10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended MARCH 31, 2015

Commission file number 0-10248

FONAR CORPORATION

(Exact name of registrant as specified in its charter)

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)

Registrant's telephone number, including area code: (631) 694-2929

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 X NO ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files. YES X NO ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer or smaller reporting company in Rule 12b-2 of the Exchange Act.(Check one): Large accelerated filer___ Accelerated filer X Non-accelerated filer ___ Smaller reporting company ___

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

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

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

Class	Outstanding at April 30, 2015
Common Stock, par value $.0001	6,050,840
Class B Common Stock, par value $.0001	146
Class C Common Stock, par value $.0001	382,513
Class A Preferred Stock, par value $.0001	313,438

FONAR CORPORATION AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION	Page No.
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets - March 31, 2015 (Unaudited) and June 30, 2014	3
Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	6
Condensed Consolidated Statements of Income for the Nine Months Ended  March 31, 2015 and March 31, 2014 (Unaudited)	7
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2. Management's Discussion and Analysis of Financial Condition and  Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
PART II - OTHER INFORMATION	29
Item 1. Legal Proceedings	29
Item 1A. Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Mine Safety Disclosures	30
Item 5. Other Information	30
Item 6. Exhibits	30
Signatures	30

Page 2

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

ASSETS

	March 31, 2015		June 30, 2014 *
Cash and cash equivalents	$	7,828	$	9,952
Accounts receivable – net		4,071		4,450
Accounts receivable - related party		30		—
Medical receivable – net		9,037		8,808
Management and other fees receivable – net		14,618		11,970
Management and other fees receivable – related medical practices – net		3,669		3,427
Costs and estimated earnings in excess of billing on uncompleted contracts		681		760
Inventories		2,286		2,444
Prepaid expenses and other current assets		855		1,011
Total Current Assets		43,075		42,822
Deferred income tax asset		5,740		5,740
Property and equipment – net		13,454		15,030
Goodwill		1,767		1,767
Other intangible assets – net		9,653		10,509
Other assets		853		922
Total Assets	$	74,542	$	76,790

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

Page 3

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' EQUITY

	March 31, 2015		June 30, 2014 *
Current Liabilities:
Current portion of long-term debt and capital leases	$	2,896	$	2,891
Accounts payable		2,304		2,482
Other current liabilities		8,994		9,024
Unearned revenue on service contracts		4,232		4,731
Unearned revenue on service contracts - related party		28		—
Customer advances		1,668		1,927
Billings in excess of costs and estimated earnings on uncompleted contracts		142		142
Total Current Liabilities		20,264		21,197
Long-Term Liabilities:
Deferred income tax liability		584		584
Due to related medical practices		232		234
Long-term debt and capital leases, less current portion		6,311		8,482
Other liabilities		156		386
Total Long-Term Liabilities		7,283		9,686
Total Liabilities		27,547		30,883

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

LIABILITIES AND STOCKHOLDERS' EQUITY (Continued)

		March 31, 2015			June 30, 2014 *
STOCKHOLDERS' EQUITY:
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at March 31, 2015 and June 30, 2014, 313 issued and outstanding at March 31, 2015 and June 30, 2014		—			—
Preferred stock $.001 par value; 567 shares authorized at March 31, 2015 and June 30, 2014, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at March 31, 2015 and June 30, 2014, 6,062 and 6,057 issued at March 31, 2015 and June 30, 2014, respectively; 6,051 and 6,046 outstanding at March 31, 2015 and June 30, 2014, respectively		1			1
Class B Common Stock (10 votes per share) $ .0001 par value; 227 shares authorized at March 31, 2015 and June 30, 2014, .146 issued and outstanding at March 31, 2015 and June 30, 2014		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at March 31, 2015 and June 30, 2014, 383 issued and outstanding at March 31, 2015 and June 30, 2014		—			—
Paid-in capital in excess of par value		175,413			175,284
Accumulated deficit		(142,047	)		(149,259	)
Notes receivable from employee stockholders		(33	)		(39	)
Treasury stock, at cost - 12 shares of common stock at March 31, 2015 and June 30, 2014		(675	)		(675	)
Total Fonar Corporation Stockholder Equity		32,659			25,312
Noncontrolling interests		14,336			20,595
Total Stockholders' Equity		46,995			45,907
Total Liabilities and Stockholders' Equity	$	74,542		$	76,790

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(UNAUDITED)

	FOR THE THREE MONTHS ENDED MARCH 31
REVENUES	2015			2014
Product sales – net	$	160		$	478
Service and repair fees – net		2,299			2,518
Service and repair fees – related parties - net		27			27
Patient fee revenue, net of contractual allowances and discounts		7,284			6,090
Provision for bad debts for patient fee		(3,201	)		(2,868	)
Management and other fees – net		8,653			8,538
Management and other fees – related medical practices – net		1,874			2,257
Total Revenues – Net		17,096			17,040
COSTS AND EXPENSES
Costs related to product sales		352			223
Costs related to service and repair fees		630			623
Costs related to service and repair fees – related parties		7			7
Costs related to patient fee revenue		2,044			1,947
Costs related to management and other fees		5,285			5,327
Costs related to management and other fees – related medical practices		1,284			1,318
Research and development		360			360
Selling, general and administrative		3,706			3,935
Provision for bad debts		762			981
Total Costs and Expenses		14,430			14,721
Income From Operations		2,666			2,319
Interest Expense		(169	)		(203	)
Investment Income		52			57
Other Income		—			39
Income Before Provision for Income Taxes		2,549			2,212
Provision for Income Taxes		30			65
Net Income		2,519			2,147
Net Income - Noncontrolling Interests		(500	)		(408	)
Net Income - Controlling Interests	$	2,019		$	1,739
Net Income Available to Common Stockholders	$	1,888		$	1,625
Net Income Available to Class A Non-Voting Preferred Stockholders	$	98		$	85
Net Income Available to Class C Common Stockholders	$	33		$	29
Basic Net Income Per Common Share Available to Common Stockholders	$	0.31		$	0.27
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.31		$	0.26
Basic and Diluted Income Per Share-Class C Common	$	0.09		$	0.08
Weighted Average Basic Shares Outstanding-Common Stockholders		6,050			6,022
Weighted Average Diluted Shares Outstanding – Common Stockholders		6,178			6,150
Weighted Average Basic Shares Outstanding – Class C Common		383			383
Weighted Average Diluted Shares Outstanding – Class C Common		383			383

See accompanying notes to condensed consolidated financial statements (unaudited).

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(UNAUDITED)

	FOR THE NINE MONTHS ENDED MARCH 31,
REVENUES	2015			2014
Product sales – net	$	1,806		$	1,261
Service and repair fees – net		7,288			7,578
Service and repair fees – related parties - net		83			83
Patient fee revenue, net of contractual allowances and discounts		20,700			17,811
Provision for bad debts for patient fee		(9,244	)		(7,130	)
Management and other fees – net		26,004			24,955
Management and other fees – related medical practices – net		5,536			6,923
Total Revenues – Net		52,173			51,481
COSTS AND EXPENSES
Costs related to product sales		1,674			902
Costs related to service and repair fees		1,611			1,755
Costs related to service and repair fees - related parties		18			19
Costs related to patient fee revenue		5,845			5,823
Costs related to management and other fees		15,665			15,591
Costs related to management and other fees –  related medical practices		3,893			3,808
Research and development		1,116			1,128
Selling, general and administrative		11,108			12,024
Provision for bad debts		1,540			763
Total Costs and Expenses		42,470			41,813
Income From Operations		9,703			9,668
Interest Expense		(545	)		(682	)
Investment Income		173			178
Other Expense		(2	)		(113	)
Income Before Provision for Income Taxes		9,329			9,051
Provision for Income Taxes		99			235
Net Income		9,230			8,816
Net Income - Noncontrolling Interests		(2,018	)		(2,497	)
Net Income - Controlling Interests	$	7,212		$	6,319
Net Income Available to Common Stockholders	$	6,743		$	5,907
Net Income Available to Class A Non-voting Preferred Stockholders	$	350		$	307
Net Income Available to Class C Common Stockholders	$	119		$	105
Basic Net Income Per Common Share Available to Common Stockholders	$	1.11		$	0.98
Diluted Net Income Per Common Share Available to Common Stockholders	$	1.09		$	0.96
Basic and Diluted Income Per Share - Class C Common	$	0.31		$	0.27
Weighted Average Basic Shares Outstanding – Common Stockholders		6,050			6,002
Weighted Average Diluted Shares Outstanding – Common Stockholders		6,178			6,130
Weighted Average Basic Shares Outstanding – Class C Common		383			383
Weighted Average Diluted Shares Outstanding – Class C Common		383			383

See accompanying notes to condensed consolidated financial statements (unaudited).

