~~[X]~~☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~YES _X_ NO ___~~☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files Yes ~~YES _X_ NO ___~~☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of accelerated filer, large accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated ~~filer___~~filer ☐ Accelerated filer ~~___~~☐ Non-accelerated filer ~~_X_~~☒, Smaller reporting company _X☒_ Emerging growth company ~~___~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES ___~~Yes ☐ No NO ~~_X_~~☒

Indicate the number of shares outstanding of each of the ~~issuer's~~issuer’s classes of common stock, as of the close of the latest practicable date.

~~Page 1~~

313,438

FONAR CORPORATION AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION	PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - December 31, ~~2022~~2023 (Unaudited) and June 30, ~~2022~~2023	3
Condensed Consolidated Statements of Income for the Three Months Ended December 31, ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	6
Condensed Consolidated Statements of Income for the Six Months Ended December 31, ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	7
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended December 31, ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	8
Condensed Consolidated Statements of Changes in Equity for the Six Months Ended December 31, ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	9
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, ~~2022~~2023 and December 31, ~~2021~~2022 (Unaudited)	10
Notes to Condensed Consolidated Financial Statements (Unaudited)	11
Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		2524
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3330
Item 4. Controls and Procedures		3430
PART II - OTHER INFORMATION		3431
Item 1. Legal Proceedings		3431
Item 1A. Risk Factors		3431
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3633
~~Item~~Item 3. Defaults Upon Senior Securities		3633
Item 4. Mine Safety Disclosures		3633
Item 5. Other Information		3633
Item 6. Exhibits		3733
Signatures		3734

~~Page 2~~

Page 2

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

ASSETS


	December 31, 2022		June 30, 2022 *		December 31, 2023		June 30, 2023 *
Current Assets:
Cash and cash equivalents	$	49,505	$	48,723	$	53,225	$	51,280
Short term investments		32		32
Short-term investments						33		33
Accounts receivable – net		3,949		4,336		3,881		3,861
Accounts receivable – related party		60		—
Accounts receivable - related party						60		—
Medical receivable – net		19,685		20,109		22,548		21,259
Management and other fees receivable – net		34,910		33,419		39,352		35,888
Management and other fees receivable – related medical practices – net		8,941		8,603		9,267		9,162
Inventories		2,634		2,360		2,835		2,570
Prepaid expenses and other current assets		1,033		1,104		1,341		1,608
Total Current Assets		120,749		118,686		132,542		125,661

Accounts receivable – long term		1,278		1,872		376		710
Deferred income tax asset - net		10,536		12,843
Note receivable – related party						577		—
Deferred income tax asset						7,758		10,042
Property and equipment – net		21,627		22,282		20,109		22,146
Right-of-use Asset – operating lease		34,107		34,232		32,234		33,069
Right-of-use Asset – financing lease		829		928		630		729
Goodwill		4,269		4,269		4,269		4,269
Other intangible assets – net		3,577		3,704		3,266		3,432
Other assets		526		526		501		524
Total Assets	$	197,498	$	199,342	$	202,262	$	200,582

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

~~Page 3~~

Page 3

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS’ EQUITY

	December 31, 2022		June 30, 2022 *		December 31, 2023		June 30, 2023 *
Current Liabilities:
Current portion of long-term debt and capital leases	$	42	$	40
Current portion of long-term debt					$	45	$	44
Accounts payable		866		1,552		1,335		1,579
Other current liabilities		4,137		6,417		3,460		5,444
Unearned revenue on service contracts		3,847		4,289		3,804		3,832
Unearned revenue on service contracts – related party		55		—		55		—
Operating lease liability – current portion		3,952		3,880
Financing lease liability – current portion		214		210
Operating lease liability - current portion						4,658		3,905
Financing lease liability - current portion						222		218
Customer deposits		632		361		600		602

Total Current Liabilities		13,745		16,749		14,179		15,624

Long-Term Liabilities:
Unearned revenue on service contracts		1,296		1,857		376		760
Deferred income tax liability		216		216		395		395
Due to related medical practices		93		93		93		93
Operating lease liability – net of current portion		33,158		33,091		30,299		32,105
Financing lease liability – net of current portion		709		838		508		620
Long-term debt and capital leases, less current portion		137		155
Long-term debt, less current portion						92		115
Other liabilities		74		107		23		42

Total Long-Term Liabilities		35,683		36,357		31,786		34,130
Total Liabilities		49,428		53,106		45,965		49,754

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

~~Page 4~~

Page 4

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS’ EQUITY (Continued)

STOCKHOLDERS' EQUITY: December 31, 2022 June 30,
2022*
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2022 and June 30, 2022, 313 issued and outstanding at December 31, 2022 and June 30, 2022 $ —   $ —
Preferred stock $.001 par value; 567 shares authorized at December 31, 2022 and June 30, 2022, issued and outstanding – none —   —
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2022 and June 30, 2022, 6,563 and 6,566 issued at December 31, 2022 and June 30, 2022, respectively 6,538 and 6,554 outstanding at December 31, 2022 and June 30, 2022 respectively 1 1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at December 31, 2022 and June 30, 2022; .146 issued and outstanding at December 31, 2022 and June 30, 2022 —   —
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2022 and June 30, 2022, 383 issued and outstanding at December 31, 2022 and June 30, 2022 —   —
Paid-in capital in excess of par value 184,130 184,531
Accumulated deficit (29,288 ) (33,567 )
Treasury stock, at cost – 25 shares of common stock at December 31, 2022 and 12 shares of common stock at June 30, 2022 (751 ) (675 )
Total Fonar Corporation’s Stockholders’ Equity 154,092 150,290
Noncontrolling interests (6,022 ) (4,054 )
Total Stockholders' Equity 148,070 146,236
Total Liabilities and Stockholders’ Equity $ 197,498 $ 199,342

STOCKHOLDERS’ EQUITY:	December 31, 2023			June 30, 2023*
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2023 and June 30, 2023, 313 issued and outstanding at December 31, 2023 and June 30, 2023	$	—		$	—
Preferred stock $.001 par value; 567 shares authorized at December 31, 2023 and June 30, 2023, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2023 and June 30, 2023, 6,332 and 6,462 issued at December 31, 2023 and June 30, 2023, respectively 6,328 and 6,451 outstanding at December 31, 2023 and June 30, 2023 respectively		1			1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at December 31, 2023 and June 30, 2023; .146 issued and outstanding at December 31, 2023 and June 30, 2023		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2023 and June 30, 2023, 383 issued and outstanding at December 31, 2023 and June 30, 2023		—			—
Paid-in capital in excess of par value		180,607			182,613
Accumulated deficit		(16,326	)		(24,191	)
Treasury stock, at cost - 4 shares of common stock at December 31, 2023 and 11 shares of common stock at June 30, 2023		(395	)		(516	)
Total Fonar Corporation’s Stockholders’ Equity		163,887			157,907
Non controlling interests		(7,590	)		(7,079	)
Total Stockholders’ Equity		156,297			150,828
Total Liabilities and Stockholders’ Equity	$	202,262		$	200,582

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

~~Page 5~~

Page 5

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)


	FOR THE THREE MONTHS ENDED DECEMBER 31,
REVENUES	2023			2022
Patient fee revenue – net of contractual allowances and discounts	$	8,221		$	7,129
Product sales – net		55			170
Service and repair fees – net		1,778			1,838
Service and repair fees - related parties – net		28			28
Management and other fees – net		12,316			12,092
Management and other fees - related medical practices – net		2,988			2,999
Total Revenues – Net		25,386			24,256
COSTS AND EXPENSES
Costs related to patient fee revenue		4,602			4,023
Costs related to product sales		302			214
Costs related to service and repair fees		784			722
Costs related to service and repair fees - related parties		12			11
Costs related to management and other fees		7,208			6,622
Costs related to management and other fees – related medical practices		1,590			1,492
Research and development		416			342
Selling, general and administrative		5,587			6,598
Total Costs and Expenses		20,501			20,024
Income From Operations		4,885			4,232
Other Expense		—			(208	)
Other Income – Related party		577			—
Interest Expense		(10	)		(12	)
Investment Income		534			263
Income Before Provision for Income Taxes and Non controlling Interests		5,986			4,275
Provision for Income Taxes		(1,366	)		(1,463	)
Net Income		4,620			2,812
Net Income – Non controlling Interests		(861	)		(580	)
Net Income – Attributable to FONAR	$	3,759		$	2,232
Net Income Available to Common Stockholders	$	3,525		$	2,097
Net Income Available to Class A Non-Voting Preferred Stockholders	$	175		$	101
Net Income Available to Class C Common Stockholders	$	59		$	34
Basic Net Income Per Common Share Available to Common Stockholders	$	0.55		$	0.32
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.54		$	0.32
Basic and Diluted Income Per Share – Class C Common	$	0.16		$	0.09
Weighted Average Basic Shares Outstanding – Common Stockholders		6,437			6,527
Weighted Average Diluted Shares Outstanding - Common Stockholders		6,565			6,655
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		383			383

FOR THE THREE MONTHS
ENDED DECEMBER 31,
REVENUES 2022 2021
Patient fee revenue net of contractual allowances and discounts $ 7,129 $ 7,443
Product sales – net 170 198
Service and repair fees – net 1,838 1,907
Service and repair fees - related parties – net 28 28
Management and other fees – net 12,092 12,108
Management and other fees - related medical practices – net 2,999 2,795
Total Revenues – Net 24,256 24,479
COSTS AND EXPENSES
Costs related to patient fee revenue 4,023 3,323
Costs related to product sales 214 190
Costs related to service and repair fees 722 719
Costs related to service and repair fees - related parties 11 10
Costs related to management and other fees 6,622 6,924
Costs related to management and other fees – related medical practices 1,492 1,690
Research and development 342 370
Selling, general and administrative 6,598 4,770
Total Costs and Expenses 20,024 17,996
Income From Operations 4,232 6,483
Other (Expense) Income (208 ) 47
Interest Expense (12 ) (23 )
Investment Income 263 60
Income Before Provision for Income Taxes and Noncontrolling Interests 4,275 6,567
Provision for Income Taxes (1,463 ) (1,430 )
Net Income 2,812 5,137
Net Income - Noncontrolling Interests (580 ) (1,117 )
Net Income – Attributable to FONAR $ 2,232 $ 4,020
STATEMENT OF INCOME
Net Income Available to Common Stockholders $ 2,097 $ 3,777
Net Income Available to Class A Non-Voting Preferred Stockholders $ 101 $ 181
Net Income Available to Class C Common Stockholders $ 34 $ 62
Basic Net Income Per Common Share Available to Common Stockholders $ 0.32 $ 0.58
Diluted Net Income Per Common Share Available to Common Stockholders $ 0.32 $ 0.57
Basic and Diluted Income Per Share – Class C Common $ 0.09 $ 0.16
Weighted Average Basic Shares Outstanding – Common Stockholders 6,527 6,554
Weighted Average Diluted Shares Outstanding – Common Stockholders 6,655 6,682
Weighted Average Basic and Diluted Shares Outstanding – Class C Common 383 383

See accompanying notes to condensed consolidated financial statements.

