As filed with the Securities and Exchange Commission
On June 23, 2000 File No. 333-39014
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SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FONAR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 3845 11-2464137
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(State or other Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation Classification
or organization) Code Number
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)
Raymond V. Damadian, M.D.
FONAR CORPORATION
110 Marcus Drive
Melville, New York 11747
(631) 694-2929
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(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
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement
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 the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box : [ ]
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
Title of each Proposed Proposed
class of maximum maximum amount
securities offering aggregate of
to be Amt. to be price offering registration
registered registered per unit* price fee
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Common Stock, 4,826,000 2.90 $13,995,400 $4,241.03
$.0001 per
share
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Total 4,826,000 2.90 $13,995,400 $4,241.03
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* Pursuant to Rule 457, subsection (c)
Specified Date: June 7, 2000
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.
<PAGE>
PROSPECTUS
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4,826,000 Shares
FONAR CORPORATION
Common Stock
This Prospectus relates to the reoffer and resale of 4,826,000 shares
(the "Shares") of the common Stock of FONAR Corporation (the "Company" or
"Fonar") acquired by certain persons (the "Selling Stockholders") who will
receive such shares in satisfaction of approximately $13,994,000 in
indebtedness (inclusive of accrued but unpaid interest as of May 20, 2000).
Such indebtedness (the "Acquisition Debt") was incurred by the Company or its
subsidiary, Health Management Corporation of America ("HMCA") in connection
with the acquisitions and mergers consummated by HMCA."). It is anticipated
that the holders of the Acquisition Debt will be offered Shares in payment for
the indebtedness held by them, plus the brokerage commissions and other
transactional costs which would be incurred by them in connection with the
resale of the Shares, at the prevailing market value of the Shares. The number
of Shares required to retire the Acquisition Debt will vary and will depend on
the market price of the Company's Common Stock at the time or times such
Shares are issued in satisfaction of the indebtedness.
The Company will not receive any proceeds from the sale of shares being
sold by the Selling Stockholders. The Shares are being offered on a "best
efforts" basis by the Selling Stockholders through broker - dealers of their
choice. The price of the Shares will vary and will depend on the market value
of the Company's Common Stock at the times the Shares are sold.
FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Company expects to pay expenses of this offering of approximately
$35,000.
On June 7, 2000, the closing price for the Common Stock of the Company
(Symbol: FONR) was $2.90 per share, as reported by NASDAQ.
The date of this Prospectus is June 23, 2000
No person has been authorized by the Company to give any information or
to make any representations other than those contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer or solicitation to any person in any jurisdiction where
such offer or solicitation would be unlawful. Neither delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company since
the date hereof.
<PAGE>
AVAILABLE INFORMATION
FONAR Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by FONAR Corporation can be inspected
and copies obtained at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and the Regional
Offices of the Commission at 7 World Trade Center, New York, New York 10048
and at the Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
FONAR Corporation has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-2 under the Securities Act of 1933, as
amended, with respect to the securities to which this Prospectus relates. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all the information set forth in the Registration Statement,
including the exhibits thereto. For further information with respect to the
Company and the securities offered hereby, reference is made to the
Registration Statement and the exhibits thereto. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. Statements contained in this
Prospectus concerning the provisions of documents included as exhibits to the
Registration Statement are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.
Where any document or part thereof is incorporated by reference in this
Prospectus, the Company will provide without charge to each person to whom
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any and all of the information that has been incorporated by
reference in this Prospectus (not including exhibits unless the exhibits are
specifically incorporated by reference). Requests for copies should be
directed to the Company at 110 Marcus Drive, Melville, New York 11747,
Attention Stockholder Relations Department. The telephone number is (631)
694-2929.
<PAGE>
SUMMARY INFORMATION
Fonar Corporation (the "Company" or "FONAR") designs, manufactures and
markets magnetic resonance imaging ("MRI") scanners which utilize
non-superconductive magnet technology for the detection and diagnosis of human
disease. The Company's address is 110 Marcus Drive, Melville, New York 11747
and its telephone number there is (631) 694-2929.
