index=180&type=chunk)[183](index=183&type=chunk) - **Dependence on Referrals:** The diagnostic imaging business relies heavily on patient referrals from unaffiliated physicians, and a reduction in these referrals could significantly harm revenue[181](index=181&type=chunk) - **COVID-19:** The pandemic continues to pose a risk, with new variants and vaccine mandates creating staffing shortages and affecting the ability to operate at full capacity[192](index=192&type=chunk) - **Information Security:** The company must comply with HIPAA and other privacy laws and faces increasing risks from cybersecurity attacks targeting protected health information[188](index=188&type=chunk)[191](index=191&type=chunk) [Other Items (2, 3, 4, 5, 6)](index=39&type=section&id=Items%202-6) The company reports no unregistered equity sales, no defaults on senior securities, no other material information, and notes mine safety disclosures are not applicable - The company reported 'None' for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), and Item 5 (Other Information)[194](index=194&type=chunk) - Item 4 (Mine Safety Disclosure) was marked as 'Not Applicable'[194](index=194&type=chunk)

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 DECEMBER 31, 2021 Commission file number 0-10248 FONAR CORPORATION (Exact name of registrant as specified in its charter) | DELAWARE | | | | | 11-2464137 | | --- | --- | --- | --- | --- | --- | | (State or jurisdiction of | other | | | (I.R.S. | Employer | | incorporation or organization) | | | | Identification | No.) | | 110 ...