~~Page 6~~

Page 6

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

FOR THE SIX MONTHS ENDED DECEMBER 31,
REVENUES 2022 2021
Patient fee revenue – net of contractual allowances and discounts $ 13,205 $ 14,294
Product sales – net 200 346
Service and repair fees – net 3,658 3,844
Service and repair fees - related parties – net 55 55
Management and other fees – net 24,342 24,081
Management and other fees - related medical practices – net 5,987 5,589
Total Revenues – Net 47,447 48,209
COSTS AND EXPENSES
Costs related to patient fee revenue 7,822 6,479
Costs related to product sales 383 299
Costs related to service and repair fees 1,440 1,443
Costs related to service and repair fees – related parties 22 21
Costs related to management and other fees 13,124 13,801
Costs related to management and other fees – related medical practices 2,890 3,326
Research and development 691 755
Selling, general and administrative 12,932 9,860
Total Costs and Expenses 39,304 35,984
Income From Operations 8,143 12,225
Other (Expense) Income (197 ) 858
Interest Expense (27 ) (40 )
Investment Income 414 122
Income Before Provision for Income Taxes and Noncontrolling Interests 8,333 13,165
Provision for Income Taxes (2,871 ) (2,846 )
Net Income 5,462 10,319
Net Income – Noncontrolling Interests (1,183 ) (2,412 )
Net Income – Attributable to FONAR $ 4,279 $ 7,907
STATEMENT OF INCOME
Net Income Available to Common Stockholders $ 4,020 $ 7,430
Net Income Available to Class A Non-Voting Preferred Stockholders $ 193 $ 355
Net Income Available to Class C Common Stockholders $ 66 $ 122
Basic Net Income Per Common Share Available to Common Stockholders $ 0.62 $ 1.13
Diluted Net Income Per Common Share Available to Common Stockholders $ 0.60 $ 1.11
Basic and Diluted Income Per Share – Class C Common $ 0.17 $ 0.32
Weighted Average Basic Shares Outstanding – Common Stockholders 6,534 6,554
Weighted Average Diluted Shares Outstanding – Common Stockholders 6,662 6,682
Weighted Average Basic and Diluted Shares Outstanding – Class C Common 383 383


	FOR THE SIX MONTHS ENDED DECEMBER 31,
REVENUES	2023			2022
Patient fee revenue – net of contractual allowances and discounts	$	16,896		$	13,205
Product sales – net		219			200
Service and repair fees – net		3,643			3,658
Service and repair fees - related parties – net		55			55
Management and other fees – net		24,436			24,342
Management and other fees - related medical practices – net		5,975			5,987
Total Revenues – Net		51,224			47,447
COSTS AND EXPENSES
Costs related to patient fee revenue		9,029			7,822
Costs related to product sales		405			383
Costs related to service and repair fees		1,633			1,440
Costs related to service and repair fees - related parties		25			22
Costs related to management and other fees		14,231			13,124
Costs related to management and other fees – related medical practices		3,109			2,890
Research and development		883			691
Selling, general and administrative		10,453			12,932
Total Costs and Expenses		39,768			39,304
Income From Operations		11,456			8,143
Other Income (Expense)		1			(197	)

Other Income – Related party		577			—
Interest Expense		(58	)		(27	)
Investment Income		1,040			414
Income Before Provision for Income Taxes and Non controlling Interests		13,016			8,333
Provision for Income Taxes		(3,036	)		(2,871	)
Net Income		9,980			5,462
Net Income – Non controlling Interests		(2,115	)		(1,183	)
Net Income – Attributable to FONAR	$	7,865		$	4,279
Net Income Available to Common Stockholders	$	7,375		$	4,020
Net Income Available to Class A Non-Voting Preferred Stockholders	$	365		$	193
Net Income Available to Class C Common Stockholders	$	125		$	66
Basic Net Income Per Common Share Available to Common Stockholders	$	1.14		$	0.62
Diluted Net Income Per Common Share Available to Common Stockholders	$	1.12		$	0.60
Basic and Diluted Income Per Share – Class C Common	$	0.33		$	0.17
Weighted Average Basic Shares Outstanding – Common Stockholders		6,448			6,534
Weighted Average Diluted Shares Outstanding - Common Stockholders		6,576			6,662
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		383			383

See accompanying notes to condensed consolidated financial statements.

~~Page 7~~

Page 7

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CHANGES IN EQUITY

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

~~For the Three Months Ending December 31, 2022~~

Common Stock Paid in capital in excess of par value Accumulated Deficit Treasury Stock Non Controlling Interests Total
Balance – September 30, 2022 $ 1 $ 184,531 ($ 31,520 ) ($ 797 ) ($ 5,085 ) $ 147,130
Net income —   —   2,232 —   —   2,232
Purchase of Treasury stock —   —   —   (356 ) —   (356 )
Cancellation of shares —   (401 ) —   402 —   1
Distributions – Non controlling —   —   —   —   (1,517 ) (1,517 )
Income – Non controlling interests —   —   —   —   580 580
Balance – December 31, 2022 $ 1 $ 184,130 ($ 29,288 ) ($ 751 ) ($ 6,022 ) $ 148,070

~~For the Three Months Ending December 31, 2021~~

Common Stock Paid in capital in excess of par value Accumulated Deficit Treasury Stock Non Controlling Interests Total
Balance – September 30, 2021 $ 1 $ 185,101 ($ 42,121 ) ($ 675 ) ($ 2,834 ) $ 139,472
Net income —   —   4,020 —   —   4,020
Purchase of Non controlling interest —   (570 ) —   —   24 (546 )
Distributions – Non controlling —   —   —   —   (1,621 ) (1,621 )
Income – Non controlling interests —   —   —   —   1,117 1,117
Balance – December 31, 2021 $ 1 $ 184,531 ($ 38,101 ) ($ 675 ) ($ 3,314 ) $ 142,442

~~Page 8~~

For the Three Months Ending December 31, 2023


	Common Stock		Common Stock (Shares)			Paid in capital in excess of par value			Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)			Non Controlling Interests			Total
Balance – September 30, 2023	$	1		6,450,882		$	182,613		$	(20,085	)	$	(1,230	)		54,674		$	(7,226	)	$	154,073
Net income		—		—			—			3,759			—			—			—			3,759
Purchase of Treasury stock		—		—			—			—			(1,171	)		72,297			—			(1,171	)
Cancellation of shares		—		(122,588	)		(2,006	)		—			2,006			(122,588	)		—			—
Distributions - Non controlling interests		—		—			—			—			—			—			(1,225	)		(1,225	)
Income - Non controlling interests		—		—			—			—			—			—			861			861
Balance – December 31, 2023	$	1		6,328,294		$	180,607		$	(16,326	)	$	(395	)		4,383		$	(7,590	)	$	156,297

For the Three Months Ending December 31, 2022

	Common Stock		Common Stock (Shares)			Paid in capital in excess of par value			Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)			Non Controlling Interests			Total
Balance – September 30, 2022	$	1		6,554,210		$	184,531		$	(31,520	)	$	(797	)		20,445		$	(5,085	)	$	147,130
Net income		—		—			—			2,232			—			—			—			2,232
Purchase of Treasury stock		—		—			—			—			(356	)		20,819			—			(356	)
Cancellation of shares		—		(16,062	)		(401	)		—			402			(16,062	)		—			1
Distributions - Non controlling interests		—		—			—			—			—			—			(1,517	)		(1,517	)
Income - Non controlling interests		—		—			—			—			—			—			580			580
Balance – December 31, 2022	$	1		6,538,148		$	184,130		$	(29,288	)	$	(751	)		25,202		$	(6,022	)	$	148,070

See accompanying notes to condensed consolidated financial statements.

Page 8

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CHANGES IN EQUITY

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

For the Six Months Ending December 31, 2023

	Common Stock		Common Stock (Shares)			Paid in capital in excess of par value			Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)			Non Controlling Interests			Total
Balance - June 30, 2023	$	1		6,450,882		$	182,613		$	(24,191	)	$	(516	)		11,463		$	(7,079	)	$	150,828
Net income		—		—			—			7,865			—			—			—			7,865
Purchase of Treasury stock		—		—			—			—			(1,885	)		115,508			—			(1,885	)
Cancellation of shares		—		(122,588	)		(2,006	)		—			2,006			(122,588	)		—			—
Distributions - Non controlling interests		—		—			—			—			—			—			(2,626	)		(2,626	)
Income - Non controlling interests		—		—			—			—			—			—			2,115			2,115
Balance - December 31, 2023	$	1		6,328,294		$	180,607		$	(16,326	)	$	(395	)		4,383		$	(7,590	)	$	156,297

For the Six Months Ending December 31, 2022

Common Stock Paid in capital in excess of par value Accumulated Deficit Treasury Stock Non Controlling Interests Total
Balance – June 30, 2022 $ 1 $ 184,531 ($ 33,567 ) ($ 675 ) ($ 4,054 ) $ 146,236
Net income —   —   4,279 —   —   4,279
Purchase of Treasury stock —   —   —   (478 ) —   (478 )
Cancellation of shares —   (401 ) —   402 —   1
Distributions – Non controlling —   —   —   —   (3,151 ) (3,151 )
Income – Non controlling interests —   —   —   —   1,183 1,183
Balance – December 31, 2022 $ 1 $ 184,130 ($ 29,288 ) ($ 751 ) ($ 6,022 ) $ 148,070

	Common Stock		Common Stock (Shares)			Paid in capital in excess of par value			Accumulated Deficit			Treasury Stock			Treasury Stock (Shares)			Non Controlling Interests			Total
Balance - June 30, 2022	$	1		6,554,210		$	184,531		$	(33,567	)	$	(675	)		11,643		$	(4,054	)	$	146,236
Net income		—		—			—			4,279			—			—			—			4,279
Purchase of Treasury stock		—		—			—			—			(478	)		29,621			—			(478	)
Cancellation of shares		—		(16,062	)		(401	)		—			402			(16,062	)		—			1
Distributions - Non controlling interests		—		—			—			—			—			—			(3,151	)		(3,151	)
Income - Non controlling interests		—		—			—			—			—			—			1,183			1,183
Balance - December 31, 2023	$	1		6,538,148		$	184,130		$	(29,288	)	$	(751	)		25,202		$	(6,022	)	$	148,070

See accompanying notes to condensed consolidated financial statements.

~~For the Six Months Ending December 31, 2021~~

Common Stock Paid in capital in excess of par value Accumulated Deficit Treasury Stock Non Controlling Interests Total
Balance – June 30, 2021 $ 1 $ 185,101 ($ 46,008 ) ($ 675 ) ($ 3,049 ) $ 135,370
Net income —   —   7,907 —   7,907
Purchase of Non controlling interests —   (570 ) —   —   24 (546 )
Distributions – Non controlling —   —   —   —   (2,701 ) (2,701 )
Income – Non controlling interests —   —   —   —   2,412 2,412
Balance – December 31, 2021 $ 1 $ 184,531 ($ 38,101 ) ($ 675 ) ($ 3,314 ) $ 142,442

~~Page 9~~

Page 9

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts and shares in thousands)

(UNAUDITED)


	FOR THE SIX MONTHS ENDED DECEMBER 31,
	2023			2022
Cash Flows from Operating Activities:
Net income	$	9,980		$	5,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,415			2,218
Amortization on right-of-use assets		2,146			2,238
Provision for bad debts		355			2,891
Deferred income tax – net		2,284			2,306
Gain on sale of equipment – related party		(577	)		—
(Increase) decrease in operating assets, net:
Accounts, medical and management fee receivable(s)		(4,958	)		(3,375	)
Notes receivable		50			11
Inventories		(265	)		(274	)
Prepaid expenses and other current assets		217			60
Other assets		22			—
Increase (decrease) in operating liabilities, net:
Accounts payable		(244	)		(685	)
Other current liabilities		(2,341	)		(3,228	)
Operating lease liabilities		(2,265	)		(1,874	)
Financing lease liabilities		(108	)		(126	)
Customer deposits		(3	)		271
Other liabilities		(19	)		(33	)
Net cash provided by operating activities		6,689			5,862
Cash Flows from Investing Activities:
Purchases of property and equipment		(192	)		(1,362	)
Cost of patents		(20	)		(74	)
Net cash used in investing activities		(212	)		(1,436	)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations		(21	)		(15	)
Purchase of treasury stock		(1,885	)		(478	)
Distributions to non controlling interests		(2,626	)		(3,151	)
Net cash used in financing activities		(4,532	)		(3,644	)
Net Increase in Cash and Cash Equivalents		1,945			782
Cash and Cash Equivalents - Beginning of Period		51,280			48,723
Cash and Cash Equivalents - End of Period	$	53,225		$	49,505

See accompanying notes to condensed consolidated financial statements.

Page 10

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

FOR THE SIX MONTHS
ENDED DECEMBER 31,
2022 2021
Cash Flows from Operating Activities:
Net income $ 5,462 $ 10,319
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,218 2,358
Amortization on right-of-use assets 2,238 1,644
Provision for bad debts 2,891 822
Deferred income tax – net 2,306 2,437
Gain on forgiveness of PPP loan —   (701 )
(Increase) decrease in operating assets, net:
Accounts, medical and management fee receivable(s) (3,375 ) (2,429 )
Notes receivable 11 22
Inventories (274 ) (436 )
Prepaid expenses and other current assets 60 (33 )
Other assets —   102
Increase (decrease) in operating liabilities, net:
Accounts payable (685 ) (1,090 )
Other current liabilities (3,228 ) (5,395 )
Operating lease liabilities (1,874 ) (1,414 )
Financing lease liabilities (126 ) (101 )
Customer deposits 271 (277 )
Other liabilities (33 ) (33 )
Net cash provided by operating activities 5,862 5,795
Cash Flows from Investing Activities:
Purchases of property and equipment (1,362 ) (2,106 )
Purchase of noncontrolling interests —   (546 )
Cost of patents (74 ) (38 )
Net cash used in investing activities (1,436 ) (2,690 )
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations (15 ) (13 )
Purchase of treasury stock (478 ) —
Distributions to noncontrolling interests (3,151 ) (2,701 )
Net cash used in financing activities (3,644 ) (2,714 )
Net Increase in Cash and Cash Equivalents 782 391
Cash and Cash Equivalents – Beginning of Period 48,723 44,460
Cash and Cash Equivalents – End of Period $ 49,505 $ 44,851

~~See accompanying notes to condensed consolidated financial statements.~~

~~Page 10~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

NOTE 1 –DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Effective July 1, 2015, the Company restructured the corporate organization of the management of diagnostic imaging centers segment of our business. The reorganization was structured to more completely integrate the operations of Health Management Corporation of America and HDM. Imperial 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, 2022, the Company purchased non-controlling interests from the minority shareholders for $546,000. Currently the Company has a direct ownership interest of 70.8% and the investors’ have a 29.2% 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”.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, ~~2022,~~2023, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2023.~~2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the ~~Company's~~Company’s Annual Report on Form 10-K filed on September 28, ~~2022~~2023 for the fiscal year ended June 30, ~~2022.~~2023.