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FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(UNAUDITED)

	FOR THE NINE MONTHS ENDED MARCH 31,
	2015			2014
Cash Flows from Operating Activities:
Net income	$	9,230		$	8,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,665			2,887
Provision for bad debts		10,784			7,894
Non cash considerations		76			407
Stock option exercised		—			31
Compensatory element of stock issuances		53			86
(Increase) decrease in operating assets, net:
Accounts, management fee and medical receivable(s)		(13,554	)		(11,012	)
Notes receivable		118			75
Costs and estimated earnings in excess of billings on uncompleted contracts		79			(236	)
Inventories		158			(433	)
Prepaid expenses and other current assets		89			31
Other assets		18			63
Increase (decrease) in operating liabilities, net:
Accounts payable		(178	)		110
Other current liabilities		(501	)		964
Customer advances		(259	)		(67	)
Other liabilities		(230	)		(221	)
Due to related medical practices		(2	)		1
Income tax payable		—			(20	)
Net cash provided by operating activities		8,546			9,376
Cash Flows from Investing Activities:
Purchases of property and equipment		(125	)		(375	)
Cost of patents		(108	)		(172	)
Net cash used in investing activities		(233	)		(547	)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations		(2,166	)		(3,401	)
Distributions to noncontrolling interests		(3,306	)		(3,724	)
Buyout of noncontrolling interests		(4,971	)		—
Repayment of notes receivable from employee stockholders		6			14
Net cash used in financing activities		(10,437	)		(7,111	)
Net (Decrease) Increase in Cash and Cash Equivalents		(2,124	)		1,718
Cash and Cash Equivalents – Beginning of Period		9,952			7,871
Cash and Cash Equivalents - End of Period	$	7,828		$	9,589

See accompanying notes to condensed consolidated financial statements (unaudited).

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 1 - 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 three and nine months ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on September 29, 2014 for the fiscal year ended June 30, 2014.

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.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based on weighted average number of shares 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 earnings per share and applied the if converted method in calculating diluted earnings per share for the three and nine months ended March 31, 2015 and March 31, 2014.

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 nine months ended March 31, 2015 and March 31, 2014, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share (Continued)

	Three months ended     March 31, 2015						Three months ended     March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	2,019	$	1,888	$	33	$	1,739	$	1,625	$	29
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,022		6,022		383
Basic income per common  share	$	0.33	$	0.31	$	0.09	$	0.29	$	0.27	$	0.08
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,022		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,150		383
Diluted income per common share			$	0.31	$	0.09			$	0.26	$	0.08

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Share (Continued)

	Nine months ended      March 31, 2015						Nine months ended      March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	7,212	$	6,743	$	119	$	6,319	$	5,907	$	105
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,002		6,002		383
Basic income per common  share	$	1.19	$	1.11	$	0.31	$	1.05	$	0.98	$	0.27
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,002		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,130		383
Diluted income per common share			$	1.09	$	0.31			$	0.96	$	0.27

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of March 31, 2015 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2015 or 2014, and it does not believe that any of those pronouncements will have a significant impact on our condensed consolidated financial statements at the time they become effective.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

(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 March 31, 2015:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,433	$	362	$	4,071
Accounts receivable - related party	$	30		—	$	30
Medical receivable	$	31,199	$	22,162	$	9,037
Management and other fees receivable	$	26,955	$	12,337	$	14,618
Management and other fees receivable - related medical practices ("PC’s")	$	4,072	$	403	$	3,669

Receivables, net is comprised of the following at June 30, 2014:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,707	$	257	$	4,450
Accounts receivable - related party	$	—		—	$	—
Medical receivable	$	21,726	$	12,918	$	8,808
Management and other fees receivable	$	22,872	$	10,902	$	11,970
Management and other fees receivable -  related medical practices ("PC’s")	$	3,830	$	403	$	3,427

The 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.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

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

Medical Receivable

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 continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. 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.

Management and Other Fees Receivable

The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the 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 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 55% and 50% of the PCs’ net revenues for the three months ended March 31, 2015 and 2014, respectively, were derived from no-fault and personal injury protection claims. Approximately 54% and 50% of the PCs’ net revenues for the nine months ended March 31, 2015 and 2014, 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 expectations.

Net revenues from management and other fees charged to the related PCs accounted for approximately 11% and 13.2% of the consolidated net revenues for the three months ended March 31, 2015 and 2014, respectively. Net revenues from management and other fees charged to the related PCs accounted for approximately 10.6% and 13.4% of the consolidated net revenues for the nine months ended March 31, 2015 and 2014, respectively.

Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (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.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

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

The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three and nine months ended March 31, 2015 and 2014 are summarized in the following tables.

	For the Three Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	1,091		$	1,033
Medicare/Medicaid		292			343
Workers' Compensation/Personal Injury		4,513			3,329
Other		1,388			1,385
Patient Fee Revenue, net of contractual allowances and discounts		7,284			6,090
Provision for Bad Debts		(3,201	)		(2,868	)
Net Patient Fee for Revenue	$	4,083		$	3,222

	For the Nine Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	3,245		$	3,144
Medicare/Medicaid		896			1,161
Workers' Compensation/Personal Injury		11,354			9,679
Other		5,205			3,827
Patient Fee Revenue, net of contractual allowances and discounts		20,700			17,811
Provision for Bad Debts		(9,244	)		(7,130	)
Net Patient Fee for Revenue	$	11,456		$	10,681

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 4 - INVENTORIES

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

	March 31, 2015		June 30, 2014
Purchased parts, components and supplies	$	2,091	$	2,094
Work-in-process		195		350
Total Inventories	$	2,286	$	2,444

NOTE 5 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Information relating to uncompleted contracts is as follows:

		March 31, 2015		June 30, 2014
Costs incurred on uncompleted contracts	$	1,859	$	1,885
Estimated earnings		1,373		1,746
Subtotal		3,232		3,631
Less: Billings to date		2,693		3,013
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

Included in the accompanying condensed consolidated balance sheets under the following captions:

		March 31, 2015		June 30, 2014
Costs and estimated earnings in excess of billings on uncompleted contracts	$	681	$	760
Less: Billings in excess of costs and estimated earnings on uncompleted contracts		142		142
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

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FONAR CORPORATION AND SUBSIDIARIES

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 6 – OTHER INTANGIBLE ASSETS

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

	March 31, 2015		June 30, 2014
Capitalized software development costs	$	7,418	$	7,418
Patents and copyrights		4,516		4,408
Non-compete		4,100		4,100
Customer relationships		3,800		3,800
Gross Other intangible assets		19,834		19,726
Less: Accumulated amortization		10,181		9,217
Other Intangible Assets	$	9,653	$	10,509

Amortization of patents and copyrights for the three months ended March 31, 2015 and 2014 amounted to $46 and $44, respectively.

Amortization of capitalized software development costs for the three months ended March 31, 2015 and 2014 amounted to $81 and $104, respectively.

Amortization of non-compete for the three months ended March 31, 2015 and 2014 amounted to $146 and $146, respectively.

Amortization of customer relationships for the three months ended March 31, 2015 and 2014 amounted to $47 and $47, respectively.

Amortization of patents and copyrights for the nine months ended March 31, 2015 and 2014 amounted to $137 and $133, respectively.

Amortization of capitalized software development costs for the nine months ended March 31, 2015 and 2014 amounted to $246 and $321, respectively.

Amortization of non-compete for the nine months ended March 31, 2015 and 2014 amounted to $439 and $439, respectively.

Amortization of customer relationships for the nine months ended March 31, 2015 and 2014 amounted to $142 and $139, respectively.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED

NOTE 7 – OTHER CURRENT LIABILITIES

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

	March 31, 2015		June 30, 2014
Accrued salaries, commissions and payroll taxes	$	1,154	$	835
Accrued interest		117		117
Litigation accruals		579		664
Sales tax payable		2,602		2,665
Legal and other professional fees		404		439
Accounting fees		231		325
Self-funded health insurance reserve		415		306
Interest and penalty - sales tax		2,462		2,374
Purchase scanners		—		450
Other		1,030		849
Total Other Current Liabilities	$	8,994	$	9,024

NOTE 8 – STOCKHOLDERS EQUITY

Common Stock

During the nine months ended March 31, 2015, the Company issued 5 shares of common stock to employees and consultants as compensation valued at $53 under a stock bonus plan.

NOTE 9 – CONTROLLING AND NONCONTROLLING INTERESTS

On January 8, 2015, the Company purchased 20% of the Class A members ownership interest in Health Diagnostic Management LLC for a cost of $4,971. The Company has a 60.4% ownership interest in Health Diagnostic Management LLC after this transaction.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 10 - 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, 2014. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations.

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

		Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the three months ended March 31, 2015
Net revenues from external customers	$	2,486		$	14,610	$	17,096
Inter-segment net revenues	$	502		$	—	$	502
(Loss) income from operations	$	(367	)	$	3,033	$	2,666
Depreciation and amortization	$	78		$	811	$	889
Capital expenditures	$	111		$	—	$	111
For the three months ended March 31, 2014
Net revenues from external customers	$	3,023		$	14,017	$	17,040
Inter-segment net revenues	$	495		$	—	$	495
Income from operations	$	192		$	2,127	$	2,319
Depreciation and amortization	$	104		$	829	$	933
Capital expenditures	$	114		$	98	$	212
For the nine months ended March 31, 2015
Net revenues from external customers	$	9,177		$	42,996	$	52,173
Inter-segment net revenues	$	1,504		$	—	$	1,504
Income from operations	$	457		$	9,246	$	9,703
Depreciation and amortization	$	229		$	2,436	$	2,665
Capital expenditures	$	178		$	55	$	233
For the nine months ended March 31, 2014
Net revenues from external customers	$	8,922		$	42,559	$	51,481
Inter-segment net revenues	$	1,485		$	—	$	1,485
Income from operations	$	323		$	9,345	$	9,668
Depreciation and amortization	$	322		$	2,565	$	2,887
Capital expenditures	$	187		$	360	$	547

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 11– SUPPLEMENTAL CASH FLOW INFORMATION

During the nine months ended March 31, 2015 and March 31, 2014, the Company paid $406 and $521 for interest, respectively.