Health Management Corporation of America ("HMCA") was organized by the
Company in March 1997 for the purpose of engaging in the business of providing
comprehensive management services to physicians' practices and other medical
providers, including diagnostic imaging centers and ancillary services. The
services provided by HMCA include administration, providing office space,
facilities medical equipment and supplies, staffing and supervision of
non-medical personnel, legal, accounting, billing and collection services and
the development and implementation of practice growth and marketing
strategies.
Since its formation, HMCA has completed five acquisitions. HMCA became
actively engaged in the physician and diagnostic management services business
through its initial two acquisitions, which were consummated effective June
30, 1997. Following these two initial acquisitions, HMCA completed two
additional acquisitions in fiscal 1998 and one additional acquisition in
fiscal 1999.
The Selling Stockholders are the former owners of three of the businesses
acquired by HMCA, in transactions where payment of a portion of the purchase
price was payable over time (the "Acquisition Debt"). The Acquisition Debt,
inclusive of accrued but unpaid interest as of May 20, 2000, is approximately
$13,994,000.
The first acquisition was of a group of several interrelated companies
engaged in the business of managing three diagnostic imaging centers and one
multi-specialty practice in New York State (together, the "Affordable
Companies"). None of the Acquisition Debt is owed to the former owners of the
Affordable Companies.
The second completed acquisition was of Raymond V. Damadian, M.D. MR
Scanning Centers Management Company ("RVDC"). Pursuant to the terms of the
transaction HMCA purchased all of the issued and outstanding shares of stock
of RVDC from Raymond V. Damadian. Raymond V. Damadian, the principal
stockholder, President and Chairman of the Board of FONAR, was the sole
stockholder, director and President of RVDC immediately prior to the
acquisition. None of the Acquisition Debt is owed to Dr. Damadian.
The third completed acquisition, consummated on January 20, 1998, was the
acquisition of the business and assets of Central Health Care Services
Management Company, LLC (Central Health). Central Health is a management
service organization (MSO) managing a multi-specialty practice in Yonkers, New
York. Approximately $140,000 (inclusive of unpaid interest through May 20,
2000) of the Acquisition Debt is owed to the former owners of Central Health.
The fourth completed acquisition, consummated effective March 20, 1998,
was the acquisition of A & A Services, Inc. ("A & A Services"), an MSO
managing four primary care practices in Queens County, New York. A & A
Services provides the practices with management services, office space,
equipment, repair and maintenance service for the equipment and clerical and
other non medical personnel. Approximately $5,902,000 (inclusive of unpaid
interest through May 20, 2000) of the Acquisition Debt is owed to the former
owners of A & A Services.
The fifth completed acquisition, consummated effective August 20, 1998,
was the acquisition of Dynamic Health Care Management, Inc. ("Dynamic").
Dynamic is an MSO which manages three physician practices in Nassau and
Suffolk Counties on Long Island, New York. Approximately $7,951,000 (inclusive
of unpaid interest through May 20, 2000) of the Acquisition Debt is owed to
the former owners of Dynamic.
The Shares are intended to be issued to the Selling Stockholders in
satisfaction of the Acquisition Debt. The number of Shares which the Selling
Stockholders will receive will depend on the market price of the Company's
Common Stock at the times the Shares are issued. The number of Shares which
will be issued will be such number as will be sufficient to cover the
Acquisition Debt plus any brokerage commissions and other transactional costs
which may be incurred by the Selling Stockholders in connection with the
reoffer and resale of the Shares.
This Prospectus relates to the reoffer and resale of the Shares by the
Selling Stockholders. The Company will receive no proceeds from the resale of
the Shares by the Selling Stockholders. The offering price of the Shares will
vary and will depend on the market price of the Company's Common Stock at the
times the Shares are sold by the Selling Stockholders. The Company will pay
all costs of this offering estimated at $35,000 (See "Plan of Distribution").
NASDAQ Symbol..............FONR
Risk Factors...............Certain risk factors concerning the Company should
be considered carefully before deciding whether to
purchase the shares offered. See "RISK FACTORS."