The global pandemic of COVID-19 has caused turbulence and uncertainty in the United States and international markets and economies which has adversely affected our workforce, liquidity, financial conditions, revenues, profitability and business operations. ~~Generally, COVID-19 had caused us to require that much of our workforce work from home and has restricted the ability of our personnel to travel for marketing purposes or to service our customers.~~ The Company was able to enact certain decisions to allow the Company to ~~survive during~~navigate the global pandemic and from further losses, or additional decreases in scan volume. The Company also received some government stimulus funds from the Paycheck Protection Program (“PPP”) and Medicare advances/stimulus payments. The Company has been able to navigate through these challengesvolume and avoid any significant disruption of the business. The Company must now take into account the severity, duration and recurrence of new strains of the COVID-19 virus which adds a new dimension to the challenges and uncertainty facing our business and the ~~volume has recently risen back almost to pre- COVID-19 levels.~~world economy in general. Although we are unable to predict if there will be additional consequences on our operations from the continuing global pandemic of COVID-19, the Company believes with positive cash flows, low debt and cash on hand, it will be able to ~~maintain~~continue operations ~~to pre COVID-19 levels~~ going forward.

~~Page 11~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

NOTE 2 – -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Page 11

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenues

~~Revenues~~

The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgements employed in the determination of revenue.

Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

BUSINESS COMBINATION

When the qualifications for business combination accounting treatment are met, it requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period of final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of ~~operations.~~income.

~~Page 12~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

Earnings Per Share

Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three and six months ended December 31, ~~2022~~2023 and ~~2021.~~2022.

Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three and six months ended December 31, ~~2022~~2023 and ~~2021,~~2022, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

~~Earnings Per Share~~

Schedule of earning per share
Three months ended
December 31, 2022 Three months ended
December 31, 2021
Total Common Stock Class C Common
Stock Total Common Stock Class C Common
Stock
Basic
Numerator:
Net income available to common stockholders $ 2,232 $ 2,097 $ 34 $ 4,020 $ 3,777 $ 62
Denominator:
Weighted average shares outstanding 6,527 6,527 383 6,554 6,554 383
Basic income per common share $ 0.34 $ 0.32 $ 0.09 $ 0.61 $ 0.58 $ 0.16
Diluted
Denominator:
Weighted average shares outstanding 6,527 383 6,554 383
Convertible Class C Stock 128 — 128 —
Total Denominator for diluted earnings per share 6,655 383 6,682 383
Diluted income per common share $ 0.32 $ 0.09 $ 0.57 $ 0.16

~~Page 13~~

Page 12

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 2 –- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings Per Share (Continued)

Schedule of earning per share
	Three months ended December 31, 2023						Three months ended December 31, 2022
	Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Basic
Numerator: Net income available to common stockholders	$	3,759	$	3,525	$	59	$	2,232	$	2,097	$	34
Denominator:
Weighted average shares outstanding		6,437		6,437		383		6,527		6,527		383
Basic income per common share	$	0.58	$	0.55	$	0.16	$	0.34	$	0.32	$	0.09
Diluted
Denominator: Weighted average shares outstanding				6,437		383				6,527		383
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,565		383				6,655		383
Diluted income per common share			$	0.54	$	0.16			$	0.32	$	0.09

	Six months ended December 31, 2022						Six months ended December 31, 2021						Six months ended December 31, 2023						Six months ended December 31, 2022
	Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Basic
Numerator: Net income available to common stockholders	$	4,279	$	4,020	$	66	$	7,907	$	7,430	$	122	$	7,865	$	7,375	$	125	$	4,279	$	4,020	$	66
Denominator:
Weighted average shares outstanding		6,534		6,534		383		6,554		6,554		383		6,448		6,448		383		6,534		6,534		383
Basic income per common share	$	0.65	$	0.62	$	0.17	$	1.21	$	1.13	$	0.32	$	1.22	$	1.14	$	0.33	$	0.65	$	0.62	$	0.17
Diluted
Denominator: Weighted average shares outstanding				6,534		383				6,554		383				6,448		383				6,534		383
Convertible Class C Stock				128		—				128		—				128		—				128		—
Total Denominator for diluted earnings per share				6,662		383				6,682		383				6,576		383				6,662		383
Diluted income per common share			$	0.60	$	0.17			$	1.11	$	0.32			$	1.12	$	0.33			$	0.60	$	0.17

Page 13

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (740) “Improvements to Income Tax Disclosures”, which requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option. We are currently evaluating the effect that adoption of ASU 2023-09 will have on our disclosures.

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280)”, which is intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments require disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM) as well as other segment items, extended certain annual disclosures to interim periods, clarify the applicability to single reportable segment entities, permit, more than one measure of profit or loss to be reported under certain conditions, and require disclosure of the title and position of the CODM. The effective date for public entities is beginning after December 15, 2023 and interim periods with fiscal years beginning after December 15, 2024. We expect to adopt the new disclosures as required and are currently evaluating the impact on the related disclosures.

In June 2016, FASB issued ASU 2016-13, “Financial Instruments – Credit Loses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. This ASU is effective for fiscal years beginning after December 15, 2022. The Company adopted this standard on July 1, 2023 using the modified retrospective approach and it did not have a material impact of the Company’s financial statements, resulting in no adjustment to prior year earnings.

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of December 31, ~~2022~~2023 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during ~~2022~~2023 or ~~2021,~~2022, and it does not believe that any of those standards will have a significant impact on our consolidated condensed financial statements at the time they become effective.

~~Page 14~~

Page 14

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 3 –ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE

Receivables, net is comprised of the following at December 31, ~~2022,~~2023, and June 30, ~~2022:~~2023:

Financing receivable noncurrent allowance for Credit loss
Schedule of financing receivable noncurrent allowance for credit loss
	December 31, 2022						December 31, 2023
	Gross Receivable		Allowance for doubtful accounts		Net		Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,154	$	205	$	3,949	$	4,080	$	199	$	3,881
Accounts receivable - related party	$	60		—	$	60	$	60		—	$	60
Medical receivable	$	19,685	$	—	$	19,685	$	22,548	$	—	$	22,548
Management and other fees receivable	$	53,810	$	18,900	$	34,910	$	51,092	$	11,740	$	39,352
Management and other fees receivable from related medical practices ("PC’s")	$	14,247	$	5,306	$	8,941
Management and other fees receivable from related medical practices (“PC’s”)							$	14,480	$	5,213	$	9,267

	June 30, 2023
	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,060	$	199	$	3,861
Medical receivable	$	21,259	$	—	$	21,259
Management and other fees receivable	$	48,497	$	12,609	$	35,888
Management and other fees receivable from related medical practices (“PC’s”)	$	13,152	$	3,990	$	9,162

June 30, 2022
Gross Receivable Allowance for doubtful accounts Net
Accounts receivable $ 4,541 $ 205 $ 4,336
Medical receivable $ 20,109 $ — $ 20,109
Management and other fees receivable $ 50,047 $ 16,628 $ 33,419
Management and other fees receivable from related medical practices ("PC’s") $ 13,290 $ 4,687 $ 8,603

The ~~Company's~~Company’s customers are concentrated in the healthcare industry.

Accounts Receivable

Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided.

~~Page 15~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

~~NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)~~

Long Term Accounts Receivable

Long term accounts receivable balances at December 31, 2023 and June 30, 2023 amounted to approximately $376 and $710 respectively. The Company will generate revenue from long-term, non-cancellable contracts to provide service and repair services. Future revenue to be recognized over the following ~~four~~two years as of December 31, ~~2022~~2023 is as follows:

Schedule of facilities owned or managed

2024
$ 970
2025 289
2026 37
Total $ 1,296

Medical Receivables

Medical receivables are due under fee-for-service contracts from third party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. The carrying amount of the medical receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. The Company determines allowances for contractual adjustments and uncollectible accounts based on specific agings, specific payor collection issues that have been identified and based on payor classifications and historical experience at each site.

Page 15

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)

Management and Other Fees Receivable

The ~~Company's~~Company’s receivables from the related and non-related professional corporations ~~(PC's)~~(PC’s) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the ~~PC's~~PC’s of fees from third party medical reimbursement organizations, principally insurance companies and health management organizations.

Payment of the management fee receivables from the PC’s may be impaired by the inability of the PC’s to collect in a timely manner their medical fees from the ~~third party~~third-party payors, particularly insurance carriers covering automobile no-fault and workers compensation claims due to longer payment cycles and rigorous informational requirements and certain other disallowed claims. Approximately 66% and 67% of the PCs’ net revenues for the three months ended December 31, 2023 and 2022, ~~and 2021,~~respectively, were derived from no-fault and personal injury protection claims. Approximately 6867% and 6768% of the PCs’ net revenue for the six months ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively, were derived from no-fault and personal injury protection claims. The Company considers the aging of its accounts receivable in determining the amount of allowance for doubtful accounts. The Company generally takes all legally available steps to collect its receivables. Credit losses associated with the receivables are provided for in the condensed consolidated financial statements and have historically been within ~~management's~~management’s expectations.

~~Page 16~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

~~NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)~~

~~Management and Other Fees Receivable (Continued)~~

Net revenues from management and other fees charged to the related PCs accounted for approximately ~~12.4~~11.8% and ~~11.4~~12.4% of the consolidated net revenues for the three months ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Net revenues from management and other fees charged to the related PCs accounted for approximately ~~12.6~~11.7% and ~~11.6~~12.6% of the consolidated net revenues for the six months ended December 31, 2023 and 2022, ~~and 2021,~~ respectively.

Tallahassee Magnetic Resonance Imaging, ~~PA,~~Inc., Stand Up MRI of Boca Raton, PAInc. and Stand Up MRI & Diagnostic Center, PAInc. (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement. Additional Company managed entities also operate under a guaranty agreement, pursuant to which management fees are payable to the Company.

The Company’s patient fee revenue, net of contractual allowances and discounts for the three and six months ended December 31, ~~2022~~2023 and ~~2021~~2022 are summarized in the following table.

Schedule of patient fee revenue
For the Three Months Ended
December 31,
2022 2021
Commercial Insurance/ Managed Care $ 958 $ 1,068
Medicare/Medicaid 247 273
Workers' Compensation/Personal Injury 4,262 4,344
Other 1,662 1,758
Patient Fee Revenue, net of contractual allowances and discounts $ 7,129 $ 7,443

For the Six Months Ended
December 31,
2022 2021
Commercial Insurance/ Managed Care $ 1,869 $ 2,154
Medicare/Medicaid 484 522
Workers' Compensation/Personal Injury 8,497 8,468
Other 2,355 3,150
Patient Fee Revenue, net of contractual allowances and discounts $ 13,205 $ 14,294

Page 16

~~Page 17~~

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (CONTINUED)

Schedule of patient fee revenue
	For the Three Months Ended December 31,
	2023		2022
Commercial Insurance/ Managed Care	$	1,243	$	958
Medicare/Medicaid		284		247
Workers’ Compensation/Personal Injury		4,907		4,262
Other		1,787		1,662
Patient Fee Revenue, net of contractual allowances and discounts	$	8,221	$	7,129

	For the Six Months Ended December 31,
	2023		2022
Commercial Insurance/ Managed Care	$	2,416	$	1,869
Medicare/Medicaid		555		484
Workers’ Compensation/Personal Injury		10,044		8,497
Other		3,881		2,355
Patient Fee Revenue, net of contractual allowances and discounts	$	16,896	$	13,205

NOTE 4 –OPERATING & FINANCING LEASES

In July 2019, the Company adopted ASU 2016-02, ~~Leases~~“Leases” (Topic 842). This standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. We have elected the optional transition method to apply the standard as of the effective date and therefore, we will not apply the standard to the comparative periods presented in the consolidated financial statements. We have also elected the transition package of the practical expedients permitted within the standard which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and indirect costs.

The Company accounts for its various operating leases in accordance with ~~Accounting Standards Codification (‘ASC’)~~Topic 842, ~~– Lease,~~ as updated by ASU 2016-02. At the inception of a lease, the Company recognizes right-of-use lease assets and related lease liabilities measured at present value of future lease payments on its balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. Our most common initial term varies in length from 2 to 10 years. Including renewal options negotiated with the landlord, we have a total span of 2 to 16 years at the facilities we lease. The Company reviewed its contracts with vendors and customers, determining that its right-to-use lease assets consisted of only office space operating leases. In determining the right-to-use lease assets and liabilities, the Company did recognize lease extension options which the Company feels would be reasonably exercised. Our incremental borrowing rate (“IBR”) used to discount the stream of operating lease payments is closely related to the interest rates available to the Company.

