Filing pursuant to Rule 424(b)(3)
Registration Statement No. 333-116908
PROSPECTUS SUPPLEMENT NO 1. DATED July 16, 2004
(TO PROSPECTUS DATED July 16, 2004)
3,500,000 SHARES
FONAR CORPORATION
COMMON STOCK
This prospectus supplement relates to the plan of distribution pursuant to which
we will issue up to 3,500,000 shares of our common stock. See "Plan of
Distribution" below for a more detailed description of this plan. These
3,500,000 shares are registered under Registration Statement No. 333-116908 and
covered by the accompanying prospectus.
You should read this prospectus supplement along with the accompanying
prospectus. These documents contain information you should consider when making
your investment decision. You should rely only on information contained or
incorporated by reference in this prospectus supplement and the accompanying
prospectus. We have not authorized anyone else to provide you with different or
additional information. You should not assume that the information in this
prospectus supplement is accurate as of any date other than the date on the
front of this document.
The prospectus supplement and the accompanying prospectus do not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
common stock offered hereby. This prospectus supplement and the accompanying
prospectus do not constitute an offer to sell or a solicitation of an offer to
buy our common stock in any circumstances in which an offer or solicitation is
unlawful.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5 OF THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLAN OF DISTRIBUTION
We may issue up to 3,500,000 shares of our common stock covered by the
accompanying prospectus by issuing them directly to vendors, suppliers of goods
and services or other creditors in lieu of cash. The recipients of the shares
would receive a number of shares having a market value of the amount to be paid
as of the date of issuance of the shares. The recipients would credit our
account with them with the net proceeds they receive from the sale of the
shares. Net proceeds for these purposes means the sales price received for the
shares less the sellers' brokerage commissions and other costs of sale, if any.
To the extent the recipient is underpaid, we may issue additional shares or pay
the balance in cash. To the extent the recipient is overpaid, we will receive a
credit to our account with the recipient.
The principal purposes of issuing these shares is to pay vendors and suppliers
for the parts and services necessary for us to make timely delivery of MRI
scanning systems, to accelerate our production rate in order to reduce per unit
manufacturing costs and for advertising and marketing expenses. Management will
have broad discretion in the use of the shares.
MARKET FOR OUR COMMON STOCK
Our common stock is listed on the NASDAQ Small Cap Market under the symbol
"FONR". On July 14, 2004 our closing price of one share of common stock was
$1.19. As of June 15, 2004, we had 98,199,765 shares of common stock
outstanding.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to "incorporate by reference" information that we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus supplement and the accompanying prospectus.
The documents we incorporate by reference and where you can find additional
filings and information concerning Fonar are set forth in the prospectus.