This summary is qualified in its entirety by the more detailed
information appearing elsewhere in the Prospectus.
<PAGE>
RISK FACTORS
Investment in the Company is highly speculative and subject to
numerous and substantial risks. Therefore, prospective purchasers should
carefully consider the risks associated with the business of the Company and
the purchase of the Shares, including the risk factors discussed below.
1. Financial Risks. For the fiscal years ended June 30, 1999 and June
30, 1998, the Company experienced net losses of $14.22 million and $5.65
million respectively and net operating losses of $15.61 million and $17.59
million respectively. For the nine months ended March 31, 2000, the Company
experienced a net loss of $10.0 million and an operating loss of $11.7
million. On July 2, 1997, however, the Company received $128.7 million from
General Electric Company (net $77.2 million after attorneys' fees and
expenses) in payment of the judgment rendered against General Electric Company
for infringement of the Company's original MRI (Cancer Detection) patent and
Multi-Angle Oblique (MAO) patent (Fonar Corporation et ano. v. General
Electric Company et ano., 92-CV-4196. (LDW), U.S. District Court for the
Eastern District of New York). The Company believes that it will be able to
reverse its operating losses with the cash infusion from its patent
litigation, the introduction into the marketplace of its new MRI scanners, and
the operating income generated by its subsidiary HMCA ($3.12 million in fiscal
1999, $2.70 million in fiscal 1998 and $1.96 million for the first nine months
of fiscal 2000.
2. Reliance on New Products. Fonar's ability to generate future
operating profits will depend on its ability to market and sell its new lines
of MRI products and works-in-progress. Included among Fonar's products are its
two "Quad"(TM) MRI scanners, which were approved for the sale by the United
States Food and Drug Administration (the "FDA") in 1995. The Quad 7000 MRI
scanner received FDA approval in April, 1995, and the Quad 12000 received FDA
approval in November, 1995. The Quad scanners have four sides that are open,
thus allowing access to the scanning area from four vantage points. With the
Quad 12000, operating at 0.6 Tesla, the Company has introduced the first open
high field MRI scanner in the industry. The Quad 7000 is similar to the Quad
12000 but operates at a 0.35 Tesla. Fonar also offers the Echo(TM), which is
a compact 0.3 Tesla open MRI scanner designed to appeal to the most cost
conscious users. The "Fonar 360"(TM), recently approved on March 16, 2000 for
marketing by the FDA, includes the "Open sky" MRI(TM) wherein the magnet
frame is incorporated into the floor, ceiling and sidewalls of the scan room
and is open so that family and physicians can walk inside the magnet to
approach the patient. The scanner is designed so as to incorporate it into the
landscape that decorates the walls of the scan room. It's ability to give
physicians direct 360 access to the patient and the availability of MRI
compatible surgical instruments approved by the FDA for intervention enables
use of the Fonar 360 for image guided intervention.
The Company's current "works in progress" include the "Stand-Up MRI"(TM) and
the Pinnacle(TM). The Company's Stand-Up MRI(TM) will allow patients to be
scanned while standing, sitting, bending or reclining. This will allow all
parts of the body, particularly the spine and joints, to be imaged in the
weight-bearing state. The Pinnacle, a superconducting version of the 0.6 Tesla
Quad 12000, combines the benefits of Fonar's patented iron-frame with a
superconducting magnet.
Although the Company believes its new products are responsive to the demands
of the market place, there can be no assurance as to the future market
acceptance of the Quad scanners.
3. Dependence Upon Services of Dr. Damadian. The Company's success is
greatly dependent upon the continued participation of Dr. Raymond V. Damadian,
its founder, Chairman of the Board and President. Loss of the services of Dr.
Damadian would have a material adverse effect upon the development of the
Company's business. The Company does not currently carry "key man" life
insurance on Dr. Damadian.