A reconciliation of operating and financing lease payments undiscounted cash flows to lease liabilities recognized as of December 31, ~~2022~~2023 is as follows:

Lessee operating leases liability maturity
Twelve Months Ending
December 31,

Operating Lease
Payments
Financing Lease Payments
2023 $ 5,588 $ 223
2024 5,551 244
2025 5,288 244
2026 4,768 244
2027 3,539 42
Thereafter 22,665 —
Present value discount (10,289 ) (74 )
Total lease liability $ 37,110 $ 923

~~Page 18~~

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 4 – OPERATING & FINANCING LEASES (CONTINUED)

	Lessee operating leases liability maturity
Twelve Months Ending December 31,		Operating Lease Payments			Financing Lease Payments
	2024	$	6,319		$	244
	2025		5,672			244
	2026		4,902			244
	2027		3,677			41
	2028		3,426			—
	Thereafter		20,698			—
	Present value discount		(9,737	)		(43	)
	Total lease liability	$	34,957		$	730

NOTE 5 -INVENTORIES

Inventories included in the accompanying condensed consolidated balance sheets consist of the following:

Schedule of inventories
	December 31, 2022		June 30, 2022		December 31, 2023		June 30, 2023
Purchased parts, components and supplies	$	2,509	$	2,126	$	2,582	$	2,346
Work-in-process		125		234		253		224
Total Inventories	$	2,634	$	2,360	$	2,835	$	2,570

NOTE 6 –OTHER INTANGIBLE ASSETS

Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following:

Schedule of other intangible assets - net
Schedule of other intangible assets
	December 31, 2022		June 30, 2022		December 31, 2023		June 30, 2023
Capitalized software development costs	$	7,005	$	7,005	$	7,005	$	7,005
Patents and copyrights		5,407		5,333		5,472		5,452
Non-compete		4,150		4,150		4,150		4,150
Customer relationships		3,900		3,900		3,900		3,900
Gross Other intangible assets		20,462		20,388		20,527		20,507
Less: Accumulated amortization		16,885		16,684		17,261		17,075
Other Intangible Assets	$	3,577	$	3,704	$	3,266	$	3,432

~~Page 19~~

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 6 – OTHER INTANGIBLE ASSETS (CONTINUED)

Amortization of patents and copyrights for the three months ended December 31, ~~2022~~2023 and ~~2021~~2022 amounted to $4743 and $4947, respectively.

~~Amortization of non-compete for the three months ended December 31, 2022 and 2021 amounted to $~~0 ~~and $~~12~~, respectively.~~

Amortization of customer relationships for the three months ended December 31, ~~2022~~2023 and ~~2021~~2022 amounted to $50 and $50, respectively.

Amortization of patents and copyrights for the six months ended December 31, ~~2022~~2023 and ~~2021~~2022 amounted to $~~101~~86 and $96101, respectively.

~~Amortization of non-compete for the six months ended December 31, 2022 and 2021 amounted to $~~0 ~~and $~~25~~, respectively.~~

Amortization of customer relationships for the six months ended December 31, ~~2022~~2023 and ~~2021~~2022 amounted to $100 and $100, respectively.

NOTE 7 –OTHER CURRENT LIABILITIES

Other current liabilities in the accompanying condensed consolidated balance sheets consist of the following:

Schedule of other current liabilities
	December 31, 2022		June 30, 2022		December 31, 2023		June 30, 2023
Accrued salaries, commissions and payroll taxes	$	1,723	$	4,653	$	2,078	$	4,413
Sales tax payable		228		249		222		193
State income taxes payable		300		382
Income taxes payable						196		48
Legal and other professional fees		33		21		11		11
Accounting fees		106		120		54		100
Self-funded health insurance reserve		15		79		86		101
Accrued interest and penalty		4		59		4		4
Other general & administrative expenses		1,728		854
Other general and administrative expenses						809		574
Other Current Liabilities	$	4,137	$	6,417	$	3,460	$	5,444

NOTE 8 - SEGMENT AND RELATED INFORMATION

The Company operates in two industry segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as disclosed in the Company’s 10-K as of June 30, ~~2022.~~2023. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations.

~~Page 20~~

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2022~~2023 and ~~2021~~2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 8 - SEGMENT AND RELATED INFORMATION (CONTINUED)

Summarized financial information concerning the ~~Company's~~Company’s reportable segments is shown in the following table:

Schedule of summarized segment financial information
	Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the three months ended Dec. 31, 2023
Net revenues from external customers	$	1,861		$	23,525	$	25,386
Inter-segment net revenues	$	254		$	—	$	254
(Loss) Income from operations	$	(993	)	$	5,878	$	4,885
Depreciation and amortization	$	60		$	1,160	$	1,220
Capital expenditures	$	4		$	129	$	133

For the three months ended Dec. 31, 2022
Net revenues from external customers	$	2,035		$	22,221	$	24,256
Inter-segment net revenues	$	245		$	—	$	245
(Loss) Income from operations	$	(551	)	$	4,783	$	4,232
Depreciation and amortization	$	65		$	1,035	$	1,100
Capital expenditures	$	50		$	423	$	473

	Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the six months ended Dec. 31, 2023
Net revenues from external customers	$	3,917		$	47,307	$	51,224
Inter-segment net revenues	$	508		$	—	$	508
(Loss) Income from operations	$	(1,731	)	$	13,187	$	11,456
Depreciation and amortization	$	121		$	2,294	$	2,415
Capital expenditures	$	20		$	192	$	212

For the six months ended Dec. 31, 2022
Net revenues from external customers	$	3,913		$	43,534	$	47,447
Inter-segment net revenues	$	490		$	—	$	490
(Loss) Income from operations	$	(1,353	)	$	9,496	$	8,143
Depreciation and amortization	$	137		$	2,081	$	2,218
Capital expenditures	$	74		$	1,362	$	1,436

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 9 – RELATED PARTY TRANSACTION

On December 31, 2023, the Company entered into an agreement with Magnetic Resonance Management, LLC (“MRM”) for the sale of a MRI scanner. MRM is owned by the CEO and President of the Company. The sales price of the equipment was $577 which is payable based upon a promissory note dated December 1, 2023. The note bears interest at a rate of 9% and is payable in full at the maturity of the note in December 2028. The MRI scanner had zero basis,which resulted ina gain of $577. The Company has the option but not the obligation to re-take possession of the scanner in lieu of payment upon maturity of the note.

Summarized segment financial information
Medical
Equipment Management
of Diagnostic
Imaging
Centers Totals
For the three months ended Dec, 31, 2022
Net revenues from external customers $ 2,035 $ 22,221 $ 24,256
Inter-segment net revenues $ 245 $ — $ 245
(Loss) Income from operations $ (551 ) $ 4,783 $ 4,232
Depreciation and amortization $ 65 $ 1,035 $ 1,100
Capital expenditures $ 50 $ 423 $ 473

For the three months ended Dec. 31, 2021
Net revenues from external customers $ 2,133 $ 22,346 $ 24,479
Inter-segment net revenues $ 239 $ — $ 239
(Loss) Income from operations $ (27 ) $ 6,510 $ 6,483
Depreciation and amortization $ 68 $ 1,121 $ 1,189
Capital expenditures $ 66 $ 869 $ 935

Medical
Equipment Management
of Diagnostic
Imaging
Centers Totals
For the six months ended Dec, 31, 2022
Net revenues from external customers $ 3,913 $ 43,534 $ 47,447
Inter-segment net revenues $ 490 $ — $ 490
(Loss) Income from operations $ (1,353 ) $ 9,496 $ 8,143
Depreciation and amortization $ 137 $ 2,081 $ 2,218
Capital expenditures $ 74 $ 1,362 $ 1,436

For the six months ended Dec. 31, 2021
Net revenues from external customers $ 4,245 $ 43,964 $ 48,209
Inter-segment net revenues $ 475 $ — $ 475
(Loss) Income from operations $ (517 ) $ 12,742 $ 12,225
Depreciation and amortization $ 135 $ 2,223 $ 2,358
Capital expenditures $ 187 $ 1,957 $ 2,144

NOTE 910 – SUPPLEMENTAL CASH FLOW INFORMATION

During the six months ended December 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company paid $2758 and $~~265~~27 for interest, respectively.

During the six months ended December 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company paid $~~647~~150 and $~~572~~647 for income taxes, respectively.

~~Page 21~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

NOTE 1011 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions, will not have a material adverse effect on the consolidated financial position or results of operations of the Company.

There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, ~~2022.~~2023.

Other Matters

On September 13, 2022, the Company adopted a stock repurchase plan. The plan has no expiration date and cannot determine the number of shares which will be repurchased. On September 26, 2022, the Board of Directors has approved up to $9 million to be repurchased under the plan which will be purchased on the publicly traded open market at prevailing prices. During the six months ended December 31, 2023 and 2022, the Company repurchased116 and 30 shares at a cost of $1,885 and $478., respectively. The Company cancelled 123 shares and 16 shares at a cost of $2,005 and $402 for the six months ended December 31, 2023 and 2022, respectively.

The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $150 per person and for a maximum potential claim liability based on member enrollment. With respect to this program, the Company considers historical and projected medical utilization data when estimating its health insurance program liability and related expense. As of December 31, ~~2022~~2023 and June 30, ~~2022,~~2023, the Company had approximately $1486 and $79101, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 11 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Other Matters - Continued

The Company regularly analyzes its reserves for incurred but not reported claims, and for reported but not paid claims related to its reinsurance and self-funded insurance programs. The Company believes its reserves are adequate. However, significant judgment is involved in assessing these reserves such as assessing historical paid claims, average lags between the claims’ incurred date, reported dates and paid dates, and the frequency and severity of claims. There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known. There were no significant adjustments recorded in the periods covered by this report.

NOTE 1112 - INCOME TAXES

In accordance with ASC 740-270, ~~Income~~“Income Taxes – Interim ~~Reporting,~~Reporting”, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate and apply that rate to year-to-date ordinary income or loss. The resulting tax expense (or benefit) is adjusted for the tax effect of specific events, if any, required to be discretely recognized in the interim period as they occur. For the six months ended December 31, ~~2022~~2023 and ~~2021,~~2022, the Company recorded income tax expense of $~~2,871~~3,036 in ~~2022~~2023 as compared to $~~2,846~~2,871 in ~~2021.~~2022. For the three months ended December 31, 2023 and 2022, the Company recorded income tax expense of $1,366 and $1,462 respectively. The ~~2022~~six month and three month 2023 provision is comprised of a current income tax component of $~~565~~751 and a deferred income tax component of $~~2,306~~2,285. and a current income tax component of $323 and a deferred income tax component of $1,043 respectively. Obligations for any liability associated with the current income tax provision, has been reduced, primarily resulting from the benefits and utilization of net operating loss carryforwards.

~~Page 22~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

~~NOTE 11 - INCOME TAXES (CONTINUED)~~

ASC ~~topic~~Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as unrecognized benefits. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC ~~topic~~Topic 740. The Company believes there are no uncertain tax positions in prior ~~years~~year tax filings and therefore it has not recorded a liability for unrecognized tax ~~benefits..~~benefits.

In accordance with ASC ~~topic~~Topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses.

The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to ~~2019.~~ 2018.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023 and 2022

(Amounts and shares in thousands, except per share amounts)

(UNAUDITED)

NOTE 12 - INCOME TAXES (CONTINUED)

The Company recorded a deferred tax asset of $~~10,536~~7,758 and a deferred tax liability of $~~216~~395 as of December 31, ~~2022,~~2023, primarily relating to ~~net operating loss carryforwards of approximately $11,180~~ ~~available to offset future taxable income through 2032.~~allowance for doubtful accounts and tax credits. The net operating losses begin to expire in ~~2023~~2028 for federal tax and state income tax purposes. The Company anticipates that their Federal operating loss will be utilized in the current fiscal year.

Future ownership changes as determined under Section 382 of the Internal Revenue code could further limit the utilization of net operating loss carryforwards. As of December 31, ~~2022,~~2023, no such changes in ownership have occurred.

The Inflation Reduction Act (“IRA”) was enacted on August 16, 2022. The IRA includes provisions imposing a 1%1% excise tax on share repurchases that occur after December 31, 2022 and introduces a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. The CAMT will be effective for tax years beginning after December 31, 2022. Currently, the Company ~~does not expect~~is expecting the IRA not to have a material impact to the Company’s financial statements.

