As filed with the Securities and Exchange Commission
On June 25,December 7, 2001
Registration No. _________
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FONAR CORPORATION
------------------------------------------------------------------------------- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 3845
(State or other jurisdiction of Primary Standard Industrial
incorporation or organization) Classification Code Number
11-2464137
(I.R.S. Employer Identification No.)
110 Marcus Drive
Melville, New York 11747
(631) 694-2929
------------------------------------------------------------------------------- -------------------------------------------------------------------------------
(Address, including zip code,
and telephone number of registrant's
principal executive offices)
Raymond V. Damadian, M.D.
FONAR CORPORATION
110 Marcus Drive
Melville, New York 11747
(631) 694-2929
------------------------------------------------------------------------------- -------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service) Please send copies of all communications to:
Henry T. Meyer, Esq.
FONAR Corporation
110 Marcus Drive
Melville, New York 11747
(631) 694-2929
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each Amount Proposed proposed Amount of
class of to be maximum maximum each class Amountregistration
securities to registered offering aggregate Amount of
of securities to be price offering registration
tofee
be registered registeredprice offering
per unit price
fee
- ----------------------------- ---------- -------- ------------------------ ------------
Common Stock Underlying
Debentures183,924 $1.40 $257,494 $ 61.54
(1) 6,940,499 Varies $4,500,000.00 $1,125.00
Common Stock
Underlying
Purchase
Warrants (2) 959,501 $1.801 $1,728,061.30 $432.02
Common Stock
Underlying 2,000,000 $1.61 $3,220,000.00 $805.00
Callable
Warrants (3)
Total 9,900,000 ----- $9,448,061.30 $2,362.02
1)Par value
$0.0001 per
share
- ------------- ---------- -------- ----------- ------------
(1) Pursuant to Rule 457, Subsection (i) and subsection (g)
2) Pursuant to Rule 457, Subsection (g)
3) Pursuant to Rule 457, Subsection (c); Specified date: June 19,December 5, 2001
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8 (a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8 (a),
may determine.
PROSPECTUS
9,900,000- ----------
183,924 Shares
FONAR CORPORATION
Common Stock
This is a prospectus will allow usfor the resale, from time to issuetime, of up to 183,924
shares of our common stock which has been issued to the ownersselling stockholder
listed in this prospectus, or by the pledgees or donees of our 4%
convertible debentures due June 30, 2002, purchase warrants and callable
warrants if the owners elect to exercise their options to convertselling
stockholder or exercise.
This prospectus will also allowby other transferees who may receive the owners to resell the shares. Since the
owners will be able to exercise their rights up to June 30, 2002 under the
debentures, up to May 24, 2006 under the purchase warrants and up to May 24,
2004 under the callable warrants, theshares of common stock
in transfers other than public sales. We will not receive any of the proceeds
from the sale of these shares.
The selling stockholder may sell the shares in open market transactions
from time to time at market prices through brokers, dealers or agents. See "PLAN
OF DISTRIBUTION" at page __ of this prospectus for a more detailed discussion of
the manner in which the shares may be issued over time. This
means
- - we will provide a prospectus supplement as required to update material
information contained in this prospectus; and
- - you should read this document and any prospectus supplement carefully
before you invest.
- - The conversion price for the debentures and the exercise price for the
purchase warrants are fixed. The proceeds we would receive if the owners
elect to buy the common stock are shown below. Neither we nor the owners
will have to pay any commissions on debenture conversions or warrant
exercises.
Maximum No. Per Share Maximum
Security of Shares Price Proceeds
----------- ----------- --------- ----------
Convertible 2,198,339 $2.047 $4,500,000
Debenture
Purchase 959,501 $1.801 $1,187,761
Warrant
The exercise price for the callable warrants will change at the beginning
of each calendar month and be equal to the average closing bid price of Fonar's
common stock for the prior calendar month. Assuming for the purpose of
illustration that the callable warrants are exercised at $1.66 per share, which
was the closing bid price for the common stock on June 15, 2001, we would
receive proceeds as shown below:
Maximum No. Per Share Maximum
Security of Shares Price Proceeds
----------- ----------- --------- ----------
Callable
Warrants 2,000,000 $1.66 $3,320,000
Even if the debentures are not converted because the market price for thesold.
Our common stock is less thantraded on the conversionNasdaq Small Cap Market under the symbol
"FONR." On December 5, 2001, the last reported sales price for the debentures, we would
still have the option of paying the debentures inour common stock
rather than cash.
In this case, however, the common stock would be valued at a much lower price,
at the lesser of a) 90% of the average of the four lowest closing bid prices
during the preceding calendar month or b) the average of the four lowest closing
bid prices during the preceding calendar month less $0.125. Assuming that we
were paying the $4.5 million principal in debentures today according to that
formula, the common stock required to be issued would be as follows:
Maximum No. Per Share Maximum
Security of Shares Price Proceeds
----------- ----------- --------- ----------
Convertible
Debenture 3,435,115 $1.31 $4,500,000
An investmentwas $1.40 per share.
Investing in our common stock is subject toinvolves a high leveldegree of risk and
yourisk. You should
consider carefully read and consider the risk factors described in this prospectus seebefore making a
decision to purchase our stock. See "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY at page __ of this
prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS THE COMMISSIONAPPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACYADEQUACY OR ADEQUACYACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
We expect to pay expensesThe Date of this Prospectus is December __, 2001.
You may rely only on the information contained in this offeringprospectus. We have
not authorized anyone to provide information or to make representations not
contained in this prospectus. This prospectus is neither an offer to sell nor a
solicitation of approximately $78,000.
On June 15, 2001,an offer to buy any securities other than those registered by
this prospectus, nor is it an offer to sell or a solicitation of an offer to buy
securities where an offer or solicitation would be unlawful. Neither the
closing price for our common stock (Symbol: FONR) was
$1.67 per share,delivery of this prospectus, nor any sale made under this prospectus, means that
the information contained in this prospectus is correct as reported by Nasdaq. Our common stock is traded onof any time after the Nasdaq
SmallCap Market.
The
date of this prospectus is June 25, 2001prospectus.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS...........................................................PROSPECTUS.........................................................
ABOUT FONAR.....................................................................FONAR CORPORATION........................................................
ABOUT THIS OFFERING............................................................
RISK FACTORS....................................................................FACTORS...................................................................
FORWARD-LOOKING STATEMENTS......................................................STATEMENTS.....................................................
USE OF PROCEEDS.................................................................PROCEEDS...............................................................