4. Competition and Obsolescence. The medical equipment industry is
highly competitive and characterized by rapidly changing technology and
extensive research. Numerous companies, many of which have substantially
greater financial resources than those available to the Company, 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., Picker
International, Philips N.V., Toshiba Corporation, Hitachi Corporation and
Shimadzu Corporation. In addition, there can be no assurance that the
Company's products will not be rendered obsolete by future products employing
technologies superior to those utilized by the Company.
5. Control of the Company. The Company's Certificate of Incorporation
does not provide for cumulative voting in the election of directors. Dr.
Raymond V. Damadian, the President, Chairman of the Board and principal
stockholder of the Company, will continue to be in control of the Company and
be in a position to elect all of the directors of the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of Shares by
the Selling Stockholders.
PLAN OF DISTRIBUTION
The Selling Stockholders will reoffer and resell the Shares through
broker - dealers of their selection into the market on a "best efforts" basis.
The price will vary and will depend on the market price of the Company's
Common Stock at the times the Shares are sold. It is not anticipated that the
Shares will be sold all at one time but over a period of time. There is no
minimum number of Shares which must be sold in order for the offering to be
effective.
The Company anticipates that the Shares will be issued to the Selling
Stockholders over a period of time. The Acquisition Debt (inclusive of accrued
but unpaid interest to May 20, 2000) is in the amount of $13,993,634.57. The
Acquisition Debt arose from three acquisitions: Dynamic, A&A Services and
Central Health. The Acquisition Debt is payable over time in installments to
the former owners of the acquired businesses up through August 2003, as
hereinafter described.
The Company will attempt to negotiate the issuance of the Shares in
satisfaction of the Acquisition Debt in installments approximating the
installments currently due under the terms of the Acquisition Debt. Whether
the holders of the Acquisition Debt will accept Shares in lieu of all or a
part of the Acquisition Debt and the terms on which they may do so, are
subject to negotiation between the Company and the holders of the Acquisition
Debt. Consequently, the precise number of Shares which may be issued and the
timing of their issuance will not be able to be determined conclusively until
such arrangements are finalized.
DYNAMIC.
As at May 20, 2000 the principal portion of the Acquisition Debt payable
to the former owners of Dynamic was $7,845,293.19, and the accrued but unpaid
interest thereon was $106,016.13. The indebtedness is payable pursuant to
three sets of notes as follows:
1. The first set of notes, in the original principal amount of $2,870,000
and of which $1,877,776.43 in principal remains outstanding, is payable in
annual installments (August 20,1999 - August 20, 2001). Two remaining annual
payments in the amount of $1,045,785.73 are due August 20, 2000 and August 20,
2001. The interest rate is 7 1/2% per annum. Accrued but unpaid interest as of
May 20, 2000 was $106,016.13.
2. The second set of notes, in the original principal amount of
$1,216,230.92 and of which $577,516.76 in principal remains outstanding, is
payable in sixty (60) monthly installments (September 20, 1999 - August 20,
2003) of $16,666.67. The interest rate is 7.254% per annum.
3. The third set of notes, in the original principal amount of $5,490,000
and of which $5,390,000 remains outstanding, is payable in thirty six (36)
equal monthly installments of principal and interest commencing August 20,
2000. No payments under these notes have been made as of the date of this
Prospectus other than a voluntary prepayment of $100,000. The interest rate is
7 1/2% per annum commencing August 20, 2000.
A&A SERVICES.
As at May 20, 2000, the principal portion of the Acquisition Debt payable
to the former owners of A&A Services was $5,871,777.70, and the accrued but
unpaid interest was $30,217.77. The indebtedness is payable pursuant to three
sets of notes as follows:
1. The first set of notes, in the original principal amount of $4,000,000
and of which $3,021,777.70 in principal remains outstanding, is payable in
sixteen (16) quarterly installments (March 20, 1999 through December 20, 2002)
in the amount of $300,043.94. The interest rate is six percent (6%) per annum.
2. The second set of notes in the original principal amount of $1,500,000
and of which $850,000 remains outstanding, is payable in sixty (60) monthly
installments (April 20, 1998 - March 20, 2003) in the amount of $25,000. The
notes do not bear interest.
