DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
Mar. 31, 2026
Description Of Business And Basis Of Presentation
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business FONAR Corporation (the “Company” or “FONAR”) is a Delaware corporation, which was incorporated on July 17, 1978. FONAR is engaged in the research, development, production and marketing of medical scanning equipment, which uses principles of Magnetic Resonance Imaging (“MRI”) for the detection and diagnosis of human diseases. In addition to the direct sale of MRI equipment, revenue is also generated from our installed-base of customers through our service and upgrade programs. FONAR, through its wholly-owned subsidiary Health Management Corporation of America (“HMCA”), provides comprehensive management services to diagnostic imaging facilities. The services provided by the Company include development, administration, leasing of office space, facilities and medical equipment, provision of supplies, staffing and supervision of non-medical personnel, legal services, accounting, billing and collection and the development and implementation of practice growth and marketing strategies. On July 1, 2015, the Company reorganized the segment of our business dedicated to the management of diagnostic imaging centers. The reorganization integrated the operations of Health Management Corporation of America and Health Diagnostics Management (“HDM”). Imperial Management Services, LLC 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, 2025, the Company sold non-controlling interests to a minority shareholder for $132. Currently, the Company has a direct ownership interest of 70.63% and the investors have a 29.37% ownership interest. The entire management of diagnostic imaging centers business segment is now being conducted by HDM, operating under the name “Health Management Company of America”. Proposed Going-Private Transaction On December 23, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with FONAR, LLC, a Delaware limited liability company (“Parent”), and FONAR Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a subsidiary of Parent following the Merger. Parent and Merger Sub are each affiliated with and owned and controlled by Timothy Damadian, the Company’s Chief Executive Officer and Chairman of our Board of Directors. Timothy Damadian and other members of a group of 57 total (including Parent and Merger Sub) individuals, trusts, corporations and limited liability companies (we refer to this group, collectively, as the “Acquisition Group”) have proposed to acquire the Company pursuant to and on the terms and conditions set forth in the Merger Agreement. Under the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our capital stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares, defined below) will be converted into the right to receive cash, without interest and subject to deduction for any required withholding tax, in an amount per share (the “Per Share Price”) equal to: (i) $19.00 per share of Common Stock, (ii) $19.00 per share of Class B Common Stock, (iii) $6.34 per share of Class C Common Stock, and (iv) $10.50 per share of Class A Non-voting Preferred Stock. Shares held by Parent, by the Company or by any of their respective subsidiaries ( including as treasury shares) will not receive any Merger consideration (the “Excluded Shares”). Pursuant to the terms of the Class B Membership Units Subscription Agreements, dated December 23, 2025, between Parent and each of its equity financing sources (the “Equity Commitment Agreements”), the members of the Acquisition Group who are FONAR stockholders will, immediately prior to the Merger, cause all of their shares of Company Capital Stock and Class A Non-voting Preferred Stock to be contributed (or, alternatively, may elect to contribute an amount of cash equal to the aggregate Per Share Price for all of their FONAR shares) to Parent in exchange for membership units of Parent. All of such shares contributed to Parent are Excluded Shares that at the Effective Time will not receive any Merger consideration. Consummation of the Merger is subject to the satisfaction or waiver (to the extent permitted by applicable law) of the conditions set forth in the Merger Agreement, including: (1) the approval by the Company’s stockholders in favor of the adoption of the Merger Agreement providing for the Merger by (a) the affirmative vote of shares representing a majority of the Company Capital Stock outstanding and entitled to vote, voting together as a single class, after giving effect to the respective voting powers of each class of Company Capital Stock (the “Company Stockholder Approval”), and (b) the affirmative vote of a majority of the votes cast at the Special Meeting (the “Special Meeting”) by disinterested stockholders of their shares of Company Capital Stock, voting together as a single class, after giving effect to the respective voting powers of each class of Company Capital Stock (the “Disinterested Stockholder Approval” and together with the Company Stockholder Approval, the “Requisite Company Vote”); (2) the expiration or termination of any applicable waiting periods; (3) the consummation of the Merger not being restrained, enjoined, rendered illegal or otherwise prohibited by any law or order of any governmental authority of competent jurisdiction; (4) the receipt of all consents, approvals and other authorizations of any governmental entity required to consummate the Merger and the other transactions contemplated by the Merger Agreement, free of any condition that would reasonably be expected to have a Company Material Adverse Effect (as defined in the Merger Agreement) or a material adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated by the Merger Agreement; (5) the accuracy of the parties’ representations and warranties, subject to certain qualifiers; and (6) the parties’ compliance in all material respects with their respective pre-closing covenants, subject to the terms of the Merger Agreement. The Merger Agreement contains customary restrictions on the Company’s ability to solicit alternative acquisition proposals from third parties, subject to a customary “fiduciary out” that permits engagement with a third party in certain circumstances involving a bona fide written Superior Proposal and compliance with specified procedures. FONAR or Parent may terminate the Merger Agreement if the Merger has not been consummated by the “End Date” of March 12, 2026, subject to an automatic extension to the later of 90 days following (a) the date the Company’s definitive proxy statement in connection with the Special Meeting is filed and (b) the date, if applicable, upon which any SEC or other governmental review or investigation is completed. FONAR or Parent also may terminate the Merger Agreement (i) by mutual written consent; (ii) if any governmental entity of competent jurisdiction shall have enacted any law or order making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement, and such law or order shall have become final and nonappealable (provided, however, that such right to terminate the Merger Agreement shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in the Merger Agreement has been the principal cause of the issuance, promulgation, enforcement, or entry of any such law or order); or (iii) if the Requisite Company Vote is not obtained at the Special Meeting. In addition, Parent may terminate the Merger Agreement if a Company Adverse Recommendation Change (as defined in the Merger Agreement) occurs, if certain non-solicitation or stockholder meeting covenants are breached, or if other specified Company breaches occur that are not cured, and FONAR may terminate the Merger Agreement to enter into a Company Acquisition Agreement (as defined in the Merger Agreement) with respect to a Superior Proposal (as defined in the Merger Agreement) or for specified Parent breaches that are not cured, in each case subject to the conditions and procedures in the Merger Agreement. Upon termination of the Merger Agreement under certain circumstances, the Company will be required to pay Parent a termination fee equal to $450,000, as described in the previously filed Form 8-K with the SEC on December 30, 2025. A special committee of the Board of Directors (the “Special Committee”), consisting of disinterested and independent directors, approved the Merger and unanimously recommended that the Board of Directors adopt and approve the Merger Agreement. Members of the Acquisition Group that are FONAR stockholders have entered into voting agreements to vote their shares in favor of the Merger Proposal. The original End Date under the Merger Agreement was March 12, 2026. Because the Company’s definitive proxy statement in connection with the Special Meeting was not filed until April 16, 2026, the End Date has automatically extended pursuant to the terms of the Merger Agreement to the later of 90 days following (a) the date the Company’s definitive proxy statement in connection with the Special Meeting was filed and (b) the date, if applicable, upon which any government review or investigation, including without limitation, any review or investigation by the SEC , is completed. Subject to the satisfaction or waiver of the conditions to, the Closing, the Company currently expects to complete the Merger in its fourth fiscal quarter of 2026. Basis of Presentation These unaudited condensed consolidated financial statements for the nine months ended March 31, 2026 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025, from which the accompanying condensed consolidated balance sheet at June 30, 2025 was derived. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature.