SELLING STOCKHOLDER...........................................................
PLAN OF DISTRIBUTION ....................................................................................................................
LEGAL MATTERS...................................................................
EXPERTS.........................................................................MATTERS.................................................................
MATERIAL CHANGES..............................................................
EXPERTS ......................................................................
INDEMNIFICATION ..............................................................................................................................
WHERE YOU CAN FIND MORE INFORMATION.............................................INFORMATION...........................................
INCORPORATION OF INFORMATION WE FILE WITH THE SEC.............................
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process.Commission. Under this shelf process, weregistration statement the
selling stockholder may sell from time to time issue any number of theup to 183,924 shares of our common
stock uponstock. These shares were issued to the conversionselling stockholder in consideration for
270,000 shares of the debentures or the exercise of the
warrants up to a total of 9,900,000 shares.
The number of shares being registered, by the terms of the agreements with
the Tail Wind Fund is two times the number of shares necessary to pay the
debentures at the lower of the market price,eMajix.com, Inc..
Periodically, as computed under the agreements or
conversion price, plus the number of shares underlying the warrants.
Periodically,required, we expect to provide a prospectus supplement
that will add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with the
additional information described below under the heading "Where You Can Find
More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement and the information incorporated by
reference, contains additional information about the common stock offered under
this prospectus. The registration statement can be read at the Securities and
Exchange Commission's web site or at the Securities and Exchange Commission
offices mentioned below under the heading "Where You Can Find More Information."
You should rely only on the information provided in this prospectus and in
any prospectus supplement, including the information incorporated by reference.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not constitute an
offer to sell any shares in any jurisdiction in which it is unlawful. The
information in this prospectus is current as of the date on the cover. You
should not assume that the information in this prospectus, or any supplement to
this prospectus, is accurate at any date other than the date indicated on the
cover page of these documents.
ABOUT FONAR CORPORATION
At Fonar we design, manufacture and market magnetic resonance imaging (MRI)
scanners. MRI scanners use magnetic fields to generate images of organs, bones
and tissue inside the human body. The MRI scanner uses a magnetic field which
causes the hydrogen atoms in tissue to align. When the magnetic force is
withdrawn, the atoms fall out of alignment emitting radio signals as they do.
The speed at which the atoms fall out of alignment, or "relaxation time" and
radio signals vary depending on the type of tissue and whether any pathology is
present. The radio signals provide the data from which the scanner's computers
generate an image of the body part being scanned.
Our address is 110 Marcus Drive, Melville, New York 11747, our telephone
number there is (631) 694-2929 and our Internet address is http://www.fonar.com.
Fonar offers the following MRI scanners: the Stand-Up, also called
Indomitable (TM), QUAD (TM), Fonar-360 (TM) and Echo (TM). The Pinnacle (TM)
MRI, a work-in-progress, recently received FDA clearance to market on June 6,
2001.
The Stand-Up allows patients to be scanned while standing, sitting or
reclining. We believe that the Stand-Up is the first and presently only MRI
scanner in which this is possible. This means that anyan abnormality or injury, such as a slipped disc,
will be able to be scanned under full weight-bearing conditions, or, more often
than not, in the position in which the patient experiences pain. An elevator
built into the floor brings the patient to the desired height in the scanner. An
adjustable bed allows the patients to stand, sit or lie on their backs, sides or
stomachs, at any angle. In the future, the Stand-Up may also be useful for MRI
directed surgical procedures and could be particularly useful in trauma centers where a quick MRI
screening within the first critical hour of treatment would greatly improve the
patient's chances for survival and complete recovery.procedures.
The Fonar 360 is an enlarged room sized magnet in which the floor, ceiling
and walls of the room are part of the magnet frame. Consequently, this scanner
allows 360 degree access to the patient. Physicians and family members are able
to actually enter the scanner and approach the patient. The Fonar 360 is presently marketed as
a diagnostic scanner and is sometimes referred to as the Open Sky MRI. The walls can be decorated with panoramic murals and the entire
scan room can be decorated to be incorporated into the pictured landscape.
In the future, we may also further develop the Fonar 360 to function as an
operating room. We sometimes refer to this contemplated version of the Fonar 360
as the OR-360.
The room sized magnet and 360 degree access to the patient would permit
surgical teams to walk into the magnet and perform surgery on the patient inside
the magnet. The MRI image could be obtained during surgery to guide the surgeon
in the surgery. Surgical instruments, needles, catheters, endoscopes and the
like could be introduced directly into the patient's body and guided to the
right location by means of the MRI image. For example, chemotherapy or radiation
in a cancer case could be delivered directly to the malignant tumor. The
challenges in converting the Fonar-360 to an actual operating room include
designing instruments and support equipment which can be used in a magnetic
field and conforming the OR-360 to operating room standards for the surgeries in
question.
The QUAD scanner is supported by four posts and is open on four sides,
thereby allowing access to the scanning area from four sides. We believe the QUAD (TM) 12000 MRI scanner was
the first "open" MRI scanner with a high field magnet. The QUAD (TM) 7000
is similar in design to the QUAD 12000 but uses a smaller lower field magnet.
We are also developing theThe "Pinnacle" (TM) which is a superconductive version of our open iron frame
magnet. The Pinnacle received FDA clearance on June 6, 2001.
Fonar also offers a low cost, low field open MRI scanner, the Echo (TM).
In addition to manufacturing MRI scanning systems, we formed a subsidiary,
Health Management Corporation of America, which we sometimes call HMCA, in 1997
to engage in the business of managing imaging facilities and medical practices.
HMCA provides and supervises the non-medical personnel for the clients at their
sites. At HMCA we also provide our clients centralized billing, collection,
marketing, advertising, accounting and financial services. We also provide
office equipment and furnishing, consumable supplies and in some cases the
office space used by our clients. Almost all of HMCA's client professional
corporations are owned by Fonar's founder, President and Chairman of the Board,
Dr. Raymond V. Damadian.
HMCA's address is at 6 Corporate Center Drive, Melville, New York 11747,
its telephone number there is (631) 694-2816 and its internet address is
www.hmca.com.
Approximately 72% of our consolidated revenues for the fiscal year ended
June 30, 2001 and 81% for the fiscal year ended June 30, 2000 were from HMCA's
management services.
Approximately 98% of HMCA's revenues for the fiscal year ended June 30,
2001 and 99% of HMCA's revenues for the fiscal year ended June 30, 2000 were
derived from entities owned by Dr. Raymond V. Damadian.