3. Additional consideration in the amount of $2,000,000 is payable to the
former owners of A&A Services either in Common Stock of HMCA or pursuant to
notes. In the event that HMCA does not complete a public offering by September
20, 2000, the former owners may require HMCA to deliver notes in the principal
amount of $2,000,000 payable in eight (8) quarterly installments. The earliest
payments under such notes could be required would be December 20, 2000.
Interest at the rate of six percent (6%) per annum will be payable from the
date of the notes. HMCA does not expect to complete a public offering by
September 20, 2000.
CENTRAL HEALTH.
As at May 20, 2000, the principal portion of the Acquisition Debt payable
to the former owners of Central Health was $137,916.25 and the accrued but
unpaid interest was $2,413.53. The indebtedness is payable pursuant to two
sets of notes as follows:
1. The first set of notes in the original principal amount of $230,000
and of which $115,000.00 in principal remains outstanding, is payable in two
annual installments (March 18, 2000 and March 18, 2001) in the amount of
$115,000. The interest rate is prime plus two percentage points.
2. The second set of notes, in the original principal amount of
$45,832.50 and of which $22,916.25 remains outstanding, is payable in two
annual installments (April 29, 2000 and April 29, 2001). The interest rate is
prime plus two percentage points.
DETERMINING OF OFFERING PRICE
The offering price of the Shares will vary, depending on the market price
of the Shares at such times as the Shares are sold.
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders and
the number of Shares to be offered by each assuming the following:
(1) all holders of the Acquisition Debt accept Shares in satisfaction of
their Acquisition Debt,
(2) the Shares are issued to the holders of the Acquisition Debt in the
same proportions as their respective shares of the Acquisition Debt bear to
the entire amount of the Acquisition Debt,
(3) the holders of the Acquisition Debt elect to sell all the Shares they
receive, and
(4) reimbursement to the Selling Stockholders in Shares for brokerage
commissions and other transactional costs is not taken into account.
Name of Beneficial Shares Beneficially Shares Beneficially
Owner Owned and Offered Owned After Offering
------------------ ------------------- --------------------
Stuart Blumberg 1,371,088 0
Steven Jonas 1,371,088 0
Glenn Muraca 1,017,714 0
Giovanni Marciano 1,017,714 0
Theresa Striano 24,198 0
Philip Striano 24,198 0
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<PAGE>
DESCRIPTION OF FONAR'S SECURITIES
The following table shows the shares of FONAR's securities authorized and
outstanding as of March 31, 2000:
CLASS AUTHORIZED ISSUED AND OUTSTANDING
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Common Stock par value 60,000,000 55,949,729
$.0001 per share
Class B Common Stock, par value 4,000,000 5,211
$.0001 per share
Class C Common Stock par value 10,000,000 9,562,824
$.000 per share
Class A Non-voting Preferred 8,000,000 7,836,286
Stock, par value $.0001 per
share
Preferred Stock , par value 10,000,000 0
$.0001 per share
Voting Rights
The Class C Common Stock has 25 votes per share, the Class B Common Stock
has 10 votes per share and the Common Stock has one vote per share in the
election of directors and on all other matters upon which stockholders are
entitled to vote. All three classes will vote together except where otherwise
required by law. The Class A Non-voting Preferred Stock does not have voting
rights except as required under the Delaware General Corporation Law.
Cash Dividend
With respect to any discretionary cash dividends which may be declared by
the Board of Directors on the Company's stock, a share of the Common Stock is
entitled to a cash dividend 20% higher than the cash dividend on a share of
the Class B Common Stock, as and when any cash dividend may be declared. A
share of the Class C Common Stock is entitled to one-third (1/3) of the
dividend declared on a share of the Class B Common Stock. The Class A
Non-voting Preferred is entitled to the same discretionary cash dividends as
the Common Stock.