The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible or when such net operating losses can be utilized. The Company considers projected future taxable income, the regulatory environment of the industry and tax planning strategies in making this assessment. At present, the Company believes that it is more likely than not that the benefits from certain deferred tax asset carryforwards, will not all be fully realized. In recognition of this inherent risk, a valuation allowance was established for ~~the partial value of the deferred tax asset, which principally related~~separate state net operating losses that are not expected to ~~research and development tax credits.~~be fully utilized. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation.

~~Page 23~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2022 and 2021~~

~~(Amounts and shares in thousands, except per share amounts)~~

~~(UNAUDITED)~~

NOTE 1213 – SUBSEQUENT EVENTS

The Company has evaluated events that occurred subsequent to December 31, ~~2022~~2023 and through the date the condensed consolidated financial statements were issued.

During ~~January 2023~~February 2024, the Company ~~repurchased~~ 24 ~~shares at~~signed an amendment to a ~~cost of $445~~ ~~which was authorized under the stock repurchase plan adopted~~property lease for its principal office in ~~September 2022.~~

~~During January 2023, the Company amended the revolving credit agreement.~~Melville, New York. The agreement ~~was extended to March 31, 2023. The interest rate on borrowings is at~~extends the ~~current prime rate~~term of ~~7.75% along with certain financial covenants.~~the lease until November 2033.

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FONAR CORPORATION AND SUBSIDIARIES

Item 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, ~~Item~~item 1 of ~~this~~the Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended June 30, ~~2022~~2023 included in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2022~~2023 filed with the U.S. Securities and Exchange Commission (SEC) on September 28, ~~2022.~~2023.

For the six month period ended December 31, 2022, we reported a net income of $5.5 million on revenues of $47.4 million as compared to net income of $10.3 million on revenues of $48.2 million for the six month period ended December 31, 2021. Operating income decreased from $12.2 million for the six month period ended December 31, 2021 to $8.1 million for the six month period ended December 31, 2022.

For the three month period ended December 31, 2022, we reported a net income of $2.8 million on revenues of $24.3 million as compared to net income of $5.1 million on revenues of $24.5 million for the three month period ended December 31, 2021.

The revenue decrease, from $48.2 million for the first six months of fiscal 2022 to $47.4 million for the first six months of fiscal 2023, was primarily due to decreases in patient fee revenue of $1.1 million, from $14.3 million for the first six months of fiscal 2022 to $13.2 million for the first six months of fiscal 2023. Revenues from product sales and service and repair fees decreased by 7.8% from $4.2 million for the first six months of fiscal 2022 to $3.93 million for the first six months of fiscal 2023.

While our revenues decreased, our costs and expenses increased, but by a greater amount resulting in our operating income decreasing to $8.1 million for the six months ended December 31, 2022 as compared to $12.2 million for the six months ended December 31, 2021. In terms of percentages, costs and expenses increased 9.2% from $36.0 million for the first six months of fiscal 2022 to $39.3 million for the first six months of fiscal 2023, while revenues decreased 1.6%, from $48.2 million for the first six months of fiscal 2022 to $47.4 million for the first six months of fiscal 2023.

~~Page 24~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

Fonar’s wholly owned subsidiary, Health Management Corporation of America (“HMCA”), has the controlling interest, in Health Diagnostics Management, LLC (“HDM”). HMCA presently has a direct ownership interest of 70.8% in HDM, and the investors in HDM have a 29.2% ownership interest, as compared to HMCA’s 70% ownership interest and the investors’ 30% ownership interest in HDM in fiscal 2021. This change resulted from the Company’s purchase of non-controlling interests from the minority shareholders for $546,000 in the second quarter of fiscal 2022. The management of the diagnostic imaging centers business segment is being conducted by HDM, operating under the name “Health Management Company of America”. For the sake of simplicity, HMCA, and HDM are referred to as “HMCA”, unless otherwise indicated.

The most significant adverse impact on our Company in fiscal 2022 and the first half of fiscal 2023 has been the continuing effects of the COVID-19 pandemic. Although it had seemed the worst had passed, subsequent events have shown a spike in new cases and the emergence of new strains of the virus. This is by no means a problem confined to our Company, but despite our best efforts and improved ability to cope with the pandemic and the availability of new vaccines, the impact on our results of operation and financial condition is potentially volatile and severe.

The global pandemic of COVID-19 has caused disruptions in the United States and international markets which have adversely affected our workforce, financial condition, profitability and business operations. Generally COVID-19 caused us to require that a portion of our workforce work from home and restricted the ability of our personnel to travel for marketing purposes or to service our customers. The Company was able to enact certain decisions to allow the Company to survive during the global pandemic and prevent further losses or additional decreases in scan volume. Although we are unable to predict if there will be additional consequences on our operations from the continuing global pandemic of COVID-19 and its variants, the Company believes with its strong cash position and general financial condition, it will be able to continue operations going forward.

One of the concerns we have had is the increased strictness in enforcement of certain COVID-19 mandates, which directly impact the conduct of our business, such as the requirement that employees in healthcare facilities be vaccinated. Another concern we have is the newer variants that are more transmissible. We are in fact facing some of these challenges now. As a result, between absences due to illness and the loss of unvaccinated employees whose duties required them to be in contact with patients, we were sometimes unable to keep a scanning facility open for all shifts. Also at the end of the first quarter of fiscal 2023, our Florida locations were effected by Hurricane Ian and had to be shut down for several days. During the first half of fiscal 2023, the aggregate number of scans performed by the sites we manage or own declined to 89,888 scans from 94,460 scans in the first half of fiscal 2022. Nevertheless, we have been able to navigate through these challenges and avoid any significant disruption to our business

~~Page 25~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

Forward Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q are ~~"forward-looking statements"~~“forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of Management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statement included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

For the six month period ended December 31, 2023, we reported a net income of $10.0 million on revenues of $51.2 million as compared to net income of $5.5 million on revenues of $47.4 million for the six month period ended December 31, 2022. Operating income increased from $8.1 million for the six month period ended December 31, 2022 to $11.5 million for the six month period ended December 31, 2023.

For the three month period ending December 31, 2023, we reported a net income of $4.6 million on revenues of $25.4 as compared to net income of $2.8 on revenues of $24.3 million for the three month period ended December 31, 2022.

The revenue increase, from $47.4 million for the first six months of fiscal 2023 to $51.2 million for the first six months of fiscal 2024, was primarily due to increases in patient fee revenue of $3.7 million, from $13.2 million for the first six months of fiscal 2023 to $16.9 million for the first six months of fiscal 2024. Revenues from product sales and service and repair fees remained constant at $3.9 million for the first six months of fiscal 2023 and for the first six months of fiscal 2024.

The revenue increase, from $24.3 million for the three month period ending December 31, 2022 to $25.4 million for the three month period ending December 31, 2023 was also primarily due to increases in patient fee revenue of $1.1 million, from $7.1 million for the three month period ending December 31, 2022 to $8.2 million for the three month period ending December 31, 2023.

While our revenues increased, our costs and expenses increased at a lower rate resulting in our operating income increasing to $11.5 million for the six months ended December 31, 2023 as compared to $8.1 million for the six months ended December 31, 2022. In terms of percentages, costs and expenses increased 1.2% to $39.8 million for the first six months of fiscal 2024 as compared to $39.3 million for the first six months of fiscal 2023, while revenues increased 8.0%, from $47.4 million for the first six months of fiscal 2023 to $51.2 million for the first six months of fiscal 2024.

Fonar’s wholly owned subsidiary, Health Management Corporation of America (“HMCA”), has the controlling interest in Health Diagnostics Management, LLC (“HDM”). HMCA presently has a direct ownership interest of 70.8% in HDM, and the investors in HDM have a 29.2% ownership interest. The management of the diagnostic imaging centers business segment is being conducted by HDM, operating under the name “Health Management Company of America”. For the sake of simplicity, HMCA, and HDM are referred to as “HMCA”, unless otherwise indicated.

The lingering effects of the COVID-19 pandemic continue to impact our business in fiscal 2024. Mask mandates are returning to public hospitals in New York City, and we must remain prepared to respond to changing guidance from regulatory authorities. This is by no means a problem confined to our Company, but the impact onour results of operations and financial condition is potentially volatile and severe.

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FONAR CORPORATION AND SUBSIDIARIES

Although we are unable to predict if there will be additional consequences on our operations from the continuing global pandemic of COVID-19, the Company believes with its positive cash flows, low debt and cash on hand, it will be able to continue operations going forward.

During the first half of fiscal 2024, the aggregate number of scans performed by the sites we manage or own increased to 101,990 scans from 89,888 scans in the first half of fiscal 2023. This increase was due to the opening of a new stand-alone facility in Florida along with our return to a full operating schedule after addressing our technologist staffing shortfall.

Results of Operations

We operate in two industry segments: the manufacture and servicing of medical (MRI) equipment, which is conducted by Fonar, and diagnostic facilities management services, which is conducted through HMCA.

Manufacturing and Service of MRI Equipment

Revenues from MRI product sales ~~decreased~~increased to $219,000 for the first six months of fiscal 2024 from $200,000 for the first six months of fiscal ~~2023 from $346,000 for the first six months of fiscal 2022.~~2023. Costs related to product sales increased from ~~$299,000 for the six month period ended December 31, 2021 to~~ $383,000 for the six month period ended December 31, ~~2022.~~2022 to $405,000 for the six month period ended December 31, 2023. Economic uncertainty and lower reimbursement rates for MRI scans, have depressed the market for our MRI scanner products, notwithstanding our scanners’ unique technological capabilities (e.g., multi positional scanning). Due to the low sales volumes of our MRI product, period to period comparisons are not necessarily indicative of any trends.

Service revenues ~~decreased to~~remained constant at $3.7 million for the six month period ended December 31, ~~2022 as compared to $3.9 million for~~2023 and the six month period ended December 31, ~~2021.~~2022.

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Costs relating to providing service ~~remained constant at $1.5~~were $1.7 million in the first six months of fiscal ~~2022~~2024 and $1.5 million in the first six months of fiscal 2023. Because of our ability to monitor the performance of customers’ scanners from our facilities in Melville, New York on a daily basis and to detect and repair any irregularities before more serious and costly problems develop, we have been able to contain our costs of providing service.

~~There were approximately~~Foreign revenues remained constant at $263,000 ~~in foreign revenues~~ for the first six months of fiscal ~~2023 as compared to approximately $353,000 in foreign revenues~~2024 and for the first six months of fiscal ~~2022, representing a decrease in foreign revenues of 25.5%.~~2023. We do not regard this as a material trend, but as part of a normal although sometimes volatile variation resulting from low volumes of foreign sales.

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~~FONAR CORPORATION AND SUBSIDIARIES~~

We recognize MRI scanner sales revenues on the “percentage of completion” basis, which means the revenues are recognized as the scanner is manufactured. Revenues recognized in a particular quarter do not necessarily reflect new orders or progress payments made by customers in that quarter. We build the scanner as the customer meets certain benchmarks in site preparation and our installation of the scanner, in order to minimize the time lag between incurring costs of manufacturing and our receipt of the cash progress payments from the customer which are due upon delivery. Consequently, there can be a disparity between the revenues recognized in a fiscal period and the number of product sales. Generally, the revenues from a scanner sale are recognized in a fiscal quarter or quarters following the quarter in which the sale was made.

Revenues for the medical equipment segment ~~decreased to~~remained constant at $3.9 million for the first six months of fiscal ~~2023 from $4.2~~2024 and for the first six months of fiscal 2023. Operating losses for our medical equipment segment increased to an operating loss of $1.7 million, for the first six months of fiscal ~~2022. Operating losses for our medical equipment segment increased~~2024 as compared to an operating loss of $1.4 million for the first six months of fiscal ~~2023 as compared to an operating loss of $517,000 for the first six months of fiscal 2022.~~2023.

Diagnostic Facilities Management Services

HMCA revenues ~~decreased~~increased in the first six months of fiscal ~~2023~~2024 by ~~1.0%~~8.7% to ~~$43.5~~$47.3 million from ~~$44.0~~$43.5 million for the first six months of fiscal ~~2022.~~2023. The percentage of our revenues derived from our diagnostic facilities management segment relative to the percentage of our total revenues ~~derived from our medical equipment segment~~ increased slightly to 92.4% for the first six months of fiscal 2024, from 91.8% for the first six months of fiscal ~~2023, from 91.2% for the first six months of fiscal 2022.~~2023.

HMCA’s current strategy is to counter the effects of lower reimbursement rates by increasing the scan volume of the facilities it owns or manages by adding additional scanners at current centers and increasing our marketing efforts. As a result of the COVID-19 virus, however, the Company had seen decreases in its scan volume. Nevertheless, the Company continued its program of adding additional scanners. The scan volume decreased slightly in the first half of 2023. Other factors that have led to the slight decrease can also be attributable to Hurricane Ian which cause the Florida locations to be closed for several days. The continuation of the COVID-19 virus and its various variants that are more transmittable may delay the completion of the installation of some of the scanners. If scan volumes decrease however, and remain at lower volumes, the Company, notwithstanding its ample cash reserves, may need to consider reducing the size of its operations temporarily as a last resort.