ABOUT THIS OFFERING
The selling stockholder will act independently of us in making decisions
with respect to the timing, manner and size of sales of the shares. They may
sell them in the open market at market prices through brokers, dealers or
agents, or in private transactions on negotiated terms. See "PLAN OF
DISTRIBUTION" for a more detailed discussion of the ways in which the selling
stockholders might sell their shares.
Our common stock is traded on the Nasdaq Small Cap Market.
NASDAQ Symbol..............FONR
Risk Factors...............AnRISK FACTORS
An investment in our stock is high riskrisk. You should carefully consider the risk
factors in this prospectus before deciding whether to purchase the shares
offered. See "Risk Factors."RISK FACTORS."
This summary is qualified in its entirety by the more detailed information
appearing elsewhere in the prospectus.
RISK FACTORS
An investment in Fonar is highly speculative and subject to a high degree
of risk. Therefore, you should carefully consider the risks discussed below and
other information contained in this prospectus before deciding to invest in
shares of our common stock.
1. We have and continue to experience significant losses.
For the fiscal years ended June 30, 20002001 and June 30, 1999,2000, we experienced
net losses of $10.96$15.18 million and $14.22$10.96 million respectively and net operating
losses of $16.43$16.21 million and $15.61$15.51 million respectively. For the nine monthsfiscal quarter
ended March 31,September 30, 2001, we experienced a net loss of $9.7$3.8 million and anas compared
to a net loss of $3.9 million for the fiscal quarter end September 30, 2000. Our
operating loss of $10.8 million.$3.4 million for the first quarter of fiscal 2002, however,
improved, compared to the operating loss of $4.0 for the first quarter fiscal
2002, due to increased scanner sales. We have been able to fund our losses to
date from the $128.7 million judgment, net amount of $77.2 million after
attorney's fees, received from General Electric Company in 1997 for patent
infringement and from other patent litigation settlements with other
competitors, the terms of which agreements are required to be kept confidential.
As of March 31,September 30, 2001, however, our balance sheet shows approximately $10.3$7.6
million in cash or cash equivalents and $7.6$6.1 million in marketable securities
out of total current assets of $40.1$35.2 million. We believe that we will be able to
reverse our operating losses with the introduction into the marketplace of our
new MRI scanners and from the operating income generated by our subsidiary HMCA.
HMCA operating income washas declined from $3.12 million in fiscal 1999 to $2.48
million in fiscal 2000 and $2.2to $1.0 million for fiscal 2001. HMCA operating
income for the first nine
monthsquarter of fiscal 2002 declined to $550,000, compared to
$801,000 for the first quarter of fiscal 2001. There can be no assurance however, that we
can reverse our operating losses.
2. Fonar is dependant on the success of its new products to become profitable.
Our ability to generate future operating profits will depend on our ability
to market and sell our new lines of MRI products. The Stand-Up MRI, also called
"Indomitable(TM), Fonar 360(TM) and Echo scanners have all been recently
introduced into the market. Although we are optimistic that these scanners'
features will make them competitive, there can be no assurance as to the degree
or timing of market acceptance of these products. Revenues from the sales of
QUAD(TM) scanners, introduced in 1995, have not been sufficient to date to
generate operating profits. The product we are currently promoting most
vigorously is the Stand-Up MRI. We believe the Stand-Up MRI is the most
promising because it enable scans to be performed on patients in weight bearing
positions, such as sitting or standing. The market for the Stand-Up, which
received FDA clearance in October 2000, is still largely untested.being tested. The following
chart shows the revenues attributable to each model between October 1, 2000during fiscal 2001 and March 31, 2001.the
first quarter of fiscal 2002. Please note that we recognize the revenue on
scanner sales on a percentage of completion basis. This means we book revenue
not as money is received or sales are made, but as the scanner is built.
Consequently, the revenues for a fiscal period do not necessarily relate to the
orders placed in that period.
Model Revenues Recognized
--------- -------------------Fiscal Year Ended June 30, 2001
Stand-Up $ 990,7001,640,615
Fonar 360 0
QUAD $3,043,308
Echo $1,052,182
Fiscal Quarter Ended September 30, 2001
Stand-Up $ 1,798,645
Echo $ 328,9501,581,378
QUAD 48,000
3. We must compete in a highly competitive market against competitors with
greater financial resources than we have.
The medical equipment industry is highly competitive and characterized by
rapidly changing technology and extensive research and development. The market
demand for a continuing supply of new and improved products requires that we be
engaged continuously in research and development. New products also require
continuous retooling or at least modifications to our manufacturing facilities,
and our sales and marketing force must continuously adjust to new products and
product features. This is highly expensive and companies with substantially
greater financial resources than we have engage in the marketing of magnetic
resonance imaging scanners which compete with the Company's scanners.
Competitors include large, multinational companies or their affiliates such as
General Electric Company, Siemens A.G., PickerMarconi International, Philips N.V.,
Toshiba Corporation Hitachi Corporation and ShimadzuHitachi Corporation. There can be no assurance that
Fonar's products will be able to successfully compete with products of its
competitors.
4. The success of some of the businesses purchased by HMCA depends on the
continued employment of the former owners of those businesses.
The businesses acquired by HMCA are essentially service organizations whose
continued success depends on retaining and developing existing business
relationships. These relationships are often heavily dependant on the personal
efforts of key persons in the acquired company or medical practices managed by
the acquired company. HMCA has sought to retain these key people through
employment agreements which include both noncompetition covenants and financial
incentives. Nevertheless, there can be no assurance that these key people will
remain as employees or produce results sufficient to make the acquired companies
profitable.
5. HMCA'S profitability depends on its ability to successfully perform billing
and collection services for its clients.
HMCA performs billing and collection services for the medical practices and
MRI facilities it manages. The viability of HMCA's clients and their ability to
remit management fees to HMCA depends on HMCA's ability to collect the clients'
receivables. Collectibility of these receivables can be adversely affected by
the longer payment cycles and rigorous informational requirements of some
insurance companies or other third party payors. Proper authorizations,
referrals and confirmation of coverage for patients, as well as issues of
medical necessity, need to be addressed prior to the rendering of service to
assure prompt payment of claims. HMCA believes it is properly addressing billing
and collection requirements and issues for its clients and that its collection
rates are good. Nevertheless, the regulations and requirements applicable to
medical billing and collections could change in the future and result in reduced
or delayed collections. Approximately 97%98% of HMCA's revenues for the receivables billed and
collected by HMCAyear ended
June 30, 2001 are from professional corporationsentities owned by Raymond V. Damadian.