Special Dividend on Common Stock
The Common Stock, but not the Class B Common Stock, the Class C Common
Stock, or the Class A Non-voting Preferred Stock, is entitled to a dividend
equal to a percentage of the amount of any cash award (in the form of damages,
royalties, or otherwise) collected by the Company in connection with
enforcement by the Company of United States Patent No. 3,789,832 as follows: 3
1/4 % of the first $10 million of any such cash award collected by the
Company, 4 1/2 % of the next $20 million of any such cash award collected by
the Company and 5 1/2 % of the amount of any such cash award in excess of $30
million collected by the Company. This patent, which was issued to the
President of the Company, Dr. Raymond V. Damadian, in 1974 and subsequently
exclusively licensed by him to the Company, expired in February 1992. Damages
for infringements occurring before its expiration, however, may still be
recoverable.
Special Dividends on Class A Non-voting Preferred Stock
The Class A Non-voting Preferred Stock is entitled to a dividend equal to
a percentage of any award or settlement collected by the Company in connection
with the enforcement of five of its patents in certain patent lawsuits, less
the special dividend payable on the Common Stock with respect to U.S. Patent
No. 3,789,832 as follows: 3 1/4 % of the first $10 million of any such cash
awards or settlements collected by the Company, 4 1/2 % of the next $20
million of any such cash awards or settlements collected by the Company and 5
1/2 % of the amount of any such cash awards or settlements in excess of $30
million collected by the Company. The five patents are as follows: Apparatus
and Method for Detecting Cancer in Tissue, 2/5/74, U.S. Patent No. 3,789,832;
Apparatus Including Permanent Magnet Configuration, 6/23/87, U.S. Patent No.
4,675,609; Apparatus and Method for Multiple Angle Oblique MRI, 10/3/89, U.S.
Patent No. 4,871,966; Solenoidal Surface Coils for Magnetic Resonance Imaging,
12/12/89, U.S. Patent No. 4,887,038; and Eddy Current Control in Magnetic
Resonance Imaging, 10/29/91, U.S. Patent No. 5061897.
The Board of Directors has reserved the right (but would not be
obligated) to expand the dividend to which the Class A Non-voting Preferred
Stock is entitled, to cover additional patents, additional lawsuits, or both
and to increase the percentage of any awards or settlements received in any
lawsuits which would be payable as a dividend.
In addition, the Board of Directors is authorized, in its discretion, to
declare cash dividends from time to time solely on the Class A Non-voting
Preferred Stock or to fix such further dividend rights for the Class A
Non-voting Preferred Stock as it may determine, in its sole discretion.
Other Dividends and Distributions
With respect to dividends and distributions other than cash dividends and
all other rights (other than voting rights), shares of the Common Stock, the
Class B Common Stock and Class A Non-voting Preferred Stock rank equally and
have the same rights, including rights in liquidation. A share of the Class C
Common Stock has one-third 1(1/3) of such rights.
Conversion
Shares of Class B Common Stock are convertible into Common Stock on a
share for share basis. Shares of Class C Common Stock are convertible into
Common Stock on a three for one basis. Shares of Class A Non-voting Preferred
Stock and shares of Common Stock are not convertible.
Preemptive Rights and Cumulative Voting
Under the Company's Certificate of Incorporation, stockholders have no
preemptive rights to subscribe for the new shares on a proportionate basis.
The Company's Certificate of Incorporation does not provide for cumulative
voting.
Preferred Stock
No shares of the Company's $ .001 par value Preferred Stock have been
issued or are presently planned to be issued. Shares of the $ .001 par value
Preferred Stock would have such voting powers and other designations,
preferences, rights and voting powers and other designations, preferences,
rights and qualifications as the Board of Directors would establish.
Transfer Agent and Registrar
American Securities Transfer & Trust, Inc., 12039 W. Alameda Parkway,
Lakewood, Colorado 80228 is the transfer agent and registrar for the Company's
Common Stock, Class B Common Stock, Class C Common Stock and Class A
Non-voting Preferred Stock.
VALIDITY OF ISSUANCE
The validity of the shares being offered hereby will be passed upon by
Henry T. Meyer, Esq., 110 Marcus Drive, Melville, New York 11747. Mr. Meyer is
the Company's General Counsel.
