FONAR Corp. Files Q3 2024 10-Q

TL;DR

**FONAR files Q3 10-Q. Financials out.**

AI Summary

FONAR Corp. filed its 10-Q for the quarter ended September 30, 2024, reporting on its financial performance. The filing details the company's operations in electromedical and electrotherapeutic apparatus. Specific financial figures and operational details for the period are presented within the report.

Why It Matters

This filing provides investors and analysts with the latest financial health and operational performance of FONAR Corp., a key player in the medical device sector.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Players & Entities

• FONAR CORP (company) — Filer
• 20240930 (date) — Period of Report
• 20241112 (date) — Filing Date
• 3845 (number) — Standard Industrial Classification Code

FAQ

Filing Documents

• fonar_10-q.htm (10-Q) — 593KB
• fonar_exhibit-31.htm (EX-31) — 23KB
• fonar_exhibit-32.htm (EX-32) — 9KB
• fonar_logo.jpg (GRAPHIC) — 14KB
• 0001731122-24-001763.txt ( ) — 4026KB
• fonr-20240930.xsd (EX-101.SCH) — 35KB
• fonr-20240930_cal.xml (EX-101.CAL) — 66KB
• fonr-20240930_def.xml (EX-101.DEF) — 163KB
• fonr-20240930_lab.xml (EX-101.LAB) — 293KB
• fonr-20240930_pre.xml (EX-101.PRE) — 242KB
• fonar_10-q_htm.xml (XML) — 492KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION PAGE

Financial Statements

Item 1. Financial Statements Condensed Consolidated Balance Sheets – as of September 30, 2024 (Unaudited) and June 30, 2024 4 Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2024 and September 30, 2023 (Unaudited) 7 Condensed Consolidated Statements of Changes in Equity for the Three Months Ended September 30, 2024 and September 30, 2023 (Unaudited) 8 Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and September 30, 2023 (Unaudited) 9 Notes to Condensed Consolidated Financial Statements (Unaudited) 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 29

Controls and Procedures

Item 4. Controls and Procedures 29

- OTHER INFORMATION

PART II - OTHER INFORMATION 29

Legal Proceedings

Item 1. Legal Proceedings 29

Risk Factors

Item 1A. Risk Factors 30

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 I tem 3. Defaults Upon Senior Securities 32

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 32

Other Information

Item 5. Other Information 32

Exhibits

Item 6. Exhibits 33

Signatures

Signatures 33 Page 3 FONAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts and shares in thousands, except per share amounts) (UNAUDITED) ASSETS September 30, 2024 (Unaudited) June 30, 2024 Current Assets: Cash and cash equivalents $ 54,193 $ 56,341 Short-term investments 136 136 Accounts receivable – net 3,873 4,035 Accounts receivable - related party 90 — Medical receivable – net 23,069 23,992 Management and other fees receivable – net 43,569 41,954 Management and other fees receivable – related medical practices – net 9,522 9,865 Inventories 2,817 2,715 Prepaid expenses and other current assets 1,833 1,286 Total Current Assets 139,102 140,324 Accounts receivable – long term 856 830 Deferred income tax asset 6,357 7,223 Property and equipment – net 19,541 18,709 Note receivable – related party 594 581 Right-of-use-asset – operating leases 37,803 38,428 Right-of-use-asset – financing lease 481 531 Goodwill 4,269 4,269 Other intangible assets – net 2,794 2,870 Other assets 493 481 Total Assets $ 212,290 $ 214,246 See accompanying notes to the unaudited condensed consolidated

financial statements

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 September 30, 2024 (Unaudited) June 30, 2024 Current Liabilities: Current portion of long-term debt $ 48 $ 47 Accounts payable 1,082 1,856 Other current liabilities 5,348 7,941 Unearned revenue on service contracts 3,758 3,870 Unearned revenue on service contracts – related party 82 — Operating lease liabilities - current portion 3,534 3,474 Financing lease liability - current portion 227 226 Customer deposits 346 443 Total Current Liabilities 14,425 17,857 Long-Term Liabilities: Unearned revenue on service contracts 1,173 1,175 Deferred income tax liability 371 371 Due to related party medical practices 93 93 Operating lease liabilities – net of current portion 36,970 37,468 Financing lease liability – net of current portion 356 395 Long-term debt, less current portion 40 67 Other liabilities 35 32 Total Long-Term Liabilities 39,038 39,601 Total Liabilities 53,463 57,458 See accompanying notes to the unaudited condensed consolidated