6. Capitated insurance programs could adversely affect HMCA's clients by
shifting a part of the financial responsibility for patient care to the
medical providers.
Certain HMO's and insurers have instituted managed care programs where the
physician or physician group is paid on a capitated basis. Under these plans,
the physician is not paid according to the services provided, but is paid a
fixed monthly fee per patient, which in HMCA's experience is based on age and
gender. Currently, approximately 12.3%less than two percent of HMCA's clients' revenues are from
capitated programs. Under capitated insurance programs, the physician or
physician practice in effect bears some of the risk in the event a patient
requires extensive treatment. In the event that HMCA's client primary care
practices experience a shortfall between the capitated payments and the cost of
providing services, the ability of those practices to pay for HMCA's services
may be impaired.
7. The profitability of HMCA could be adversely affected if medical insurance
reimbursement raterates change.
HMCA receives substantially all of its revenue from medical practices and
providers of MRI services. Consequently, HMCA would be indirectly affected by
changes in medical insurance reimbursement policies, HMO policies, referral
patterns, no-fault and workers compensation reimbursement levels and other
factors affecting the profitability of a medical practice or MRI facility. The
types of medical providers served by HMCA are (a) MRI facilities, (b) primary
care practices and (c) physical therapy and rehabilitation practices. There are
approximately 20 MRI facilities served by HMCA located in New York, Florida and
Georgia. The primary care practices served by HMCA consist of four offices in
New York and the physical therapy and rehabilitation practices consist of eight
offices located primarily in New York. Approximately 40%57% of HMCA's clients
revenues arefor the year ended June 30, 2001 were generated from the no-fault and
personal injury protection claims. Although we do not know of any pending
adverse development affecting these types of facilities, future changes in the
reimbursement levels for MRI, primary care, workers compensation or no fault
reimbursement, or changes in utilization policies for MRI or physical
rehabilitation therapy could adversely affect the ability of HMCA's clients to
pay HMCA's fees. In addition, HMCA depends on the ability of the medical
practices and providers to attract and retain physicians and other professional
staff.
8. The amortization of the goodwillmanagement agreements on our balance sheet will
reduce future profits.
HMCA acquired businesses which were essentially service businesses for
purchase prices based on earnings multiples rather than net tangible assets. As
the historical cost of the assets was small relative to the purchase price, the
consolidated balance sheet of Fonar, HMCA and Fonar's subsidiaries reflects a
net carrying value of approximately $20.7$20.4 million in goodwillmanagement agreements as at
March 31,June 30, 2001 and $20.1 million as at September 30, 2001. Before amortization,
the aggregate amount of goodwillmanagement agreements attributable to the acquisitions
was approximately $23.4 million. Amortization of this goodwill,these management agreements,
which is over a period of twenty (20) years, will reduce net profits by
approximately $1.2 million annually. This is a non-cash annual expense.
9. Professional liability claims against HMCA or its clients may exceed
insurance coverage levels.
Although with one exception, HMCA does not provide medical services, it is
possible that a patient suing one of HMCA's client medical practices or MRI
facilities would also sue HMCA. In Florida, where the corporate practice of
medicine is legally permissible, a subsidiary of HMCA in one case provides
medical care through employee doctors and could be subject to professional
liability claims in the event of malpractice. Neither HMCA nor its clients carry
professional liability insurance but physicians working for HMCA's clients or
for HMCA's subsidiaries are required to maintain professional liability
insurance in the minimum amount of $1,000,000/$3,000,000. Such insurance would
not cover HMCA or a client professional corporation, however, in the event a
claim were made which was not covered by the physician's insurance. Claims in
excess of insurance coverage might also have to be satisfied by HMCA or its
clients if they were named as defendants.
10. We do not carry product liability insurance and would have to pay any
claims from our revenues and capital resources.
Fonar does not carry product liability insurance but is self-insured.
Consequently, Fonar would have to pay from its own resources any valid products
liability claim. To date, Fonar has not had to pay any such claims.
11. We are dependant upon the services of Dr. Damadian.
Our success is greatly dependent upon the continued participation of Dr.
Raymond V. Damadian, Fonar's founder, Chairman of the Board and President. Dr.
Damadian has acted as our CEO since 1978 and will continue to do so for the
foreseeable future. In addition to providing general supervision and direction,
he provides active direction, supervision and management of our sales, marketing
and research and development efforts. In connection with the physician and
diagnostic management services business conducted by HMCA, Dr. Damadian owns
most of the professional corporations which are HMCA clients. With the exception
of four professional corporations which provided management fees to HMCA of
approximately $374,000 in the aggregate during fiscal 2001, all of the
professional corporations are owned by Dr. Damadian. Loss of the services of Dr.
Damadian would have a material adverse effect on our business. We do not have an
employment or noncompetition agreement with Dr. Damadian. We do not currently
carry "key man" life insurance on Dr. Damadian.
12. Dr. Raymond V. Damadian has voting control of Fonar; the management cannot
be changed or the company sold without his agreement.
Dr. Raymond V. Damadian, the President, Chairman of the Board and principal
stockholder of Fonar is and will continue to be in control of Fonar and in a
position to elect all of the directors of Fonar. As of March 31,September 30, 2001, there
were outstanding 58,787,81760,033,490 shares of common stock, having one vote per share,
4,211 shares of Class B common stock, having ten votes per share and 9,562,824
shares of Class C common stock, having 25 votes per share. Of these totals Dr.
Damadian owned 2,488,274 shares of common stock and 9,561,174 shares of Class C
common stock, giving him over 80% of the voting power of Fonar's voting stock.
This means that the holders of the common stock will not be able to control
decisions concerning any merger or sale of Fonar, the election of directors or
the determination of business and management policy.
13. The dilution which may result from the payment of theits debentures in common
stock could be significant.
