SCHEDULE: FONAR Insiders Propose 'Going Private' Transaction with Premium Offer

A group of FONAR Corp. insiders, including the CEO and other key executives, has submitted a non-binding proposal to acquire all outstanding shares not currently owned by them in a 'going private' transaction, offering a premium of at least 10% to recent trading prices.

Summary

• A group of ten Reporting Persons, including FONAR Corp.'s Chairman and CEO Timothy Raymond Damadian, Vice President and COO Luciano Benedetto Bonanni, and other key management and directors, have jointly filed a Schedule 13D.
• The filing indicates a change in their intentions regarding their ownership of FONAR securities, now forming a group to pursue a 'going private' transaction.
• On July 7, 2025, the Reporting Persons delivered a non-binding proposal letter to FONAR's Board of Directors.
• The proposal aims to acquire all outstanding shares of FONAR capital stock not currently owned by the Proposed Acquisition Group.
• The Proposed Acquisition Group collectively beneficially owns approximately 5.01% of the outstanding FONAR Stock.
• The proposed per share price for public shareholders would be a cash premium of no less than 10% to the average closing market price of FONAR's common stock for the 90 trading days immediately preceding July 1, 2025.
• The transaction is expected to be structured as a merger where a newly formed special purpose vehicle (Acquisition Vehicle) would acquire FONAR.
• Approval of the merger agreement is contemplated to require a 'majority of the minority' vote from FONAR stockholders not part of the Proposed Acquisition Group.
• As of May 2, 2025, there were 6,203,465 shares of Common Stock issued and outstanding.
• Timothy Raymond Damadian beneficially owns 121,553 shares, representing approximately 1.9% of the outstanding Common Stock.
• Jevan Damadian beneficially owns 78,853 shares, representing approximately 1.3% of the outstanding Common Stock.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive for public shareholders due to the proposed premium offer for a 'going private' transaction. However, the non-binding nature of the proposal and the stated intent of the group not to support alternative transactions introduce uncertainty and potential limitations on value maximization, preventing a higher score.

Positives

• The proposal offers a premium of no less than 10% to the average closing market price for the 90 trading days preceding July 1, 2025, providing a potential attractive cash-out opportunity for public shareholders.
• The Proposed Acquisition Group expresses confidence in its ability to secure adequate debt financing and additional equity capital, anticipating no financing condition at the time of merger agreement execution.
• The proposal includes a 'majority of the minority' vote requirement, which is a governance mechanism designed to protect the interests of public shareholders.

Negatives

• The proposal is preliminary and non-binding, meaning there is no assurance that the transaction will be pursued or consummated.
• Timothy R. Damadian, as a shareholder, explicitly states he will not support or vote in favor of any alternative transaction proposed by third parties, which could limit competitive bids.
• Other members of the Proposed Acquisition Group may also feel similarly about not supporting alternative transactions.

Risks

• The proposed 'going private' transaction is non-binding and may not proceed or be consummated.
• The final per share price is subject to negotiation and may differ from the initial premium indication.
• The Proposed Acquisition Group's stated intent not to support alternative transactions could deter other potential bidders, potentially limiting the value public shareholders might receive.
• The transaction is subject to due diligence, which could uncover issues impacting the proposal.
• The transaction requires Board approval and a 'majority of the minority' shareholder vote, which are not guaranteed.

Future Outlook

The Proposed Acquisition Group intends to pursue a 'going private' transaction for FONAR Corp., offering a premium to public shareholders. This involves negotiating definitive agreements, conducting due diligence, and securing financing. There is no assurance that the transaction will be consummated, and the group reserves the right to change its position.

Management Comments

• "I, along with certain other members of the management team and Board of Directors of FONAR Corporation (FONAR) and third parties (collectively, the Proposed Acquisition Group), are contemplating the pursuit of a plan to acquire all of the outstanding shares of capital stock of FONAR not owned by members of the Proposed Acquisition Group in a going private transaction."
• "The Acquisition Group believes that an Acquisition Transaction, at a price per share to be negotiated, will provide a very attractive opportunity to FONARs public shareholders to cash out of their investment in FONAR Stock."
• "We anticipate that the per share price for the FONAR Stock held by the public stockholders would be at a premium of no less than 10% to the average closing market price of FONARs common stock for the 90 trading days immediately preceding July 1, 2025."
• "The Proposed Acquisition Group is confident that it can timely secure adequate debt financing and additional equity capital to consummate the Acquisition Transaction, and we expect the Acquisition Transaction would not be subject to any financing condition at the time the merger agreement is executed."
• "I, personally, as a holder of FONAR Stock, will not support or vote in favor of any alternative transaction submitted or proposed by any third party or parties. Other members of the Proposed Acquisition Group may feel similarly."
• "Those members of the Proposed Acquisition Group who are part of the management team or directors of FONAR, including myself, will continue to abide by our respective fiduciary duties to FONAR and all of FONARs stockholders."

Industry Context

This announcement is a company-specific corporate action, a 'going private' transaction, rather than an operational or financial performance update. It reflects an internal strategic decision by a group of insiders to take the company private, which is a common occurrence in various industries for reasons such as perceived undervaluation, desire for greater operational flexibility, or to avoid public company costs and scrutiny.

Comparison to Industry Standards

• This document details a specific 'going private' proposal for FONAR Corp. and does not contain financial or operational results that can be directly compared to global industry benchmarks or specific comparable companies/projects.
• The proposed premium of 'no less than 10%' is a common starting point for such transactions, but the ultimate value will depend on negotiations and market conditions, which can vary widely across similar transactions in the healthcare technology or medical device sector.

Corporate Governance

Related Party Transactions

• The core of this filing is a proposed 'going private' transaction where a group of FONAR's management and directors (related parties) intend to acquire all shares not already owned by them. This constitutes a significant related-party transaction.

Stakeholder Impact

• **Shareholders (Public)**: Potential to cash out their investment at a premium, offering liquidity and a defined return. However, the non-binding nature and potential lack of alternative bids introduce uncertainty.
• **Management/Insiders (Proposed Acquisition Group)**: If successful, they would gain full control of the company, allowing for greater operational flexibility and potentially long-term value creation without public market pressures.
• **Employees (HMCA)**: Several HMCA executives are part of the Proposed Acquisition Group, indicating their alignment with the transaction. The impact on other employees is not explicitly detailed but would depend on post-acquisition plans.

Next Steps

• The Board of Directors of FONAR is expected to evaluate the non-binding proposal.
• Discussions and negotiations between the Reporting Persons and the Issuer's Board of Directors will commence.
• The Proposed Acquisition Group and its financing partners will conduct due diligence on FONAR's books and records.
• Negotiation and finalization of definitive merger and related agreements.
• A 'majority of the minority' shareholder vote will be required for approval if the transaction proceeds.

Key Dates

Recommendation

Keywords

FONAR Corp, going private, Schedule 13D, management buyout, tender offer, shareholder proposal, premium offer, corporate governance, SEC filing, common stock, beneficial ownership