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

9 Months Ended

Mar. 31, 2026

Description Of Business And Basis Of Presentation

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

FONAR Corporation (the “Company” or “FONAR”) is a Delaware corporation, which was incorporated on July 17, 1978. FONAR is engaged in the research, development, production and marketing of medical scanning equipment, which uses principles of Magnetic Resonance Imaging (“MRI”) for the detection and diagnosis of human diseases. In addition to the direct sale of MRI equipment, revenue is also generated from our installed-base of customers through our service and upgrade programs.

FONAR, through its wholly-owned subsidiary Health Management Corporation of America (“HMCA”), provides comprehensive management services to diagnostic imaging facilities. The services provided by the Company include development, administration, leasing of office space, facilities and medical equipment, provision of supplies, staffing and supervision of non-medical personnel, legal services, accounting, billing and collection and the development and implementation of practice growth and marketing strategies.

On July 1, 2015, the Company reorganized the segment of our business dedicated to the management of diagnostic imaging centers. The reorganization integrated the operations of Health Management Corporation of America and Health Diagnostics Management (“HDM”). Imperial Management Services, LLC 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, 2025, the Company sold non-controlling interests to a minority shareholder for $132. Currently, the Company has a direct ownership interest of 70.63% and the investors have a 29.37% ownership interest. The entire management of diagnostic imaging centers business segment is now being conducted by HDM, operating under the name “Health Management Company of America”.

Proposed Going-Private Transaction

On December 23, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with FONAR, LLC, a Delaware limited liability company (“Parent”), and FONAR Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a subsidiary of Parent following the Merger. Parent and Merger Sub are each affiliated with and owned and controlled by Timothy Damadian, the Company’s Chief Executive Officer and Chairman of our Board of Directors. Timothy Damadian and other members of a group of 57 total (including Parent and Merger Sub) individuals, trusts, corporations and limited liability companies (we refer to this group, collectively, as the “Acquisition Group”) have proposed to acquire the Company pursuant to and on the terms and conditions set forth in the Merger Agreement.

Under the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of our capital stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares, defined below) will be converted into the right to receive cash, without interest and subject to deduction for any required withholding tax, in an amount per share (the “Per Share Price”) equal to: (i) $19.00 per share of Common Stock, (ii) $19.00 per share of Class B Common Stock, (iii) $6.34 per share of Class C Common Stock, and (iv) $10.50 per share of Class A Non-voting Preferred Stock. Shares held by Parent, by the Company or by any of their respective subsidiaries ( including as treasury shares) will not receive any Merger consideration (the “Excluded Shares”). Pursuant to the terms of the Class B Membership Units Subscription Agreements, dated December 23, 2025, between Parent and each of its equity financing sources (the “Equity Commitment Agreements”), the members of the Acquisition Group who are FONAR stockholders will, immediately prior to the Merger, cause all of their shares of Company Capital Stock and Class A Non-voting Preferred Stock to be contributed (or, alternatively, may elect to contribute an amount of cash equal to the aggregate Per Share Price for all of their FONAR shares) to Parent in exchange for membership units of Parent. All of such shares contributed to Parent are Excluded Shares that at the Effective Time will not receive any Merger consideration.