In May, 2001, the Company issued convertible debentures in the principal
amount of $4.5 million. As of December 7, 2001, the outstanding principal amount
of the debentures was $3.15 million. The debentures can be converted at a price
of $2.047 per share, which would result in 2,198,3391,538,837 shares of common stock
being issued. If, however,issued if the remaining principal balance of the debentures were
converted. At the times when the market price for our common stock is less than
$2.047 per share, thenhowever, the holders will not be likely to convert and we
willwould be left with the alternative of paying the debentures in cash or in shares
of common stock valued, for the purpose of payment, at a discount from the then
current market value for the common stock. This discounted value would be the
lesser of (1) 90% of the average of the four lowest closing bid prices during
the preceding calendar month or (2) the average of the four lowest closing bid
prices during the preceding calendar month less $0.125. If for example, we were
paying the remaining principal balance of the debentures in June,full in December,
2001, then the approximate number of shares we would have to issue based on the formula
would be 3,435,1152,739,130, or approximately 56%78% more shares thenthan would be issued on
conversion.conversion in full. Since this alternative is based on market price, there is no
limit on how low the determined value could be. The payments for October,
November and December 2001 were made through the issuance of 1,357,807 shares of
common stock. No part of the debentures have been converted to date. Fonar does
retain the option, however, to pay the debentures in cash if they are not
converted.
14. The provisions of the debentures would subject Fonar's stockholders to
further dilution if we were to issue common stock at prices below market or
below the conversion price in the debentures.
In addition to provisions providing for proportionate adjustments in the
event of stock splits, stock dividends, reverse stock splits and similar events,
the debentures provide for an adjustment of the conversion price if Fonar issues
shares of common stock at prices lower than the conversion price or the then
prevailing market price. This means that if we need to raise equity financing at
a time when the market price for Fonar's common stock is lower than the
conversion price, or if we need to provide a new equity investor with a discount
from the then prevailing market price, then the conversion price will be reduced
and the dilution to stockholders increased.
15. The provisions of the warrants provide for reductions in the exercise price
if we issue common stock at prices below market or below the warrant
exercise prices.
In addition to provisions providing for proportionate adjustments in the
event of stock splits, stock dividends, reverse stock splits and similar events,
the warrants provide for a reduction of the exercise price if Fonar issues
shares of common stock at prices lower than the exercise price or lower than the
then prevailing market price. Although theThe number of shares issuable under the warrants
will notwould change in this case in inverse proportion, but we would receive less inthe same
amount of proceeds if the warrants were subsequently exercised.exercised in full.
FORWARD-LOOKING STATEMENTS
We make statements in this prospectus and the documents incorporated by
reference that are considered forward-looking statements within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private
Securities Litigation Reform Act of 1995 contains the safe harbor provisions
that cover these forward-looking statements. We are including this statement for
purposes of complying with these safe harbor provisions. We base these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions including,
among other things:
- continued losses and cash flow deficits;
- the continued availability of financing in the amounts, at the times
and on the terms required to support our future business;
- uncertain market acceptance of our products; and
- reliance on key personnel.
Words such as "expect," "anticipate," "intend," "plan," "believe,"
"estimate" and variations of such words and similar expressions are intended to
identify such forward-looking statements. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Because of these risks, uncertainties
and assumptions, the forward-looking events discussed or incorporated by
reference in this document may not occur.
USE OF PROCEEDS
We cannot guaranteewill not receive any proceeds from the amountsale by the selling stockholder
of the proceedscommon stock
SELLING STOCKHOLDER
Pursuant to a stock subscription agreement dated January 17, 2001 between
us and eMajix, Inc., we issued and sold to the selling stockholder, eMajix.com,
183,924 shares of common stock in consideration for 270,000 shares of the common
stock of eMajix.com, Inc.
The table below presents information regarding the selling stockholder and
the shares that it may offer and sell from time to time under this prospectus.
The table assumes that the selling stockholder sells all of the shares. However,
no assurances can be given as to the actual number of shares that will receivebe sold
by the selling stockholder or that will be held by the selling stockholder after
completion of the sales. Information concerning the selling stockholder may
change from time to time and any changed information will be presented in a
supplement to this prospectus if and when necessary and required.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned by
any person who has voting or investment power with respect to the shares. Common
stock issuable upon conversion of the debentures or exercise of warrants that
are currently convertible, exercisable or exercisable within 60 days are
considered to be outstanding and to be beneficially owned by the person holding
the debentures and warrants for the purpose of computing beneficiary ownership.
Assuming that the selling stockholders sell all of the shares offered under this
prospectus, the selling stockholders will beneficially own less than one percent
of our outstanding shares of common stock after the completion of this offering.
WhetherShares Shares Shares
Beneficially Offered Beneficially
Selling Owned Prior By This Owned After
Stockholder to Offering (1) Prospectus Offering
- ---------------- --------------- ---------- ------------
eMajix.com, Inc. 183,924 183,924 0
Neither the debentures will be convertedselling stockholder nor any of its affiliates, officers, directors
or principal equity holders has held any position or office or has had any
material relationship with us within the warrants exercised
will depend on the market price for Fonar's common stock. We have received $4.5
million from the issuance of the debentures.past three years.
PLAN OF DISTRIBUTION
We will not receive any additionalof the proceeds of the sales of these shares.
WHO MAY SELL AND APPLICABLE RESTRICTIONS. Shares may be offered and sold
directly by the selling stockholder and those persons' pledgees, donees,
transferees or other successors in interest from any conversions. Whether wetime to time. The selling
stockholder could transfer, devise or gift shares by other means. The selling
stockholder may also resell all or a portion of their shares in open market
transactions in reliance upon available exemptions under the Securities Act,
such as Rule 144, provided it meets the requirements of these exemptions.
Alternatively, the selling stockholder may from time to time offer shares
through brokers, dealers or agents. Brokers, dealers, agents or underwriters
participating in transactions may receive any proceedscompensation in the form of discounts,
concessions or commissions from the warrants
will depend on the market price of our common stock relative to the exercise
price under the warrants.
We intend to use the net proceeds of this offering,selling stockholder (and, if any, for general
corporate purposes, including working capital to fund operating losses, expenses
and capital expenditures. As of the date of this prospectus, we cannot specify
with certainty the particular usesthey act as
agent for the net proceeds to be received in this
offering. Accordingly, our management will have broad discretion in the
application of any net proceeds received. Pending such uses, we intend to invest
the net proceeds, if any, from this offering in short-term, interest-bearing,
investment grade securities.
PLAN OF DISTRIBUTION
Allpurchaser of the shares, from that purchaser). The discounts,
concessions or commissions might be in excess of commonthose customary in the type of
transaction involved.
The selling stockholder received the shares in the ordinary course of
business pursuant to the stock being offered by this prospectus will be
issued uponsubscription agreement. The selling stockholder
does not have any agreements or understandings, directly or indirectly, with any
person to distribute the conversionsecurities.
Nevertheless, the selling stockholder and any brokers, dealers or payment of our 4% convertible debentures due June
30, 2002 or uponagents
who participate in the exercise of our outstanding purchase warrants and callable
warrants.