During the nine months ended March 31, 2015 and March 31, 2014, the Company paid $99 and $255 for income taxes, respectively.

NOTE 12 – 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, 2014 and our form 10-Q for the first and second quarters of fiscal 2015.

Other Matters

The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of March 31, 2015, the Company has recorded tax obligations of approximately $2,602 plus interest and penalties of approximately $2,462. The Company is in the process of determining the regulatory requirements in order to become compliant.

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 $100 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 March 31, 2015 and June 30, 2014, the Company had approximately $415 and $306, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets.

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.

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FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 and 2014

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

(UNAUDITED)

NOTE 13 - INCOME TAXES

ASC 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 740.

In accordance with ASC 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 2009.

The Company netted a deferred tax asset of $5,740 and a deferred tax liability of $584 as of March 31, 2015, primarily relating to net operating loss carryforwards of approximately $137,252 available to offset future taxable income through 2034. The net operating losses begin to expire in 2019 for federal tax purposes and in 2014 for state income tax purposes.

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. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company does have a sufficient history of income and anticipates profitability in the coming years and has concluded that it is more-likely-than-not that the Company will be able to realize a portion of its tax benefits in the near future and therefore a valuation allowance was established for the partial value of the deferred tax asset.

A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance. Should the Company continue to remain profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly.

NOTE 14- SUBSEQUENT EVENTS

On May 1, 2015, the Company repaid a portion of the Class A Stockholders capital contribution in the amount of $1,125. As a result, the Company’s subsidiary, HMCA, owns a 96% interest in Imperial Management Services.

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FONAR CORPORATION AND SUBSIDIARIES

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

For the nine month period ended March 31, 2015, we reported a net income of $9.2 million on revenues of $52.2 million as compared to net income of $8.8 million on revenues of $51.5 million for the nine month period ended March 31, 2014. Operating income remained constant at $9.7 million for the nine month period ended March 31, 2014 and for the nine month period ended March 31, 2015.

For the three month period ended March 31, 2015, we reported net income of $2.5 million on revenues of $17.1 as compared to net income of $2.1 million on revenues of $17.0 million for the three month period ended March 31, 2014.

The revenue increase of 1.3%, from $51.5 million for the first nine months of fiscal 2014 to $52.2 million for the first nine months of fiscal 2015, was due to a 43.2% increase in product sales from $1.3 million for the first nine months of fiscal 2014 to $1.8 million for the first nine months of fiscal 2015. There was also an increase of 7.3% of net patient fees from $10.7 million for the first nine months of fiscal 2014 to $11.5 million for the nine months of fiscal 2015 (patient fees less the provision for bad debts for patient fees). Patient fees represent fees for services paid directly by patients to facilities owned by us. All patient fees are derived from Florida facilities.

Offsetting these increases, however, service and repair fees decreased slightly by 3.8% to $7.4 million for the first nine months of fiscal 2015 from $7.7 million for the first nine months of fiscal 2014. In addition, there was a 29.6% increase in the provision for bad debts for patient fees, from $7.1 million for the nine months ended March 31, 2014 to $9.2 million for the nine months ended March 31, 2015. (The provision for bad debts was taken into account in calculating net patient fees).

The increase in the amount of our revenues was slightly larger than the increase in the amount of our costs and expenses, and as a result, our operating income of $9.7 million remained constant for the nine months ended March 31, 2015 compared to the nine months ended March 31, 2014. In terms of percentages, however, costs and expenses increased 1.6% from $41.8 million in the first nine months of fiscal 2014 to $42.5 million in the first nine months of fiscal 2015, while revenues increased only 1.3%, from $51.5 million in the first nine months of fiscal 2014 to $52.2 million in the first nine months of fiscal 2015.

Fonar’s wholly-owned subsidiary, Health Management Corporation of America (“HMCA”), is the controlling, but not sole owner of two limited liability companies, Imperial Management Services, LLC (“Imperial”) and Health Diagnostics Management, LLC (“HDM”), through which HMCA conducts its business. The outside investors are passive investors, and do not have the right to participate in the management of either company. For the sake of simplicity, HMCA, Imperial and HDM are referred to as “HMCA”, unless otherwise indicated.

Forward Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q are "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.

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FONAR CORPORATION AND SUBSIDIARIES

Results of Operations

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

Effective May 2, 2011, HMCA contributed all of its assets, liabilities and business to Imperial Management Services, LLC (“Imperial”), which is controlled but not wholly-owned by HMCA. Imperial is conducting the business of HMCA utilizing the same facilities, equipment and personnel. This transaction did not result in a change of control or policy, but was solely a means to raise capital. The membership interests of the non-controlling investors in Imperial are redeemable over a five year period.

Effective March 5, 2013, HDM, in which HMCA then had a 50.5% interest (60.4% after an acquisition of 20% of investors’ membership interests on January 8, 2015), acquired twelve (12) Stand-Up® MRI Centers and two (2) other scanning centers from Health Diagnostics, LLC. The contribution of these new scanning centers to the operating results of the Company are reflected in both the first nine months of fiscal 2015, and the first nine months of fiscal 2014.

Manufacturing and Service of MRI Equipment

Revenues from MRI product sales increased 43.2% to $1.8 million for the first nine months of fiscal 2015 from $1.3 million for the first nine months of fiscal 2014. Costs related to product sales also increased, by 85.6%, from $902,000 for the nine month period ended March 31, 2014 to $1.7 million for the nine month period ended March 31, 2015. These increases, however, reflect a volatility resulting from low sales volume, and we do not regard the changes as indicative of a material trend. During the first nine months of fiscal 2014 we sold one scanner; during the first nine months of fiscal 2015 we sold two scanners. Continuing tight credit and economic uncertainty, including lower reimbursement rates for MRI scans, have depressed the market for our MRI scanner products.

Service revenues decreased 3.8% from $7.7 million for the nine month period ended March 31, 2014 to $7.4 million for the nine month period ended March 31, 2015. Service revenues also decreased 8.6% from $2.5 million for the three month period ended March 31, 2014 to $2.3 million for the three month period ended March 31, 2015. The changes in service revenues reflect the net result of newer customers entering into service contracts following the expiration of their warranties offset by older scanners being taken out of service. Continuing lower sales volumes are a factor ultimately contributing to decreasing service revenues.

Costs relating to providing service for the first nine months of fiscal 2015 decreased by 8.2% from $1.8 million in the first nine months of fiscal 2014 to $1.6 million in the first nine months of fiscal 2015. Costs related to providing service for the three month period ended March 31, 2015 increased slightly by 1.1% from $630,000 for the three month period ended March 31, 2014 to $637,000 for the three month period ended March 31, 2015. We believe that an important factor in controlling our service costs is 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 problems result.

There were approximately $1.9 million in foreign revenues for the first nine months of fiscal 2015 as compared to approximately $1.2 million in foreign revenues for the first nine months of fiscal 2014, representing an increase in foreign revenues of 58.3%. 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.

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 its site preparation 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.

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FONAR CORPORATION AND SUBSIDIARIES

Revenues for the medical equipment segment as a whole increased by 2.9% to $9.2 million for the nine months of fiscal 2015 from $8.9 million for the first nine months of fiscal 2014. Operating results for our medical equipment segment increased to an operating income of $457,000 for the first nine months of fiscal 2015 as compared to an operating income of $323,000 for the first nine months of fiscal 2014. For the first nine months of fiscal 2015, our medical equipment segment recognized net income of $377,000, compared to a net loss of $83,000 in the same period of fiscal 2014.

Diagnostic Facilities Management Services

HMCA revenues increased slightly in the first nine months of fiscal 2015 by 1.0% to $43.0 million from $42.6 million for the first nine months of fiscal 2014. The percentage of our revenues derived from our diagnostic facilities management segment relative to the percentage of our revenues derived from our medical equipment segment decreased slightly (82.4% for the first nine months of fiscal 2015 compared to 82.7% for the first nine months of fiscal 2014).

The increase in HMCA revenues 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. These developments are not unique to HMCA or HMCA’s clients but are being experienced by the industry in general.

HMCA’s efforts are countering effect of lower reimbursement rates by increasing the scan volume of the facilities it owns or manages.

As a result of our vigorous marketing efforts, the number of scans performed at our centers and at our client’s centers increased from 97,504 in the first nine months of fiscal 2014 to106,259 in the first nine months of fiscal 2015.

We manage twenty-four sites, twenty-three of which are equipped with Fonar Upright® MRI scanners (our Stand-Up® MRI Scanners are also called Upright® MRI Scanners). HMCA experienced an operating income of $9.2 million for the first nine months of fiscal 2015 compared to operating income of $9.3 million for the first nine months of fiscal 2014.