New York State mandated that as of October 7, 2021, all workers at hospitals, long-term care facilities and diagnostic centers be COVID-19-vaccinated. Workers who were not vaccinated either resigned, were transferred to a non-diagnostic facility within the company, or were dismissed. The resulting reduction in the number of workers available at sites owned or managed by HMCA, has been challenging and has significantly reduced the pool of qualified and vaccinated workers. Also this is combined with the emergence of the new highly transmissible variants. HMCA owned or managed sites struggling with reduced staff either have cut their business hours and therefore scan fewer patients or, when possible, maintain regular business hours by paying employees who are willing to work extra hours at overtime rates.

~~Although the~~ number of scans performed at our centers and at our ~~client’s~~clients’ centers has recovered to pre-COVID-19 levels itand has ~~decreased~~increased from approximately ~~94,500~~90,000 in the first six months of fiscal ~~2022~~2023 to approximately ~~89,900~~102,000 in the first six months of fiscal ~~2023.~~2024. The ~~decrease~~increase in scans was due to the additional of a ~~shortage~~new stand-alone facility which opened in Florida, as well as our investment in software to enhance the quality of MRI ~~technologists who operate~~images and enable the ~~scanners, which is an industry-wide issue that caused our centers to be open for fewer hours. We believe that the worst part~~reduction of ~~this shortage has passed and we will be back to full employment by the end of February.~~MRI scan times.

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We now manage or own a total of 4042 MRI scanners. Twenty-five (25) MRI scanners are located in New York and ~~fifteen (15)~~seventeen (17) are located in Florida. HMCA experienced an operating income of $13.2 million for the first six months of fiscal 2024 compared to operating income of $9.5 million for the first six months of fiscal ~~2023 compared to operating income of $12.7 million for the first six months of fiscal 2022.~~2023.

The ability of HMCA to maintain its profitability is principally due to HMCA’s success in marketing the scanning services of the facilities managed or owned by HMCA, notwithstanding the decrease in reimbursement rates paid for MRI scans by insurers, Medicare and other government ~~programs and the lockdowns imposed as a result of the COVID-19 virus.~~programs. The reductions in reimbursement rates are not unique to HMCA or HMCA’s clients but are being experienced by the industry in general.

HMCA’s cost of revenues for the first six months of fiscal ~~2023~~2024 increased to $26.4 million as compared to ~~the first six months of fiscal 2022 increased slightly by 1.0% from $23.6 million to~~ $23.8 ~~million.~~

~~Consolidated~~

~~For the first six months of fiscal 2023, our consolidated net revenues decreased by 1.6% to $47.4 million from $48.2~~ million for the first six months of fiscal ~~2022, and total costs and expenses~~2023.

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Consolidated

For the first six months of fiscal 2024, our consolidated net revenues increased by ~~9.2%~~8.0% to ~~$39.3~~$51.2 million from ~~$36.0~~$47.4 million for the first six months of fiscal 2023, and total costs and expenses increased by 1.2% to $39.8 million from the first six months of fiscal 2024 as compared to $39.3 million for the first six months of fiscal ~~2022~~2023 respectively. As a result, our operating income ~~decreased~~increased to $11.5 million in the first six months of fiscal 2024 as compared to $8.1 million in the first six months of fiscal ~~2023 as compared to $12.2 million in the first six months of fiscal 2022. An increase~~2023. A decrease in selling, general and other administrative costs in particular resulted in ~~the increase of~~ cost and expenses increase at a much lower percentage as compared to the increase in net revenues.

Selling, general and administrative expenses ~~increased~~decreased to $10.5 million in the first six months of fiscal 2024 from $12.9 million in the first six months of fiscal ~~2023 from $9.9 million in the first six months of fiscal 2022.~~2023. This ~~increase~~decrease in selling, general and administrative expenses was due mainly to ~~more~~less reserves taken on management fees. Some of these reserves had been taken in the ordinary course of business and some in connection with the impact of the COVID-19 virus. ~~The compensatory element of stock issuances, which is included in selling, general~~

Research and ~~administrative~~development expenses ~~remained constant at $0~~increased by 27.8% to $883,000 for the first six months of fiscal ~~2023 and fiscal 2022.~~

~~Research and development expenses decreased by 8.5% to~~2024 from $691,000 for the first six months of fiscal ~~2023 from $755,000 for the first six months of fiscal 2022.~~2023.

Interest expense in the first six months of fiscal ~~2023 decreased~~2024 increased by ~~32.5%~~116.2% to ~~$27,000~~$58,000 from ~~$40,000~~$27,000 in the first six months of fiscal ~~2022.~~2023.

Inventories increased to $2.8 million at December 31, 2023 as compared to $2.6 million at ~~December 31, 2022 as compared to $2.4 million at~~ June 30, ~~2022.~~2023.

Net management fee and medical receivables increased by ~~2.3%~~7.3% to ~~$63.5~~$71.2 million at December 31, ~~2022~~2023 from ~~$62.1~~$66.3 million at June 30, ~~2022~~2023 as a result of slower collections and increased scan volume. The slower collections were primarily due to an increase in no-fault and workers’ compensation revenue, which typically takes longer to collect.

The results of operations for the first six months of fiscal ~~2023~~2024 reflect ~~a decrease~~an increase in revenues from management, patient and other fees, as compared to the first ~~three~~six months of fiscal ~~2022~~2023 ($~~43.5~~47.3 million for the first six months of fiscal ~~2023~~2024 as compared to ~~$44.0~~$43.5 million for the first six months of fiscal ~~2022)~~2023), ~~and~~coupled with a ~~decrease~~smaller increase in the ~~MRI equipment segment revenues~~total cost and expenses ($~~3.9~~39.8 million for the first six months of fiscal ~~2023~~2024 as compared to ~~$4.2~~$39.3 million for the first six months of fiscal ~~2022)~~2023). Revenues were ~~8.2%~~7.6% from the MRI equipment segment ~~as compared to 91.2%~~and 92.4% from HMCA, for the first six months of fiscal ~~2023,~~2024, as compared to ~~8.8%~~8.2% from the MRI equipment segment and ~~91.2%~~91.8% from HMCA for the first six months of fiscal ~~2022.~~2023.

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~~FONAR CORPORATION AND SUBSIDIARIES~~

As a result of the Patient Protection and Affordable Care Act (PPACA) we have experienced a reduction of reimbursement rates and less interest in our MRI equipment. Any changes to the PPACA may result in further changes in the healthcare industry and our business.

We are committed to improving our operating results and dealing with the challenges posed by legislative and regulatory requirements. Nevertheless, factors beyond our control, such as the COVID-19 virus, the timing and rate of market growth, economic conditions, the availability of credit and payor reimbursement rates, or unexpected expenditures and the timing of such expenditures, make it difficult to forecast future operating results.

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As mentioned, one of the effects of the PPACA on our business has been the reduction in Medicare reimbursement rates for MRI scans. This also has resulted in a reduction in the reimbursement rates by commercial insurers and government programs which tie their reimbursement rates to the Medicare rates. Nevertheless, the patient volume of the scanning centers we manage or own has enabled us to maintain healthy operating results in spite of these challenges. We believe we are pursuing the correct policies to cope with these problems and ~~the problems caused by the COVID-19 pandemic, and~~ to improve the Company’s operating results.

Our Upright® MRI (also referred to as the Stand-Up® MRI), together with our works-in-progress, are intended to significantly improve our competitive position.

The Upright® MRI scanner, which operates at 6000 gauss (.6 Tesla) field strength, allows patients to be scanned while standing, sitting, reclining and in multiple flexion and extension positions. It is common in visualizing the spine that abnormalities are visualized in some positions and not others. This enables surgical corrections that heretofore would not have been addressable for lack of visualizing the symptom causing the pathology and therefore, in general enables the treating physician to achieve a better treatment outcome for his patient. A floor-recessed elevator brings the patient to the height appropriate for the targeted image region. A custom-built multi-position adjustable bed will allow patients to sit or lie on their backs, sides or stomachs at any angle. This allows the MRI technologist to ask the patient to position himself/herself in the exact position that generates his/her pain so that images of the patient in the position that explicitly generates the patient’s pain can be nailed down. Full-range-of-motion studies of the joints in virtually any direction are possible, a particularly promising feature for sports injuries.

In addition, FONAR had announced the publication of a book “THE CRANIOCERVICAL SYNDROME and MRI” that highlights the unique attributes of FONAR UPRIGHT® MRI Imaging (S. Karger, A.G. based in Basel, Switzerland- www.karger.com/Book/Home/261956) which has been published by S. Karger, an approximately 125 year old company and an academic publisher of scientific and medical journals and books. The seven chapter monograph examines the rapid advances in MRI made possible by the FONAR UPRIGHT® Multi-Position MRI that are transforming the treatment of patients suffering from the craniocervical syndrome (CCS). It is written by leading international experts in the field to practitioners with a better understanding of the subtle anatomy and MRI appearances at the craniocervical junction, along with insight into the clinical significance of cerebrospinal fluid (CSF) flow measurements and its potential role in generating the devastating impairments of the neurodegenerative diseases: Alzheimer’s (5.1 million patients in the United States), childhood and adult Autism (3.0 million), Parkinson’s (1.0 million), Multiple Sclerosis (250,000-350,000) and Amyotrophic Lateral Sclerosis (ALS) (30,000). It calls attention to the revolutionary importance of FONAR’s UPRIGHT® MRI imaging technology and the prospect of significantly relieving the suffering of the above totaled 9.38 million patients afflicted with these disorders.

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Fonar also had announced a major diagnostic breakthrough in multiple sclerosis achieved with advanced Upright® MRI. Medical researchers at FONAR published a paper reporting a diagnostic breakthrough in multiple sclerosis (MS), based on observations made possible by the Company’s unique Upright® Multi-Position™ MRI scanner. The findings reveal that the cause of multiple sclerosis may be biomechanical and related to earlier trauma to the neck, which can result in obstruction of the flow of cerebrospinal fluid (CSF), which is produced and stored in the central anatomic structures of the brain known as the ventricles. Since the ventricles produce a large net volume of CSF each day (500 cc), the obstruction can result in a build up of pressure within the ventricles, resulting in leakage of the CSF and the antigenic polypeptides it contains into the surrounding brain tissue. This leakage could be responsible for generating the brain lesions of multiple sclerosis.

The paper, titled “The Possible Role of Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the Genesis of Multiple Sclerosis," appears in the journal Physiological Chemistry and Physics and Medical NMR (Sept. 20, 2011).

This capability of the Fonar Upright® technology has demonstrated its key value on patients with the Arnold-Chiari syndrome [Cerebellar Tonsil Extopia (CTE)], which is believed to affect 200,000 to 500,000 Americans. In this syndrome, brain stem compression and subsequent severe neurological symptoms occur in these patients, because the brain stem descends and is compressed at the base of the skull in the foramen magnum, which is the circular bony opening at the base of the skull where the spinal cord exits the skull. Conventional lie-down MRI scanners cannot make an adequate evaluation of this pathology since the patient's pathology is most visible and the symptoms most acute when the patient is scanned in the upright fully weight-bearing position.

A combined study of 1,200 neck pain patients published in “Brain Injury” (July 2010) by eight university medical centers reported that cerebellar tonsil ectopia (CTE) of 1mm or greater was found and visualized 2.5 times (250%) more frequently when patients who had sustained automobile whiplash injuries were scanned upright rather than lying down.

The Upright® MRI has also demonstrated its value for patients suffering from scoliosis. Scoliosis patients have been typically subjected to routine x-ray exams for years and must be imaged upright for an adequate evaluation of their scoliosis. Because the patient must be standing for a complete evaluation of the extent of the patient’s scoliosis, an x-ray machine has been the only modality that could provide that service. The Upright® MRI is the only MRI scanner which allows the patient to stand during the MRI exam. Fonar has developed an RF receiver and scanning protocol that for the first time allows scoliosis patients to obtain diagnostic pictures of their spines without the risks of x-rays. A study by the National Cancer Institute (2000) of 5,466 women with scoliosis reported a 70% increase in breast cancer resulting from 24.7 chest x-rays these patients received on the average in the course of their scoliosis treatment. The Upright® MRI examination of scoliosis enables the needed imaging evaluation of the degree of spine scoliosis without exposing the patient to the risk of breast cancer from x-radiation. Currently scoliosis affects more than 3,000,000 American women.

