SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): July 28, 2005
FONAR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-10248 11-2464137
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(State or other (Commission File (I.R.S. Employer
jurisdiction of No.) Number) Identification
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 office)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
[ ] Written Communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets
On July 28, 2005, Fonar Corporation ("Fonar"), Health Management
Corporation of America ("HMCA"), a wholly-owned subsidiary of Fonar and Dynamic
Healthcare Management, Inc. ("Dynamic") entered into an Asset Purchase
Agreement with Health Plus Management, L.L.C. ("Health Plus"), pursuant to
which HMCA and its subsidiary Dynamic sold to Health Plus the portion of their
business which was engaged in the business of managing physical therapy and
rehabilitation facilities, together with the assets used in the conduct of such
business.
The assets sold consisted principally of the management agreements with
the physical therapy and rehabilitation facilities, the assignment of other
agreements and rights utilized in our physical therapy and rehabilitation
facility management business, the physical therapy equipment, a portion of the
accounts receivable and office furnishings and equipment we provided to the
physical therapy and rehabilitation facilities.
The sale was made to Health Plus. There is no material relationship
between Health Plus and Fonar, HMCA or Dynamic, or any of their respective
directors or officers or associates of any such person. The two principals of
Health Plus were employed by HMCA and Dynamic up to the time of the closing of
the transaction in our physical therapy and rehabilitation facility management
business. In consideration for the termination of their employment agreement,
these two individuals each became entitled to receive $800,000. In addition,
each became entitled to receive $200,000 for billing and collection services to
be provided on behalf of HMCA and Dynamic with respect to a portion of the
accounts receivable of certain physical therapy and rehabilitation facilities
which arose during the period when we were engaged in the management of those
facilities. The $1,000,000 payable to each of these individuals may be paid at
our option in shares of Fonar common stock.
The purchase price under the Asset Purchase Agreement was $6.6 million,
payable pursuant to a promissory note (the "Note") in 120 monthly installments
commencing on August 28, 2005. The first twelve installments are interest only
and the remaining 108 payments will consist of equal installments of principal
and interest in the amount of $76,014 each. The Note is subject to prepayment
provisions to the extent Health Plus resells all or part of the assets and
business or utilizes the assets sold as collateral in any debt financing.
The purchase price and nature of payment were determined by arms-length
negotiation between the parties and was not determined in accordance with any
set formula. HMCA had decided to sell the physical therapy and rehabilitation
facility management business and focus its efforts and capital on expanding its
magnetic resonance imaging (MRI) facility management business, which was its
first business and with which it is most familiar. Fonar, HMCA's parent
corporation, has been experiencing accelerating growth from its MRI
manufacturing and has elected to focus its corporate efforts on MRI related
businesses.
Item 9.01. Any financial statements or pro forma financial information
required will be filed by amendment not later than October 14, 2005 (71
calendar days after date this initial report must be filed).
Exhibits.
Exhibit 2. Asset Purchase Agreement. Schedules (called "Exhibits" in the
Agreement) containing information relating to representations and warranties
and other information are omitted. We will furnish supplementally a copy of
any omitted schedule to the Securities and Exchange Commission on request.
SIGNATURES
Pursuant to the requirements of the Securities and 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 Damadian
Raymond Damadian
President and Chairman
Dated: August 1, 2005