HMCA’s cost of revenues for the first nine months of fiscal 2015 as compared to the first nine months of fiscal 2014 increased by 0.7% from $25.2 million to $25.4 million.

Consolidated

For the first nine months of fiscal 2015, our consolidated net revenues increased by 1.3% to $52.2 million from $51.5 million for the first nine months of fiscal 2014, while total costs and expenses increased by 1.6% to $42.5 million for the first nine months of fiscal 2015 from $41.8 million for the first nine months of fiscal 2014. As a result, our operating income of $9.7 million in the first nine months of fiscal 2014 remained constant in the first nine months of fiscal 2015.

Selling, general and administrative expenses decreased by 7.6% to $11.1 million in the first nine months of fiscal 2015 from $12.0 million in the first nine months of fiscal 2014 as we continued our cost-cutting policies. The compensatory element of stock issuances, which is included in selling, general and administrative expenses, also decreased, by 38.3%, to $53,200 for the first nine months of fiscal 2015 from $86,290 for the first nine months of fiscal 2014.

Research and development expenses remained constant at $1.1 million for the first nine months of fiscal 2015 and for the first nine months of fiscal 2014.

Interest expense in the first nine months of fiscal 2015 decreased by 20.1% to $545,000 from $682,000 in the first nine months of fiscal 2014. The decrease was due to the repayment of debt incurred by Fonar in connection with the acquisition of HDM.

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FONAR CORPORATION AND SUBSIDIARIES

Inventories decreased to $2.3 million at March 31, 2015 as compared to $2.4 million at June 30, 2014. This represents our use of raw materials and components in our business operations.

Net Management fee and medical receivables increased by 12.9% to $27.3 million at March 31, 2014 from $24.2 million at June 30, 2014 due to slower collections.

The results of operations for the first nine months of fiscal 2015 reflect a slight increase in revenues from management, patient and other fees, as compared to the first nine months of fiscal 2014 ($43.0 million for the first nine months of fiscal 2015 as compared to $42.6 million for the first nine months of fiscal 2014), and an increase in MRI equipment segment revenues ($9.2 million as compared to $8.9 million). Revenues were 17.6% from the MRI equipment segment as compared to 82.4% from HMCA, for the first nine months of fiscal 2015, as compared to 17.3% from the MRI equipment segment and 82.7% from HMCA for the first nine months of fiscal 2014. We do not believe that these variations constitute a trend.

The implementation of the Patient Protection and Affordable Care Act (PPACA) is likely to have a profound impact on the healthcare industry. We are beginning to see some impact of the Act on our business, in the reduction of reimbursement rates, but are unable to predict the degree of the effect of the new legislative mandates and regulations on our MRI equipment segment or HMCA in the future.

We are committed to improving our operating results and dealing with the challenges posed by new legislative and regulatory requirements. Nevertheless, factors beyond our control, such as the timing and rate of market growth which depend on economic conditions, including the availability of credit, payor reimbursement rates and policies, and unexpected expenditures or the timing of such expenditures, make it problematical to forecast future operating results.

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 those of Medicare. Nevertheless, the increased patient volume of the scanning centers has enabled us to maintain a healthy profitability in spite of these challenges. We believe we are pursuing the correct policies to cope with these problems 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 be unaddressable 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.

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FONAR CORPORATION AND SUBSIDIARIES

In addition FONAR has announced the publication of a new 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, a 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 new UPRIGHT® MRI imaging technology and the prospect of significantly relieving the suffering of the above totaled 9.38 million patients afflicted with these disorders.

Fonar also 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 of 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.

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FONAR CORPORATION AND SUBSIDIARIES

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.

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 neurosurgical 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.

Liquidity and Capital Resources

Cash and cash equivalents decreased by 21.3% from $10.0 million at June 30, 2014 to $7.8 million at March 31, 2015, primarily as a result of the Company purchasing 20% of the outside investors’ membership interests in HDM for $5.0 million. This purchase increased the Company’s interests in HDM from 50.5% to 60.4%. The result and intent of this acquisition was to increase the share of HDM’s income allocatable to the Company.

Cash provided by operating activities for the first nine months of fiscal 2015 was $8.5 million. Cash provided by operating activities was attributable principally to net income of $9.2 million, a provision for bad debts of $10.8 million , and depreciation and amortization of $2.7 million, offset by an increase in accounts, management fees and medical receivables of $13.6 million.

Cash used in investing activities for the first nine months of fiscal 2015 was $233,000. The principal uses of cash used in investing activities during the first nine months of fiscal 2015 consisted of patent costs of $108,000 and the purchase of property and equipment of $125,000.

Cash used in financing activities for the first nine months of fiscal 2015 was $10.4 million. The principal uses of cash in financing activities during the first nine months of fiscal 2015 were the repayment of principal on long-term debt and capital lease obligations of $2.2 million, distributions to non-controlling interests of $3.3 million and a buyout of non controlling interests of $5.0 million.

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FONAR CORPORATION AND SUBSIDIARIES

Total liabilities decreased by 10.8% to $27.5 million at March 31, 2015 from $30.9 million at June 30, 2014. Other current liabilities remained constant at $9.0 million at June 30, 2014 and March 31, 2015 along with a decrease in long-term debt and capital lease obligations from $8.5 million to $6.3 million. The current portion of our unearned revenue on service contracts decreased from $4.7 million to $4.3 million. Customer deposits decreased to $1.7 million at March 31, 2015 as compared to $1.9 million at June 30, 2014.

As of March 31, 2015, the total of $9.0 million in other current liabilities included accrued salaries and payroll taxes of $1.2 million, and sales taxes of $2.6 million plus accrued interest and penalties of $2.5 million.

Our working capital increased to $22.8 million at March 31, 2015 from $21.6 million at June 30, 2014. This resulted from an increase in current assets ($42.8 million at June 30, 2014 as compared to $43.1 million at March 31, 2015), and a decrease in current liabilities from $21.2 million at June 30, 2014 to $20.3 million at March 31, 2015.

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. The Company considers projected future taxable income and tax planning strategies in making this assessment. A valuation will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation. Should the Company continue to remain profitable in the future periods with supportable trends, the valuation allowance will be reversed accordingly.

Fonar has not committed to making any significant capital expenditures for the remainder of the 2015 fiscal 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.

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, and the uncertainty resulting for the Patient Protection and Affordable Care Act, the sale of medical equipment has and may continue to suffer.

Management anticipates that Fonar’s capital resources will continue to improve if (1) Fonar’s MRI scanner products gain wider market recognition and acceptance resulting in increased product sales, (2) service and maintenance revenues increase as warranties on scanners expire and (3) HMCA revenues are increased through the Company’s vigorous marketing efforts and the installation or acquisition of more HMCA managed Upright® MRI scanners. If our marketing efforts to increase revenues fail, and we are unable to raise debt or equity capital, we may experience a shortfall in cash, and it may be necessary to reduce operating expenses to attempt to avoid the need to curtail our operations. Current economic, credit and political conditions have contributed to a challenging business environment for our company. The precise impact of these conditions can not be fully predicted. There can be no assurance that we would be able to secure additional funds if needed.

The Company believes that its business plan has been responsible for the past three consecutive fiscal years and past three fiscal quarters of profitability (fiscal 2012, fiscal 2013, fiscal 2014 and the first nine months of fiscal 2015) and that its capital resources will be adequate to support operations at current levels through at least March 31, 2016. In the past, the Company experienced periods of working capital deficits and prior to fiscal 2011, losses. The future effects on our business of healthcare reform legislation, the Deficit Reduction Act, the 2.3% excise tax on sales of medical equipment, 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.

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FONAR CORPORATION AND SUBSIDIARIES

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

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Acting Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any control and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officer and Acting Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2015. Based on this evaluation, the Company’s Principal Executive Officer and Acting Principal Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2015 because of the material weakness in our internal control over financial reporting described in our Annual Report on Form 10-K. The Company intends to begin its remediation process of implementing changes in information technology general controls in order to improve controls over segregation of duties, restricted access to programs and data, and change management activities in order to address the previously reported internal control deficiencies in our Form 10-K.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting, during the fiscal quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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, 2014 and our Form 10-Q for the fiscal quarter ended December 31, 2014.

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 HCMA (including HMCA’s subsidiary HDM). We are experiencing lower reimbursement rates from Medicare, other government programs and private insurance companies. To date, we have been able to counter the impact of these reductions by increasing our volume of scans, maintaining profitability in this business segment.

2. Demand for MRI Scanners. The reduced reimbursement rates also affects our sales of MRI scanners negatively. With lower revenue projections, fewer prospective customers will be able to operate a profitable scanning center business, resulting in a lower demand and 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.

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FONAR CORPORATION AND SUBSIDIARIES

3. 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.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds: The Company has not issued any unregistered shares of its Common Stock during the first three quarters of fiscal 2015.

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 February 10, 2015, Item 2.02: Results of Operations and Financial Condition for the fiscal quarter ended December 31, 2014.