In addition, the University of California, Los Angeles (UCLA) reported their results of their study of 1,302 patients utilizing the Fonar Upright® MRI at the 22nd Annual Meeting of the North American Spine Society on October 23, 2007. The UCLA study showed the superior ability of the Fonar Upright® MRI to detect spine pathology, including spondylolisthesis, disc herniations and disc degeneration, as compared to visualizations of the spine produced by traditional single position static MRIs.

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The UCLA study by MRI of 1,302 back pain patients when they were in the Fonar Upright® MRI and examined in a full range of flexion and extension positions made possible by Fonar’s new Upright® technology established that significant “misses” of pathology were occurring with static single position MRI imaging. At L4-5, the vertebral level responsible for 49.8% of lumbar disc herniations, 35.1% of the spondylolistheses (vertebral instabilities) visualized by the Upright® MRI, were being missed by static single position MRI (510 patients). Since this vertebral segment is responsible for the majority of all disc herniations, the finding may reveal a significant cause of failed back surgeries. The UCLA study further showed the “miss-rate” of vertebral instabilities by static only MRI was even higher, 38.7%, at the L3-4 vertebral segment. Additionally, the UCLA study showed that MRI examinations of the cervical spine that did not perform extension images of the neck “missed” disc bulges 23.75% of the time (163 patients).

The UCLA study further reported that they were able to quantitatively measure the dimensions of the central spinal canal with the “highest accuracy” using the FONAR Upright® MRI thereby enabling the extent of spinal canal stenosis that existed in patients to be measured. Spinal canal stenosis gives rise to the symptom complex intermittent neurogenic claudication manifest as debilitating pain in the back and lower extremities, weakness and difficulties in ambulation and leg paresthesias. Spinal canal stenosis is a spinal compression syndrome separate and distinct from the more common nerve compression syndrome of the spinal nerves as they exit the vertebral column through the bony neural foramen.

The Fonar Upright® MRI can also be useful for MRI directed emergency neuro-surgical procedures as the surgeon would have unhindered access to the patient’s head when the patient is supine with no restrictions in the vertical direction. This easy-entry, mid-field-strength scanner could prove ideal for trauma centers where a quick MRI-screening within the first critical hour of treatment will greatly improve patients’ chances for survival and optimize the extent of recovery.

MRI has brought a new dimension to MEDICAL TREATMENT, the power to VISUALIZE ANATOMIC DETAIL in the body's VITAL SOFT TISSUES (brain, heart, kidney, liver, spleen, lungs, pancreas, intestines) plus MRI's new power to non-invasively QUANTIFY (e.g. measure T1, T2, diffusion, chemical spectra) the response of these VITAL TISSUES to treatment.

Liquidity and Capital Resources

Cash and cash equivalents, and short term investments increased ~~by 1.6%~~ from ~~$48.7~~$51.3 million at June 30, ~~2022~~2023 to ~~$49.5~~$53.2 million at December 31, ~~2022.~~2023.

Cash provided by operating activities for the first six months of fiscal ~~2023~~2024 was ~~$5.9~~$6.7 million. Cash provided by operating activities was attributable principally to net income of ~~$5.5~~$10.0 million, depreciation and amortization of ~~$2.2~~$2.4 million, amortization on right-to-use assets of ~~$2.2 million, provision for bad debts of $2.9~~$2.1 million, and deferred income tax of $2.3 million, offset by an increase in accounts, management fee receivables and medical receivables of ~~$3.4~~$5.0 million, a decrease of operating lease liabilities of $2.3 million and a decrease in other current liabilities of ~~$3.2~~$2.3 million.

Cash used in investing activities for the first six months of fiscal ~~2023~~2024 was ~~$1.4 million.~~$212,000. Cash usedin investing activities during the first six months of fiscal ~~2023~~2024 consistedof patent costs of ~~$74,000~~$20,000 and the purchase of property and equipment of ~~$1.4 million.~~$192,000.

Cash used in financing activities for the first six months of fiscal ~~2023~~2024 was ~~$3.6~~$4.5 million. The principal uses of cash in financing activities during the first six months of fiscal ~~2022~~2024 were the repayment of principal on long-term debt and capital lease obligations of ~~$15,000,~~$21,000, the purchase of treasury stock of ~~$478,000~~$1.9 million and distributions to non-controlling interests of ~~$3.2~~$2.6 million.

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~~FONAR CORPORATION AND SUBSIDIARIES~~

Total liabilities decreased by ~~6.9%~~7.6% to ~~$49.4~~$46.0 million at December 31, ~~2022~~2023 from ~~$53.1~~$49.8 million at June 30, ~~2022.~~2023. “Other” current liabilities decreased by ~~35.5%~~36.4% to ~~$4.1~~$3.5 million at December 31, ~~2022~~2023 from ~~$6.4~~$5.4 million at June 30, ~~2022.~~2023. The current portion of our service contract liabilities ~~decreased~~increased by ~~9.0%~~0.7% to $3.9 million at December 31, ~~2022~~2023 as compared to ~~$4.3~~$3.8 million at June 30, ~~2022. Customer deposits~~2023. The current portion of operating lease liability increased from ~~$361,000~~$3.9 million at June 30, ~~2022~~2023 to ~~$632,000~~$4.7 million at December 31, ~~2022.~~2023.

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As of December 31, ~~2022,~~2023, the total of ~~$4.1~~$3.5 million in “other” current liabilities included accrued salaries and payroll taxes of ~~$1.9~~$2.1 million, ~~state income~~sales taxes payable of ~~$300,000~~$222,000 and other general and administrative expenses of ~~$1.5 million.~~$809,000.

Our working capital increased to ~~$107.0~~$118.4 million at December 31, ~~2022~~2023 from ~~$101.9~~$110.0 million at June 30, ~~2022.~~2023. This resulted from an increase in current assets ($~~118.7~~125.7 million at June 30, ~~2022~~2023 as compared to ~~$120.7~~$132.5 million at December 31, ~~2022)~~2023), and a decrease in current liabilities from ~~$16.7~~$15.6 million at June 30, ~~2022~~2023 to ~~$13.7~~$14.1 million at December 31, ~~2022.~~2023.

The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible or when such net operating losses can be utilized. The Company considers projected future taxable income, the regulatory environment of the industry, and tax planning strategies in making this assessment. At the present, the Company believes that it is more likely than not that the benefits from certain deferred tax asset carryforwards, will not all be fully realized. In recognition of this inherent risk, a valuation allowance was established for ~~the partial value of the deferred tax asset, (principally related~~separate state net operating losses that are not expected to ~~research and development tax credits and allowance for doubtful accounts).~~be utilized. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance.

The Company’s effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year’s taxable income on a periodic basis as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

On August 16, 2020 Congress enacted the Inflation Reduction Act (“IRA”). The IRA includes provisions imposing a 1% excise tax on share repurchases that occur after December 31, 2022 and introduces a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. The CAMT will be effective for tax years beginning after December 31, 2022. Currently, the Company does not expect the IRA to have a material impact to the Company’s financial statements.

Fonar is not committed to making any significant capital expenditures for the remainder of the ~~2023~~2024 fiscal year, for placing a scanner at a new stand-alone facility located in Florida which is scheduled to open in February. The current estimated costs of these capital expenditures is approximately $1.5 million.year.

Critical to our business plan are the improvement and expansion of the MRI facilities managed or owned by HMCA, and increasing the number of scans performed at those facilities. In addition, our business plan calls for a continuing commitment to providing our customers with enhanced equipment service and maintenance capabilities and delivering state-of-the-art, innovative and high quality equipment and upgrades at competitive prices.

~~Page 32~~

~~FONAR CORPORATION AND SUBSIDIARIES~~In pursuit of those goals, Fonar has entered into an agreement with AIRS Medical to install its SwiftMR™ product on all Fonar Upright® scanners operating at the facilities HMCA owns or manages. Fonar will also make the AIRS SwiftMR™ product available to the installed base of Fonar scanners operating in the United States. The AIRS SwiftMR™ product enhances image quality using AI-powered denoising and sharpening. Management believes this product will improve the quality of the images produced by Fonar equipment, including the scanners operated by HMCA facilities.

Management is seeking to promote wider market recognition of Fonar’s scanner products, and to increase demand for Upright® scanning at the facilities HMCA owns or manages. Given the liquidity and credit constraints in the markets, the uncertainty resulting from the Patient Protection and Affordable Care Act or its repeal or modification, and the impact of the COVID-19 virus on the economy in general, the sale of medical equipment has and may continue to suffer.

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FONAR CORPORATION AND SUBSIDIARIES

The Company believes that its business plan has been responsible for its profitability in the past nine consecutive fiscal years and first half quarter of fiscal ~~2023 of profitability~~2024, and that its capital resources will be adequate to support operations through at least February 14, ~~2024.~~2025. The future effects on our business of healthcare legislation, ~~the impact of the COVID-19 virus, the Deficit Reduction Act,~~ the 2.3% excise tax on sales of medical equipment, reimbursement rates, public health conditions and the general economic and business climate are not known at the present time. Nevertheless, there is a possibility of adverse consequences to our business operations from these causes. Although the Company cannot predict the full effect of COVID-19 for the ~~second~~first half or any later period, the Company believes that it has adequate revenues, cash reserves and other assets that will enable it to continue to operate until at least February 14, ~~2024.~~2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company maintains its funds in liquid accounts. None of our investments are in fixed rate instruments.

All of our revenue, expense and capital purchasing activities are transacted in United States dollars.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon our evaluation, our chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures were effective as of ~~the~~ December 31, ~~2022,~~2023, in ensuring that material information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the same time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our system of internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings: There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, ~~2022~~2023 and Form 10-Q for the fiscal quarter ended September 30, ~~2022.~~2023.

Item 1A – Risk Factors: An investment in the securities of the Company is subject to various risks, the most significant of which are summarized below.

1. Reduced Reimbursement Rates. Most of our revenues are derived from our scanning center business conducted by HMCA. Our scanning center clients and the Florida facilities owned by HMCA are experiencing lower reimbursement rates from Medicare, other government programs and private insurance companies. To ~~date,~~ the ~~impact of~~extent possible, we counter these reductions ~~has been countered~~ by increasing scanning volume ~~notwithstanding~~and controlling operating expenses. Inflation in the ~~COVID-19 pandemic,~~cost of both materials and ~~reducing~~labor have limited our ~~operating expenses, thereby maintaining~~ability to control our costs, negatively impacting our ability to maintain profitability in this business segment. ~~There is, however, no assurance~~

2. Inflation and Increasing Interest Rates. Inflation has drastically increased our costs for both materials and labor. The Federal Reserve has increased interest rates substantially in an attempt to control inflation, which in turn has increased the cost of capital. Diagnostic imaging facilities require significant amounts of capital to operate, particularly in the context of opening new diagnostic imaging centers. These increased costs make it more difficult to achieve organic growth and extend the time that ~~we will be able~~a new center takes to ~~continue~~achieve profitability. Continued costs increases, coupled with reduced reimbursement rates may threaten the profitability of our current operations and cause the cost of expansion to ~~do so.~~become prohibitively high.

2.3. Demand for MRI Scanners. The reduced reimbursement rates ~~also affects~~have a negative effect on our sales of MRI ~~scanners negatively.~~scanners. With lower revenue projections, prospective customers would demand lower prices for scanners. Although the reduced reimbursements may not affect foreign demand, a lower number of sales in the aggregate could reduce economies of scale and consequently, profit margins.

3.4. Manufacturing Competition. Many if not most of our competing scanner manufacturers have significantly greater financial resources, production capacity, and other resources than we do. Such competitors would include General Electric, Siemens, Hitachi and Phillips. Although Fonar is the only company which can manufacture and sell the unique Stand-Up® (Upright®) MRI scanner, potential customers must be convinced that the purchase of a Fonar scanner is their best choice. We believe that with time, that objective will be reached, particularly with customers scanning patients having neck, back, knee and various orthopedic issues who would benefit from being scanned in weight-bearing positions.

4.5. Dependence on Referrals. HMCA derives substantially all of its revenue, directly or indirectly, from fees charged for the diagnostic imaging services performed at the facilities. We depend on referrals of patients from unaffiliated physicians and other third parties to the facilities we manage or own for the services we perform. If these physicians and other third parties were to reduce the number of patients they refer or discontinue referring patients, scan volumes could decrease, which would reduce our net revenue and operating margins.

5.6. Pressure to Control Healthcare Costs. One of the principal objectives of health maintenance organizations and preferred provider organizations is to control the cost of healthcare services. Healthcare providers participating in managed care plans may be required to refer diagnostic imaging tests to certain providers depending on the plan in which a covered patient is enrolled. In addition, managed care contracting has become very competitive. The expansion of health maintenance organizations, preferred provider organizations and other managed care organizations in New York or Florida could have a negative impact on the utilization and pricing of services performed at the facilities HMCA manages or owns to the extent these organizations exert control over patients’ access to diagnostic imaging services, selections of the provider of such services and reimbursement rates for those services.