EXPERTS
The financial statements and supplemental financial schedules contained
in the Company's latest annual report on Form 10-K, incorporated by reference
into this Prospectus, has been examined by Tabb Conigliaro & McGann, 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.
ADDITIONAL DOCUMENTS
This prospectus is accompanied by the Company's most recent Form 10-K
(for the fiscal year ended June 30, 1999) and most recent Form 10-Q (for the
fiscal quarter ended March 31, 2000) filed with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934, as amended.
INDEMNIFICATION
The Delaware General Corporation Law and the Company'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 Act may be
permitted to directors, officers or person controlling the Company pursuant to
the foregoing provisions, the Company has been informed 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.
INCORPORATION BY REFERENCE
The following documents are incorporated by reference into this
Prospectus:
1. The registrant's latest Form 10-K filed pursuant to Section 13(a) or
15(d) of the Securities and Exchange Act of 1934 which contains
certified financial statements for the registrant's latest fiscal
year for which a Form 10-K was required to have been filed
(specifically, for the fiscal year ended June 30, 1999).
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities and Exchange Act of 1934 since the end of the fiscal year
covered by the annual report referred to in (1) above, including,
specifically, the Company's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 2000.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth all expenses in connection with the
issuance and distribution of the securities being registered, other than
broker/dealer commissions.
SEC registration filing fee $4,219
NASD filing fee $7,500*
Blue Sky fees and expenses $2,500*
Printing and Engraving $7,500*
Professional Fees (Accounting & Legal) $10,000*
Miscellaneous $3,281*
Total $35,000.00*
* Estimated
Item 15. Indemnification of Directors and Officers
Article Eighth of the Certificate of Incorporation, as amended, of FONAR
Corporation provides as follows:
The personal liability of directors to the Corporation or its
stockholders for monetary damages for breach of their fiduciary duties as
directors is eliminated, provided however, that this provision shall not
eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
an improper personal benefit.
Article V of the By-law's of FONAR Corporation generally provides for
indemnification of its officers and directors to the full extent permitted by
Delaware Corporation Law.
Section 145 of the Delaware General Corporation Law permits
indemnification of officers, directors and employees of the Company under
certain conditions and subject to certain limitations.
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
Company incorporated by reference to Exhibit 4.1 to the Registrant's
registration statement on Form S-8, Commission File No. 33-62099.
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.
23.1 Consent of Tabb, Conigliaro & McGann, P.C., Certified Public Accountants.
See Exhibits.
23.2 (Consent of Counsel is included in Exhibit 5).
99.1 The Registrant's Form 10-K filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 for the fiscal year ended June 30,
1999. See Exhibits.
99.2 The Registrant's Form 10-Q filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 for the fiscal quarter ended March
31, 2000. See Exhibits.
Financial Statement Schedules
None
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) 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.
(2) 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.
(3) 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: June 23, 2000
FONAR CORPORATION
By: /s/ Raymond V. Damadian
-----------------------
Raymond V. Damadian,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, 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 June 23, 2000
----------------------- Board of Directors,
Raymond V. Damadian President and a Director
(Principal Executive Officer)
Director
------------------------
Claudette J.V. Chan
/s/ Robert J. Janoff Director June 23, 2000
---------------------
Robert J. Janoff
/s/ Charles N. O'Data Director June 23, 2000
---------------------
Charles N. O'Data
As filed with the Securities and Exchange Commission
On June 23, 2000 File No. 333-39014
Registration No.
SECURITIES AND EXCHANGE COMMISSION
EXHIBITS
AMENDMENT NO. 1
TO
FORM S-2
Registration Statement
Under
The Securities Act of 1933
FONAR CORPORATION
(Exact name of registrant as specified in its charter)
FONAR CORPORATION
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
5 Opinion of Counsel
re Legality
23.1 Consent of Certified
Public Accountants
23.2 (Consent of Counsel is
included in Exhibit 5)
99.1 Form 10-K for the
Fiscal Year Ended
June 30, 1999
99.2 Form 10-Q for the
Fiscal Quarter Ended
March 31, 2000