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/ Raymond V. Damadian

Raymond V. Damadian

President & Chairman

Dated: May 11, 2015

Page 30

EX-31

FONAR CORPORATION AND SUBSIDIARIES

Dated: May11, 2015

Exhibit 31.1

CERTIFICATION

I, Raymond V. Damadian, certify that:

1. I have reviewed this report on Form 10-Q of Fonar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls over procedures to be designed under my supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2015

/s/ Raymond V. Damadian

Raymond V. Damadian

President, Principal Executive Officer and Acting Principal

Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of FONAR Corporation and Subsidiaries (the “Company”) on Form 10Q for the fiscal quarter ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dr. Raymond V. Damadian, President, Chief Executive Officer, and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Dr. Raymond V. Damadian

----------------------------------

Dr. Raymond V. Damadian

President, Chief Executive Officer

and Chief Financial Officer

May 11, 2015

A signed original of this written statement required by Section 906 has been provided to Fonar Corporation and will be retained by Fonar Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

NOTE 6 - OTHER INTANGIBLE ASSETS - (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Patents and copyrights
Amortization of intangible assets	$ 46	$ 44	$ 137	$ 133
Software Development Costs
Amortization of intangible assets	81	104	246	321
Non-compete Agreements
Amortization of intangible assets	146	146	439	439
Customer Relationships
Amortization of intangible assets	$ 47	$ 47	$ 142	$ 139

XML

NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Balance Sheet Items - (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Note 5 - Costs And Estimated Earnings On Uncompleted Contracts - Balance Sheet Items - Details
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 681	$ 760
Less: Billings in excess of costs and estimated earnings on uncompleted contracts	142	142
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$ 539	$ 618

XML

NOTE 6 - OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Other intangible assets - net

NOTE 6 – OTHER INTANGIBLE ASSETS

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

	March 31, 2015		June 30, 2014
Capitalized software development costs	$	7,418	$	7,418
Patents and copyrights		4,516		4,408
Non-compete		4,100		4,100
Customer relationships		3,800		3,800
Gross Other intangible assets		19,834		19,726
Less: Accumulated amortization		10,181		9,217
Other Intangible Assets	$	9,653	$	10,509

XML

NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION ($)- (Details Narrative) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Note 11 - Supplemental Cash Flow Information - Details Narrative
Interest paid	$ 406	$ 521
Income Taxes Paid	$ 99	$ 255

XML

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Details Narrative)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Accounting Policies [Abstract]
Shares included upon conversion of Class C Common to calculate a diluted EPS	128,000	128,000	128,000	128,000

XML

NOTE 4 - INVENTORIES

9 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

NOTE 4 - INVENTORIES

NOTE 4 - INVENTORIES

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

	March 31, 2015		June 30, 2014
Purchased parts, components and supplies	$	2,091	$	2,094
Work-in-process		195		350
Total Inventories	$	2,286	$	2,444

XML

NOTE 12 - COMMITMENTS AND CONTINGENCIES - (Details Narrative) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Recorded tax obligations	$ 2,602
Tax interest and penalties	2,462
Maximum limit for individual claims under stop-loss umbrella policy for health insurance	100
Self-funded health insurance reserve	$ 415	$ 306

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NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Receivables, Net - (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Accounts receivable	$ 4,071	$ 4,450
Accounts receivable - Related party	30
Medical Receivables	9,037	8,808
Management and other fees receivable	14,618	11,970
Management and other fees receivable from related medical practices ("PC's")	3,669	3,427
Accounts Receivable [Member]
Accounts receivable	4,433	4,707
Accounts receivable - Related party	30
Medical Receivables	31,199	21,726
Management and other fees receivable	26,955	22,872
Management and other fees receivable from related medical practices ("PC's")	4,072	3,830
Allowance for Doubtful Accounts, Current
Accounts receivable	362	257
Accounts receivable - Related party
Medical Receivables	22,162	12,918
Management and other fees receivable	12,337	10,902
Management and other fees receivable from related medical practices ("PC's")	$ 403	$ 403

XML

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Basic Numerator: Net income available to common stockholders	$ 2,019	$ 1,739	$ 7,212	$ 6,319
Basic Denominator: Weighted average shares outstanding	6,050,000	6,022,000	6,050,000	6,002,000
Basic Income Per Common Share	$ 0.33	$ 0.29	$ 1.19	$ 1.05
Convertible Class C Stock	128,000	128,000	128,000	128,000
Common Stock
Basic Numerator: Net income available to common stockholders	1,888	1,625	6,743	5,907
Basic Denominator: Weighted average shares outstanding	6,050,000	6,022,000	6,050,000	6,002,000
Basic Income Per Common Share	$ 0.31	$ 0.27	$ 1.11	$ 0.98
Stock options
Convertible Class C Stock	128,000	128,000	128,000	128,000
Total Denominator for diluted earnings per share	6,178,000	6,150,000	6,178,000	6,130,000
Diluted Income Per Share	$ 0.31	$ 0.26	$ 1.09	$ 0.96
Class C Common Stock
Basic Numerator: Net income available to common stockholders	$ 33	$ 29	$ 119	$ 105
Basic Denominator: Weighted average shares outstanding	383,000	383,000	383,000	383,000
Basic Income Per Common Share	$ 0.09	$ 0.08	$ 0.31	$ 0.27
Stock options
Convertible Class C Stock
Total Denominator for diluted earnings per share	383,000	383,000	383,000	383,000
Diluted Income Per Share	$ 0.09	$ 0.08	$ 0.31	$ 0.27

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NOTE 13 - INCOME TAXES - (Details Narrative) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Income Tax Disclosure [Abstract]
Deferred income tax asset	$ 5,740	$ 5,740
Deferred income tax liability	584	584
Net deferred operating loss carryforwards	$ 137,252

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NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Patient Fees Revenue - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Patient fee revenue, net of contractual allowances and discounts	$ 7,284	$ 6,090	$ 20,700	$ 17,811
Provision for bad debts for patient fee	(3,201)	(2,868)	(9,244)	(7,130)
Net patient fee revenue	4,083	3,222	11,456	10,681
Commercial Insurance / Managed Care
Patient fee revenue, net of contractual allowances and discounts	1,091	1,033	3,245	3,144
Medicare/Medicaid
Patient fee revenue, net of contractual allowances and discounts	292	343	896	1,161
Workers Compensation/Personal Injury
Patient fee revenue, net of contractual allowances and discounts	4,513	3,329	11,354	9,679
Other
Patient fee revenue, net of contractual allowances and discounts	$ 1,388	$ 1,385	$ 5,205	$ 3,827

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NOTE 4 - INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Total inventories	$ 2,286	$ 2,444
InventoriesMember
Purchased parts, components and supplies	2,091	2,094
Work-in-process	195	350
Total inventories	$ 2,286	$ 2,444

XML

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)

9 Months Ended

Mar. 31, 2015

Receivables [Abstract]

NOTE 3 - ACCOUNTS RECEIVABLE. MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)

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

Receivables, net is comprised of the following at March 31, 2015:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,433	$	362	$	4,071
Accounts receivable - related party	$	30		—	$	30
Medical receivable	$	31,199	$	22,162	$	9,037
Management and other fees receivable	$	26,955	$	12,337	$	14,618
Management and other fees receivable - related medical practices ("PC’s")	$	4,072	$	403	$	3,669

Receivables, net is comprised of the following at June 30, 2014:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,707	$	257	$	4,450
Accounts receivable - related party	$	—		—	$	—
Medical receivable	$	21,726	$	12,918	$	8,808
Management and other fees receivable	$	22,872	$	10,902	$	11,970
Management and other fees receivable -  related medical practices ("PC’s")	$	3,830	$	403	$	3,427

The 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.

Medical Receivable

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 continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. 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.

Management and Other Fees Receivable

The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the 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 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 55% and 50% of the PCs’ net revenues for the three months ended March 31, 2015 and 2014, respectively, were derived from no-fault and personal injury protection claims. Approximately 54% and 50% of the PCs’ net revenues for the nine months ended March 31, 2015 and 2014, 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 expectations.

Net revenues from management and other fees charged to the related PCs accounted for approximately 11% and 13.2% of the consolidated net revenues for the three months ended March 31, 2015 and 2014, respectively. Net revenues from management and other fees charged to the related PCs accounted for approximately 10.6% and 13.4% of the consolidated net revenues for the nine months ended March 31, 2015 and 2014, respectively.

Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (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.

The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three and nine months ended March 31, 2015 and 2014 are summarized in the following tables.