financial statements

financial statements. Page 5 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: September 30, 2024 (Unaudited) June 30, 2024 Class A non-voting preferred stock $ .0001 par value; 453 shares authorized at September 30, 2024 and June 30, 2024, 313 issued and outstanding at September 30, 2024 and June 30, 2024 $ — $ — Preferred stock $ .001 par value; 567 shares authorized at September 30, 2024 and June 30, 2024, issued and outstanding – none — — Common Stock $ .0001 par value; 8,500 shares authorized at September 30, 2024 and June 30, 2024, 6,373 issued at September 30, 2024 and June 30, 2024, respectively, 6,304 and 6,328 outstanding at September 30, 2024 and June 30, 2024 respectively 1 1 Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at September 30, 2024 and June 30, 2024; . 146 issued and outstanding at September 30, 2024 and June 30, 2024 — — Class C Common Stock (25 votes per share) $ .0001 par value; 567 shares authorized at September 30, 2024 and June 30, 2024, 383 issued and outstanding at September 30, 2024 and June 30, 2024 — — Paid-in capital in excess of par value 180,608 180,608 Accumulated deficit ( 10,489 ) ( 13,624 ) Treasury stock, at cost – 69 shares of common stock at September 30, 2024 and 45 shares of common stock at June 30, 2024 ( 1,432 ) ( 1,017 ) Total Fonar Corporation's Stockholders' Equity 168,688 165,968 Noncontrolling interests ( 9,861 ) ( 9,180 ) Total Stockholders' Equity 158,827 156,788 Total Liabilities and Stockholders' Equity $ 212,290 $ 214,246 See accompanying notes to the unaudited condensed consolidated

financial statements

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 THREE MONTHS ENDED SEPTEMBER 30, (Unaudited) REVENUES 2024 2023 Patient fee revenue – net of contractual allowances and discounts $ 7,487 $ 8,676 Product sales 120 164 Service and repair fees 1,992 1,864 Service and repair fees - related parties 45 28 Management and other fees 12,329 12,119 Management and other fees - related medical practices 2,987 2,987 Total Revenues – Net 24,960 25,838 COSTS AND EXPENSES Costs related to patient fee revenue 4,646 4,427 Costs related to product sales 221 103 Costs related to service and repair fees 1,091 848 Costs related to service and repair fees - related parties 67 13 Costs related to management and other fees 7,319 7,024 Costs related to management and other fees – related medical practices 1,573 1,519 Research and development 307 467 Selling, general and administrative expenses 5,130 4,866 Total Costs and Expenses 20,354 19,267 INCOME FROM OPERATIONS 4,606 6,571 Other Income and (Expenses) Interest Expense ( 8 ) ( 48 ) Investment income – related party 13 — Investment Income 639 507 Other income ( 1 ) — Income Before Provision for Income Taxes and Noncontrolling Interests 5,249 7,030 Provision for Income Taxes ( 1,249 ) ( 1,670 ) Net Income 4,000 5,360 Net Income - Noncontrolling Interests ( 865 ) ( 1,254 ) Net Income – Attributable to FONAR $ 3,135 $ 4,106 Net Income Available to Common Stockholders $ 2,939 $ 3,855 Net Income Available to Class A Non-Voting Preferred Stockholders $ 146 $ 187 Net Income Available to Class C Common Stockholders $ 50 $ 64 Basic Net Income Per Common Share Available to Common Stockholders $ 0.47 $ 0.60 Diluted Net Income Per Common Share Available to Common Stockholders $

financial statements

financial statements. Page 8 FONAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts and shares in thousands, except per share amounts) (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, (Unaudited) 2024 2023 Cash Flows from Operating Activities: Net income $ 4,000 $ 5,360 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,063 1,195 Amortization of right-of-use assets 1,033 1,024 Recovery for credit losses ( 27 ) ( 68 ) Deferred tax expense 866 1,242 Changes in operating assets and liabilities, net: Accounts, medical and management fee receivable(s) ( 278 ) ( 2,837 ) Notes receivable — 5 Notes receivable – related party ( 13 ) — Inventories ( 102 ) ( 255 ) Prepaid expenses and other current assets ( 547 ) 293 Other assets ( 11 ) 29 Accounts payable ( 774 ) ( 539 ) Other current liabilities ( 2,625 ) ( 1,463 ) Operating lease liabilities ( 796 ) ( 1,322 ) Financing lease liabilities ( 37 ) ( 54 ) Customer deposits ( 98 ) 20 Other liabilities 3 ( 12 ) Net cash provided by operating activities 1,657 2,618 Cash Flows from Investing Activities: Purchases of property and equipment ( 1,805 ) ( 63 ) Cost of patents ( 13 ) ( 16 ) Net cash used in investing activities ( 1,818 ) ( 79 ) Cash Flows from Financing Activities: Repayment of borrowings and capital lease obligations ( 26 ) ( 11 ) Purchase of treasury stock ( 415 ) ( 714 ) Distributions to noncontrolling interests ( 1,546 ) ( 1,401 ) Net cash used in financing activities ( 1,987 ) ( 2,126 ) Net (Decrease) Increase in Cash and Cash Equivalents ( 2,148 ) 413 Cash and Cash Equivalents - Beginning of Period 56,341 51,280 Cash and Cash Equivalents - End of Period $ 54,193 $ 51,693 See accompanying notes to the unaudited condensed consolidated

financial statements

financial statements. Page 9 FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2024 and 2023 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Effective July 1, 2015, the Company restructured the corporate organization of the management of diagnostic imaging centers segment of our business. The reorganization was structured to more completely integrate the operations of Health Management Corporation of America and HDM. Imperial 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, 2022, the Company purchased non-controlling interests from the minority shareholders for $ 546,000 . Currently the Company has a direct ownership interest of 70.8 % and the investors' have a 29.2 % the name "Health Management Company of America". Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Oper

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