Consummation of the Merger is subject to the satisfaction or waiver (to the extent permitted by applicable law) of the conditions set forth in the Merger Agreement, including: (1) the approval by the Company’s stockholders in favor of the adoption of the Merger Agreement providing for the Merger by (a) the affirmative vote of shares representing a majority of the Company Capital Stock outstanding and entitled to vote, voting together as a single class, after giving effect to the respective voting powers of each class of Company Capital Stock (the “Company Stockholder Approval”), and (b) the affirmative vote of a majority of the votes cast at the Special Meeting (the “Special Meeting”) by disinterested stockholders of their shares of Company Capital Stock, voting together as a single class, after giving effect to the respective voting powers of each class of Company Capital Stock (the “Disinterested Stockholder Approval” and together with the Company Stockholder Approval, the “Requisite Company Vote”); (2) the expiration or termination of any applicable waiting periods; (3) the consummation of the Merger not being restrained, enjoined, rendered illegal or otherwise prohibited by any law or order of any governmental authority of competent jurisdiction; (4) the receipt of all consents, approvals and other authorizations of any governmental entity required to consummate the Merger and the other transactions contemplated by the Merger Agreement, free of any condition that would reasonably be expected to have a Company Material Adverse Effect (as defined in the Merger Agreement) or a material adverse effect on Parent’s and Merger Sub’s ability to consummate the transactions contemplated by the Merger Agreement; (5) the accuracy of the parties’ representations and warranties, subject to certain qualifiers; and (6) the parties’ compliance in all material respects with their respective pre-closing covenants, subject to the terms of the Merger Agreement.

The Merger Agreement contains customary restrictions on the Company’s ability to solicit alternative acquisition proposals from third parties, subject to a customary “fiduciary out” that permits engagement with a third party in certain circumstances involving a bona fide written Superior Proposal and compliance with specified procedures. FONAR or Parent may terminate the Merger Agreement if the Merger has not been consummated by the “End Date” of March 12, 2026, subject to an automatic extension to the later of 90 days following (a) the date the Company’s definitive proxy statement in connection with the Special Meeting is filed and (b) the date, if applicable, upon which any SEC or other governmental review or investigation is completed. FONAR or Parent also may terminate the Merger Agreement (i) by mutual written consent; (ii) if any governmental entity of competent jurisdiction shall have enacted any law or order making illegal the consummation of the Merger or the other transactions contemplated by the Merger Agreement, and such law or order shall have become final and nonappealable (provided, however, that such right to terminate the Merger Agreement shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in the Merger Agreement has been the principal cause of the issuance, promulgation, enforcement, or entry of any such law or order); or (iii) if the Requisite Company Vote is not obtained at the Special Meeting. In addition, Parent may terminate the Merger Agreement if a Company Adverse Recommendation Change (as defined in the Merger Agreement) occurs, if certain non-solicitation or stockholder meeting covenants are breached, or if other specified Company breaches occur that are not cured, and FONAR may terminate the Merger Agreement to enter into a Company Acquisition Agreement (as defined in the Merger Agreement) with respect to a Superior Proposal (as defined in the Merger Agreement) or for specified Parent breaches that are not cured, in each case subject to the conditions and procedures in the Merger Agreement. Upon termination of the Merger Agreement under certain circumstances, the Company will be required to pay Parent a termination fee equal to $450,000, as described in the previously filed Form 8-K with the SEC on December 30, 2025.

A special committee of the Board of Directors (the “Special Committee”), consisting of disinterested and independent directors, approved the Merger and unanimously recommended that the Board of Directors adopt and approve the Merger Agreement. Members of the Acquisition Group that are FONAR stockholders have entered into voting agreements to vote their shares in favor of the Merger Proposal. The original End Date under the Merger Agreement was March 12, 2026. Because the Company’s definitive proxy statement in connection with the Special Meeting was not filed until April 16, 2026, the End Date has automatically extended pursuant to the terms of the Merger Agreement to the later of 90 days following (a) the date the Company’s definitive proxy statement in connection with the Special Meeting was filed and (b) the date, if applicable, upon which any government review or investigation, including without limitation, any review or investigation by the SEC , is completed. Subject to the satisfaction or waiver of the conditions to, the Closing, the Company currently expects to complete the Merger in its fourth fiscal quarter of 2026.

Basis of Presentation

These unaudited condensed consolidated financial statements for the nine months ended March 31, 2026 have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2025, from which the accompanying condensed consolidated balance sheet at June 30, 2025 was derived. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial information have been included and are of a normal recurring nature.