	For the Three Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	1,091		$	1,033
Medicare/Medicaid		292			343
Workers' Compensation/Personal Injury		4,513			3,329
Other		1,388			1,385
Patient Fee Revenue, net of contractual allowances and discounts		7,284			6,090
Provision for Bad Debts		(3,201	)		(2,868	)
Net Patient Fee for Revenue	$	4,083		$	3,222

	For the Nine Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	3,245		$	3,144
Medicare/Medicaid		896			1,161
Workers' Compensation/Personal Injury		11,354			9,679
Other		5,205			3,827
Patient Fee Revenue, net of contractual allowances and discounts		20,700			17,811
Provision for Bad Debts		(9,244	)		(7,130	)
Net Patient Fee for Revenue	$	11,456		$	10,681

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NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Information relating to uncompleted contracts - (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Notes to Financial Statements
Costs incurred on uncompleted contracts	$ 1,859	$ 1,885
Estimated earnings	1,373	1,746
Subtotal	3,232	3,631
Less: Billings to date	2,693	3,013
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$ 539	$ 618

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NOTE 8 - STOCKHOLDERS EQUITY - (Details Narrative) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Mar. 31, 2015
Equity [Abstract]
Common shares issued for compensation (shares)	5,000
Common shares issued for compensation ($)	$ 53

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Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Current Assets:
Cash and cash equivalents	$ 7,828	$ 9,952
Accounts receivable - net	4,071	4,450
Accounts receivable - Related party	30
Medical receivables -net	9,037	8,808
Management and other fees receivable -net	14,618	11,970
Management and other fees receivable - related medical practices -net	3,669	3,427
Costs and estimated earnings in excess of billings on uncompleted contracts	681	760
Inventories	2,286	2,444
Prepaid expenses and other current assets	855	1,011
Total Current Assets	43,075	42,822
Deferred income tax asset	5,740	5,740
Property and equipment - net	13,454	15,030
Goodwill	1,767	1,767
Other intangible assets - net	9,653	10,509
Other assets	853	922
Total Assets	74,542	76,790
Current Liabilities:
Current portion of long-term debt and capital leases	2,896	2,891
Accounts payable	2,304	2,482
Other current liabilities	8,994	9,024
Unearned revenue on service contracts	4,232	4,731
Unearned revenue on service contracts - related parties	28
Customer advances	1,668	1,927
Billings in excess of costs and estimated earnings on uncompleted contracts	142	142
Total Current Liabilities	20,264	21,197
Long-Term Liabilities:
Deferred income tax liability	584	584
Due to related medical practices	232	234
Long-term debt and capital leases, less current portion	6,311	8,482
Other liabilities	156	386
Total Long-Term Liabilities	7,283	9,686
Total Liabilities	27,547	30,883
STOCKHOLDERS' EQUITY:
Common Stock	1	1
Paid-in capital in excess of par value	175,413	175,284
Accumulated deficit	(142,047)	(149,259)
Notes receivable from employee stockholders	(33)	(39)
Treasury stock, at cost - 12 shares of common stock at December 31, 2014 and June 30, 2014	(675)	(675)
Total Fonar Corporation Stockholder Equity	32,659	25,312
Noncontrolling interests	14,336	20,595
Total Stockholders' Equity	46,995	45,907
Total Liabilities and Stockholders' Equity	$ 74,542	$ 76,790

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NOTE 14 - SUBSEQUENT EVENTS - (Details Narrative) (USD $) In Thousands, unless otherwise specified	May 01, 2015
Note 14 - Subsequent Events - Details Narrative
Repayment of portion of Class A Stockholders Capital Contribution (value)	$ 1,125
HMCA ownership size of Imperial Management Services (percent)	96.00%

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NOTE 1 - BASIS OF PRESENTATION (USD $)

9 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

NOTE 1 - BASIS OF PRESENTATION & LIQUIDITY & CAPITAL RESOURCES

NOTE 1 - 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 three and nine months ended March 31, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on September 29, 2014 for the fiscal year ended June 30, 2014.

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NOTE 7 - OTHER CURRENT LIABILITIES - (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Payables and Accruals [Abstract]
Accrued salaries, commissions and payroll taxes	$ 1,154	$ 835
Accrued interest	117	117
Litigation accruals	579	664
Sales tax payable	2,602	2,665
Legal and other professional fees	404	439
Accounting fees	231	325
Self-funded health insurance reserve	415	306
Interest and penalty - sales tax	2,462	2,374
Purchase Scanners		450
Other	1,030	849
Total Other current liabilities	$ 8,994	$ 9,024

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NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) (Tables)

9 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Receivables - net

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

Receivables, net is comprised of the following at March 31, 2015:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,433	$	362	$	4,071
Accounts receivable - related party	$	30		—	$	30
Medical receivable	$	31,199	$	22,162	$	9,037
Management and other fees receivable	$	26,955	$	12,337	$	14,618
Management and other fees receivable - related medical practices ("PC’s")	$	4,072	$	403	$	3,669

Receivables, net is comprised of the following at June 30, 2014:

	Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,707	$	257	$	4,450
Accounts receivable - related party	$	—		—	$	—
Medical receivable	$	21,726	$	12,918	$	8,808
Management and other fees receivable	$	22,872	$	10,902	$	11,970
Management and other fees receivable -  related medical practices ("PC’s")	$	3,830	$	403	$	3,427

Patient fee revenue - net

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

Management and Other Fees Receivable

The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three and nine months ended March 31, 2015 and 2014 are summarized in the following tables.

	For the Three Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	1,091		$	1,033
Medicare/Medicaid		292			343
Workers' Compensation/Personal Injury		4,513			3,329
Other		1,388			1,385
Patient Fee Revenue, net of contractual allowances and discounts		7,284			6,090
Provision for Bad Debts		(3,201	)		(2,868	)
Net Patient Fee for Revenue	$	4,083		$	3,222

	For the Nine Months Ended March 31,
	2015			2014
Commercial Insurance/ Managed Care	$	3,245		$	3,144
Medicare/Medicaid		896			1,161
Workers' Compensation/Personal Injury		11,354			9,679
Other		5,205			3,827
Patient Fee Revenue, net of contractual allowances and discounts		20,700			17,811
Provision for Bad Debts		(9,244	)		(7,130	)
Net Patient Fee for Revenue	$	11,456		$	10,681

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NOTE 10 - SEGMENT AND RELATED INFORMATION - Segment Information - (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Net revenues from external customers	$ 17,096	$ 17,040	$ 52,173	$ 51,481
Inter-segment net revenues	502	495	1,504	1,485
Income from operations	2,666	2,319	9,703	9,668
Depreciation and amortization	889	933	2,665	2,887
Capital expenditures	111	212	233	547
Medical Equipment
Net revenues from external customers	2,486	3,023	9,177	8,922
Inter-segment net revenues	502	495	1,504	1,485
Income from operations	(367)	192	457	323
Depreciation and amortization	78	104	229	322
Capital expenditures	111	114	178	187
Management Of Diagnostic Imaging Centers
Net revenues from external customers	14,610	14,017	42,996	2,559
Inter-segment net revenues
Income from operations	3,033	2,127	9,246	9,345
Depreciation and amortization	811	829	2,436	2,565
Capital expenditures		$ 98	$ 55	$ 360

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NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables)

9 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Information relating to uncompleted contracts

NOTE 5 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Information relating to uncompleted contracts is as follows:

		March 31, 2015		June 30, 2014
Costs incurred on uncompleted contracts	$	1,859	$	1,885
Estimated earnings		1,373		1,746
Subtotal		3,232		3,631
Less: Billings to date		2,693		3,013
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

Included in the accompanying condensed consolidated balance sheets

NOTE 5 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Included in the accompanying condensed consolidated balance sheets under the following captions:

		March 31, 2015		June 30, 2014
Costs and estimated earnings in excess of billings on uncompleted contracts	$	681	$	760
Less: Billings in excess of costs and estimated earnings on uncompleted contracts		142		142
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (USD $)

9 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based on weighted average number of shares 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 earnings per share and applied the if converted method in calculating diluted earnings per share for the three and nine months ended March 31, 2015 and March 31, 2014.

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 nine months ended March 31, 2015 and March 31, 2014, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

	Three months ended     March 31, 2015						Three months ended     March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	2,019	$	1,888	$	33	$	1,739	$	1,625	$	29
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,022		6,022		383
Basic income per common  share	$	0.33	$	0.31	$	0.09	$	0.29	$	0.27	$	0.08
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,022		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,150		383
Diluted income per common share			$	0.31	$	0.09			$	0.26	$	0.08

	Nine months ended      March 31, 2015						Nine months ended      March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	7,212	$	6,743	$	119	$	6,319	$	5,907	$	105
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,002		6,002		383
Basic income per common  share	$	1.19	$	1.11	$	0.31	$	1.05	$	0.98	$	0.27
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,002		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,130		383
Diluted income per common share			$	1.09	$	0.31			$	0.96	$	0.27

Recent Accounting Pronouncements

The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of March 31, 2015 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2015 or 2014, and it does not believe that any of those pronouncements will have a significant impact on our condensed consolidated financial statements at the time they become effective.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented.

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Class A NonVoting Preferred Stock
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	453,000	453,000
Preferred Stock, Issued	313,000	313,000
Preferred Stock, Outstanding	313,000	313,000
Preferred Stock
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Authorized	567,000	567,000
Preferred Stock, Issued
Preferred Stock, Outstanding
Common Stock
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	8,500,000	8,500,000
Common Stock, Issued	6,062,000	6,057,000
Common Stock, Outstanding	6,051,000	6,046,000
Class B Common Stock
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	227,000	227,000
Common Stock, Issued	146	146
Common Stock, Outstanding	146	146
Class C Common Stock
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	567,000	567,000
Common Stock, Issued	383,000	383,000
Common Stock, Outstanding	383,000	383,000

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NOTE 12 - COMMITMENTS AND CONTINGENCIES

9 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

NOTE 12 - COMMITMENTS AND CONTINGENCIES

NOTE 12 – 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, 2014 and our form 10-Q for the first and second quarters of fiscal 2015.