The debentures are convertible at the optiondistribution of the holder at a priceshares may be deemed to be
underwriters, and any profits on the sale of $2.047 per share. Ifshares by them and any discounts,
commissions or concessions received by any broker, dealer or agent might be
deemed to be underwriting discounts and commissions under the holders decideSecurities Act. To
the extent the selling stockholder may be deemed to be an underwriter, the
selling stockholder may be subject to statutory liabilities, including, but not
limited to, convert, then we would still have
the right to pay the debentures in shares of our common stock, but the stock
would be valued at the lesser of a) 90%Sections 11, 12 and 17 of the averageSecurities Act and Rule 10b-5 under
the Securities Exchange Act. These provisions of the four lowest
closing bid prices during the preceding month or b) the average of the four
lowest closing bid prices during the preceding calendar month less $0.125.
This means that if the holders of the debenture elect not to covert because
the market pricesecurities laws provide, in
general terms, for our common stock is less than the conversion price, the
selection of the second alternative by Fonar will resultliability for fraud, untrue statements contained in a
significantly
lower valuation of our shares and greater dilution to our stockholders than
would be the case in a conversion.
We received the $4.5 million upon the issuance of the debentures. Whether
the debentures are convertedprospectus or we elect to pay the debentures in stock, we will
not receive additional proceeds.
The purchase warrants cover 959,501 shares of common stock and have an
exercise price of $1.801 per share. The exercise period extends to May 24, 2006.
If all of the purchase warrants are exercised, we would receive proceeds in the
approximate amount of $1.7 million.
The callable warrants cover 2,000,000 shares of common stock and have a
variable exercise price. Subject to a maximum price of $6.00 per share and a
minimum price of $2.00 per share, the exercise price will be equal to the
average closing bid price of Fonar's common stock for the full calendar month
preceding the date of exercise. The exercise period extends to May 24, 2004.
Since the exercise price varies, the amount of proceeds, if any, which we would
receive cannot be predicted. At the minimum exercise price of $2.00 per share we
would receive proceeds of $4 million.
No proceeds can be expected to be received from the exercise of the
warrants unless the market price of our common stock is higher than the
applicable exercise prices.
No commissions are payable by us or the holders of the debentures and the
warrantsotherwise made in connection with a conversionthe sale of securities, and the
failure to disclose significant information which is necessary to prevent
information disclosed from being misleading.
To comply with certain states' securities laws, if applicable, the shares
will be sold in such jurisdictions only through registered or exercise.
Welicensed brokers
or dealers. In addition, in certain states the shares may not be sold unless the
shares have been registered or qualified for sale in that state or an exemption
from registration or qualification is available and is complied with.
MANNER OF SALES. The selling stockholder will act independently of us in
making decisions with respect to the optiontiming, manner and size of redeeming upeach sale. The
shares may be sold at then prevailing market prices, at prices related to
200,000 callable warrants per monthprevailing market prices, at a price of $0.01 per underlying warrant share, if the average closing bid
price of Fonar's common stock is greater than 115%fixed prices or at other negotiated prices. The
shares may be sold according to one or more of the warrant pricefollowing methods.
A block trade in effectwhich the broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction.
Purchases by a broker or dealer as principal and resale by the broker or
dealer for five consecutive trading daysits account as allowed under this prospectus.
Ordinary brokerage transactions and transactions in any calendar month. We also havewhich the optionbroker
solicits purchasers.
Pledges of reducing the exercise price under the callable warrantsshares to any lower
exercise price that was previously in effect.
The debentures and warrants provide for proportionate adjustmentsa broker-dealer or other person, who may, in the event
of stock splits, stock dividendsdefault, purchase or sell the pledged shares.
An exchange distribution under the rules of the exchange.
In private transactions between sellers and reverse stock splits.purchasers without a
broker-dealer.
By writing options.
Any combination of the foregoing, or any other available means allowable
under law.
HEDGING OR SHORT TRANSACTIONS. In addition, the conversionselling stockholder may
enter into option, derivative, hedging or short transactions with respect to the
shares, and exercise prices will be reduced, with certain specified
exceptions, if we issue shares at lower prices then the debenture conversionany related offers or warrant exercise prices, or less than market price for our common stock.
The numbersales of shares being registered, bymay be made under this
prospectus. For example, the termsselling stockholder may:
enter into transactions involving short sales of the agreementsshares by
broker-dealers in the course of hedging the positions they assume with the
Tail Wind Fund is two timesselling stockholders;
sell shares short itself and deliver the numbershares registered hereby to settle
such short sales or to close out stock loans incurred in connection with
its short positions;
write call options, put options or other derivative instruments (including
exchange-traded options or privately negotiated options) with respect to
the shares, or which it settles through delivery of the shares;
enter into option transactions or other types of transactions that require
the selling stockholder to deliver shares to a broker, dealer or other
financial institution, who may then resell or transfer the shares under
this prospectus; or
loan the shares to a broker, dealer or other financial institution, who may
sell the loaned shares.
These option, derivative, hedging and short transactions may require the
delivery to a broker, dealer or other financial institution of shares necessaryoffered
under this prospectus, and that broker, dealer or other financial institution
may resell those shares under this prospectus.
EXPENSES ASSOCIATED WITH REGISTRATION. We have agreed to pay the debentures atexpenses
of registering the lower of the market price, as computedshares under the agreementsSecurities Act, including registration and
filing fees, printing expenses, administrative expenses, legal fees and
accounting fees. If the shares are sold through underwriters or conversion price, plusbroker-dealers,
the number of shares underlyingselling stockholder will be responsible for underwriting discounts,
underwriting commissions and agent commissions.
INDEMNIFICATION AND CONTRIBUTION. In the warrants.
Inregistration rights agreement that
we entered into with the selling stockholder, we and the selling stockholders
agreed to indemnify or provide contribution to each other and specified other
persons against some liabilities in connection with the issuanceoffering of the debenturesshares,
including liabilities arising under the Securities Act. The selling stockholders
may also agree to The Tail Wind Fund,indemnify any broker-dealer or agent that participates in
transactions involving sales of the shares against some liabilities, including
liabilities arising under the Securities Act.
SUSPENSION OF THIS OFFERING. We may suspend the use of this prospectus if
we paidlearn of any event that causes this prospectus to include an untrue statement
of material fact or omit to state a placement feematerial fact required to Roan Meyers, Inc.be stated in the
amountprospectus or necessary to make the statements in the prospectus not misleading
in light of $157,500. In
addition, we issued 300,000 purchase warrantsthe circumstances then existing. If this type of event occurs, a
prospectus supplement or post-effective amendment, if required, will be
distributed to Roan Meyers, Inc.the selling stockholder. Any material changes in this plan of
distribution will be reflected in a post-effective amendment.
Computershare Trust Company, Inc., formerly called American Securities
Transfer & Trust, Inc., located at 12039 W. Alameda Parkway, Lakewood, Colorado
80228, is the transfer agent and registrar for our common stock.
SELLING STOCKHOLDERS
Assuming that all 9,900,000 shares of common stock are issued to the owners
of the debentures and warrants upon conversion and exercise, the following chart
shows the owners and certain other information. The chart assumes that the
owners will resell all the shares they receive.
Name of Shares To Be Percentage Shares Beneficially
Beneficial Beneficially of Voting Owned
Owner Owned and Offered Power After Offering
- ---------------- ----------------- ---------- -------------------
The Tail Wind 9,600,000 2.65% 0
Fund Ltd.
Roan Meyers Inc. 300,000 0.09% 0LEGAL MATTERS
Certain legal matters with respect to the validity of the shares being
offered by the prospectus will be passed upon by Henry T. Meyer, Esq., 110
Marcus Drive, Melville, New York 11747. Mr. Meyer is Fonar's General Counsel.
ExpertsEXPERTS
The consolidated financial statements and supplemental financial schedules
contained in Fonar's latest annual report on Form 10-K,10-K/A, incorporated by
reference into this prospectus, has been examinedaudited by Tabb ConigliaroGrassi & McGann,Co., CPA's, P.C.,
to the extent set forth in their report. Such financial statements and schedules
were included therein in reliance upon their reports, given on their authority
as experts in accounting and auditing.
SubsequentMATERIAL CHANGES
The Company no longer consolidates any medical practices which it manages.
In 1999, 2000 and 2001, the Company had consolidated certain medical practices
managed as a result of the 1998 acquisitions of A & A Services, Inc. and Dynamic
Health Care Management, Inc. The Company also previously consolidated the
practices conducted by Superior Medical Services, P.C. in 1999, 2000 and 2001.
The Company has determined that consolidation of such medical practices is not
appropriate because the underlying management agreements do not meet all of the
six criteria of Emerging Issues Task Force ("EITF") Consensus No. 97-2.
Accordingly, the consolidated financial statements have been restated. The
significant effect of such restated financial statements for 1999, 2000 and 2001
has been to their report, Tabb
Conigliaro & McGann merged into Grassi & Co., CPA's, P.C.decrease revenue and related costs by $3.7 million, $3.8 million and
$4.2 million respectively. In addition, the balance sheet caption "Excess of
Cost Over Net Assets of Businesses Acquired - Net" has been reclassified to
"Management Agreements - Net".
INDEMNIFICATION
The Delaware General Corporation Law and Fonar's by-laws provide for the
indemnification of an officer or director under certain circumstances against
reasonable expenses incurred in connection with the defense of any action
brought against him by reason of his being a director or officer. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or other persons under Fonar's by-laws or the
Delaware General Corporation Law, Fonar has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Our Securities and Exchange Commission filings are also
available over the Internet at the Securities and Exchange Commission's web site
at http://www.sec.gov. You may also read and copy any document we file at the
Securities and Exchange Commission's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for more information on the public
reference rooms. Our Commission File No. is 0-10248.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means:
- incorporated documents are considered part of this prospectus;
- we can disclose important information to you by referring you to
those documents; and
- information that we file with the Securities and Exchange
Commission will automatically update and supersede this
prospectus.
We are incorporating by reference the documents listed below which were
filed with the Securities and Exchange Commission under the Securities Exchange
Act of 1934:
- AnnualQuarterly Report on Form 10-K for the year ended June 30, 2000, which was
filed on September 28, 2000;
- Quarterly report on Form 10-Q for the fiscal quarter ended
March 31,September 30, 2001, which was filed on May 14,November 16, 2001.
- Annual Report on Form 10-K/A for the year ended June 30, 2001,
which was filed on October 30, 2001;
We also incorporate by reference each of the following documents that we
will file with the Securities and Exchange Commission after the date of this
prospectus but before the end of the offering:
- Reports filed under Sections 13(a) and (c) of the Securities
Exchange Act of 1934;
- Definitive proxy or information statements filed under Section 14
of the Securities Exchange Act of 1934 in connection with any
subsequent stockholders' meeting; and
- Any reports filed under Section 15(d) of the Securities Exchange
Act of 1934.
You may request a copy of these filings, at no cost, by contacting us at
the following address or phone number:
Fonar Corporation
110 Marcus Drive
Melville, New York 11747
Attention: Investor Relations
(631) 694-2929
Part
PART II
Information Not Required in prospectusINFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All amounts are estimates except the
registration fee.
AMOUNT TO BE PAID
SEC Registration Fee $ 2,362.0261.54
Printing 15,000.002,500.00*
Legal Fees and Expenses 25,000.002,500.00*
Accounting Fees and Expenses 15,000.002,500.00*
Blue Sky Fees and Expenses 15,000.002,500.00*
Transfer Agent and Registrar Fees 5,000.002,500.00*
Miscellaneous 1,000.00
-----------
Total...........................................................1,000.00*
----------
Total.............................................$ 78,362.0113,561.54*
===========
* estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "Delaware Law") grants corporations the right to limit or eliminate the
personal liability of their directors in certain circumstances in accordance
with provisions therein set forth. Our Certificate of Incorporation contains a
provision eliminating director liability to us and our stockholders for monetary
damages for breach of fiduciary duty as a director. The provision does not,
however, eliminate or limit the personal liability of a director: (i) for any
breach of such director's duty of loyalty to us or our stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under the Delaware statutory provision making
directors personally liable, for improper payment of dividends or improper stock
purchases or redemptions; or (iv) for any transaction from which the director
derived an improper personal benefit. This provision offers persons who serve on
our Board of Directors protection against awards of monetary damages resulting
from breaches of their duty of care (except as indicated above). As a result of
this provision, our ability or a stockholder's ability to successfully prosecute
an action against a director for a breach of his duty of care is limited.
However, the provision does not affect the availability of equitable remedies
such as an injunction or rescission based upon a director's breach of his duty
of care. The SEC has taken the position that the provision will have no effect
on claims arising under federal securities laws.
Section 145 of the Delaware Law grants corporations the right to indemnify
their directors, officers, employees and agents in accordance with the
provisions therein set forth. Our By-laws provide that the corporation shall,
subject to limited exceptions, indemnify its directors and executive officers to
the fullest extent not prohibited by the Delaware Law. Our By-laws provide
further that the corporation shall have the power to indemnify its other
officers, employees and her agents as set forth in the Delaware Law. Such
indemnification rights permit reimbursement for expenses incurred by such
director, executive officer, other officer, employee or agent in advance of the
final disposition of such proceeding in accordance with the applicable
provisions of the Delaware Law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of us
pursuant to these provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
Item 16. Exhibits and Financial Statement Schedules
Exhibits
4.1 * Specimen Common Stock Certificate incorporated herein by reference
to Exhibit 4.1 to the Registrant's registration statement on Form S-1,
Commission File No. 33-13365.
4.2 * Article Fourth of the Certificate of Incorporation, as amended, of
the Registrant incorporated by reference to Exhibit 4.1 to the
Registrant's registration statement on Form S-8, Commission File No.
33-62099.
4.3 * Section A of Article FOURTH of the Certificate of Incorporation, as
amended, of the Registrant. See Exhibits.Registrant, incorporated by reference to Exhibit 4.3
to the Registrant's registration statement on Form S-3, Commission
File No.333-63782
4.4 * Form of 4% Convertible Debentures due June 30, 2002 incorporated
herein by reference to Exhibit 4.1 of the Registrant's current report
on For 8-K filed on June 11, 2001. Commission File No. 0-10248.
4.5 * Form of Purchase Warrants incorporated herein by reference to
Exhibit 4.2 of the Registrant's current report on Form 8-K filed on
June 11, 2001. Commission File No. 0-10248.
4.6 * Form of Callable Warrants incorporated herein by reference to
Exhibit 4.3 of the Registrant's current reports on Form 8-K filed on
June 11, 2001. Commission File No. 0-10248.
54.7 * Amendments dated October 25, 2001 to 4% Convertible Debentures due
June 30, 2002, incorporated by reference to Exhibit 4.7 to the
Registrant's registration statement on Form S-3, Commission file No.
333-63782.
5. Opinion of Counsel re: Legality. See Exhibits.
10.1 * License Agreement between Fonar and Raymond V. Damadian incorporated
herein by reference to Exhibit 10 (e) to Form 10-K for the fiscal year
ended June 30, 1983, Commission File No. 0-10248
10.2 * 1993 Incentive Stock Option Plan incorporated herein by reference to
Exhibit 28.1 to the Registrant's registration statement on Form S-8,
Commission File No. 33-60154.
10.3 * 1997 Non-Statutory Stock Option Plan incorporated herein by
reference to Exhibit 28.1 to the Registrant's registration statement
on Form S-8, Commission File No.: 333-27411.
10.4 * 1997 Stock Bonus Plan incorporated herein by reference to Exhibit
28.2 to the Registrant's registration statement on Form S-8,
Commission File No: 333-27411
10.5 * Stock Purchase Agreement, dated July 31, 1997 by and between U.S.
Health Management Corporation , Raymond V. Damadian, M.D. MR Scanning
Centers Management Company and Raymond V. Damadian, incorporated
herein by reference to Exhibit 2.1 to the Registrant's Form 8-K, July
31, 1997, Commission File No: 0-10248.
10.6 * Merger Agreement and Supplemental Agreement dated June 17, 1997 and
Letter of Amendment dated June 27, 1997 by and among U.S. Health
Management Corporation and Affordable Diagnostics Inc. et al.,
incorporated herein by reference to Exhibit 2.1 to the Registrant's
8-K, June 30, 1997, Commission File No: 0-10248.
10.7 * Stock Purchase Agreement dated March 20, 1998 by and among Health
Management Corporation of America, Fonar Corporation, Giovanni
Marciano, Glenn Muraca et al., incorporated herein by reference to
Exhibit 2.1 to the Registrant's 8-K, March 20, 1998, Commission File
No: 0-10248.
10.8 * Stock Purchase Agreement dated August 20, 1998 by and among Health
Management Corporation of America, Fonar Corporation, Stuart Blumberg
and Steven Jonas, incorporated herein by reference to Exhibit 2 to the
Registrant's 8-K, September 3, 1998, Commission File No. 0-10248.
10.9 * Purchase Agreement dated May 24, 2001 by and between Fonar and The
Tail Wind Fund Ltd. incorporated herein by reference to Exhibit 10.1
to the Registrant's current report on Form 8-K filed June 11, 2001.
Commission File No. 0-10248.
10.10*Registration Rights Agreement dated May 24, 2001 by and among Fonar,
The Tail Wind Fund, Ltd. and Roan Meyers, Inc. incorporated herein by
reference to Exhibit 10.2 to the Registrant's current report on Form
8-K filed June 11, 2001. Commission File No. 0-10248.
10.11Stock Subscription Agreement dated January 17, 2001, between Fonar
and eMajix.com, Inc.. See Exhibits.
23.1 Consent of Grassi & Co., CPA's, P.C., Certified Public Accountants. See Exhibits.
23.2 (Consent of Counsel is included in Exhibit 5).
* Exhibits incorporated by reference.
Financial Statement Schedules
None
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(b) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13 (a) or
section 15 (d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall
be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on June 25,December 7, 2001.
Dated: June 25,December 7, 2001
FONAR CORPORATION
By: /s/ Raymond V. Damadian
Raymond V. Damadian,
President, Acting Chief Financial
Officer and Acting Principal
Accounting Officer
Signing in his capacities as
Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Signature Title Date
- ----------------------- ------------------- -------------
/s/ Raymond V. Damadian Chairman of the Board of
Directors, - -----------------------President and a December 7, 2001
/s/ Raymond V. Damadian President and a
Director (Principal
June 25,Raymond V. Damadian Executive Officer, Principal
Financial Officer and
Principal Accounting Officer)
Director December 7, 2001
Executive Officer)
/s/ Claudette J.V. Chan
Director June 25, 2001
- -----------------------
Claudette J.V. Chan
Director December 7, 2001
/s/ Robert J. Janoff
Director June 25, 2001
- --------------------
Robert J. Janoff
Director December 7, 2001
/s/ Charles N. O'Data
Director June 25, 2001
- ---------------------
Charles N. O'Data
/s/ Luis E. Todd Director June 25, 2001
- ----------------
Luis E. Todd