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FONAR CORPORATION AND SUBSIDIARIES

7. Scanning Facility Competition. The market for diagnostic imaging services is highly competitive. The facilities we manage or own compete for patients on the basis of reputation, location and the quality of diagnostic imaging services. Groups of radiologists, established hospitals, clinics and other independent organizations that own and operate imaging equipment are the principal competitors.

~~Page 34~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

7.8. Eligibility Changes to Insurance Programs. Due to potential decreased availability of healthcare through private employers, the number of patients who are uninsured or participate in governmental programs may increase. Healthcare reform legislation will continue to increase the participation of individuals in the Medicaid program in states that elect to participate in the expanded Medicaid coverage. A shift in payor mix from managed care and other private payors to government payors or an increase in the number of uninsured patients may result in a reduction in the rates of reimbursement or an increase in uncollectible receivables or uncompensated care, with a corresponding decrease in net revenue. Policies now being offered under various insurance plans are expected to reduce demand for MRI scans as they become less affordable. Changes in the eligibility requirements for governmental programs such as the Medicaid program and state decisions on whether to participate in the expansion of such programs also could increase the number of patients who participate in such programs and the number of uninsured patients. Even for those patients who remain in private insurance plans, changes to those plans could increase patient financial responsibility, resulting in a greater risk of uncollectible receivables. These factors and events could have a material adverse effect on our business, financial condition, and results of operations.

~~8. Possible~~9. Current and future changes in Florida Insurance Law. ~~In early 2019, two senate bills and one house~~On March 24, 2023, Florida Governor Ron DeSantis signed the Tort Reform Act. The bill in Florida were introduced, all of them calling for the repeal of PIP and replacing PI with $25,000 Bodily Injury Coverage and Property Damage Liability Coverage. Another Florida senate bill was introduced that would preserve PIP but dramatically cut reimbursement rates. None of the proposed bills ever made it onto the 2019 legislative agenda. During Fonar’s fiscal 2021, the Florida house and senate reached an agreement and passed similar legislation. It was, however, vetoed by the Governor. We cannot predict whether such efforts by the Florida legislaturemakes sweeping changes to Florida’s negligence laws.

These changes will continue or be successful. Currently, drivers and passengers get car damages and PIP, paid for up to $10,000, no matter who is at fault in an accident. Drivers have to pay an additional cost to insurance companies to pay for bodily injuries which covers them if they are at fault. While PIP is required, coverage for bodily injury is not.

Over the past several years there have been various bills introduced by a number of Florida legislators to eliminate PIP and instead mandate coverage including some combination of a minimum of bodily injury and a reduced or no amount of medical payments (Medpay coverage). Eliminating PIP would mean that the $10,000 drivers now get paid toward medical costs through their insurers might not be there for them to pay for injured drivers. Importantly, payments would be reduced by approximately 60% due to claims being paid at commercial rates or through legal settlements instead of at the presently prevailing PIP fee schedule. This would negatively impact our Florida diagnostic imaging facilities (both those we own and those we manage) with more unpaid bills, and lower reimbursement ~~rates and elongated waiting times. To date proponents~~rates. The full extent of ~~these changes have been unsuccessful.~~those reductions are unclear at this time.

9.10. Federal and state privacy and information security laws. We must comply with numerous federal and state laws and regulations governing the collection, dissemination, access, use, security and privacy of ~~Protected Health Information (‘PHI’),~~PHI, including ~~Health Insurance Portability and Accountability Act (‘HIPAA’)~~HIPAA and its implementing privacy and security regulations, as amended by the federal ~~Health Information Technology for Economic and Clinical Health (‘HITECH’) Act and collectively referred to as HIPAA.~~HITECH Act. If we fail to comply with applicable privacy and security laws, regulations and standards, properly maintain the integrity of our data, protect our proprietary rights to our systems, or defend against cybersecurity attacks, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.

Information security risks have significantly increased in recent years because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct our operations, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state agents. Our operations rely on the secure processing, transmission and storage of confidential, proprietary and other information in our computer systems and networks.

~~Page 35~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

10. COVID-19. Although we believe we have taken the proper steps and are making a good recovery from the impact of the first wave of the COVID-19 virus, new strains of the disease have developed and future variants may continue to develop. The relatively recent new variants are particularly contagious and coupled with New York State requirements that medical employees must be vaccinated if they care for patients, including our technicians and support staff caring for scanning patients, has resulted in fewer available employees and adversely affected our ability to staff a full number of shifts. The course and severity of the virus, and the ultimate and economic and medical impact it will have worldwide and at home, is uncertain.

11. Other changes in Domestic and Worldwide Economic Conditions. We are subject to risk arising from adverse changes in general domestic and global economic and other conditions, including recessions or economic slowdowns, disruptions of credit markets and military conflicts. Turbulence and uncertainty in the United States and international markets and economies may adversely affect our workforce, liquidity, financial condition, revenues, profitability and business operations generally.

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FONAR CORPORATION AND SUBSIDIARIES

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds: None

In September 2022, our Board of Directors authorized a program to repurchase up to $9 million of our common stock. Under this program, we may purchase stock in the open market or through privately negotiated transactions in accordance with applicable securities laws, including pursuant to pre-arranged stock trading plans. The timing and actual amount of the stock repurchases will depend on several factors including price, capital availability, regulatory requirements, and other market conditions. We are not obligated to repurchase a specific number of shares under this program and it may be modified, suspended or discontinued at any time.

The following table summarizes the number of shares repurchased during the three months ended December 31, 2023:

Fiscal Month		Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Dollar Value that May Still Be Purchased Under the Program (In Thousands)
	October 1, 2023 - October 31, 2023		33,243	$	14.17		33,243		6,055
	November 1, 2023 - November 30, 2023		30,726	$	17.43		30,726		5,520
	December 1, 2023 - December 31, 2023		8,328	$	19.74		8,328		5,355

	Total		72,297	$	16.20		72,297

Item 3 - Defaults Upon Senior Securities: None

Item 4 - Mine Safety Disclosure: Not Applicable

Item 5 - Other Information: None

Item 6 - Exhibits and Reports on Form 8-K:

a)	Exhibit 31.1 Certification. See Exhibits

b)	Exhibit 32.1 Certification. See Exhibits

c)	Report on Form 8-K filed on November 14, ~~2022,~~2023, Item 2.02: Results of Operations and Financial Condition for the ~~fiscal~~ quarter ended September 30, ~~2022.~~2023.

Page 33

SIGNATURES

~~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 thereunto duly authorized.

	FONAR CORPORATION
	(Registrant)


	By: /s/ Timothy Damadian
	Timothy Damadian
	Chairman of the Board of Directors, President,
	Principal Executive Officer and Treasurer


	/s/ Luciano Bonanni
	Luciano Bonanni
	Executive Vice President, Chief Operating Officer,
	Acting Principal Financial Officer

Dated: February 14, 2024

~~(Registrant)~~

~~________________~~

~~By: /s/ Timothy Damadian~~

~~Timothy Damadian~~

~~Chairman of the Board of Directors, President, Principal Executive Officer and Treasurer~~

~~________________~~

~~/s/ Luciano Bonanni~~

~~Luciano Bonanni~~

~~Executive Vice President, Chief Operating Officer, Acting Principal Financial Officer~~

~~Dated: February 14, 2023~~ Page 34

~~Page 36~~

delaware		11-2464137
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

110 Marcus Drive Melville, New York		11747
Address of principal executive offices)		(Zip Code)

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, $.0001 par value		FONR		NASDAQ Capital Market

Class	Outstanding at February ~~7, 2023~~9, 2024
Common Stock, par value $.0001		6,328,294	~~6,538,148~~
Class B Common Stock, par value $.0001		146	~~146~~
Class C Common Stock, par value $.0001		382,513	~~382,513~~
Class A Preferred Stock, par value $.0001	~~313,438~~

STOCKHOLDERS' EQUITY:	December 31, 2022			June 30, 2022*
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at December 31, 2022 and June 30, 2022, 313 issued and outstanding at December 31, 2022 and June 30, 2022	$	—		$	—
Preferred stock $.001 par value; 567 shares authorized at December 31, 2022 and June 30, 2022, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at December 31, 2022 and June 30, 2022, 6,563 and 6,566 issued at December 31, 2022 and June 30, 2022, respectively 6,538 and 6,554 outstanding at December 31, 2022 and June 30, 2022 respectively		1			1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at December 31, 2022 and June 30, 2022; .146 issued and outstanding at December 31, 2022 and June 30, 2022		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at December 31, 2022 and June 30, 2022, 383 issued and outstanding at December 31, 2022 and June 30, 2022		—			—
Paid-in capital in excess of par value		184,130			184,531
Accumulated deficit		(29,288	)		(33,567	)
Treasury stock, at cost – 25 shares of common stock at December 31, 2022 and 12 shares of common stock at June 30, 2022		(751	)		(675	)
Total Fonar Corporation’s Stockholders’ Equity		154,092			150,290
Noncontrolling interests		(6,022	)		(4,054	)
Total Stockholders' Equity		148,070			146,236
Total Liabilities and Stockholders’ Equity	$	197,498		$	199,342


	FOR THE THREE MONTHS ENDED DECEMBER 31,
REVENUES	2022			2021
Patient fee revenue net of contractual allowances and discounts	$	7,129		$	7,443
Product sales – net		170			198
Service and repair fees – net		1,838			1,907
Service and repair fees - related parties – net		28			28
Management and other fees – net		12,092			12,108
Management and other fees - related medical practices – net		2,999			2,795
Total Revenues – Net		24,256			24,479
COSTS AND EXPENSES
Costs related to patient fee revenue		4,023			3,323
Costs related to product sales		214			190
Costs related to service and repair fees		722			719
Costs related to service and repair fees - related parties		11			10
Costs related to management and other fees		6,622			6,924
Costs related to management and other fees – related medical practices		1,492			1,690
Research and development		342			370
Selling, general and administrative		6,598			4,770
Total Costs and Expenses		20,024			17,996
Income From Operations		4,232			6,483
Other (Expense) Income		(208	)		47
Interest Expense		(12	)		(23	)
Investment Income		263			60
Income Before Provision for Income Taxes and Noncontrolling Interests		4,275			6,567
Provision for Income Taxes		(1,463	)		(1,430	)
Net Income		2,812			5,137
Net Income - Noncontrolling Interests		(580	)		(1,117	)
Net Income – Attributable to FONAR	$	2,232		$	4,020
STATEMENT OF INCOME
Net Income Available to Common Stockholders	$	2,097		$	3,777
Net Income Available to Class A Non-Voting Preferred Stockholders	$	101		$	181
Net Income Available to Class C Common Stockholders	$	34		$	62
Basic Net Income Per Common Share Available to Common Stockholders	$	0.32		$	0.58
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.32		$	0.57
Basic and Diluted Income Per Share – Class C Common	$	0.09		$	0.16
Weighted Average Basic Shares Outstanding – Common Stockholders		6,527			6,554
Weighted Average Diluted Shares Outstanding – Common Stockholders		6,655			6,682
Weighted Average Basic and Diluted Shares Outstanding – Class C Common		383			383

Schedule of earning per share
	Three months ended December 31, 2022						Three months ended December 31, 2021
	Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Basic
Numerator: Net income available to common stockholders	$	2,232	$	2,097	$	34	$	4,020	$	3,777	$	62
Denominator:
Weighted average shares outstanding		6,527		6,527		383		6,554		6,554		383
Basic income per common share	$	0.34	$	0.32	$	0.09	$	0.61	$	0.58	$	0.16
Diluted
Denominator: Weighted average shares outstanding				6,527		383				6,554		383
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,655		383				6,682		383
Diluted income per common share			$	0.32	$	0.09			$	0.57	$	0.16

	June 30, 2022
	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,541	$	205	$	4,336
Medical receivable	$	20,109	$	—	$	20,109
Management and other fees receivable	$	50,047	$	16,628	$	33,419
Management and other fees receivable from related medical practices ("PC’s")	$	13,290	$	4,687	$	8,603

Schedule of facilities owned or managed
2024	$	970
2025		289
2026		37
Total	$	1,296

Schedule of patient fee revenue
	For the Three Months Ended December 31,
	2022		2021
Commercial Insurance/ Managed Care	$	958	$	1,068
Medicare/Medicaid		247		273
Workers' Compensation/Personal Injury		4,262		4,344
Other		1,662		1,758
Patient Fee Revenue, net of contractual allowances and discounts	$	7,129	$	7,443

	For the Six Months Ended December 31,
	2022		2021
Commercial Insurance/ Managed Care	$	1,869	$	2,154
Medicare/Medicaid		484		522
Workers' Compensation/Personal Injury		8,497		8,468
Other		2,355		3,150
Patient Fee Revenue, net of contractual allowances and discounts	$	13,205	$	14,294

Schedule of Future revenue