Other Matters

The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of March 31, 2015, the Company has recorded tax obligations of approximately $2,602 plus interest and penalties of approximately $2,462. The Company is in the process of determining the regulatory requirements in order to become compliant.

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 $100 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 March 31, 2015 and June 30, 2014, the Company had approximately $415 and $306, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets.

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.

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Document and Entity Information	9 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Entity Registrant Name	Fonar Corporation
Entity Central Index Key	0000355019
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2015
Common Stock
Entity Common Stock, Shares Outstanding		6,050,840
Class B Common Stock
Entity Common Stock, Shares Outstanding		146
Class C Common Stock
Entity Common Stock, Shares Outstanding		382,513
Preferred Stock Class A
Entity Common Stock, Shares Outstanding		313,438

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NOTE 13 - INCOME TAXES

9 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

NOTE 13 - INCOME TAXES

NOTE 13 - INCOME TAXES

ASC 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 740.

In accordance with ASC 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 2009.

The Company netted a deferred tax asset of $5,740 and a deferred tax liability of $584 as of March 31, 2015, primarily relating to net operating loss carryforwards of approximately $137,252 available to offset future taxable income through 2034. The net operating losses begin to expire in 2019 for federal tax purposes and in 2014 for state income tax purposes.

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. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company does have a sufficient history of income and anticipates profitability in the coming years and has concluded that it is more-likely-than-not that the Company will be able to realize a portion of its tax benefits in the near future and therefore a valuation allowance was established for the partial value of the deferred tax asset.

A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance. Should the Company continue to remain profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly.

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
REVENUES
Product sales - net	$ 160	$ 478	$ 1,806	$ 1,261
Service and repair fees - net	2,299	2,518	7,288	7,578
Service and repair fees - related parties - net	27	27	83	83
Patient fee revenue, net of contractual allowances and discounts	7,284	6,090	20,700	17,811
Provision for bad debts for patient fee	(3,201)	(2,868)	(9,244)	(7,130)
Management and other fees - net	8,653	8,538	26,004	24,955
Management and other fees - related medical practices - net	1,874	2,257	5,536	6,923
Total Revenues - Net	17,096	17,040	52,173	51,481
COSTS AND EXPENSES
Costs related to product sales	352	223	1,674	902
Costs related to service and repair fees	630	623	1,611	1,755
Costs related to service and repair fees - related parties	7	7	18	19
Costs related to patient fee revenue	2,044	1,947	5,845	5,823
Costs related to management and other fees	5,285	5,327	15,665	15,591
Costs related to management and other fees - related medical practices	1,284	1,318	3,893	3,808
Research and development	360	360	1,116	1,128
Selling, general and administrative	3,706	3,935	11,108	12,024
Provision for bad debts	762	981	1,540	763
Total Costs and Expenses	14,430	14,721	42,470	41,813
Income From Operations	2,666	2,319	9,703	9,668
Interest Expense	(169)	(203)	(545)	(682)
Investment Income	52	57	173	178
Other Income (Expense)		39	(2)	(113)
Income Before Provision for Income Taxes	2,549	2,212	9,329	9,051
Provision for Income Taxes	30	65	99	235
Net Income	2,519	2,147	9,230	8,816
Net Income - Noncontrolling Interests	(500)	(408)	(2,018)	(2,497)
Net Income - Controlling Interests	2,019	1,739	7,212	6,319
Basic Net Income Per Common Share	$ 0.33	$ 0.29	$ 1.19	$ 1.05
Weighted Average Basic Shares Outstanding	6,050,000	6,022,000	6,050,000	6,002,000
Common Stock
COSTS AND EXPENSES
Net Income - Controlling Interests	1,888	1,625	6,743	5,907
Basic Net Income Per Common Share	$ 0.31	$ 0.27	$ 1.11	$ 0.98
Diluted Net Income Per Common Share	$ 0.31	$ 0.26	$ 1.09	$ 0.96
Weighted Average Basic Shares Outstanding	6,050,000	6,022,000	6,050,000	6,002,000
Weighted Average Diluted Shares Outstanding	6,178,000	6,150,000	6,178,000	6,130,000
Preferred Stock Class A
COSTS AND EXPENSES
Net Income - Controlling Interests	98	85	350	307
Class C Common Stock
COSTS AND EXPENSES
Net Income - Controlling Interests	$ 33	$ 29	$ 119	$ 105
Basic Net Income Per Common Share	$ 0.09	$ 0.08	$ 0.31	$ 0.27
Diluted Net Income Per Common Share	$ 0.09	$ 0.08	$ 0.31	$ 0.27
Weighted Average Basic Shares Outstanding	383,000	383,000	383,000	383,000
Weighted Average Diluted Shares Outstanding	383,000	383,000	383,000	383,000

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NOTE 7 - OTHER CURRENT LIABILITIES

9 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

NOTE 7 - OTHER CURRENT LIABILITIES

NOTE 7 – OTHER CURRENT LIABILITIES

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

	March 31, 2015		June 30, 2014
Accrued salaries, commissions and payroll taxes	$	1,154	$	835
Accrued interest		117		117
Litigation accruals		579		664
Sales tax payable		2,602		2,665
Legal and other professional fees		404		439
Accounting fees		231		325
Self-funded health insurance reserve		415		306
Interest and penalty - sales tax		2,462		2,374
Purchase scanners		—		450
Other		1,030		849
Total Other Current Liabilities	$	8,994	$	9,024

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NOTE 6 - OTHER INTANGIBLE ASSETS

9 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 6 - OTHER INTANGIBLE ASSETS

NOTE 6 – OTHER INTANGIBLE ASSETS

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

	March 31, 2015		June 30, 2014
Capitalized software development costs	$	7,418	$	7,418
Patents and copyrights		4,516		4,408
Non-compete		4,100		4,100
Customer relationships		3,800		3,800
Gross Other intangible assets		19,834		19,726
Less: Accumulated amortization		10,181		9,217
Other Intangible Assets	$	9,653	$	10,509

Amortization of patents and copyrights for the three months ended March 31, 2015 and 2014 amounted to $46 and $44, respectively.

Amortization of capitalized software development costs for the three months ended March 31, 2015 and 2014 amounted to $81 and $104, respectively.

Amortization of non-compete for the three months ended March 31, 2015 and 2014 amounted to $146 and $146, respectively.

Amortization of customer relationships for the three months ended March 31, 2015 and 2014 amounted to $47 and $47, respectively.

Amortization of patents and copyrights for the nine months ended March 31, 2015 and 2014 amounted to $137 and $133, respectively.

Amortization of capitalized software development costs for the nine months ended March 31, 2015 and 2014 amounted to $246 and $321, respectively.

Amortization of non-compete for the nine months ended March 31, 2015 and 2014 amounted to $439 and $439, respectively.

Amortization of customer relationships for the nine months ended March 31, 2015 and 2014 amounted to $142 and $139, respectively.

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NOTE 4 - INVENTORIES (Tables)

9 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

NOTE 4 - INVENTORIES

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

	March 31, 2015		June 30, 2014
Purchased parts, components and supplies	$	2,091	$	2,094
Work-in-process		195		350
Total Inventories	$	2,286	$	2,444

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NOTE 14 - SUBSEQUENT EVENTS

9 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

NOTE 14 - SUBSEQUENT EVENTS

NOTE 14 - SUBSEQUENT EVENTS

On May 1, 2015, the Company repaid a portion of the Class A Stockholders capital contribution in the amount of $1,125. As a result, the Company’s subsidiary, HMCA, owns a 96% interest in Imperial Management Services.

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NOTE 10 - SEGMENT AND RELATED INFORMATION

9 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

NOTE 10 - SEGMENT AND RELATED INFORMATION

NOTE 10 - 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, 2014. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations.

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

		Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the three months ended March 31, 2015
Net revenues from external customers	$	2,486		$	14,610	$	17,096
Inter-segment net revenues	$	502		$	—	$	502
(Loss) income from operations	$	(367	)	$	3,033	$	2,666
Depreciation and amortization	$	78		$	811	$	889
Capital expenditures	$	111		$	—	$	111
For the three months ended March 31, 2014
Net revenues from external customers	$	3,023		$	14,017	$	17,040
Inter-segment net revenues	$	495		$	—	$	495
Income from operations	$	192		$	2,127	$	2,319
Depreciation and amortization	$	104		$	829	$	933
Capital expenditures	$	114		$	98	$	212
For the nine months ended March 31, 2015
Net revenues from external customers	$	9,177		$	42,996	$	52,173
Inter-segment net revenues	$	1,504		$	—	$	1,504
Income from operations	$	457		$	9,246	$	9,703
Depreciation and amortization	$	229		$	2,436	$	2,665
Capital expenditures	$	178		$	55	$	233
For the nine months ended March 31, 2014
Net revenues from external customers	$	8,922		$	42,559	$	51,481
Inter-segment net revenues	$	1,485		$	—	$	1,485
Income from operations	$	323		$	9,345	$	9,668
Depreciation and amortization	$	322		$	2,565	$	2,887
Capital expenditures	$	187		$	360	$	547

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NOTE 8 - STOCKHOLDERS EQUITY

9 Months Ended

Mar. 31, 2015

Equity [Abstract]

NOTE 8 - STOCKHOLDERS EQUITY

NOTE 8 – STOCKHOLDERS EQUITY

Common Stock

During the nine months ended March 31, 2015, the Company issued 5 shares of common stock to employees and consultants as compensation valued at $53 under a stock bonus plan.

