SECURTIES AND EXCHANGE COMMISSION
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 25, 2001
FONAR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-10248 11-2464137
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
110 Marcus Drive
Melville, New York 11747
(631) 694-2929
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(Address, including zip code, and telephone
number of registrant's principal executive offices)
Item 5. Other Events and Regulation FD Disclosure
Fonar Obtains New Financing from Tail Wind Fund Ltd.
Fonar Corporation and Tail Wind Fund Ltd on May 25, 2001 executed a
Purchase Agreement pursuant to which Fonar has issued convertible debt
instruments to Tail Wind Fund Ltd. in the aggregate principal amount of $4.5
million.
According to the Agreement, FONAR has issued 4% Convertible Debentures due
June 30, 2002 to Tail Wind Fund Ltd. in the aggregate principal amount of $4.5
million. The Debentures have a conversion price of $2.047 per share. In the
event the holder does not elect to convert, Fonar still would have the option to
repay the Debentures in shares of common stock; in such case, however, the stock
would be valued at the lesser of a) 90% of the average of the four lowest
closing bid prices during the preceding calendar month or b) said average less
$0.125.
In connection with the Debentures, Fonar also has issued to Tail Wind Fund
Ltd. Purchase Warrants for 659,501 shares of common stock having an exercise
price of $1.801 per share and Callable Warrants to purchase 2,000,000 shares of
common stock. The exercise price for the Callable Warrants will vary, and be
equal to the average closing bid price of Fonar common stock for the full
calendar month immediately preceding the date of exercise, subject to a maximum
of $6.00 per share and a minimum of $2.00 per share. Fonar has the option to
redeem the Callable Warrants at a redemption price of $0.01 per underlying
warrant share, up to 200,000 underlying shares per month, if the average closing
bid price of Fonar's common stock is greater than 115% of the warrant exercise
price in effect for five consecutive trading days in any calendar month. Upon
the giving of notice, Fonar may reduce the warrant exercise price then in effect
to any lower warrant exercise price under the Callable Warrants previously in
effect.
The Debentures and Warrants include provisions for adjustment of price and
number of shares in the event of stock splits, stock dividends, reverse stock
splits, and the like, and stock issuances at prices below the warrant exercise
or debenture conversion prices. There are also certain limitations on Fonar's
right to issue or sell securities during the period the Debentures are
outstanding.
The Company is required under the Agreement to file a registration
statement with the United States Securities and Exchange Commission to register
the shares of common stock underlying the Debentures and Warrants. In the event
the registration statement does not become effective within certain specified
time periods the Company will be required to pay liquidated damages of 2% per
month of the outstanding principal balance of the Debentures.
Fonar received the funds on May 25, 2001. Tail Wind Inc. was paid $45,000
as reimbursement for legal and due diligence expenses. A placement fee of
$157,000 plus Purchase Warrants for 300,000 shares of Fonar common stock was
paid to Fonar's broker.
Exhibits
4.1 4% Convertible Debentures due June 30, 2002
4.2 Purchase Warrants
4.3 Callable Warrants
10.1 Purchase Agreement
10.2 Registration Rights Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FONAR CORPORATION
(Registrant)
By: /s/ Raymond V. Damadian
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Raymond V. Damadian
President and Chairman
Dated: June 1, 2001