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NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS

9 Months Ended

Mar. 31, 2015

Noncontrolling Interest [Abstract]

NOTE 9 - CONTROLLING AND NONCONTROLLING

NOTE 9 – CONTROLLING AND NONCONTROLLING INTERESTS

On January 8, 2015, the Company purchased 20% of the Class A members ownership interest in Health Diagnostic Management LLC for a cost of $4,971. The Company has a 60.4% ownership interest in Health Diagnostic Management LLC after this transaction.

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NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

9 Months Ended

Mar. 31, 2015

Supplemental Cash Flow Elements [Abstract]

NOTE 11 - SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 11– SUPPLEMENTAL CASH FLOW INFORMATION

During the nine months ended March 31, 2015 and March 31, 2014, the Company paid $406 and $521 for interest, respectively.

During the nine months ended March 31, 2015 and March 31, 2014, the Company paid $99 and $255 for income taxes, respectively.

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NOTE 6 - OTHER INTANGIBLE ASSETS - (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Jun. 30, 2014
Accumulated Amortization	$ 10,181	$ 9,217
Intangible asset value, net	9,653	10,509
Software Development Costs
Intangible asset value, gross	7,418	7,418
Patents and copyrights
Intangible asset value, gross	4,516	4,408
Non-compete Agreements
Intangible asset value, gross	4,100	4,100
Customer Relationships
Intangible asset value, gross	3,800	3,800
Other Intangible Assets
Intangible asset value, gross	$ 19,834	$ 19,726

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Mar. 31, 2015

Notes to Financial Statements

Earnings Per Share

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Earnings Per Share

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 nine months ended March 31, 2015 and March 31, 2014, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

	Three months ended     March 31, 2015						Three months ended     March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	2,019	$	1,888	$	33	$	1,739	$	1,625	$	29
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,022		6,022		383
Basic income per common  share	$	0.33	$	0.31	$	0.09	$	0.29	$	0.27	$	0.08
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,022		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,150		383
Diluted income per common share			$	0.31	$	0.09			$	0.26	$	0.08

	Nine months ended      March 31, 2015						Nine months ended      March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	7,212	$	6,743	$	119	$	6,319	$	5,907	$	105
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,002		6,002		383
Basic income per common  share	$	1.19	$	1.11	$	0.31	$	1.05	$	0.98	$	0.27
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,002		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,130		383
Diluted income per common share			$	1.09	$	0.31			$	0.96	$	0.27

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NOTE 7 - OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

Other current liabilities

NOTE 7 – OTHER CURRENT LIABILITIES

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

	March 31, 2015		June 30, 2014
Accrued salaries, commissions and payroll taxes	$	1,154	$	835
Accrued interest		117		117
Litigation accruals		579		664
Sales tax payable		2,602		2,665
Legal and other professional fees		404		439
Accounting fees		231		325
Self-funded health insurance reserve		415		306
Interest and penalty - sales tax		2,462		2,374
Purchase scanners		—		450
Other		1,030		849
Total Other Current Liabilities	$	8,994	$	9,024

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NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - (Details Narrative) (USD $) In Thousands, unless otherwise specified	Jan. 08, 2015
Note 9 - Controlling And Noncontrolling Interests - Details Narrative
Company purchased Class A members ownership interest in Health Diagnostic Management, LLC (%)	20.00%
Company purchase price for 20% ownership in Health Diagnostic Management, LLC ($)	$ 4,971
Current Company ownership of Health Diagnostic Management, LLC (%)	60.40%

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Statements of Cash Flows (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash Flows from Operating Activities:
Net income	$ 9,230	$ 8,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,665	2,887
Provision for bad debts	10,784	7,894
Non-cash considerations	76	407
Stock option exercised		31
Compensatory element of stock issuances	53	86
(Increase) decrease in operating assets, net:
Accounts, management fee and medical receivable(s)	(13,554)	(11,012)
Notes receivable	118	75
Costs and estimated earnings in excess of billings on uncompleted contracts	79	(236)
Inventories	158	(433)
Prepaid expenses and other current assets	89	31
Other assets	18	63
Increase (decrease) in operating liabilities, net:
Accounts payable	(178)	110
Other current liabilities	(501)	964
Customer advances	(259)	(67)
Other liabilities	(230)	(221)
Due to related medical practices	(2)	1
Income tax payable		(20)
Net cash provided by operating activities	8,546	9,376
Cash Flows from Investing Activities:
Purchases of property and equipment	(125)	(375)
Cost of patents	(108)	(172)
Net cash used in investing activities	(233)	(547)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations	(2,166)	(3,401)
Distributions to noncontrolling interests	(3,306)	(3,724)
Buyout of noncontrolling interests	(4,971)
Repayment of notes receivable from employee stockholders	6	14
Net cash used in financing activities	(10,437)	(7,111)
Net (Decrease) Increase in Cash and Cash Equivalents	(2,124)	1,718
Cash and Cash Equivalents - Beginning of Period	9,952	7,871
Cash and Cash Equivalents - End of Period	$ 7,828	$ 9,589

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NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

9 Months Ended

Mar. 31, 2015

Notes to Financial Statements

NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

NOTE 5 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Information relating to uncompleted contracts is as follows:

		March 31, 2015		June 30, 2014
Costs incurred on uncompleted contracts	$	1,859	$	1,885
Estimated earnings		1,373		1,746
Subtotal		3,232		3,631
Less: Billings to date		2,693		3,013
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

Included in the accompanying condensed consolidated balance sheets under the following captions:

		March 31, 2015		June 30, 2014
Costs and estimated earnings in excess of billings on uncompleted contracts	$	681	$	760
Less: Billings in excess of costs and estimated earnings on uncompleted contracts		142		142
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618

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NOTE 10 - SEGMENT AND RELATED INFORMATION (Tables)

9 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment information

NOTE 10 - SEGMENT AND RELATED INFORMATION

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

		Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the three months ended March 31, 2015
Net revenues from external customers	$	2,486		$	14,610	$	17,096
Inter-segment net revenues	$	502		$	—	$	502
(Loss) income from operations	$	(367	)	$	3,033	$	2,666
Depreciation and amortization	$	78		$	811	$	889
Capital expenditures	$	111		$	—	$	111
For the three months ended March 31, 2014
Net revenues from external customers	$	3,023		$	14,017	$	17,040
Inter-segment net revenues	$	495		$	—	$	495
Income from operations	$	192		$	2,127	$	2,319
Depreciation and amortization	$	104		$	829	$	933
Capital expenditures	$	114		$	98	$	212
For the nine months ended March 31, 2015
Net revenues from external customers	$	9,177		$	42,996	$	52,173
Inter-segment net revenues	$	1,504		$	—	$	1,504
Income from operations	$	457		$	9,246	$	9,703
Depreciation and amortization	$	229		$	2,436	$	2,665
Capital expenditures	$	178		$	55	$	233
For the nine months ended March 31, 2014
Net revenues from external customers	$	8,922		$	42,559	$	51,481
Inter-segment net revenues	$	1,485		$	—	$	1,485
Income from operations	$	323		$	9,345	$	9,668
Depreciation and amortization	$	322		$	2,565	$	2,887
Capital expenditures	$	187		$	360	$	547

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NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - (Details Narrative)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Note 3 - Accounts Receivable Medical Receivable And Management And Other Fees Receivable - Details Narrative
Net revenues derived from no-fault and personal injury protection claims	55.00%	50.00%	54.00%	50.00%
Net revenues from management and other fees charged to related PCs	11.00%	13.20%	10.60%	13.40%

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Mar. 31, 2015

Note 2 - Summary Of Significant Accounting Policies Policies

Principles of Consolidation

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.

Earnings Per Share

Earnings Per Share

Basic earnings per share (“EPS”) is computed based on weighted average number of shares 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 earnings per share and applied the if converted method in calculating diluted earnings per share for the three and nine months ended March 31, 2015 and March 31, 2014.

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 nine months ended March 31, 2015 and March 31, 2014, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

	Three months ended     March 31, 2015						Three months ended     March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	2,019	$	1,888	$	33	$	1,739	$	1,625	$	29
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,022		6,022		383
Basic income per common  share	$	0.33	$	0.31	$	0.09	$	0.29	$	0.27	$	0.08
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,022		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,150		383
Diluted income per common share			$	0.31	$	0.09			$	0.26	$	0.08

	Nine months ended      March 31, 2015						Nine months ended      March 31, 2014
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	7,212	$	6,743	$	119	$	6,319	$	5,907	$	105
Denominator:
Weighted average shares  outstanding		6,050		6,050		383		6,002		6,002		383
Basic income per common  share	$	1.19	$	1.11	$	0.31	$	1.05	$	0.98	$	0.27
Diluted
Denominator:
Weighted average shares  outstanding				6,050		383				6,002		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,130		383
Diluted income per common share			$	1.09	$	0.31			$	0.96	$	0.27

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of March 31, 2015 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2015 or 2014, and it does not believe that any of those pronouncements will have a significant impact on our condensed consolidated financial statements at the time they become effective.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented.