Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Sep. 05, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Fonar Corporation | ' |
Entity Central Index Key | '0000355019 | ' |
Document Type | '10-K | ' |
Document Period End Date | 30-Jun-14 | ' |
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 | ' |
Entity Public Float | ' | $125,000,000 |
Entity Common Stock, Shares Outstanding | ' | 6,050,840 |
Document Fiscal Period Focus | 'FY | ' |
Document Fiscal Year Focus | '2014 | ' |
Balance_Sheets
Balance Sheets (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $9,951,736 | $7,870,727 |
Accounts receivable - net of allowances for doubtful accounts of $257,362 at June 30, 2014 and 2013 | 4,450,125 | 4,443,595 |
Medical receivable -net of allowances for doubtful accounts of $12,917,751 and $2,584,669 at June 30, 2014 and 2013, respectively | 8,807,856 | 8,126,476 |
Management and other fees receivable - net of allowances for doubtful accounts of $10,901,619 and $9,095,320 at June 30, 2014 and 2013, respectively | 11,970,388 | 11,465,913 |
Management and other fees receivable - related medical practices - net of allowances for doubtful accounts of $403,047 at June 30, 2014 and 2013 | 3,426,982 | 2,381,664 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 759,809 | 445,742 |
Inventories | 2,443,536 | 2,077,088 |
Prepaid expenses and other current assets | 1,011,358 | 1,054,551 |
Total Current Assets | 42,821,790 | 37,865,756 |
Deferred Income Tax Asset | 5,740,287 | 2,935,750 |
Property and Equipment - Net | 15,029,729 | 17,524,494 |
Goodwill | 1,767,098 | 1,767,098 |
Other Intangible Assets - Net | 10,508,843 | 11,904,248 |
Other Assets | 922,096 | 1,153,304 |
Total Assets | 76,789,843 | 73,150,650 |
Current Liabilities: | ' | ' |
Current portion of long-term debt and capital leases | 2,890,816 | 2,885,769 |
Accounts payable | 2,481,997 | 2,752,479 |
Other current liabilities | 9,024,033 | 8,494,361 |
Unearned revenue on service contracts | 4,730,962 | 4,965,415 |
Customer advances | 1,926,813 | 1,857,870 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 142,217 | 142,217 |
Income tax payable | ' | 19,501 |
Total Current Liabilities | 21,196,838 | 21,117,612 |
Long-Term Liabilities: | ' | ' |
Deferred Income Tax Liability | 583,990 | 461,858 |
Due to Related Medical Practices | 234,581 | 230,626 |
Long-Term Debt and Capital Leases, Less Current Portion | 8,481,830 | 12,887,005 |
Other Liabilities | 386,012 | 654,273 |
Total Long-Term Liabilities | 9,686,413 | 14,233,762 |
Total Liabilities | 30,883,251 | 35,351,374 |
Stockholders' Equity: | ' | ' |
Paid-in capital in excess of par value | 175,284,437 | 174,499,020 |
Accumulated deficit | -149,259,286 | -159,655,416 |
Notes receivable from employee stockholders | -38,828 | -54,820 |
Treasury stock, at cost - 11,643 shares of common stock at June 30, 2014 and 2013 | -675,390 | -675,390 |
Total Fonar Corporation's Stockholders' Equity | 25,311,608 | 14,114,061 |
Noncontrolling interests | 20,594,984 | 23,685,215 |
Total Stockholders' Equity | 45,906,592 | 37,799,276 |
Total Liabilities and Stockholders' Equity | 76,789,843 | 73,150,650 |
Class A Non-Voting Preferred | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred Stock Value | 31 | 31 |
Class A Non-Voting Preferred Stock | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred Stock Value | ' | ' |
Common Stock | ' | ' |
Stockholders' Equity: | ' | ' |
Common Stock Value | 606 | 598 |
Class B Members | ' | ' |
Stockholders' Equity: | ' | ' |
Common Stock Value | ' | ' |
Class C Common | ' | ' |
Stockholders' Equity: | ' | ' |
Common Stock Value | $38 | $38 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Class A Non-Voting Preferred | ' | ' |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Authorized | 453,000 | 453,000 |
Preferred Stock, Issued | 313,438 | 313,438 |
Preferred Stock, Outstanding | 313,438 | 313,438 |
Class A Non-Voting Preferred Stock | ' | ' |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Authorized | 567,000 | 567,000 |
Preferred Stock, Issued | ' | ' |
Preferred Stock, Outstanding | ' | ' |
Common Stock | ' | ' |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Authorized | 8,500,000 | 8,500,000 |
Common Stock, Issued | 6,057,483 | 5,980,775 |
Common Stock, Outstanding | 6,045,840 | 5,969,132 |
Class B Members | ' | ' |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Authorized | 227,000 | 227,000 |
Common Stock, Issued | 146 | 146 |
Common Stock, Outstanding | 146 | 146 |
Class C Common | ' | ' |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Authorized | 567,000 | 567,000 |
Common Stock, Issued | 382,513 | 382,513 |
Common Stock, Outstanding | 382,513 | 382,513 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Revenues | ' | ' |
Product sales - net | $1,877,932 | $3,939,140 |
Service and repair fees - net | 10,082,631 | 10,841,935 |
Service and repair fees - related parties - net | 110,000 | 110,000 |
Patient revenue - net of contractual allowances and discounts | 24,307,192 | 7,481,865 |
Provision for bad debts for patient fee | -10,333,082 | -2,584,669 |
Management and other fees - net | 34,839,969 | 21,493,599 |
Management and other fees - related medical practices - net | 7,620,835 | 7,859,944 |
Total Revenues - Net | 68,505,477 | 49,141,814 |
Costs and Expenses | ' | ' |
Costs related to product sales | 1,067,120 | 3,656,635 |
Costs related to service and repair fees | 2,496,985 | 3,213,420 |
Costs related to service and repair fees -related parties | 27,242 | 32,603 |
Costs related to patient fee revenue | 7,670,484 | 2,704,758 |
Costs related to management and other fees | 20,851,065 | 12,998,243 |
Costs related to management and other fees - related medical practices | 5,134,553 | 3,515,706 |
Research and development | 1,760,821 | 1,438,560 |
Selling, general and administrative, inclusive of compensatory element of stock issuances of $223,000 and $415,021 for the years ended June 30, 2014 and 2013, respectively | 15,388,239 | 12,501,621 |
Provision for bad debts | 1,806,299 | 1,544,521 |
Total Costs and Expenses | 56,202,808 | 41,606,067 |
Income from Operations | 12,302,669 | 7,535,747 |
Other Income and (Expenses): | ' | ' |
Interest expense | -884,541 | -500,362 |
Investment income | 238,928 | 217,598 |
Other (expense) income - net | -608,599 | 725,488 |
Income before benefit (provision) for income taxes and noncontrolling interests | 11,048,457 | 7,978,471 |
Benefit for Income Taxes | 2,348,312 | 2,277,891 |
Net Income | 13,396,769 | 10,256,362 |
Net Income - Noncontrolling Interests | -3,000,639 | -1,577,820 |
Net Income - Controlling Interests | 10,396,130 | 8,678,542 |
Weighted Average Basic Shares Outstanding | 6,009,822 | 5,933,318 |
Weighted Average Diluted Shares Outstanding | 6,137,326 | 6,060,822 |
Common Stock | ' | ' |
Other Income and (Expenses): | ' | ' |
Net Income - Controlling Interests | 9,720,030 | 8,107,367 |
Basic Net Income Per Common Share Available to Common Stockholders | $1.62 | $1.37 |
Diluted Net Income Per Common Share Available to Common Stockholders | $1.58 | $1.34 |
Weighted Average Basic Shares Outstanding | 6,009,822 | 5,933,318 |
Weighted Average Diluted Shares Outstanding | 6,137,326 | 6,060,822 |
Class A Non Voting Preferred Stock | ' | ' |
Other Income and (Expenses): | ' | ' |
Net Income - Controlling Interests | 503,911 | 425,708 |
Class C Common | ' | ' |
Other Income and (Expenses): | ' | ' |
Net Income - Controlling Interests | $172,189 | $145,467 |
Basic Net Income Per Common Share Available to Common Stockholders | $0.45 | $0.38 |
Diluted Net Income Per Common Share Available to Common Stockholders | $0.45 | $0.38 |
Basic and Diluted Income Per Share - Common C | $0.45 | $0.38 |
Weighted Average Basic Shares Outstanding | 382,513 | 382,513 |
Weighted Average Diluted Shares Outstanding | 382,513 | 382,513 |
Statements_of_Operations_Paren
Statements of Operations (Parenthetical) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement [Abstract] | ' | ' |
compensatory element of stock issuances | $223,000 | $415,021 |
Shareholders_Equity_and_Compre
Shareholders Equity and Comprehensive Income (USD $) | Class A Non-Voting Preferred | Common Stock | Class C Common | Paid-in Capital in Excess of Par Value | Treasury Stock | Notes Receivable | Accumulated Deficit | Noncontrolling Interest | Total |
Balance - Beginning, Value at Jun. 30, 2012 | $31 | $590 | $38 | $174,084,007 | ($675,390) | ($70,813) | ($168,333,958) | $6,096,560 | $11,101,065 |
Balance - Beginning, Shares at Jun. 30, 2012 | ' | 5,901,262 | ' | ' | ' | ' | ' | ' | ' |
Net Income | ' | ' | ' | ' | ' | ' | 8,678,542 | 1,577,820 | 10,256,362 |
Stock issued to employees under stock bonus plans, Shares | ' | 67,870 | ' | ' | ' | ' | ' | ' | ' |
Stock issued to employees under stock bonus plans, Value | ' | 8 | ' | 415,013 | ' | ' | ' | ' | 415,021 |
Issuance of stock for goods and services, Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of stock for goods and services, Value | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments on notes receivable from employee stockholders | ' | ' | ' | ' | ' | 15,993 | ' | ' | 15,993 |
Buyout of noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | -564,315 | 564,315 |
Stock option exercised, Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option exercised, Value | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption of noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | -1,424,900 | -1,424,900 |
Distributions to noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | -1,799,950 | -1,799,950 |
Proceeds from noncontrolling interest | ' | ' | ' | ' | ' | ' | ' | 19,800,000 | 19,800,000 |
Balance - Ending, Value at Jun. 30, 2013 | 31 | 598 | 38 | 174,499,020 | -675,390 | -54,820 | -159,655,416 | 23,685,215 | 37,799,276 |
Balance - Ending, Shares at Jun. 30, 2013 | ' | 5,969,132 | ' | ' | ' | ' | ' | ' | ' |
Net Income | ' | ' | ' | ' | ' | ' | 10,396,130 | 3,000,639 | 13,396,769 |
Stock issued to employees under stock bonus plans, Shares | ' | 21,443 | ' | ' | ' | ' | ' | ' | ' |
Stock issued to employees under stock bonus plans, Value | ' | 2 | ' | 222,998 | ' | ' | ' | ' | 223,000 |
Issuance of stock for goods and services, Shares | ' | 45,265 | ' | ' | ' | ' | ' | ' | ' |
Issuance of stock for goods and services, Value | ' | 5 | ' | 531,820 | ' | ' | ' | ' | ' |
Payments on notes receivable from employee stockholders | ' | ' | ' | ' | ' | 15,992 | ' | ' | ' |
Buyout of noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option exercised, Shares | ' | 10,000 | ' | ' | ' | ' | ' | ' | ' |
Stock option exercised, Value | ' | 1 | ' | 30,599 | ' | ' | ' | ' | 30,600 |
Redemption of noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | -1,125,100 | ' |
Distributions to noncontrolling interests | ' | ' | ' | ' | ' | ' | ' | -4,965,770 | -4,965,770 |
Proceeds from noncontrolling interest | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance - Ending, Value at Jun. 30, 2014 | $31 | $606 | $38 | $175,284,437 | ($675,390) | ($38,828) | ($149,259,286) | $20,594,984 | $45,906,592 |
Balance - Ending, Shares at Jun. 30, 2014 | ' | 6,045,840 | ' | ' | ' | ' | ' | ' | ' |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Statement of Cash Flows [Abstract] | ' | ' |
Net Income | $13,396,769 | $10,256,362 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 3,817,205 | 2,421,177 |
Abandoned patents or software written off | 250,523 | 66,619 |
Provision for bad debts | 1,806,299 | 1,544,521 |
Deferred income tax benefit | -2,682,405 | -2,473,892 |
Gain on sale of equipment | ' | -557,473 |
Loss on disposition of equipment | 657,350 | ' |
Gain on litigation settlement | ' | -755,500 |
Impairment on management agreement | ' | 357,500 |
Compensatory element of stock issuances | 223,000 | 415,021 |
Stock issued for costs and expenses | 531,825 | ' |
(Increase) decrease in operating assets, net: | ' | ' |
Accounts, management fee and medical receivable(s) | -4,044,002 | -3,717,440 |
Notes receivable | 95,623 | 120,976 |
Costs and estimated earnings in excess of Billings on uncompleted contracts | -314,067 | 682,854 |
Inventories | -366,448 | 117,861 |
Prepaid expenses and other current assets | 46,967 | -698,284 |
Other assets | 131,811 | -204,037 |
Increase (decrease) in operating liabilities, net: | ' | ' |
Accounts payable | -270,482 | 628,033 |
Other current liabilities | 295,219 | -414,402 |
Customer advances | 68,943 | -567,914 |
Billings in excess of costs and estimated earnings on uncompleted contracts | ' | 142,217 |
Other liabilities | -268,261 | 253,559 |
Due to related medical practices | 3,955 | 1,885 |
Income tax payable | -19,501 | -80,499 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 13,360,323 | 7,539,144 |
Cash Flows from Investing Activities: | ' | ' |
Purchases of property and equipment | -620,697 | -1,135,382 |
Cost of acquisition | ' | -40,000,000 |
Cost of patents | -214,211 | -159,907 |
NET CASH USED IN INVESTING ACTIVITIES | -834,908 | -41,295,289 |
Cash Flows from Financing Activities | ' | ' |
Proceeds from debt | ' | 14,689,646 |
Proceeds from sale of equipment | ' | 700,000 |
Repayment of borrowings and capital lease obligations | -4,400,128 | -1,821,617 |
Repayment of notes receivable from employee stockholders | 15,992 | 15,993 |
Stock option exercised | 30,600 | ' |
Distributions to noncontrolling interests | -4,965,770 | -1,799,950 |
Redemption of noncontroling Interests | -4,965,770 | -1,799,950 |
Buyout of noncontroling Interest | ' | 564,315 |
Proceeds from noncontrolling interest | ' | 19,800,000 |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | -10,444,406 | 29,594,857 |
Net Increase in Cash and Cash Equivalents | 2,081,009 | -4,161,288 |
Cash and Cash Equivalents Beginning of Year | 7,870,727 | 12,032,015 |
Cash and Cash Equivalents - End of Year | $9,951,736 | $7,870,727 |
NOTE_1_DESCRIPTION_OF_BUSINESS
NOTE 1 - DESCRIPTION OF BUSINESS AND LIQUIDITY AND CAPITAL RESOURCES | 12 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
NOTE 1 - DESCRIPTION OF BUSINESS AND LIQUIDITY AND CAPITAL RESOURCES | ' |
NOTE 1 - DESCRIPTION OF BUSINESS AND LIQUIDITY AND CAPITAL RESOURCES | |
Description of Business | |
FONAR Corporation (the “Company” or “FONAR”) is a Delaware corporation, which was incorporated on July 17, 1978. FONAR is engaged in the research, development, production and marketing of medical scanning equipment, which uses principles of Magnetic Resonance Imaging ("MRI") for the detection and diagnosis of human diseases. In addition to deriving revenues from the direct sale of MRI equipment, revenue is also generated from our installed-base of customers through our service and upgrade programs. | |
FONAR, through its wholly-owned subsidiary Health Management Corporation of America ("HMCA") provides comprehensive management services to diagnostic imaging facilities. The services provided by the Company include development, administration, leasing of office space, facilities and medical equipment, provision of supplies, staffing and supervision of non-medical personnel, legal services, accounting, billing and collection and the development and implementation of practice growth and marketing strategies. | |
On March 5, 2013, the Company acquired a majority interest in a newly formed limited liability company, Health Diagnostics Management LLC (HDM), a business managing 12 Stand-Up MRI centers and 2 other scanning centers located in Florida and New York for a total cost of $40 million. HDM has a perpetual existence. See Note 9. | |
During May 2011, HMCA contributed all of its assets together with its liabilities to a newly formed limited liability company, Imperial Management Services, LLC (“Imperial”), which has a perpetual existence. As of June 30, 2014, Imperial manages 11 diagnostic imaging facilities which are located in the states of New York and Florida. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||
Principles of Consolidation | |||||||||||||
The consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships. The operating activities of subsidiaries are included in the accompanying consolidated statements from the date of acquisition. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||
Use of Estimates | |||||||||||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The most significant estimates relate to receivable allowances, intangible assets, income taxes and related tax asset valuation allowances, useful lives of property and equipment, contingencies, revenue recognition and the assessment of litigation. In addition, healthcare industry reforms and reimbursement practices will continue to impact the Company's operations and the determination of contractual and other allowance estimates. Actual results could differ from those estimates. | |||||||||||||
Inventories | |||||||||||||
Inventories consist of purchased parts, components and supplies, as well as work-in-process, and are stated at the lower of cost, determined on the first-in, first-out method, or market. | |||||||||||||
Property and Equipment | |||||||||||||
Property and equipment procured in the normal course of business is stated at cost. Property and equipment purchased in connection with an acquisition is stated at its estimated fair value, generally based on an appraisal. Property and equipment is being depreciated for financial accounting purposes using the straight-line method over their estimated useful lives. Leasehold improvements are being amortized over the shorter of the useful life or the remaining lease term. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation of these assets are removed from the accounts and the resulting gains or losses are reflected in the results of operations. Expenditures for maintenance and repairs are charged to operations. Renewals and betterments are capitalized. Maintenance and repair expenses totaled approximately $1,037,000 and $598,000 for the years ended June 30, 2014 and 2013, respectively. The estimated useful lives in years are generally as follows: | |||||||||||||
Diagnostic equipment under capital lease | 2.5 | ||||||||||||
Diagnostic equipment | 5–13 | ||||||||||||
Research, development and demonstration equipment | 7-Mar | ||||||||||||
Machinery and equipment | 7-Feb | ||||||||||||
Furniture and fixtures | 9-Mar | ||||||||||||
Leasehold improvements | 2–10 | ||||||||||||
Building | 28 | ||||||||||||
Long-Lived Assets | |||||||||||||
The Company periodically assesses the recoverability of long-lived assets, including property and equipment and intangibles, other than goodwill, when there are indications of potential impairment, based on estimates of undiscounted future cash flows. The amount of impairment is calculated by comparing anticipated discounted future cash flows with the carrying value of the related asset. In performing this analysis, management considers such factors as current results, trends, and future prospects, in addition to other economic factors. | |||||||||||||
Deferred Rent | |||||||||||||
Rent expense is recorded on the straight-line method based on the total minimum rent payments required over the term of the lease. The cumulative difference between the lease expense recorded under this method and the contractual lease payment terms is recorded as deferred rent. | |||||||||||||
Other Intangible Assets | |||||||||||||
1) Capitalized Software Development Costs | |||||||||||||
Capitalization of software development costs begins upon the establishment of technological feasibility. Technological feasibility for the Company’s computer software is generally based upon achievement of a detail program design free of high risk development issues and the completion of research and development on the product hardware in which it is to be used. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized computer software development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological feasibility, anticipated future gross revenue, estimated economic life and changes in software and hardware technology. Prior to reaching technological feasibility those costs are expensed as incurred and included in research and development. | |||||||||||||
Amortization of capitalized software development costs commences when the related products become available for general release to customers. Amortization is provided on a product by product basis. The annual amortization is the greater of the amount computed using (a) the ratio that current gross revenue for a product bears to the total of current and anticipated future gross revenue for that product, or (b) the straight-line method over the remaining estimated economic life of the product. | |||||||||||||
The Company periodically performs reviews of the recoverability of such capitalized software development costs. At the time a determination is made that capitalized amounts are not recoverable, based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. | |||||||||||||
2) Patents and Copyrights | |||||||||||||
Amortization is calculated on the straight-line basis over a period ranging from 15 to 17 years. | |||||||||||||
3) Management Agreement | |||||||||||||
The management agreement was being amortized on the straight line basis over the length of the agreement (15 years). For the year ended June 30, 2013, the Company recorded an impairment of $357,500 as a result of the closing of a scanning center in New York. | |||||||||||||
4) Non-Competition Agreements | |||||||||||||
The non-competition agreements are being amortized on the straight line basis over the length of the agreement (7 years). | |||||||||||||
5) Customer Relationships | |||||||||||||
Amortization is calculated on the straight line basis over 20 years. | |||||||||||||
Goodwill | |||||||||||||
Generally accepted accounting principles in the United States require the Company to perform a goodwill impairment test annually and more frequently when negative conditions or a triggering event arises. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered potentially impaired and a second step is performed to measure the amount of impairment loss, if any. | |||||||||||||
Acquired assets and assumed liabilities | |||||||||||||
Pursuant to ASC No. 805-10-25, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, but during the allowed measurement period not to exceed one year from the acquisition date, the Company retrospectively adjusts the provisional amounts recognized at the acquisition date by means of adjusting the amount recognized for goodwill. | |||||||||||||
Revenue Recognition | |||||||||||||
Revenue on sales contracts for scanners, included in “product sales” in the accompanying consolidated statements of operations, is recognized under the percentage-of-completion method in accordance with FASB ASC 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts”. The Company manufactures its scanners under specific contracts that provide for progress payments. Production and installation take approximately three to six months. | |||||||||||||
Revenue on scanner service contracts is recognized on the straight-line method over the related contract period, usually one year. | |||||||||||||
Revenue from sales of other items is recognized upon shipment. | |||||||||||||
Revenue under management contracts is recognized based upon contractual agreements for management services rendered by the Company primarily under various long-term agreements with various medical providers (the "PCs"). As of June 30, 2014, the Company has twenty management agreements of which three are with PC’s owned by Raymond V. Damadian, M.D., President and Chairman of the Board of FONAR (“the Related medical practices”) and seventeen are with PC’s, which are all located in the state of New York (“the New York PC’s”), owned by two unrelated radiologists. The contractual fees for services rendered to the PCs consists of fixed monthly fees per diagnostic imaging facility ranging from approximately $35,000 to $242,000. All fees are re-negotiable at the anniversary of the agreements and each year thereafter. Revenue under lease contracts is recognized based upon contractual agreements for the leasing of medical equipment primarily under long term contracts to various unrelated PC’s. The lease fees for the medical equipment consist of fixed monthly fees ranging from $2,000 to $19,000. All fees are re-negotiable at the anniversary of the agreements and each year thereafter. | |||||||||||||
Patient fee revenue, net of contractual allowance and discounts, consist of net patient fees received from insurance companies, third party payors (including federal and state agencies under Medicare and Medicaid programs), hospitals and patients themselves based mainly upon established contractual billing rates, less allowances for contractual adjustments and discounts. Patient fee revenue is recorded in the period in which services are provided. | |||||||||||||
The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the years ended June 30, 2014 and 2013 are summarized in the following table. | |||||||||||||
For the Year Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Commercial Insurance/ Managed Care | $ | 4,217,088 | $ | 1,360,536 | |||||||||
Medicare/Medicaid | 1,443,020 | 541,602 | |||||||||||
Workers' Compensation/Personal Injury | 13,369,956 | 3,597,416 | |||||||||||
Other | 5,277,128 | 1,982,311 | |||||||||||
Patient Fee Revenue, net of contractual allowances and discounts | 24,307,192 | 7,481,865 | |||||||||||
Provision for Bad Debts | (10,333,082 | ) | (2,584,669 | ) | |||||||||
Net Patient Fee Revenue | $ | 13,974,110 | $ | 4,897,196 | |||||||||
Allowance for Doubtful Accounts – Patient Fee | |||||||||||||
The Company provides for medical receivables that could become uncollectible by establishing an allowance for doubtful accounts in order to adjust medical receivables to estimated net realizable value. In evaluating the collectability of medical receivables, the Company considers a number of factors, including the age of the account, historical collection experiences, payor type, current economic conditions and other relevant factors. There are various factors that impact collection trends, such as payor mix, changes in the economy, increase burden on copayments to be made by patients with insurance and business practices related to collection efforts. These factors continuously change and can have an impact on collection trends and the estimation process. | |||||||||||||
Research and Development Costs | |||||||||||||
Research and development costs are charged to expense as incurred. The costs of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses (either in research and development, marketing or production), are classified as property and equipment and depreciated over their estimated useful lives. | |||||||||||||
Advertising Costs | |||||||||||||
Advertising costs are expensed as incurred. Advertising expense approximated $889,000 and $835,000 for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
Shipping Costs | |||||||||||||
The Company’s shipping and handling costs are included in revenue from product sales and the related expense included in costs related to product sales is $1,885 and $5,838 for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
Income Taxes | |||||||||||||
Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. | |||||||||||||
Customer Advances | |||||||||||||
Cash advances and progress payments received on sales orders are reflected as customer advances until such time as revenue recognition begins. | |||||||||||||
Earnings Per Share | |||||||||||||
Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class Method”, the Company used the Two-Class method for calculating basic earnings per share and applied the if converted method in calculating diluted earnings per share for the years ended June 30, 2014 and June 30, 2013. | |||||||||||||
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 both the year ended June 30, 2014 and June 30, 2013, diluted EPS for common shareholders includes 127,504 shares upon conversion of Class C Common. | |||||||||||||
30-Jun-14 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 10,396,130 | $ | 9,720,030 | $ | 172,189 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 6,009,822 | 382,513 | ||||||||||
Basic income per common share | $ | 1.73 | $ | 1.62 | $ | 0.45 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,137,326 | 382,513 | |||||||||||
Diluted income per common share | $ | 1.58 | $ | 0.45 | |||||||||
30-Jun-13 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 8,678,542 | $ | 8,107,367 | $ | 145,467 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 5,933,318 | 382,513 | ||||||||||
Basic income per common share | $ | 1.46 | $ | 1.37 | $ | 0.38 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,060,822 | 382,513 | |||||||||||
Diluted income per common share | . | $ | 1.34 | $ | 0.38 | ||||||||
Cash and Cash Equivalents | |||||||||||||
The Company considers all short-term highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. | |||||||||||||
Concentration of Credit Risk | |||||||||||||
Cash: The Company maintains its cash and cash equivalents with various financial institutions, which exceed federally insured limits throughout the year. At June 30, 2014, the Company had cash on deposit of approximately $8,035,000 in excess of federally insured limits of $250,000. | |||||||||||||
Related Parties: Net revenues from related parties accounted for approximately 11% and 16% of the consolidated net revenues for the years ended June 30, 2014 and 2013, respectively. Net management fee receivables from the related medical practices accounted for approximately 12% and 9% of the consolidated accounts receivable for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
See Note 3 regarding the Company’s concentrations in the healthcare industry. | |||||||||||||
Fair Value of Financial Instruments | |||||||||||||
The financial statements include various estimated fair value information at June 30, 2014 and 2013, as required by ASC topic 820, "Disclosures about Fair Value of Financial Instruments". Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that Statement and does not purport to represent the aggregate net fair value to the Company. | |||||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: | |||||||||||||
Cash and cash equivalents: The carrying amount approximates fair value because of the short-term maturity of those instruments. | |||||||||||||
Receivable and accounts payable: The carrying amounts approximate fair value because of the short maturity of those instruments. | |||||||||||||
Notes receivable: The carrying amount approximates fair value because the discounted present value of the cash flow generated by the parties approximates the carrying value of the amounts due to the Company. | |||||||||||||
Long-term debt, notes payable and accounts payable: The carrying amounts of debt and notes payable approximate fair value due to the length of the maturities, the interest rates being tied to market indices and/or due to the interest rates not being significantly different from the current market rates available to the Company. | |||||||||||||
All of the Company's financial instruments are held for purposes other than trading. | |||||||||||||
Recent Accounting Pronouncements | |||||||||||||
The FASB has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations. | |||||||||||||
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 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 June 30, 2014 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 2014 or 2013, and it does not believe that any of those pronouncements will have a significant impact on our 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 net income for any periods presented. |
NOTE_3_ACCOUNTS_RECEIVABLE_MED
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | ' | ||||||||
NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | |||||||||
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 (“PCs”) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the PCs 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 50% and 41%, respectively, of the PCs’ 2014 and 2013 net revenues 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 consolidated financial statements and have historically been within management's expectations. | |||||||||
Net revenues from management and other fees charged to the related medical practices accounted for approximately 11% and 16%, of the consolidated net revenues for the years ended June 30, 2014 and 2013, 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 following table sets forth the number of our facilities for the year end June 30, 2014 and 2013. | |||||||||
For The Year Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Total Facilities Owned or Managed (at Beginning of Year) | 24 | 11 | |||||||
Facilities Added by: | |||||||||
Acquisition | — | 14 | |||||||
Internal development | 1 | — | |||||||
Managed Facilities Closed | (1 | ) | (1 | ) | |||||
Total Facilities Owned or Managed (at End of Year) | 24 | 24 | |||||||
NOTE_4_COSTS_AND_ESTIMATED_EAR
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS AND CUSTOMER ADVANCES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS AND CUSTOMER ADVANCES | ' | ||||||||
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS AND CUSTOMER ADVANCES | |||||||||
Information relating to uncompleted contracts as of June 30, 2014 and 2013 is as follows: | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Costs incurred on uncompleted contracts | $ | 1,884,984 | $ | 1,482,384 | |||||
Estimated earnings | 1,745,608 | 1,191,141 | |||||||
3,630,592 | 2,673,525 | ||||||||
Less: Billings to date | 3,013,000 | 2,370,000 | |||||||
$ | 617,592 | $ | 303,525 | ||||||
Included in the accompanying consolidated balance sheets under the following captions: | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 759,809 | $ | 445,742 | |||||
Less: Billings in excess of costs and estimated earnings on uncompleted contracts | 142,217 | 142,217 | |||||||
$ | 617,592 | $ | 303,525 | ||||||
NOTE_5_INVENTORIES
NOTE 5 - INVENTORIES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
NOTE 5 - INVENTORIES | ' | ||||||||
NOTE 5 – INVENTORIES | |||||||||
Inventories included in the accompanying consolidated balance sheets consist of: | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Purchased parts, components and supplies | $ | 2,093,671 | $ | 1,783,847 | |||||
Work-in-process | 349,865 | 293,241 | |||||||
$ | 2,443,536 | $ | 2,077,088 | ||||||
NOTE_6_PROPERTY_AND_EQUIPMENT
NOTE 6 - PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
NOTE 6 - PROPERTY AND EQUIPMENT | ' | ||||||||
NOTE 6 - PROPERTY AND EQUIPMENT | |||||||||
Property and equipment, at cost, less accumulated depreciation and amortization, at June 30, 2014 and 2013, is comprised of: | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Diagnostic equipment under capital leases | $ | 620,307 | $ | 620,307 | |||||
Diagnostic equipment | 17,396,797 | 18,567,787 | |||||||
Research, development and | 3,510,224 | 3,500,902 | |||||||
demonstration equipment | |||||||||
Machinery and equipment | 2,069,055 | 4,987,159 | |||||||
Furniture and fixtures | 2,550,627 | 2,952,449 | |||||||
Leasehold improvements | 5,593,148 | 5,669,338 | |||||||
Building | 939,614 | 939,614 | |||||||
32,679,772 | 37,237,556 | ||||||||
Less: Accumulated depreciation and amortization | 17,650,043 | 19,713,062 | |||||||
$ | 15,029,729 | $ | 17,524,494 | ||||||
Depreciation and amortization of property and equipment for the years ended June 30, 2014 and 2013 was $2,458,113 and $1,554,458, respectively. | |||||||||
Depreciation and amortization of diagnostic equipment under capital leases for the years ended June 30, 2014 and 2013 was $95,026 and $248,123, respectively. Accumulated depreciation and amortization of diagnostic equipment under capital leases for the years ended June 30, 2014 and 2013 was $620,307 and $525,281, respectively. | |||||||||
During the year ended June 30, 2014, the Company has retired assets that were fully depreciated with a cost and accumulated depreciation basis of $4,418,903. |
NOTE_7_OTHER_INTANGIBLE_ASSETS
NOTE 7 - OTHER INTANGIBLE ASSETS | 12 Months Ended | ||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||
NOTE 7 - OTHER INTANGIBLE ASSETS | ' | ||||||||||||||||||||||
NOTE 7 - OTHER INTANGIBLE ASSETS | |||||||||||||||||||||||
Other intangible assets, net of accumulated amortization, at June 30, 2014 and 2013 are comprised of: | |||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Capitalized software developmentcosts | $ | 7,418,436 | $ | 7,668,959 | |||||||||||||||||||
Patents and copyrights | 4,408,011 | 4,193,800 | |||||||||||||||||||||
Non-competition agreements | 4,100,000 | 4,100,000 | |||||||||||||||||||||
Customer relationships | 3,800,000 | 3,800,000 | |||||||||||||||||||||
19,726,447 | 19,762,759 | ||||||||||||||||||||||
Less: Accumulated amortization | 9,217,604 | 7,858,511 | |||||||||||||||||||||
$ | 10,508,843 | $ | 11,904,248 | ||||||||||||||||||||
Information related to the above intangible assets for the years ended June 30, 2014 and 2013 is as follows: | |||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Balance – Beginning of Year | $ | 11,904,248 | $ | 3,835,179 | |||||||||||||||||||
Amounts capitalized | 214,211 | 9,359,907 | |||||||||||||||||||||
Abandon software or patents written off | (250,523 | ) | (66,619 | ) | |||||||||||||||||||
Impairment of management agreement | — | (357,500 | ) | ||||||||||||||||||||
Amortization | (1,359,093 | ) | (866,719 | ) | |||||||||||||||||||
Balance – End of Year | $ | 10,508,843 | $ | 11,904,248 | |||||||||||||||||||
Amortization of patents and copyrights for the years ended June 30, 2014 and 2013 amounted to $178,836 and $168,631, respectively. | |||||||||||||||||||||||
Amortization of capitalized software development costs for the years ended June 30, 2014 and 2013 was $407,876 and $335,350, respectively. | |||||||||||||||||||||||
Amortization of management agreement for the years ended June 30, 2014 and 2013 amounted to $0 and $100,833, respectively. | |||||||||||||||||||||||
Amortization of non-competition agreements for the years ended June 30, 2014 and 2013 amounted to $585,714 and $195,238, respectively. | |||||||||||||||||||||||
Amortization of customer relationships for the years ended June 30, 2014 and 2013 amounted to $186,667 and $66,667, respectively. | |||||||||||||||||||||||
The estimated amortization of other intangible assets for the five years ending June 30, 2019 and thereafter is as follows: | |||||||||||||||||||||||
For the Years Ending June 30, | Total | Patents and Copyrights | Capitalized Software Development Costs | Non- | Customer Relationships | ||||||||||||||||||
competition | |||||||||||||||||||||||
2015 | $ | 1,328,315 | $ | 189,559 | $ | 363,042 | $ | 585,714 | $ | 190,000 | |||||||||||||
2016 | 1,347,439 | 205,114 | 366,611 | 585,714 | 190,000 | ||||||||||||||||||
2017 | 1,368,582 | 220,668 | 372,200 | 585,714 | 190,000 | ||||||||||||||||||
2018 | 1,329,294 | 230,647 | 322,933 | 585,714 | 190,000 | ||||||||||||||||||
2019 | 1,043,968 | 228,665 | 39,589 | 585,714 | 190,000 | ||||||||||||||||||
Thereafter | 4,091,245 | 1,104,100 | — | 390,478 | 2,596,667 | ||||||||||||||||||
$ | 10,508,843 | $ | 2,178,753 | $ | 1,464,375 | $ | 3,319,048 | $ | 3,546,667 | ||||||||||||||
The weighted average amortization period for other intangible assets is 11.0 years and they have no expected residual value. |
NOTE_8_CAPITAL_STOCK
NOTE 8 - CAPITAL STOCK | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
NOTE 8 - CAPITAL STOCK | ' | ||||||||||||
NOTE 8 - CAPITAL STOCK | |||||||||||||
Common Stock | |||||||||||||
Cash dividends payable on the common stock shall, in all cases, be on a per share basis, one hundred twenty percent (120%) of the cash dividend payable on shares of Class B common stock and three hundred sixty percent (360%) of the cash dividend payable on a share of Class C common stock. | |||||||||||||
Class B Common Stock | |||||||||||||
Class B common stock is convertible into shares of common stock on a one-for-one basis. Class B common stock has 10 votes per share. There were 146 and 146 of such shares outstanding at June 30, 2014 and 2013, respectively. | |||||||||||||
Class C Common Stock | |||||||||||||
On April 3, 1995, the stockholders ratified a proposal creating a new Class C common stock and authorized the exchange offering of three shares of Class C common stock for each share of the Company's outstanding Class B common stock. The Class C common stock has 25 votes per share, as compared to 10 votes per share for the Class B common stock and one vote per share for the common stock. The Class C common stock was offered on a three-for-one basis to the holders of the Class B common stock. Although having greater voting power, each share of Class C common stock has only one-third of the rights of a share of Class B common stock to dividends and distributions. Class C common stock is convertible into shares of common stock on a three-for-one basis. | |||||||||||||
Class A Non-Voting Preferred Stock | |||||||||||||
On April 3, 1995, the stockholders ratified a proposal consisting of the creation of a new class of Class A non-voting preferred stock with special dividend rights and the declaration of a stock dividend on the Company's common stock consisting of one share of Class A non-voting preferred stock for every five shares of common stock. The stock dividend was payable to holders of common stock on October 20, 1995. Class A non-voting preferred stock issued pursuant to such stock dividend approximates 313,000 shares. | |||||||||||||
The Class A non-voting preferred stock is entitled to a special dividend equal to 3-1/4% of first $10 million, 4-1/2% of next $20 million and 5-1/2% on amounts in excess of $30 million of the amount of any cash awards or settlements received by the Company in connection with the enforcement of five of the Company's patents in its patent lawsuits, less the revised special dividend payable on the common stock with respect to one of the Company's patents. | |||||||||||||
The Class A non-voting preferred stock participates on an equal per share basis with the common stock in any dividends declared and ranks equally with the common stock on distribution rights, liquidation rights and other rights and preferences (other than the voting rights). | |||||||||||||
Stock Bonus Plans | |||||||||||||
On April 23, 2010, the Board approved the 2010 Stock Bonus Plan. The plan entitles the Company to reserve 2,000,000 shares of common stock. On August 10, 2010, the Company filed Form S-8 to register the 2,000,000 shares. As of June 30, 2014, 958,367 shares of common stock of FONAR were available for future grant under this plan. For the years ended June 30, 2014 and 2013, 46,708 and 67,870 shares were issued, respectively. | |||||||||||||
Options | |||||||||||||
The Company has stock option plans, which provide for the awarding of incentive and non-qualified stock options to employees, directors and consultants who may contribute to the success of the Company. The options granted vest either immediately or ratably over a period of time from the date of grant, typically three or four years, at a price determined by the Board of Directors or a committee of the Board of Directors, generally the fair value of the Company's common stock at the date of grant. The options must be exercised within ten years from the date of grant. | |||||||||||||
FONAR’s 2002 Incentive Stock Option Plan (the “FONAR 2002 Plan”), adopted on July 1, 2002, is intended to qualify as an incentive stock option plan under Section 422A of the Internal Revenue Code of 1954, as amended. The FONAR 2002 Plan permits the issuance of stock options covering an aggregate of 100,000 shares of common stock of FONAR. The options have an exercise price equal to the fair market value of the underlying stock on the date the option is granted, are nontransferable, are exercisable for a period not exceeding ten years and expire upon the voluntary termination of employment. The FONAR 2002 Plan terminated on June 30, 2012. During the year ended June 30, 2014, 6,610 options expired, therefore no options remain outstanding. | |||||||||||||
FONAR’s 2005 Incentive Stock Option Plan (the “FONAR 2005 Plan”), adopted on February 16, 2005,is intended to qualify as an incentive stock option plan under Section 422A of the Internal Revenue Code of 1954, as amended. The FONAR 2005 Plan permits the issuance of stock options covering an aggregate of 80,000 shares of common stock of FONAR. The options have an exercise price equal to the fair value of the underlying stock on the date the option is granted, are non-transferable, are exercisable for a period not exceeding ten years, and expire upon the voluntary termination of employment. The FONAR 2005 Plan will terminate on February 14, 2015. As of June 30, 2014, 70,000 shares of common stock of FONAR were available for future grant under this Plan. | |||||||||||||
Stock option activity and weighted average exercise prices under these plans and grants for the years ended June 30, 2014 and 2013 were as follows: | |||||||||||||
Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||
Outstanding, June 30, 2012 | 14,022 | 27.76 | — | ||||||||||
Granted | — | — | — | ||||||||||
Exercised | — | — | — | ||||||||||
Forfeited / Expired | (7,412 | ) | 26.65 | — | |||||||||
Outstanding, June 30, 2013 | 6,610 | 29 | — | ||||||||||
Granted | — | — | |||||||||||
Exercised | — | — | — | ||||||||||
Forfeited / Expired | (6,610 | ) | 29 | — | |||||||||
Outstanding, June 30, 2014 | — | — | — | ||||||||||
Exercisable at: | |||||||||||||
30-Jun-13 | 6,610 | $ | 29 | ||||||||||
30-Jun-14 | — | $ | — | ||||||||||
NOTE_9_CONTROLLING_AND_NONCONT
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS | 12 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Noncontrolling Interest [Abstract] | ' | ||||||||||||||||
NOTE 9 - CONTROLLING AND NON CONTROLLING INTERESTS | ' | ||||||||||||||||
NOTE 9 – CONTROLLING AND NONCONTROLLING INTERESTS | |||||||||||||||||
On February 13, 2013 the Company entered into an agreement with outside investors to acquire a 50.5% controlling interest in a newly formed limited liability company, Health Diagnostics Management LLC (HDM). According to the February 13, 2013 LLC operating agreement of HDM there are two classes of members; Class A members and one Class B member. The Class A members have an ownership interest of 49.5% of HDM. The Class B member (HMCA) has an ownership of 50.5% of HDM. On all matters on which members may vote every member is entitled to cast the percentage of votes equal to their percentage of ownership interest. Profits and losses an all items of income, gain or loss, deductions or other allocations of the Company will be allocated among the members in the same proportions as their membership interests in the Company bear to all the Class A and Class B membership interests of the Company in the aggregate outstanding. All of the depreciation and amortization of the assets of the Company will be allocated solely to the Class A members, unless and until their interests have been redeemed by the Company in full pursuant to the provisions of the operating agreement. During March 2013 the Company contributed $20,200,000 to HDM and the group of outside investors contributed $19,800,000 for its non-controlling membership interest. | |||||||||||||||||
To fund its capital contribution the Company borrowed a total of $14,000,000 from a bank in the form of a term loan aggregating $11,000,000 and a revolving credit loan aggregating $3,000,000. The term loan is payable in 60 consecutive monthly installments, commencing September 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The revolving credit loan is due March 5, 2016. The Company can prepay the loan in whole or in part in multiples of $100,000 at any time without penalty. The revolving credit note bears interest at a rate of 4% per annum and is payable monthly. All borrowings under the loan agreements are collateralized by substantially all of the Company’s assets. The loan agreements also contain certain financial covenants that must be met on a periodic basis. | |||||||||||||||||
On March 5, 2013 HDM purchased from Health Diagnostics, LLC (“HD”) and certain of its subsidiaries, a business managing twelve (12) Stand-Up® MRI Centers and two (2) other scanning centers located in the States of New York and Florida for a total purchase price (including consideration of $1.5 million to outside investors) aggregating $35.9 million. Concurrently with the acquisition, HDM entered into several consulting and non-competition agreements for a consideration of $4.1 million. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations”. The accompanying consolidated financial statements include the operations of HDM from the date of acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. | |||||||||||||||||
The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date: | |||||||||||||||||
Management fee receivable | $ | 6,667,259 | |||||||||||||||
Medical receivables | 7,389,953 | ||||||||||||||||
Prepaid expenses and other current assets | 10,262 | ||||||||||||||||
Property and equipment | 14,912,650 | ||||||||||||||||
Intangible assets | 9,200,000 | ||||||||||||||||
Goodwill | 1,767,098 | ||||||||||||||||
Other assets | 332,949 | ||||||||||||||||
Other current liabilities | (6,323 | ) | |||||||||||||||
Long term debt | (273,848 | ) | |||||||||||||||
Net assets acquired | $ | 40,000,000 | |||||||||||||||
The purchase price was allocated to the tangible and intangible assets and liabilities assumed based on estimates of their respective fair values at the date of acquisition with the remaining unallocated purchase price recorded as goodwill. Management is responsible for the valuation of net assets acquired and considered a number of factors, including valuations and appraisals, when estimating the fair values and estimated useful lives of acquired assets and liabilities. The intangible assets, excluding goodwill, are being amortized on a straight-line basis over their weighted average lives as follows: | |||||||||||||||||
Fair Value | |||||||||||||||||
Non compete | $ | 4,100,000 | 7 years | ||||||||||||||
Customer relationships | 3,800,000 | 20 years | |||||||||||||||
Developed software | 1,300,000 | 5 years | |||||||||||||||
Total intangible assets | $ | 9,200,000 | |||||||||||||||
The following unaudited pro forma results of operations for the twelve months ended June 30, 2013 assumes that the above acquisitions were made at the beginning of the year of acquisition. The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the year prior to acquisition, nor of the results that may be reported in the future. | |||||||||||||||||
Year ended | |||||||||||||||||
30-Jun-13 | |||||||||||||||||
Total Revenues - Net | 69,723,542 | ||||||||||||||||
Net Income - Controlling Interests | 17,442,337 | ||||||||||||||||
Net Income Available to Common Stockholders | 16,294,377 | ||||||||||||||||
Net Income Available to Class A Non-Voting Preferred Stockholders | 855,597 | ||||||||||||||||
Net Income Available to Class C Common Stockholders | 292,363 | ||||||||||||||||
Basic Net Income Per Common Share Available to Common Stockholders | 2.75 | ||||||||||||||||
Diluted Net Income Per Common Share Available to Common Stockholders | 2.69 | ||||||||||||||||
Basic and Diluted Income Per Share - Common C | 0.76 | ||||||||||||||||
Weighted Average Basic Shares Outstanding | 5,933,318 | ||||||||||||||||
Weighted Average Diluted Shares Outstanding | 6,060,822 | ||||||||||||||||
Weighted Average Basic and Diluted Shares Outstanding - Class C Common | 382,513 | ||||||||||||||||
HDM’s total net revenues and income from operations for the period from the acquisition date (March 5, 2013) to June 30, 2013 was $14,834,143 and $1,958,714, respectively. | |||||||||||||||||
Amount of each class of members’ equity as of June 30, 2014 and 2013 | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Class A Members | Class B Member | Class A Members | Class B Member | ||||||||||||||
Opening Members’ Equity | $ | 19,526,475 | $ | 20,763,830 | $ | — | $ | — | |||||||||
Share of Net Income | 2,266,473 | 4,566,186 | 543,225 | 1,397,080 | |||||||||||||
Contributions | — | — | 19,800,000 | 20,200,000 | |||||||||||||
Distributions | (4,133,250 | ) | (4,216,750 | ) | (816,750 | ) | (833,250 | ) | |||||||||
Ending Members’ Equity | $ | 17,659,698 | $ | 21,113,266 | $ | 19,526,475 | $ | 20,763,830 | |||||||||
On May 2, 2011, the Company completed a private placement of equity and succeeded in raising $6,000,000. The offering consisted of Preferred Class A membership interests in a newly formed limited liability company, Imperial Management Services, LLC (“Imperial”). The Class B membership interests in Imperial, all of which were retained by the Company’s subsidiary, HMCA, hold a 75% equity interest in Imperial. The Class A membership interests are entitled to receive a dividend of 18% per annum of their cash capital contribution of $6,000,000. HMCA contributed all of its assets, together with its liabilities, to Imperial as HMCA’s capital contribution. The Imperial operating agreement provides for the Class A members to receive priority distributions until their original capital contributions are returned. Dividends are payable quarterly beginning August 1, 2011. On May 1, 2014 and on May 1, 2013, the Company returned a portion of the Class A Members capital contribution in the amount of $1,125,100 and $1,424,900, respectively. As of June 30, 2014, the Company’s subsidiary, HMCA, now owns approximately 91% interest in Imperial Management Services. | |||||||||||||||||
Amount of each class of members’ equity as of June 30, 2014 and 2013 | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Class A Members | Class B Member | Class A Members | Class B Member | ||||||||||||||
Opening Members’ Equity | $ | 3,599,519 | $ | 7,772,781 | $ | 4,918,365 | $ | 3,824,945 | |||||||||
Share of Net Income | 536,913 | 3,306,536 | 959,254 | 3,947,836 | |||||||||||||
Contributions | — | — | — | — | |||||||||||||
Distributions | (607,520 | ) | — | (853,200 | ) | — | |||||||||||
Redemption | (1,125,100 | ) | — | (1,424,900 | ) | — | |||||||||||
Ending Members’ Equity | $ | 2,403,812 | $ | 11,079,317 | $ | 3,599,519 | $ | 7,772,781 | |||||||||
On May 1, 2010, the Company purchased a 15.2% interest from an unrelated party of an entity that provides management services to a diagnostic center in the New York Metropolitan area. On January 1, 2011, the Company purchased an additional 34.8% interest by the issuance of a promissory note of $400,000. Commencing January 1, 2011, the Company consolidates the activity of this entity. On June 1, 2013, the Company purchased from the noncontrolling members their remaining 50% interest for $700,000. | |||||||||||||||||
The Company also has a 50% controlling interest in an entity which the Company consolidates, that provides management services to a diagnostic center in the New York Metropolitan area. The center began operations during January 2012. The noncontrolling interest as of June 30, 2014 and 2013 aggregated $531,474 and $559,221, respectively. |
NOTE_10_LONGTERM_DEBT_NOTES_PA
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES | ' | ||||||||
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES | |||||||||
Long-term debt, notes payable and capital leases consist of the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
$ | 439,983 | $ | 461,648 | ||||||
Note payable requiring monthly payments of interest at a rate of 7% until May 2009 followed by 240 monthly payments of $4,472 through October 2026. The loan is collateralized by a building with a net book value of $652,505 as of June 30, 2014. | |||||||||
300,000 | 2,400,000 | ||||||||
The revolving credit note is due by March 5, 2016. The Company can prepay the loan in whole or part in multiples of $100,000 at any time without penalty. The note bears interest at a rate of 4% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
9,349,994 | 11,000,000 | ||||||||
The term loan is payable with interest only for 6 consecutive months commencing at the inception of the loan followed by 60 consecutive monthly installments, commencing October 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
660,911 | 689,646 | ||||||||
Note payable requiring 12 consecutive interest only payments commencing at the inception of the loan followed by 48 consecutive monthly payments, commencing May 1, 2014. The note bears interest at a rate of 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
621,758 | 1,221,480 | ||||||||
Other (including capital leases for property and equipment). | |||||||||
11,372,646 | 15,772,774 | ||||||||
Less: Current portion | 2,890,816 | 2,885,769 | |||||||
$ | 8,481,830 | $ | 12,887,005 | ||||||
The maturities of long-term debt over the next five years and thereafter are as follows: | |||||||||
Years Ending June 30, | |||||||||
2015 | $ | 2,890,816 | |||||||
2016 | 2,782,561 | ||||||||
2017 | 2,440,108 | ||||||||
2018 | 2,372,330 | ||||||||
2019 | 580,891 | ||||||||
Thereafter | 305,940 | ||||||||
$ | 11,372,646 | ||||||||
NOTE_11_INCOME_TAXES
NOTE 11 - INCOME TAXES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
NOTE 11 - INCOME TAXES | ' | ||||||||
NOTE 11 - 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 $5,740,287 and a deferred tax liability of $583,990 as of June 30, 2014, primarily relating to net operating loss carryforwards of approximately $137,252,000 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 the remainder of the valuation. Should the Company continue to remain profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly. | |||||||||
Components of the current (benefit) provision for income taxes are as follows: | |||||||||
Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Federal | $ | 310,000 | $ | 125,000 | |||||
State | 24,093 | 71,001 | |||||||
Deferred taxes | (2,682,405 | ) | (2,473,892 | ) | |||||
$ | (2,348,312 | ) | $ | (2,277,891 | ) | ||||
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate as reported is as follows: | |||||||||
Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Taxes at federal statutory rate | 34 | % | 34 | % | |||||
State and local income taxes (benefit), net of federal benefit | 6 | % | 6 | % | |||||
Permanent differences | (0.9 | )% | 0.6 | % | |||||
(Decrease) increase in the valuation allowance and true ups | (68.3 | )% | (76.2 | )% | |||||
Effective income tax rate | (29.2 | )% | (35.6 | )% | |||||
As of June 30, 2014, the Company has net operating loss (“NOL”) carryforwards of approximately $137,252,000 that will be available to offset future taxable income. The utilization of certain of the NOLs is limited by separate return limitation year rules pursuant to Section 1502 of the Internal Revenue Code. | |||||||||
The Company has, for federal income tax purposes, research and development tax credit carryforwards aggregating $3,742,000, which are accounted for under the flow-through method. The Company also has $578,000 in alternative minimum tax credits. | |||||||||
In addition, for New York State income tax purposes, the Company has tax credit carryforwards, aggregating approximately $1,133,000, which are accounted for under the flow-through method. The tax credit carryforwards expire during the years ending June 30, 2014 to June 30, 2029. | |||||||||
Significant components of the Company's deferred tax assets and liabilities at June 30, 2014 and 2013 are as follows: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 6,961,016 | $ | 6,139,291 | |||||
Non-deductible accruals | 65,108 | 264,062 | |||||||
Net operating carryforwards | 54,900,136 | 58,052,831 | |||||||
Tax credits | 5,644,097 | 5,873,204 | |||||||
Property and equipment and depreciation | 195,408 | 1,070,291 | |||||||
Inventory | 130,822 | 84,136 | |||||||
67,896,587 | 71,483,815 | ||||||||
Valuation allowance | (62,156,300 | ) | (68,548,065 | ) | |||||
Total deferred tax assets | 5,740,287 | 2,935,750 | |||||||
Deferred tax liabilities: Inventory | — | — | |||||||
Capitalized software development costs | (583,990 | ) | (461,858 | ) | |||||
Total deferred tax liabilities | (583,990 | ) | (461,858 | ) | |||||
Net deferred tax asset | $ | 5,156,297 | $ | 2,473,892 | |||||
The valuation allowance for deferred tax assets decreased by approximately $6,392,000 during the year ended June 30, 2014 and decreased by approximately $5,206,000 during the year ended June 30, 2013. |
NOTE_12_OTHER_CURRENT_LIABILIT
NOTE 12 - OTHER CURRENT LIABILITIES | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
NOTE 12 - OTHER CURRENT LIABILITIES | ' | ||||||||
NOTE 12 - OTHER CURRENT LIABILITIES | |||||||||
Included in other current liabilities are the following: | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Accrued salaries, commissions and payroll taxes | $ | 834,324 | $ | 710,897 | |||||
Accrued interest | 117,480 | 117,480 | |||||||
Litigation accruals | 664,349 | 809,349 | |||||||
Sales tax payable | 2,665,181 | 2,858,652 | |||||||
Legal and other professional fees | 438,730 | 569,049 | |||||||
Accounting fees | 325,139 | 305,000 | |||||||
Purchase scanners | 450,000 | — | |||||||
Insurance premiums | 306,092 | 13,443 | |||||||
Interest and penalty – sales tax | 2,374,339 | 2,321,858 | |||||||
Penalty – 401k plan | — | 250,000 | |||||||
Rent | — | 147,665 | |||||||
Other | 848,399 | 390,968 | |||||||
$ | 9,024,033 | $ | 8,494,361 | ||||||
NOTE_13_COMMITMENTS_AND_CONTIN
NOTE 13 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||
NOTE 13 - COMMITMENTS AND CONTINGENCIES | ' | ||||||
NOTE 13 - COMMITMENTS AND CONTINGENCIES | |||||||
Leases | |||||||
The Company rents its operating facilities and certain equipment, pursuant to operating lease agreements expiring at various dates through December 2022. The leases for certain facilities contain escalation clauses relating to increases in real property taxes as well as certain maintenance costs. | |||||||
Future minimum operating lease commitments consisted of the following at June 30, 2014: | |||||||
Year Ending | Facilities And Equipment (Operating Lease) | ||||||
June 30, | |||||||
2015 | $ | 3,753,050 | |||||
2016 | 3,042,814 | ||||||
2017 | 1,295,636 | ||||||
2018 | 835,680 | ||||||
2019 | 351,732 | ||||||
Thereafter | 894,072 | ||||||
Total minimum obligations | $ | 10,172,984 | |||||
Rent expense for operating leases approximated $4,571,000 and $4,035,000, for the years ended June 30, 2014 and 2013, respectively. The expense for the year ended June 30, 2013 included an expense for early termination of a lease of approximately $690,000. | |||||||
Employee Benefit Plans | |||||||
The Company has a non-contributory 401(k) Plan (the “401(k) Plan”). The 401(k) Plan covers all non-union employees who are at least 21 years of age with no minimum service requirements. There were no employer contributions to the Plan for the years ended June 30, 2014 and 2013. (See Other Matters below) | |||||||
The stockholders of the Company approved the 2000 Employee Stock Purchase Plan (“ESPP”) at the Company’s annual stockholders’ meeting in April 2000. The ESPP provides for eligible employees to acquire common stock of the Company at a discount, not to exceed 15%. This plan has not been put into effect as of June 30, 2014. | |||||||
Stipulation Agreements | |||||||
The Company has entered into stipulation agreements with a number of its creditors that in the aggregate total $305,916, which is included in other current liabilities and other liabilities on the Company’s balance sheet as of June 30, 2014. The monthly payments total $19,552. | |||||||
The amounts to be paid over the next three years are as follows: | |||||||
Year Ending June 30, | |||||||
2015 | $ | 152,166 | |||||
2016 | 96,000 | ||||||
2017 | 57,750 | ||||||
$ | 305,916 | ||||||
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. | |||||||
On or about June 30, 2010, one of Fonar’s customers, Golden Triangle Company, commenced an action against Fonar and certain individual defendants employed or formerly employed by Fonar, in the United States District Court for the Eastern District of New York based on the alleged wrongful failure of Fonar to deliver a scanner in Kuwait. The claim alleged various causes of action including breach of contract, fraud, conspiracy to defraud and conversion. | |||||||
Golden Triangle Company v. Fonar Corporation et al, CV10-2933. The Plaintiff contracted with Fonar to purchase a scanner, and paid $1,455,500 in advance. The scanner was never delivered, but Plaintiff never designed a site for delivery either. Alleging other damages, fraud and deceptive trade practices, Plaintiff sought up to $5,000,000. Fonar made a motion to dismiss the complaint, the outcome of which left Plaintiff with only a cause of action for breach of contract. The claims against the individual officers and employees of Fonar were dismissed. Fonar filed its answer, together with a counterclaim alleging that the Plaintiff, by attempting to overcharge the end-customer, had damaged Fonar’s reputation and ability to sell in Kuwait. The case was settled in June 2013 for $480,000 in cash and 30,000 shares of Fonar’s common stock payable in installments. The Company recorded a gain of $755,500 on the statements of income for the year ended June 30, 2013. | |||||||
Jack Shapiro v. Fonar Corporation, Supreme Court of the State of New York, Nassau County, was commenced by plaintiff in July, 2009 to recover $500,000 based on Fonar’s failure to refund a deposit on an MRI scanner and termination of plaintiff’s sales representative agreement. Plaintiff alleged that the deposit on the machine was in part consideration for the sales representative agreement. Fonar’s view was that the sales agreement and sales representative agreement were separate and (1) Fonar was entitled to keep the deposit on the sale when plaintiff failed to proceed with the transaction and (2) properly terminated the sales representative agreement in accordance with its terms. During the year ended June 30, 2013, the case has been settled for $323,000 payable in installments, subject to the plaintiff obtaining a sale for Fonar and the payment of installments of the purchase price by the customer. | |||||||
Matt Malek Madison v. Fonar Corporation, United States District Court, Northern District of California, was commenced by plaintiff on August 27, 2007 to recover a down payment for a scanner in the amount of $300,000, with interest. The plaintiff sought costs of suit and attorney’s fees as well. Fonar answered the complaint and sued the plaintiff for breach of contract in the amount of $450,000. Although down payments are usually expressly non-refundable in Fonar’s quotations and agreements, in this case, the quotation contemplated the sale of four scanners, and provided that the deposit would be refundable with interest, if the customer were unable to find suitable locations in the San Francisco Bay area. The issue was whether the customer made a good faith effort to find locations; Fonar’s position was that the customer did not. The case went to trial before a judge; the parties submitted post-trial briefs, and judgment was awarded to the plaintiff. Fonar appealed the trial court’s decision, but on January 31, 2012, the U.S. Court of Appeals for the 9th Circuit affirmed the lower court’s decision awarding the plaintiff the $300,000 deposit with prejudgment interest from July 1, 2006. Fonar sought to have the Court of Appeals reconsider the decision en banc, (by all or a larger number of the judges on the Circuit Court of Appeals), but this was not granted. Although the case has been concluded, the plaintiff has not taken any steps to collect the judgment. As of June 30, 2014 and 2013, $300,000 was included in the Company’s accrued expenses. | |||||||
Bonutti Research v. Fonar Corporation, Health Management Corporation of America, Health Diagnostics, LLC et al, was commenced on December 2, 2011. Bonutti Research filed a patent infringement action in the U.S. District Court for the Eastern District Court of New York, alleging that Fonar’s Upright® MRI scanners infringe plaintiff’s patent which relates to the moving of a patient into the scanner. Fonar believes plaintiff’s claims are without merit and further, that the patent is invalid. The parties have settled the case for $150,000 payable by Fonar in twelve installments and certain licenses and covenants not to sue. The $150,000 has been recorded in the Company’s consolidated statements of income for the year ended June 30, 2014. | |||||||
Bolt MRI Technologies v. Fonar Corporation, Health Management Corporation of America & Health Diagnostics, LLC, was commenced on July 22, 2013, when Bolt MRI Technologies filed an action against Fonar Corporation, Health Management Corporation of America and Health Diagnostics, LLC alleging infringement of the same patent which is the subject of the Bonutti case. Bolt alleged that the patent was assigned to Bolt. The settlement of the Bonutti case covers this case as well. | |||||||
Other Matters | |||||||
The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. The Company has recorded tax obligations of $2,665,000 plus interest and penalties of approximately $2,374,000. The Company is in the process of determining its regulatory requirements in order to become compliant. | |||||||
On August 31, 2011 the Company submitted an application to the Internal Revenue Service to voluntarily correct required reporting and disclosure requirements regarding its 401(k) Employee Benefit Plan. On December 9, 2011, the Internal Revenue Service issued a favorable determination letter on the tax-qualified status of the 401K plan document and a favorable compliance statement. During December 2013, the Company submitted an application to the U.S. Department of Labor to voluntarily correct the late filing of prior Form 5500s (annual returns). The voluntary correction application is still pending. The Company, however, does not anticipate any additional penalties will be assessed by the U.S. Department of Labor. The Company has recorded provisions for any potential penalties totaling $250,000, which was the Company’s best estimate of its possible exposure for penalties at that time. The Company has engaged outside counsel to assist with the correction process and to obtain compliance with all reporting and disclosure requirements. The Company’s actions to obtain compliance have concluded successfully and the $250,000 reserve has been reversed. | |||||||
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 $100,000 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 June 30, 2014 and 2013, the Company had approximately $344,000 and $0, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the 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. |
NOTE_14_OTHER_EXPENSE_INCOME
NOTE 14 - OTHER (EXPENSE) INCOME | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Other Income and Expenses [Abstract] | ' | ||||||||
NOTE 14 - OTHER (EXPENSE) INCOME | ' | ||||||||
NOTE 14 - OTHER (EXPENSE) INCOME | |||||||||
Other (expense) income consists of: | |||||||||
For the Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Loss from investment | $ | — | $ | (48,777 | ) | ||||
Litigation settlement | 13,586 | 716,250 | |||||||
Loss on disposition of equipment | (657,350 | ) | |||||||
Gain on sale of equipment | 40,000 | 557,473 | |||||||
Impairment of management agreement | — | (357,500 | ) | ||||||
Other expense | (4,835 | ) | (141,958 | ) | |||||
$ | (608,599 | ) | $ | 725,488 | |||||
NOTE_15_SUPPLEMENTAL_CASH_FLOW
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION | ' | ||||
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION | |||||
During the years ended June 30, 2014 and 2013, the Company paid $668,475 and $389,907 for interest, respectively. | |||||
During the years ended June 30, 2014 and 2013, the Company paid $349,501 and $277,000 for income taxes, respectively. | |||||
Purchase consideration: | |||||
Assets acquired: | |||||
Management fee receivable | $ | 6,667,259 | |||
Medical receivable | 7,389,953 | ||||
Prepaid expenses and other current assets | 10,262 | ||||
Property and equipment | 14,912,650 | ||||
Intangible assets | 9,200,000 | ||||
Goodwill | 1,767,098 | ||||
Other assets | 332,949 | ||||
Total assets acquired | $ | 40,280,171 | |||
Less liabilities assumed: | |||||
Other current liabilities | $ | 6,323 | |||
Long term debt | 273,848 | ||||
Total liabilities assumed | $ | 280,171 | |||
$ | 40,000,000 | ||||
NOTE_16_DUE_TO_RELATED_MEDICAL
NOTE 16 - DUE TO RELATED MEDICAL PRACTICES | 12 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
NOTE 16 - DUE TO RELATED MEDICAL PRACTICES | ' |
NOTE 16 – DUE TO RELATED MEDICAL PRACTICES | |
In June 2009, an entity owned by the Company’s Chairman of the Board, Tallahassee Scanning Services PA, sold its Upright MRI scanning system to the Company for $550,000 in exchange for 35 monthly payments of $18,769 to be made over a three year period, commencing October 18, 2009 including interest at a rate of 10.41% per annum. The Company used this scanning system to fulfill a sales order with an unrelated customer. The unpaid balance of as of June 30, 2014 and 2013 was $134,880. |
NOTE_17_SEGMENT_AND_RELATED_IN
NOTE 17 - SEGMENT AND RELATED INFORMATION | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
NOTE 17 - SEGMENT AND RELATED INFORMATION | ' | ||||||||||||
NOTE 17 - SEGMENT AND RELATED INFORMATION | |||||||||||||
The Company provides segment data in accordance with the provisions of ASC topic 280, “Disclosures about Segments of an Enterprise 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. All intersegment 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: | |||||||||||||
Manufacturing and Servicing of Medical Equipment | Management of Diagnostic Imaging Centers | Totals | |||||||||||
Fiscal 2014: | |||||||||||||
Net revenues from external customers | $ | 12,070,563 | $ | 56,434,914 | $ | 68,505,477 | |||||||
Intersegment net revenues * | $ | 1,963,750 | $ | — | $ | 1,963,750 | |||||||
Income from operations | $ | 468,793 | $ | 11,833,876 | $ | 12,302,669 | |||||||
Depreciation and amortization | $ | 410,728 | $ | 3,406,477 | $ | 3,817,205 | |||||||
Compensatory element of stock issuances | $ | 223,000 | $ | — | $ | 223,000 | |||||||
Total identifiable assets | $ | 18,093,789 | $ | 58,696,054 | $ | 76,789,843 | |||||||
Capital expenditures | $ | 234,275 | $ | 600,633 | $ | 834,908 | |||||||
Fiscal 2013: | |||||||||||||
Net revenues from external customers | $ | 14,891,075 | $ | 34,250,739 | $ | 49,141,814 | |||||||
Intersegment net revenues * | $ | 1,200,000 | $ | — | $ | 1,200,000 | |||||||
Income from operations | $ | 139,390 | $ | 7,396,357 | $ | 7,535,747 | |||||||
Depreciation and amortization | $ | 541,551 | $ | 1,879,626 | $ | 2,421,177 | |||||||
Compensatory element of stock issuances | $ | 415,021 | $ | — | $ | 415,021 | |||||||
Total identifiable assets | $ | 15,071,225 | $ | 58,079,425 | $ | 73,150,650 | |||||||
Capital expenditures | $ | 237,636 | $ | 25,170,303 | $ | 25,407,939 | |||||||
.* Amounts eliminated in consolidation | |||||||||||||
Export Product Sales | |||||||||||||
The Company’s areas of operations are principally in the United States. The Company had export sales of medical equipment amounting to 42.4% and 3.8% of product sales revenues to third parties for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
The foreign product sales, as a percentage of product sales to unrelated parties, were made to customers in the following countries: | |||||||||||||
For the Years Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Abu Dhabi | 29.8 | % | -% | ||||||||||
Switzerland | 12.4 | — | |||||||||||
England | — | 3.6 | |||||||||||
Germany | — | 0.1 | |||||||||||
Libya | 0.2 | 0.1 | |||||||||||
42.4 | % | 3.8 | % | ||||||||||
Foreign Service and Repair Fees | |||||||||||||
The Company’s areas of service and repair are principally in the United States. The Company had foreign revenues of service and repair of medical equipment amounting to 8.8% and 8.2% of consolidated net service and repair fees for the years ended June 30, 2014 and 2013, respectively. The foreign service and repair fees, as a percentage of total service and repair fees, were provided principally to the following countries: | |||||||||||||
For the Years Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Spain | 1 | % | 0.9 | % | |||||||||
Puerto Rico | 1.1 | 1 | |||||||||||
Switzerland | 1.1 | 1.1 | |||||||||||
Germany | 0.4 | — | |||||||||||
England | 2.6 | 2 | |||||||||||
Holland | 1.3 | 2.2 | |||||||||||
Canada | 0.2 | — | |||||||||||
Australia | 1.1 | 1 | |||||||||||
8.8 | % | 8.2 | % | ||||||||||
The Company does not have any material assets outside of the United States. |
NOTE_18_ALLOWANCE_FOR_DOUBTFUL
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS | 12 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Valuation and Qualifying Accounts [Abstract] | ' | ||||||||||||||||
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS | ' | ||||||||||||||||
NOTE 18 – ALLOWANCE FOR DOUBTFUL ACCOUNTS | |||||||||||||||||
The following represents a summary of allowance for doubtful accounts for the years ended June 30, 2014 and 2013, respectively: | |||||||||||||||||
Description | Balance June 30, 2013 | Additions | Deductions | Balance June 30, 2014 | |||||||||||||
Accounts receivable | $ | 257,362 | (1)$ | — | $ | — | $ | 257,362 | |||||||||
Management and other fees receivable | 9,095,320 | -1 | 1,806,299 | — | 10,901,619 | ||||||||||||
Management and other fees receivable - related medical practices | 403,047 | — | — | 403,047 | |||||||||||||
Medical receivables | 2,584,669 | -1 | 10,333,082 | — | 12,917,751 | ||||||||||||
Advance and notes to related parties | 202,379 | — | — | 202,379 | |||||||||||||
Description | Balance June 30, 2012 | Additions | Deductions | Balance June 30, 2013 | |||||||||||||
Accounts receivables | $ | 1,852,987 | (1)$ | (92,454 | ) | $ | 1,503,171 | $ | 257,362 | ||||||||
Management and other fees receivable | 7,458,345 | -1 | 950,000 | — | 9,095,320 | ||||||||||||
Management and other fees receivable - related medical practices | 403,047 | — | — | 403,047 | |||||||||||||
Medical receivables | — | -1 | 2,584,669 | 2,584,669 | |||||||||||||
Advance and notes to related parties | 239,791 | — | 37,412 | 202,379 | |||||||||||||
Notes receivable | 65,000 | — | 65,000 | — | |||||||||||||
(1) Included in provision for bad debts. |
NOTE_19_SUBSEQUENT_EVENTS
NOTE 19 - SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
NOTE 19 - SUBSEQUENT EVENTS | ' |
NOTE 19 – SUBSEQUENT EVENTS | |
The Company evaluates events that have occurred after the balance sheet date, but before the consolidated financial statements are issued. | |
During the period from July 1, 2014 through September 29, 2014, the Company has issued 5,000 shares of common stock to employees and consultants as compensation valued at $53,200 under a stock bonus plan. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_1
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Principles of Consolidation | ' | ||||||||||||
Principles of Consolidation | |||||||||||||
The consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships. The operating activities of subsidiaries are included in the accompanying consolidated statements from the date of acquisition. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||
Use of Estimates | ' | ||||||||||||
Use of Estimates | |||||||||||||
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The most significant estimates relate to receivable allowances, intangible assets, income taxes and related tax asset valuation allowances, useful lives of property and equipment, contingencies, revenue recognition and the assessment of litigation. In addition, healthcare industry reforms and reimbursement practices will continue to impact the Company's operations and the determination of contractual and other allowance estimates. Actual results could differ from those estimates. | |||||||||||||
Inventories | ' | ||||||||||||
Inventories | |||||||||||||
Inventories consist of purchased parts, components and supplies, as well as work-in-process, and are stated at the lower of cost, determined on the first-in, first-out method, or market. | |||||||||||||
Property and Equipment | ' | ||||||||||||
Property and Equipment | |||||||||||||
Property and equipment procured in the normal course of business is stated at cost. Property and equipment purchased in connection with an acquisition is stated at its estimated fair value, generally based on an appraisal. Property and equipment is being depreciated for financial accounting purposes using the straight-line method over their estimated useful lives. Leasehold improvements are being amortized over the shorter of the useful life or the remaining lease term. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation of these assets are removed from the accounts and the resulting gains or losses are reflected in the results of operations. Expenditures for maintenance and repairs are charged to operations. Renewals and betterments are capitalized. Maintenance and repair expenses totaled approximately $1,037,000 and $598,000 for the years ended June 30, 2014 and 2013, respectively. The estimated useful lives in years are generally as follows: | |||||||||||||
Diagnostic equipment under capital lease | 2.5 | ||||||||||||
Diagnostic equipment | 5–13 | ||||||||||||
Research, development and demonstration equipment | 7-Mar | ||||||||||||
Machinery and equipment | 7-Feb | ||||||||||||
Furniture and fixtures | 9-Mar | ||||||||||||
Leasehold improvements | 2–10 | ||||||||||||
Building | 28 | ||||||||||||
Long-Lived Assets | ' | ||||||||||||
Long-Lived Assets | |||||||||||||
The Company periodically assesses the recoverability of long-lived assets, including property and equipment and intangibles, other than goodwill, when there are indications of potential impairment, based on estimates of undiscounted future cash flows. The amount of impairment is calculated by comparing anticipated discounted future cash flows with the carrying value of the related asset. In performing this analysis, management considers such factors as current results, trends, and future prospects, in addition to other economic factors. | |||||||||||||
Deferred Rent | ' | ||||||||||||
Deferred Rent | |||||||||||||
Rent expense is recorded on the straight-line method based on the total minimum rent payments required over the term of the lease. The cumulative difference between the lease expense recorded under this method and the contractual lease payment terms is recorded as deferred rent. | |||||||||||||
Other Intangible Assets | ' | ||||||||||||
Other Intangible Assets | |||||||||||||
1) Capitalized Software Development Costs | |||||||||||||
Capitalization of software development costs begins upon the establishment of technological feasibility. Technological feasibility for the Company’s computer software is generally based upon achievement of a detail program design free of high risk development issues and the completion of research and development on the product hardware in which it is to be used. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized computer software development costs require considerable judgment by management with respect to certain external factors, including, but not limited to, technological feasibility, anticipated future gross revenue, estimated economic life and changes in software and hardware technology. Prior to reaching technological feasibility those costs are expensed as incurred and included in research and development. | |||||||||||||
Amortization of capitalized software development costs commences when the related products become available for general release to customers. Amortization is provided on a product by product basis. The annual amortization is the greater of the amount computed using (a) the ratio that current gross revenue for a product bears to the total of current and anticipated future gross revenue for that product, or (b) the straight-line method over the remaining estimated economic life of the product. | |||||||||||||
The Company periodically performs reviews of the recoverability of such capitalized software development costs. At the time a determination is made that capitalized amounts are not recoverable, based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. | |||||||||||||
2) Patents and Copyrights | |||||||||||||
Amortization is calculated on the straight-line basis over a period ranging from 15 to 17 years. | |||||||||||||
3) Management Agreement | |||||||||||||
The management agreement was being amortized on the straight line basis over the length of the agreement (15 years). For the year ended June 30, 2013, the Company recorded an impairment of $357,500 as a result of the closing of a scanning center in New York. | |||||||||||||
4) Non-Competition Agreements | |||||||||||||
The non-competition agreements are being amortized on the straight line basis over the length of the agreement (7 years). | |||||||||||||
5) Customer Relationships | |||||||||||||
Amortization is calculated on the straight line basis over 20 years. | |||||||||||||
Goodwill | ' | ||||||||||||
Goodwill | |||||||||||||
Generally accepted accounting principles in the United States require the Company to perform a goodwill impairment test annually and more frequently when negative conditions or a triggering event arises. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered potentially impaired and a second step is performed to measure the amount of impairment loss, if any. | |||||||||||||
Acquired Assets and Assumed Liabilities | ' | ||||||||||||
Acquired assets and assumed liabilities | |||||||||||||
Pursuant to ASC No. 805-10-25, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, but during the allowed measurement period not to exceed one year from the acquisition date, the Company retrospectively adjusts the provisional amounts recognized at the acquisition date by means of adjusting the amount recognized for goodwill. | |||||||||||||
Revenue Recognition | ' | ||||||||||||
Revenue Recognition | |||||||||||||
Revenue on sales contracts for scanners, included in “product sales” in the accompanying consolidated statements of operations, is recognized under the percentage-of-completion method in accordance with FASB ASC 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts”. The Company manufactures its scanners under specific contracts that provide for progress payments. Production and installation take approximately three to six months. | |||||||||||||
Revenue on scanner service contracts is recognized on the straight-line method over the related contract period, usually one year. | |||||||||||||
Revenue from sales of other items is recognized upon shipment. | |||||||||||||
Revenue under management contracts is recognized based upon contractual agreements for management services rendered by the Company primarily under various long-term agreements with various medical providers (the "PCs"). As of June 30, 2014, the Company has twenty management agreements of which three are with PC’s owned by Raymond V. Damadian, M.D., President and Chairman of the Board of FONAR (“the Related medical practices”) and seventeen are with PC’s, which are all located in the state of New York (“the New York PC’s”), owned by two unrelated radiologists. The contractual fees for services rendered to the PCs consists of fixed monthly fees per diagnostic imaging facility ranging from approximately $35,000 to $242,000. All fees are re-negotiable at the anniversary of the agreements and each year thereafter. Revenue under lease contracts is recognized based upon contractual agreements for the leasing of medical equipment primarily under long term contracts to various unrelated PC’s. The lease fees for the medical equipment consist of fixed monthly fees ranging from $2,000 to $19,000. All fees are re-negotiable at the anniversary of the agreements and each year thereafter. | |||||||||||||
Patient fee revenue, net of contractual allowance and discounts, consist of net patient fees received from insurance companies, third party payors (including federal and state agencies under Medicare and Medicaid programs), hospitals and patients themselves based mainly upon established contractual billing rates, less allowances for contractual adjustments and discounts. Patient fee revenue is recorded in the period in which services are provided. | |||||||||||||
The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the years ended June 30, 2014 and 2013 are summarized in the following table. | |||||||||||||
For the Year Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Commercial Insurance/ Managed Care | $ | 4,217,088 | $ | 1,360,536 | |||||||||
Medicare/Medicaid | 1,443,020 | 541,602 | |||||||||||
Workers' Compensation/Personal Injury | 13,369,956 | 3,597,416 | |||||||||||
Other | 5,277,128 | 1,982,311 | |||||||||||
Patient Fee Revenue, net of contractual allowances and discounts | 24,307,192 | 7,481,865 | |||||||||||
Provision for Bad Debts | (10,333,082 | ) | (2,584,669 | ) | |||||||||
Net Patient Fee Revenue | $ | 13,974,110 | $ | 4,897,196 | |||||||||
Allowance for Doubtful Accounts - Patient Fee | ' | ||||||||||||
Allowance for Doubtful Accounts – Patient Fee | |||||||||||||
The Company provides for medical receivables that could become uncollectible by establishing an allowance for doubtful accounts in order to adjust medical receivables to estimated net realizable value. In evaluating the collectability of medical receivables, the Company considers a number of factors, including the age of the account, historical collection experiences, payor type, current economic conditions and other relevant factors. There are various factors that impact collection trends, such as payor mix, changes in the economy, increase burden on copayments to be made by patients with insurance and business practices related to collection efforts. These factors continuously change and can have an impact on collection trends and the estimation process. | |||||||||||||
Research and Development Costs | ' | ||||||||||||
Research and Development Costs | |||||||||||||
Research and development costs are charged to expense as incurred. The costs of materials and equipment that are acquired or constructed for research and development activities, and have alternative future uses (either in research and development, marketing or production), are classified as property and equipment and depreciated over their estimated useful lives. | |||||||||||||
Advertising Costs | ' | ||||||||||||
Advertising Costs | |||||||||||||
Advertising costs are expensed as incurred. Advertising expense approximated $889,000 and $835,000 for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
Shipping Costs | ' | ||||||||||||
Shipping Costs | |||||||||||||
The Company’s shipping and handling costs are included in revenue from product sales and the related expense included in costs related to product sales is $1,885 and $5,838 for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
Income Taxes | ' | ||||||||||||
Income Taxes | |||||||||||||
Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. | |||||||||||||
Customer Advances | ' | ||||||||||||
Customer Advances | |||||||||||||
Cash advances and progress payments received on sales orders are reflected as customer advances until such time as revenue recognition begins. | |||||||||||||
Earnings Per Share | ' | ||||||||||||
Earnings Per Share | |||||||||||||
Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class Method”, the Company used the Two-Class method for calculating basic earnings per share and applied the if converted method in calculating diluted earnings per share for the years ended June 30, 2014 and June 30, 2013. | |||||||||||||
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 both the year ended June 30, 2014 and June 30, 2013, diluted EPS for common shareholders includes 127,504 shares upon conversion of Class C Common. | |||||||||||||
30-Jun-14 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 10,396,130 | $ | 9,720,030 | $ | 172,189 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 6,009,822 | 382,513 | ||||||||||
Basic income per common share | $ | 1.73 | $ | 1.62 | $ | 0.45 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,137,326 | 382,513 | |||||||||||
Diluted income per common share | $ | 1.58 | $ | 0.45 | |||||||||
30-Jun-13 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 8,678,542 | $ | 8,107,367 | $ | 145,467 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 5,933,318 | 382,513 | ||||||||||
Basic income per common share | $ | 1.46 | $ | 1.37 | $ | 0.38 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,060,822 | 382,513 | |||||||||||
Diluted income per common share | . | $ | 1.34 | $ | 0.38 | ||||||||
Cash and Cash Equivalents | ' | ||||||||||||
Cash and Cash Equivalents | |||||||||||||
The Company considers all short-term highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. | |||||||||||||
Concentration of Credit Risk | ' | ||||||||||||
Concentration of Credit Risk | |||||||||||||
Cash: The Company maintains its cash and cash equivalents with various financial institutions, which exceed federally insured limits throughout the year. At June 30, 2014, the Company had cash on deposit of approximately $8,035,000 in excess of federally insured limits of $250,000. | |||||||||||||
Related Parties: Net revenues from related parties accounted for approximately 11% and 16% of the consolidated net revenues for the years ended June 30, 2014 and 2013, respectively. Net management fee receivables from the related medical practices accounted for approximately 12% and 9% of the consolidated accounts receivable for the years ended June 30, 2014 and 2013, respectively. | |||||||||||||
See Note 3 regarding the Company’s concentrations in the healthcare industry. | |||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||
Fair Value of Financial Instruments | |||||||||||||
The financial statements include various estimated fair value information at June 30, 2014 and 2013, as required by ASC topic 820, "Disclosures about Fair Value of Financial Instruments". Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that Statement and does not purport to represent the aggregate net fair value to the Company. | |||||||||||||
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: | |||||||||||||
Cash and cash equivalents: The carrying amount approximates fair value because of the short-term maturity of those instruments. | |||||||||||||
Receivable and accounts payable: The carrying amounts approximate fair value because of the short maturity of those instruments. | |||||||||||||
Notes receivable: The carrying amount approximates fair value because the discounted present value of the cash flow generated by the parties approximates the carrying value of the amounts due to the Company. | |||||||||||||
Long-term debt, notes payable and accounts payable: The carrying amounts of debt and notes payable approximate fair value due to the length of the maturities, the interest rates being tied to market indices and/or due to the interest rates not being significantly different from the current market rates available to the Company. | |||||||||||||
All of the Company's financial instruments are held for purposes other than trading. | |||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||
Recent Accounting Pronouncements | |||||||||||||
The FASB has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations. | |||||||||||||
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 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 June 30, 2014 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 2014 or 2013, and it does not believe that any of those pronouncements will have a significant impact on our 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 net income for any periods presented. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_2
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Estimated Useful Life in Years for Property and Equipment | ' | ||||||||||||
Estimated Useful Lives in Years For Property and Equipment | |||||||||||||
Diagnostic equipment under capital lease | 2.5 | ||||||||||||
Diagnostic equipment | 5–13 | ||||||||||||
Research, development and demonstration equipment | 7-Mar | ||||||||||||
Machinery and equipment | 7-Feb | ||||||||||||
Furniture and fixtures | 9-Mar | ||||||||||||
Leasehold improvements | 2–10 | ||||||||||||
Building | 28 | ||||||||||||
Patient Fee Revenue - Net | ' | ||||||||||||
Patient Fee Revenue - Net | |||||||||||||
For the Year Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Commercial Insurance/ Managed Care | $ | 4,217,088 | $ | 1,360,536 | |||||||||
Medicare/Medicaid | 1,443,020 | 541,602 | |||||||||||
Workers' Compensation/Personal Injury | 13,369,956 | 3,597,416 | |||||||||||
Other | 5,277,128 | 1,982,311 | |||||||||||
Patient Fee Revenue, net of contractual allowances and discounts | 24,307,192 | 7,481,865 | |||||||||||
Provision for Bad Debts | (10,333,082 | ) | (2,584,669 | ) | |||||||||
Net Patient Fee Revenue | $ | 13,974,110 | $ | 4,897,196 | |||||||||
Earnings Per Share | ' | ||||||||||||
Earnings Per Share | |||||||||||||
30-Jun-14 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 10,396,130 | $ | 9,720,030 | $ | 172,189 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 6,009,822 | 382,513 | ||||||||||
Basic income per common share | $ | 1.73 | $ | 1.62 | $ | 0.45 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 6,009,822 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,137,326 | 382,513 | |||||||||||
Diluted income per common share | $ | 1.58 | $ | 0.45 | |||||||||
30-Jun-13 | |||||||||||||
Basic | Total | Common Stock | Class C Common Stock | ||||||||||
Numerator: | |||||||||||||
Net income Available to common stockholders | $ | 8,678,542 | $ | 8,107,367 | $ | 145,467 | |||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 5,933,318 | 382,513 | ||||||||||
Basic income per common share | $ | 1.46 | $ | 1.37 | $ | 0.38 | |||||||
Diluted | |||||||||||||
Denominator: | |||||||||||||
Weighted average shares outstanding | 5,933,318 | 382,513 | |||||||||||
Class C Common Stock | 127,504 | — | |||||||||||
Total Denominator for diluted earnings per share | 6,060,822 | 382,513 | |||||||||||
Diluted income per common share | . | $ | 1.34 | $ | 0.38 | ||||||||
NOTE_3_ACCOUNTS_RECEIVABLE_MED1
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Total Facilities Owned or Managed | ' | ||||||||
Total Facilities Owned or Managed | |||||||||
For The Year Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Total Facilities Owned or Managed (at Beginning of Year) | 24 | 11 | |||||||
Facilities Added by: | |||||||||
Acquisition | — | 14 | |||||||
Internal development | 1 | — | |||||||
Managed Facilities Closed | (1 | ) | (1 | ) | |||||
Total Facilities Owned or Managed (at End of Year) | 24 | 24 | |||||||
NOTE_4_COSTS_AND_ESTIMATED_EAR1
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS AND CUSTOMER ADVANCES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Notes to Financial Statements | ' | ||||||||
Costs and Estimated Earnings on Uncompleted Contracts | ' | ||||||||
Costs and Estimated Earnings on Uncompleted Contracts | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Costs incurred on uncompleted contracts | $ | 1,884,984 | $ | 1,482,384 | |||||
Estimated earnings | 1,745,608 | 1,191,141 | |||||||
3,630,592 | 2,673,525 | ||||||||
Less: Billings to date | 3,013,000 | 2,370,000 | |||||||
$ | 617,592 | $ | 303,525 | ||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 759,809 | $ | 445,742 | |||||
Less: Billings in excess of costs and estimated earnings on uncompleted contracts | 142,217 | 142,217 | |||||||
$ | 617,592 | $ | 303,525 | ||||||
NOTE_5_INVENTORIES_Tables
NOTE 5 - INVENTORIES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Inventories | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Purchased parts, components and supplies | $ | 2,093,671 | $ | 1,783,847 | |||||
Work-in-process | 349,865 | 293,241 | |||||||
Inventories | $ | 2,443,536 | $ | 2,077,088 | |||||
NOTE_6_PROPERTY_AND_EQUIPMENT_
NOTE 6 - PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and Equipment - Net | |||||||||
As of June 30, | |||||||||
2014 | 2013 | ||||||||
Diagnostic equipment under capital leases | $ | 620,307 | $ | 620,307 | |||||
Diagnostic equipment | 17,396,797 | 18,567,787 | |||||||
Research, development and | 3,510,224 | 3,500,902 | |||||||
demonstration equipment | |||||||||
Machinery and equipment | 2,069,055 | 4,987,159 | |||||||
Furniture and fixtures | 2,550,627 | 2,952,449 | |||||||
Leasehold improvements | 5,593,148 | 5,669,338 | |||||||
Building | 939,614 | 939,614 | |||||||
32,679,772 | 37,237,556 | ||||||||
Less: Accumulated depreciation and amortization | 17,650,043 | 19,713,062 | |||||||
Property and Equipment - Net | $ | 15,029,729 | $ | 17,524,494 |
NOTE_7_OTHER_INTANGIBLE_ASSETS1
NOTE 7 - OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||
Other Intagible Assets - Net | ' | ||||||||||||||||||||||
Other Intangible Assets - Net | |||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Capitalized software developmentcosts | $ | 7,418,436 | $ | 7,668,959 | |||||||||||||||||||
Patents and copyrights | 4,408,011 | 4,193,800 | |||||||||||||||||||||
Non-competition agreements | 4,100,000 | 4,100,000 | |||||||||||||||||||||
Customer relationships | 3,800,000 | 3,800,000 | |||||||||||||||||||||
19,726,447 | 19,762,759 | ||||||||||||||||||||||
Less: Accumulated amortization | 9,217,604 | 7,858,511 | |||||||||||||||||||||
Other Intangible Assets - Net | $ | 10,508,843 | $ | 11,904,248 | |||||||||||||||||||
Schedule Of Other Intangle Assets | ' | ||||||||||||||||||||||
Schedule of Other Intangible Assets | |||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Balance – Beginning of Year | $ | 11,904,248 | $ | 3,835,179 | |||||||||||||||||||
Amounts capitalized | 214,211 | 9,359,907 | |||||||||||||||||||||
Abandon software or patents written off | (250,523 | ) | (66,619 | ) | |||||||||||||||||||
Impairment of management agreement | — | (357,500 | ) | ||||||||||||||||||||
Amortization | (1,359,093 | ) | (866,719 | ) | |||||||||||||||||||
Balance – End of Year | $ | 10,508,843 | $ | 11,904,248 | |||||||||||||||||||
Amortization of Other Intangible Assets | ' | ||||||||||||||||||||||
Amortization of Intangible Assets - Net | |||||||||||||||||||||||
For the Years Ending June 30, | Total | Patents and Copyrights | Capitalized Software Development Costs | Non- | Customer Relationships | ||||||||||||||||||
competition | |||||||||||||||||||||||
2015 | $ | 1,328,315 | $ | 189,559 | $ | 363,042 | $ | 585,714 | $ | 190,000 | |||||||||||||
2016 | 1,347,439 | 205,114 | 366,611 | 585,714 | 190,000 | ||||||||||||||||||
2017 | 1,368,582 | 220,668 | 372,200 | 585,714 | 190,000 | ||||||||||||||||||
2018 | 1,329,294 | 230,647 | 322,933 | 585,714 | 190,000 | ||||||||||||||||||
2019 | 1,043,968 | 228,665 | 39,589 | 585,714 | 190,000 | ||||||||||||||||||
Thereafter | 4,091,245 | 1,104,100 | — | 390,478 | 2,596,667 | ||||||||||||||||||
$ | 10,508,843 | $ | 2,178,753 | $ | 1,464,375 | $ | 3,319,048 | $ | 3,546,667 | ||||||||||||||
NOTE_8_CAPITAL_STOCK_Tables
NOTE 8 - CAPITAL STOCK (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
Stock Option Activity and Weighted Average Exercise Prices under Fonar Incentive Stock Option Plans | ' | ||||||||||||
Stock Option Activity and Weighted Average Exercise Prices under Fonar Incentive Stock Option Plans | |||||||||||||
Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||
Outstanding, June 30, 2012 | 14,022 | 27.76 | — | ||||||||||
Granted | — | — | — | ||||||||||
Exercised | — | — | — | ||||||||||
Forfeited / Expired | (7,412 | ) | 26.65 | — | |||||||||
Outstanding, June 30, 2013 | 6,610 | 29 | — | ||||||||||
Granted | — | — | |||||||||||
Exercised | — | — | — | ||||||||||
Forfeited / Expired | (6,610 | ) | 29 | — | |||||||||
Outstanding, June 30, 2014 | — | — | — | ||||||||||
Exercisable at: | |||||||||||||
30-Jun-13 | 6,610 | $ | 29 | ||||||||||
30-Jun-14 | — | $ | — | ||||||||||
NOTE_9_CONTROLLING_AND_NONCONT1
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS (Tables) | 12 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Noncontrolling Interest [Abstract] | ' | ||||||||||||||||
Estimated Fair Value of Assets and Liabilities Assumed at Acquisition Date of Health Diagnostics Management (HDM) | ' | ||||||||||||||||
Estimated Fair Values of the Assets and Liabilities Assumed at the Acquisition Date of Health Diagnostics Management LLC (HDM) | |||||||||||||||||
Management fee receivable | $ | 6,667,259 | |||||||||||||||
Medical receivables | 7,389,953 | ||||||||||||||||
Prepaid expenses and other current assets | 10,262 | ||||||||||||||||
Property and equipment | 14,912,650 | ||||||||||||||||
Intangible assets | 9,200,000 | ||||||||||||||||
Goodwill | 1,767,098 | ||||||||||||||||
Other assets | 332,949 | ||||||||||||||||
Other current liabilities | (6,323 | ) | |||||||||||||||
Long term debt | (273,848 | ) | |||||||||||||||
Net assets acquired | $ | 40,000,000 | |||||||||||||||
Fair Value of Intangible Assets, Acquired in Acquisition, Excluding Goodwill | ' | ||||||||||||||||
Fair Value of Intangible Assets, Acquired in Acquisition, Excluding Goodwill | |||||||||||||||||
Fair Value | |||||||||||||||||
Non compete | $ | 4,100,000 | 7 years | ||||||||||||||
Customer relationships | 3,800,000 | 20 years | |||||||||||||||
Developed software | 1,300,000 | 5 years | |||||||||||||||
Total intangible assets | $ | 9,200,000 | |||||||||||||||
Unaudited Pro Forma Results of Operations | ' | ||||||||||||||||
Unaudited Pro Forma results of Operations | |||||||||||||||||
Year ended | |||||||||||||||||
30-Jun-13 | |||||||||||||||||
Total Revenues - Net | 69,723,542 | ||||||||||||||||
Net Income - Controlling Interests | 17,442,337 | ||||||||||||||||
Net Income Available to Common Stockholders | 16,294,377 | ||||||||||||||||
Net Income Available to Class A Non-Voting Preferred Stockholders | 855,597 | ||||||||||||||||
Net Income Available to Class C Common Stockholders | 292,363 | ||||||||||||||||
Basic Net Income Per Common Share Available to Common Stockholders | 2.75 | ||||||||||||||||
Diluted Net Income Per Common Share Available to Common Stockholders | 2.69 | ||||||||||||||||
Basic and Diluted Income Per Share - Common C | 0.76 | ||||||||||||||||
Weighted Average Basic Shares Outstanding | 5,933,318 | ||||||||||||||||
Weighted Average Diluted Shares Outstanding | 6,060,822 | ||||||||||||||||
Weighted Average Basic and Diluted Shares Outstanding - Class C Common | 382,513 | ||||||||||||||||
Class Aand B Members' Equity (HDM Acquisition) | ' | ||||||||||||||||
Class A and B Members’ Equity (HDM Acquisition) | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Class A Members | Class B Member | Class A Members | Class B Member | ||||||||||||||
Opening Members’ Equity | $ | 19,526,475 | $ | 20,763,830 | $ | — | $ | — | |||||||||
Share of Net Income | 2,266,473 | 4,566,186 | 543,225 | 1,397,080 | |||||||||||||
Contributions | — | — | 19,800,000 | 20,200,000 | |||||||||||||
Distributions | (4,133,250 | ) | (4,216,750 | ) | (816,750 | ) | (833,250 | ) | |||||||||
Ending Members’ Equity | $ | 17,659,698 | $ | 21,113,266 | $ | 19,526,475 | $ | 20,763,830 | |||||||||
Class Aand B Members' Equity (Imperial Management Services) | ' | ||||||||||||||||
Class A and B Members’ Equity (Imperial Management Services, LLC) | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Class A Members | Class B Member | Class A Members | Class B Member | ||||||||||||||
Opening Members’ Equity | $ | 3,599,519 | $ | 7,772,781 | $ | 4,918,365 | $ | 3,824,945 | |||||||||
Share of Net Income | 536,913 | 3,306,536 | 959,254 | 3,947,836 | |||||||||||||
Contributions | — | — | — | — | |||||||||||||
Distributions | (607,520 | ) | — | (853,200 | ) | — | |||||||||||
Redemption | (1,125,100 | ) | — | (1,424,900 | ) | — | |||||||||||
Ending Members’ Equity | $ | 2,403,812 | $ | 11,079,317 | $ | 3,599,519 | $ | 7,772,781 | |||||||||
NOTE_10_LONGTERM_DEBT_NOTES_PA1
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long-Term Debt, Notes Payable And Capital Leases | ' | ||||||||
Long-term Debt, Notes Payable and Capital Leases | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
$ | 439,983 | $ | 461,648 | ||||||
Note payable requiring monthly payments of interest at a rate of 7% until May 2009 followed by 240 monthly payments of $4,472 through October 2026. The loan is collateralized by a building with a net book value of $652,505 as of June 30, 2014. | |||||||||
300,000 | 2,400,000 | ||||||||
The revolving credit note is due by March 5, 2016. The Company can prepay the loan in whole or part in multiples of $100,000 at any time without penalty. The note bears interest at a rate of 4% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
9,349,994 | 11,000,000 | ||||||||
The term loan is payable with interest only for 6 consecutive months commencing at the inception of the loan followed by 60 consecutive monthly installments, commencing October 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
660,911 | 689,646 | ||||||||
Note payable requiring 12 consecutive interest only payments commencing at the inception of the loan followed by 48 consecutive monthly payments, commencing May 1, 2014. The note bears interest at a rate of 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the Company’s assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |||||||||
621,758 | 1,221,480 | ||||||||
Other (including capital leases for property and equipment). | |||||||||
11,372,646 | 15,772,774 | ||||||||
Less: Current portion | 2,890,816 | 2,885,769 | |||||||
Long-term Debt, Notes Payable and Capital Leases | $ | 8,481,830 | $ | 12,887,005 | |||||
Maturities Of Long-Term Debt | ' | ||||||||
Maturities of Long-Term Debt | |||||||||
Years Ending June 30, | |||||||||
2015 | $ | 2,890,816 | |||||||
2016 | 2,782,561 | ||||||||
2017 | 2,440,108 | ||||||||
2018 | 2,372,330 | ||||||||
2019 | 580,891 | ||||||||
Thereafter | 305,940 | ||||||||
$ | 11,372,646 | ||||||||
NOTE_11_INCOME_TAXES_Tables
NOTE 11 - INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Components Of Current (Benefit) Provision For Income Taxes | ' | ||||||||
Components of the Current (Benefit) Provision for Income Taxes | |||||||||
Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Federal | $ | 310,000 | $ | 125,000 | |||||
State | 24,093 | 71,001 | |||||||
Deferred taxes | (2,682,405 | ) | (2,473,892 | ) | |||||
$ | (2,348,312 | ) | $ | (2,277,891 | ) | ||||
Reconciliation Of Federal Statutory Income Tax Rate To Company's Effective Tax Rate | ' | ||||||||
Reconciliation of the Federal Statutory Income Tax Rate to the Company's Effective Tax Rate | |||||||||
Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Taxes at federal statutory rate | 34 | % | 34 | % | |||||
State and local income taxes (benefit), net of federal benefit | 6 | % | 6 | % | |||||
Permanent differences | (0.9 | )% | 0.6 | % | |||||
(Decrease) increase in the valuation allowance and true ups | (68.3 | )% | (76.2 | )% | |||||
Effective income tax rate | (29.2 | )% | (35.6 | )% | |||||
Components Of Company's Deferred Tax Assets And Liabilities | ' | ||||||||
Components of the Company's Deferred Tax Assets and Liabilities | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 6,961,016 | $ | 6,139,291 | |||||
Non-deductible accruals | 65,108 | 264,062 | |||||||
Net operating carryforwards | 54,900,136 | 58,052,831 | |||||||
Tax credits | 5,644,097 | 5,873,204 | |||||||
Property and equipment and depreciation | 195,408 | 1,070,291 | |||||||
Inventory | 130,822 | 84,136 | |||||||
67,896,587 | 71,483,815 | ||||||||
Valuation allowance | (62,156,300 | ) | (68,548,065 | ) | |||||
Total deferred tax assets | 5,740,287 | 2,935,750 | |||||||
Deferred tax liabilities: Inventory | — | — | |||||||
Capitalized software development costs | (583,990 | ) | (461,858 | ) | |||||
Total deferred tax liabilities | (583,990 | ) | (461,858 | ) | |||||
Net deferred tax asset | $ | 5,156,297 | $ | 2,473,892 | |||||
NOTE_12_OTHER_CURRENT_LIABILIT1
NOTE 12 - OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Other Current Liabilities | ' | ||||||||
Other Current Liabilities | |||||||||
June 30, | |||||||||
2014 | 2013 | ||||||||
Accrued salaries, commissions and payroll taxes | $ | 834,324 | $ | 710,897 | |||||
Accrued interest | 117,480 | 117,480 | |||||||
Litigation accruals | 664,349 | 809,349 | |||||||
Sales tax payable | 2,665,181 | 2,858,652 | |||||||
Legal and other professional fees | 438,730 | 569,049 | |||||||
Accounting fees | 325,139 | 305,000 | |||||||
Purchase scanners | 450,000 | — | |||||||
Insurance premiums | 306,092 | 13,443 | |||||||
Interest and penalty – sales tax | 2,374,339 | 2,321,858 | |||||||
Penalty – 401k plan | — | 250,000 | |||||||
Rent | — | 147,665 | |||||||
Other | 848,399 | 390,968 | |||||||
Other Current Liabilities | $ | 9,024,033 | $ | 8,494,361 | |||||
NOTE_13_COMMITMENTS_AND_CONTIN1
NOTE 13 - COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||
Jun. 30, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||
Future Minimums Operating Lease Commitments | ' | ||||||
Leases | |||||||
Future Minimum Operating Lease Commitments | |||||||
Year Ending | Facilities And Equipment (Operating Lease) | ||||||
June 30, | |||||||
2015 | $ | 3,753,050 | |||||
2016 | 3,042,814 | ||||||
2017 | 1,295,636 | ||||||
2018 | 835,680 | ||||||
2019 | 351,732 | ||||||
Thereafter | 894,072 | ||||||
Total minimum obligations | $ | 10,172,984 | |||||
Stipulation Agreements | ' | ||||||
Stipulation Agreements | |||||||
Year Ending June 30, | |||||||
2015 | $ | 152,166 | |||||
2016 | 96,000 | ||||||
2017 | 57,750 | ||||||
Stipulation Agreements | $ | 305,916 | |||||
NOTE_14_OTHER_INCOME_Tables
NOTE 14 - OTHER INCOME (Tables) | 12 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Other Income and Expenses [Abstract] | ' | ||||||||
Other (Expense) Income - Net | ' | ||||||||
Other (Expense) Income - Net | |||||||||
For the Years Ended June 30, | |||||||||
2014 | 2013 | ||||||||
Loss from investment | $ | — | $ | (48,777 | ) | ||||
Litigation settlement | 13,586 | 716,250 | |||||||
Loss on disposition of equipment | (657,350 | ) | |||||||
Gain on sale of equipment | 40,000 | 557,473 | |||||||
Impairment of management agreement | — | (357,500 | ) | ||||||
Other expense | (4,835 | ) | (141,958 | ) | |||||
Other (Expense) Income - Net | $ | (608,599 | ) | $ | 725,488 | ||||
NOTE_15_SUPPLEMENTAL_CASH_FLOW1
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended | ||||
Jun. 30, 2014 | |||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||
Supplemental Cash Flow (Purchase Consideration) From Business Combination (HDM Acquisition) | ' | ||||
Supplemental Cash Flow (Purchase Consideration) From Business Combination (HDM Acquisition) | |||||
Assets acquired: | |||||
Management fee receivable | $ | 6,667,259 | |||
Medical receivable | 7,389,953 | ||||
Prepaid expenses and other current assets | 10,262 | ||||
Property and equipment | 14,912,650 | ||||
Intangible assets | 9,200,000 | ||||
Goodwill | 1,767,098 | ||||
Other assets | 332,949 | ||||
Total assets acquired | $ | 40,280,171 | |||
Less liabilities assumed: | |||||
Other current liabilities | $ | 6,323 | |||
Long term debt | 273,848 | ||||
Total liabilities assumed | $ | 280,171 | |||
$ | 40,000,000 | ||||
NOTE_17_SEGMENT_AND_RELATED_IN1
NOTE 17 - SEGMENT AND RELATED INFORMATION (Tables) | 12 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||
Summarized Segment Financial Information | ' | ||||||||||||
Summarized Segment Financial Information | |||||||||||||
Manufacturing and Servicing of Medical Equipment | Management of Diagnostic Imaging Centers | Totals | |||||||||||
Fiscal 2014: | |||||||||||||
Net revenues from external customers | $ | 12,070,563 | $ | 56,434,914 | $ | 68,505,477 | |||||||
Intersegment net revenues * | $ | 1,963,750 | $ | — | $ | 1,963,750 | |||||||
Income from operations | $ | 468,793 | $ | 11,833,876 | $ | 12,302,669 | |||||||
Depreciation and amortization | $ | 410,728 | $ | 3,406,477 | $ | 3,817,205 | |||||||
Compensatory element of stock issuances | $ | 223,000 | $ | — | $ | 223,000 | |||||||
Total identifiable assets | $ | 18,093,789 | $ | 58,696,054 | $ | 76,789,843 | |||||||
Capital expenditures | $ | 234,275 | $ | 600,633 | $ | 834,908 | |||||||
Fiscal 2013: | |||||||||||||
Net revenues from external customers | $ | 14,891,075 | $ | 34,250,739 | $ | 49,141,814 | |||||||
Intersegment net revenues * | $ | 1,200,000 | $ | — | $ | 1,200,000 | |||||||
Income from operations | $ | 139,390 | $ | 7,396,357 | $ | 7,535,747 | |||||||
Depreciation and amortization | $ | 541,551 | $ | 1,879,626 | $ | 2,421,177 | |||||||
Compensatory element of stock issuances | $ | 415,021 | $ | — | $ | 415,021 | |||||||
Total identifiable assets | $ | 15,071,225 | $ | 58,079,425 | $ | 73,150,650 | |||||||
Capital expenditures | $ | 237,636 | $ | 25,170,303 | $ | 25,407,939 | |||||||
.* Amounts eliminated in consolidation | |||||||||||||
Export Product Sales | ' | ||||||||||||
Foreign Product Sales, as a Percentage of Product Sales to Unrelated Parties | |||||||||||||
For the Years Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Abu Dhabi | 29.8 | % | -% | ||||||||||
Switzerland | 12.4 | — | |||||||||||
England | — | 3.6 | |||||||||||
Germany | — | 0.1 | |||||||||||
Libya | 0.2 | 0.1 | |||||||||||
42.4 | % | 3.8 | % | ||||||||||
Foreign Service and Repair Fees | ' | ||||||||||||
Foreign Service and Repair Fees, as a Percentage of Total Service and Repair Fees | |||||||||||||
For the Years Ended June 30, | |||||||||||||
2014 | 2013 | ||||||||||||
Spain | 1 | % | 0.9 | % | |||||||||
Puerto Rico | 1.1 | 1 | |||||||||||
Switzerland | 1.1 | 1.1 | |||||||||||
Germany | 0.4 | — | |||||||||||
England | 2.6 | 2 | |||||||||||
Holland | 1.3 | 2.2 | |||||||||||
Canada | 0.2 | — | |||||||||||
Australia | 1.1 | 1 | |||||||||||
8.8 | % | 8.2 | % | ||||||||||
NOTE_18_ALLOWANCE_FOR_DOUBTFUL1
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Valuation and Qualifying Accounts [Abstract] | ' | ||||||||||||||||
Summary of Allowance For Doubtful Accounts | ' | ||||||||||||||||
Summary of Allowance for Doubtful Accounts | |||||||||||||||||
Description | Balance June 30, 2013 | Additions | Deductions | Balance June 30, 2014 | |||||||||||||
Accounts receivable | $ | 257,362 | (1)$ | — | $ | — | $ | 257,362 | |||||||||
Management and other fees receivable | 9,095,320 | -1 | 1,806,299 | — | 10,901,619 | ||||||||||||
Management and other fees receivable - related medical practices | 403,047 | — | — | 403,047 | |||||||||||||
Medical receivables | 2,584,669 | -1 | 10,333,082 | — | 12,917,751 | ||||||||||||
Advance and notes to related parties | 202,379 | — | — | 202,379 | |||||||||||||
Description | Balance June 30, 2012 | Additions | Deductions | Balance June 30, 2013 | |||||||||||||
Accounts receivables | $ | 1,852,987 | (1)$ | (92,454 | ) | $ | 1,503,171 | $ | 257,362 | ||||||||
Management and other fees receivable | 7,458,345 | -1 | 950,000 | — | 9,095,320 | ||||||||||||
Management and other fees receivable - related medical practices | 403,047 | — | — | 403,047 | |||||||||||||
Medical receivables | — | -1 | 2,584,669 | 2,584,669 | |||||||||||||
Advance and notes to related parties | 239,791 | — | 37,412 | 202,379 | |||||||||||||
Notes receivable | 65,000 | — | 65,000 | — | |||||||||||||
(1) Included in provision for bad debts. | |||||||||||||||||
NOTE_2_SUMMARY_OF_SIGNIFICANT_3
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT - Useful Life in Years - (Details) | 12 Months Ended |
Jun. 30, 2014 | |
Diagnostic Equipment Under Capital Lease | Weighted Average | ' |
Property, Plant and Equipment | '2 years 6 months |
Diagnostic Equipment | Minimum | ' |
Property, Plant and Equipment | '5 years |
Diagnostic Equipment | Maximum | ' |
Property, Plant and Equipment | '13 years |
Research, development, and demonstration equipment | Minimum | ' |
Property, Plant and Equipment | '3 years |
Research, development, and demonstration equipment | Maximum | ' |
Property, Plant and Equipment | '7 years |
Machinery and Equipment | Minimum | ' |
Property, Plant and Equipment | '2 years |
Machinery and Equipment | Maximum | ' |
Property, Plant and Equipment | '7 years |
Furniture and Fixtures | Minimum | ' |
Property, Plant and Equipment | '3 years |
Furniture and Fixtures | Maximum | ' |
Property, Plant and Equipment | '9 years |
Leasehold Improvements | Minimum | ' |
Property, Plant and Equipment | '2 years |
Leasehold Improvements | Maximum | ' |
Property, Plant and Equipment | '10 years |
Building | Weighted Average | ' |
Property, Plant and Equipment | '28 years |
NOTE_2_SUMMARY_OF_SIGNIFICANT_4
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Patient Fee Revenue Recognition - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Patient fee revenue, net of contractual allowances and discounts | $24,307,192 | $7,481,865 |
Patient fee revenue provision for bad debts | -10,333,082 | -2,584,669 |
Net patient fee revenue | 13,974,110 | 4,897,196 |
Commercial Insurance / Managed Care | ' | ' |
Patient fee revenue, net of contractual allowances and discounts | 4,217,088 | 1,360,536 |
Medicare/Medicaid | ' | ' |
Patient fee revenue, net of contractual allowances and discounts | 1,443,020 | 541,602 |
Workers Compensation/Personal Injury | ' | ' |
Patient fee revenue, net of contractual allowances and discounts | 13,369,956 | 3,597,416 |
Other | ' | ' |
Patient fee revenue, net of contractual allowances and discounts | $5,277,128 | $1,982,311 |
NOTE_2_SUMMARY_OF_SIGNIFICANT_5
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Basic Numerator: Net income Available to common stockholders | $10,396,130 | $8,678,542 |
Basic Denominator: Weighted Average Shares outstanding | 6,009,822 | 5,933,318 |
Total Denominator for diluted earnings per share | 6,137,326 | 6,060,822 |
Common Stock | ' | ' |
Basic Numerator: Net income Available to common stockholders | 9,720,030 | 8,107,367 |
Basic Denominator: Weighted Average Shares outstanding | 6,009,822 | 5,933,318 |
Basic income per common share | $1.62 | $1.37 |
Diluted Denominator: Weighted Average Shares outstanding | 6,009,822 | 5,933,318 |
Class C Common Stock | 127,504 | 127,504 |
Total Denominator for diluted earnings per share | 6,137,326 | 6,060,822 |
Diluted income per common share | $1.58 | $1.34 |
Class C Common | ' | ' |
Basic Numerator: Net income Available to common stockholders | $172,189 | $145,467 |
Basic Denominator: Weighted Average Shares outstanding | 382,513 | 382,513 |
Basic income per common share | $0.45 | $0.38 |
Diluted Denominator: Weighted Average Shares outstanding | 382,513 | 382,513 |
Class C Common Stock | ' | ' |
Total Denominator for diluted earnings per share | 382,513 | 382,513 |
Diluted income per common share | $0.45 | $0.38 |
NOTE_3_ACCOUNTS_RECEIVABLE_MED2
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE-Total Facilities (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
MRICenter | MRICenter | |
Note 3 - Accounts Receivable Medical Receivable And Management And Other Fees Receivable-Total Facilities Details | ' | ' |
Total Facilities Owned or Managed (at Beginning of Year) | 24 | 11 |
Facilities Added by: | ' | ' |
Acquisition | ' | 14 |
Internal development | 1 | ' |
Managed Facilities Closed | -1 | -1 |
Total Facilities Owned or Managed (at End of Year) | 24 | 24 |
NOTE_4_COSTS_ESTIMATED_EARNING
NOTE 4 - COSTS, ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS, CUSTOMER ADVANCES - Costs, Earnings, Billings - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Notes to Financial Statements | ' | ' |
Costs incurred on uncompleted contracts | $1,884,984 | $1,482,384 |
Estimated earnings | 1,745,608 | 1,191,141 |
Less: billings to date | 3,013,000 | 2,370,000 |
Unbilled contracts receivable | $617,592 | $303,525 |
NOTE_4_COSTS_ESTIMATED_EARNING1
NOTE 4 - COSTS, ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS, CUSTOMER ADVANCES -Uncompleted Contracts (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Notes to Financial Statements | ' | ' |
Costs and estimated earnings in excess of billings on uncompleted contracts | $759,809 | $445,742 |
Less: Billings in excess of costs and estimated earnings on uncompleted contracts | -142,217 | -142,217 |
Unbilled contracts receivable | $617,592 | $303,525 |
NOTE_5_INVENTORIES_Inventories
NOTE 5 - INVENTORIES - Inventories (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Purchased parts, components and supplies | $2,093,671 | $1,783,847 |
Work-in-process | 349,865 | 293,241 |
Inventories | $2,443,536 | $2,077,088 |
NOTE_6_PROPERTY_AND_EQUIPMENT_1
NOTE 6 - PROPERTY AND EQUIPMENT - Property and Equipment (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Property, Plant and Equipment [Abstract] | ' | ' |
Diagnostic equipment under capital leases | $620,307 | $620,307 |
Diagnostic equipment | 17,396,797 | 18,567,787 |
Research, development and demonstration equipment | 3,510,224 | 3,500,902 |
Machinery and equipment | 2,069,055 | 4,987,159 |
Furniture and fixtures | 2,550,627 | 2,952,449 |
Leasehold improvements | 5,593,148 | 5,669,338 |
Building | 939,614 | 939,614 |
Property and Equipment Subtotal Before Accumulated depreciation and amortization | 32,679,772 | 37,237,556 |
Less: Accumulated depreciation and amortization | -17,650,043 | -19,713,062 |
Property and Equipment Total AfterAccumulated depreciation and amortization | $15,029,729 | $17,524,494 |
NOTE_7_OTHER_INTANGIBLE_ASSETS2
NOTE 7 - OTHER INTANGIBLE ASSETS - Other Intagible Assets Net of Amoritization (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Capitalized software development costs | $7,418,436 | $7,668,959 |
Patents and copyrights | 4,408,011 | 4,193,800 |
Non-competition agreements | 4,100,000 | 4,100,000 |
Customer Relationships | 3,800,000 | 3,800,000 |
Less: Accumulated amortization | -9,217,604 | -7,858,511 |
Other Intangible Assets - Net | $10,508,843 | $11,904,248 |
NOTE_7_OTHER_INTANGIBLE_ASSETS3
NOTE 7 - OTHER INTANGIBLE ASSETS - Schedule Of Intangle Assets - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Balance - Beginning of Year | $11,904,248 | $3,835,179 |
Amounts capitalized | 214,211 | 9,359,907 |
Abandon patents written off | -250,523 | -66,619 |
Impairment of Management Agreement | ' | -357,500 |
Amortization | -1,359,093 | -866,719 |
Balance - End of Year | $10,508,843 | $11,904,248 |
NOTE_7_OTHER_INTANGIBLE_ASSETS4
NOTE 7 - OTHER INTANGIBLE ASSETS - Forward Looking Schedule of Other Intangible Assets - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
2015 | $1,328,315 | ' |
2016 | 1,347,439 | ' |
2017 | 1,368,582 | ' |
2018 | 1,329,294 | ' |
2019 | 1,043,968 | ' |
Thereafter | 4,091,245 | ' |
Other Intangible Assets - Net | 10,508,843 | 11,904,248 |
Patents and Copyrights | ' | ' |
2015 | 189,559 | ' |
2016 | 205,114 | ' |
2017 | 220,668 | ' |
2018 | 230,647 | ' |
2019 | 228,665 | ' |
Thereafter | 1,104,100 | ' |
Other Intangible Assets - Net | 2,178,753 | ' |
Capitalized software development costs | ' | ' |
2015 | 363,042 | ' |
2016 | 366,611 | ' |
2017 | 372,200 | ' |
2018 | 322,933 | ' |
2019 | 39,589 | ' |
Thereafter | ' | ' |
Other Intangible Assets - Net | 1,464,375 | ' |
Non-competition agreements | ' | ' |
2015 | 585,714 | ' |
2016 | 585,714 | ' |
2017 | 585,714 | ' |
2018 | 585,714 | ' |
2019 | 585,714 | ' |
Thereafter | 390,478 | ' |
Other Intangible Assets - Net | 3,319,048 | ' |
Customer Relationships | ' | ' |
2015 | 190,000 | ' |
2016 | 190,000 | ' |
2017 | 190,000 | ' |
2018 | 190,000 | ' |
2019 | 190,000 | ' |
Thereafter | 2,596,667 | ' |
Other Intangible Assets - Net | $3,546,667 | ' |
NOTE_8_CAPITAL_STOCK_Stock_Opt
NOTE 8 - CAPITAL STOCK - Stock Option Activity - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Number of Options | ' | ' |
Options Outstanding, beginning balance | 6,610 | 14,022 |
Shares Granted | ' | ' |
Shares Exercised | ' | ' |
Shares Expired | -6,610 | -7,412 |
Options Outstanding, ending balance | ' | 6,610 |
Weighted Average Exercise Price | ' | ' |
Options Outstanding, beginning balance | $29 | $27.76 |
Shares Granted | ' | ' |
Forfeited / Expired | ' | $26.65 |
Options Outstanding, ending balance | ' | $29 |
Aggregate Intrinsic Value | ' | ' |
Outstanding, beginning balance | ' | ' |
Granted | ' | ' |
Exercised | ' | ' |
NOTE_9_CONTROLLING_AND_NONCONT2
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - Net Assets Acquired (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 05, 2013 | Mar. 05, 2013 | Mar. 05, 2013 |
Health Diagnostics Management LLC (HDM) | Health Diagnostics Management LLC (HDM) | Health Diagnostics Management LLC (HDM) | |||
Management fee receivable | Medical receivables | ||||
Fee receivable | ' | ' | ' | $6,667,259 | $7,389,953 |
Prepaid expenses and other current assets | 1,011,358 | 1,054,551 | 10,262 | ' | ' |
Property and equipment - Net | 15,029,729 | 17,524,494 | 14,912,650 | ' | ' |
Intangible assets | ' | ' | 9,200,000 | ' | ' |
Goodwill | 1,767,098 | 1,767,098 | 1,767,098 | ' | ' |
Other assets | 922,096 | 1,153,304 | 332,949 | ' | ' |
Other current liabilities | 9,024,033 | 8,494,361 | -6,323 | ' | ' |
Long term debt | ' | ' | -273,848 | ' | ' |
Net assets acquired | ' | ' | $40,000,000 | ' | ' |
NOTE_9_CONTROLLING_AND_NONCONT3
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - Total Intangible Assets (Details) (USD $) | 12 Months Ended |
Jun. 30, 2014 | |
Fair Value | $9,200,000 |
Non-competition agreements | ' |
Fair Value | 4,100,000 |
Estimated Useful Life | '7 years |
Customer Relationships | ' |
Fair Value | 3,800,000 |
Estimated Useful Life | '20 years |
Developed Software | ' |
Fair Value | $1,300,000 |
Estimated Useful Life | '5 years |
NOTE_9_CONTROLLING_AND_NONCONT4
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - Unaudited Proforma Results of Operations (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Total Revenues - Net | $68,505,477 | $49,141,814 |
Net Income - Controlling Interests | 10,396,130 | 8,678,542 |
Weighted Average Basic Shares Outstanding | 6,009,822 | 5,933,318 |
Weighted Average Diluted Shares Outstanding | 6,137,326 | 6,060,822 |
Common Stock | ' | ' |
Net Income - Controlling Interests | 9,720,030 | 8,107,367 |
Basic Net Income Per Common Share Available to Common Stockholders | $1.62 | $1.37 |
Diluted Net Income Per Common Share Available to Common Stockholders | $1.58 | $1.34 |
Weighted Average Basic Shares Outstanding | 6,009,822 | 5,933,318 |
Weighted Average Diluted Shares Outstanding | 6,137,326 | 6,060,822 |
Class C Common | ' | ' |
Net Income - Controlling Interests | 172,189 | 145,467 |
Basic Net Income Per Common Share Available to Common Stockholders | $0.45 | $0.38 |
Diluted Net Income Per Common Share Available to Common Stockholders | $0.45 | $0.38 |
Weighted Average Basic Shares Outstanding | 382,513 | 382,513 |
Weighted Average Diluted Shares Outstanding | 382,513 | 382,513 |
Health Diagnostics Management LLC (HDM) | ' | ' |
Total Revenues - Net | ' | 69,723,542 |
Net Income - Controlling Interests | ' | 17,442,337 |
Weighted Average Basic Shares Outstanding | ' | 5,933,318 |
Weighted Average Diluted Shares Outstanding | ' | 6,060,822 |
Health Diagnostics Management LLC (HDM) | Common Stock | ' | ' |
Net Income Available to Stockholders | ' | 16,294,377 |
Basic Net Income Per Common Share Available to Common Stockholders | ' | $2.75 |
Diluted Net Income Per Common Share Available to Common Stockholders | ' | $2.69 |
Health Diagnostics Management LLC (HDM) | Class A Non-Voting Preferred | ' | ' |
Net Income Available to Stockholders | ' | 855,597 |
Health Diagnostics Management LLC (HDM) | Class C Common | ' | ' |
Net Income Available to Stockholders | ' | $292,363 |
Basic Net Income Per Common Share Available to Common Stockholders | ' | $0.76 |
Diluted Net Income Per Common Share Available to Common Stockholders | ' | $0.76 |
Weighted Average Basic Shares Outstanding | ' | 382,513 |
Weighted Average Diluted Shares Outstanding | ' | 382,513 |
NOTE_9_CONTROLLING_AND_NONCONT5
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - HDM Members Equity (Details) (HDM Equity, USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Class A Members | ' | ' |
Opening Members Equity | $19,526,475 | ' |
Share of Net Income | 2,266,473 | 543,225 |
Contributions | ' | 19,800,000 |
Distributions | -4,133,250 | -816,750 |
Ending Members Equity | 17,659,698 | 19,526,475 |
Class B Members | ' | ' |
Opening Members Equity | 20,763,830 | ' |
Share of Net Income | 4,566,186 | 1,397,080 |
Contributions | ' | 20,200,000 |
Distributions | -4,216,750 | -833,250 |
Ending Members Equity | $21,113,266 | $20,763,830 |
NOTE_9_CONTROLLING_AND_NONCONT6
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - Members Equity (Details) (HDM and Imperial Equity, USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Class A Members | ' | ' |
Opening Members' Equity | $3,599,519 | $4,918,365 |
Share of Net Income | 536,913 | 959,254 |
Contributions to Members'Equity | ' | ' |
Distributions to Members' Equity | -607,520 | -853,200 |
Redemption | -1,125,100 | -1,424,900 |
Ending Members' Equity at June 30, | 2,403,812 | 3,599,519 |
Class B Members | ' | ' |
Opening Members' Equity | 7,772,781 | 3,824,945 |
Share of Net Income | 3,306,536 | 3,947,836 |
Contributions to Members'Equity | ' | ' |
Distributions to Members' Equity | ' | ' |
Redemption | ' | ' |
Ending Members' Equity at June 30, | $11,079,317 | $7,772,781 |
NOTE_10_LONGTERM_DEBT_NOTES_PA2
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES Long-Term Debt, Notes Payable And Capital Leases - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Less: Current portion | ($2,890,816) | ($2,885,769) |
Long Term Debt and Capital Lease Obligations | 8,481,830 | 12,887,005 |
Long Term Note 1 | ' | ' |
Long Term Note Payable | 439,983 | 461,648 |
Long Term Note Payable Description | 'Note payable requiring monthly payments of interest at a rate of 7% until May 2009 followed by 240 monthly payments of $4,472 through October 2026. The loan is collateralized by a building with a net book value of $652,505 as of June 30, 2014. | ' |
Long Term Note 2 | ' | ' |
Long Term Note Payable | 300,000 | 2,400,000 |
Long Term Note Payable Description | 'The revolving credit note is due by March 5, 2016. The Company can prepay the loan in whole or part in multiples of $100,000 at any time without penalty. The note bears interest at a rate of 4% per annum and is payable monthly. The loan is collateralized by substantially all of the CompanyBs assets. The loan also contains certain financial covenants that must be met on a periodic basis. | ' |
Long Term Note 3 | ' | ' |
Long Term Note Payable | 9,349,994 | 11,000,000 |
Long Term Note Payable Description | 'The term loan is payable with interest only for 6 consecutive months commencing at the inception of the loan followed by 60 consecutive monthly installments, commencing October 1, 2013. The term loan bears interest at 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the CompanyBs assets. The loan also contains certain financial covenants that must be met on a periodic basis. | ' |
Long Term Note 4 | ' | ' |
Long Term Note Payable | $660,911 | $689,646 |
Long Term Note Payable Description | 'Note payable requiring 12 consecutive interest only payments commencing at the inception of the loan followed by 48 consecutive monthly payments, commencing May 1, 2014. The note bears interest at a rate of 4.75% per annum and is payable monthly. The loan is collateralized by substantially all of the Company's assets. The loan also contains certain financial covenants that must be met on a periodic basis. | ' |
NOTE_10_LONGTERM_DEBT_NOTES_PA3
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE & CAPITAL LEASES - Maturities Of Long-Term Debt Over 5 Years - (Details) (USD $) | Jun. 30, 2014 |
Debt Disclosure [Abstract] | ' |
2015 | $2,890,816 |
2016 | 2,782,561 |
2017 | 2,440,108 |
2018 | 2,372,330 |
2019 | 580,891 |
Thereafter | 305,940 |
Long-Term Debt Over Five Years and Thereafter | $11,372,646 |
NOTE_11_INCOME_TAXES_Component
NOTE 11 - INCOME TAXES - Components Of Current (Benefit) Provision For Income Taxes - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' |
Current: Federal | $310,000 | $125,000 |
Current: State | 24,093 | 71,001 |
Total Deferred taxes | -2,682,405 | -2,473,892 |
Benefit for Income Taxes | ($2,348,312) | ($2,277,891) |
NOTE_11_INCOME_TAXES_Income_Ta
NOTE 11 - INCOME TAXES - Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Note 11 - Income Taxes - Income Tax Rate Reconciliation Details | ' | ' |
Taxes at federal statutory rate | 34.00% | 34.00% |
State and local income taxes (benefit), net of federal benefit | 6.00% | 6.00% |
Permanent differences taxes | -9.00% | 0.60% |
(Decrease) increase in the valuation allowance and true ups | -68.30% | -76.20% |
Effective income tax rate | -29.20% | -35.60% |
NOTE_11_INCOME_TAXES_Significa
NOTE 11 - INCOME TAXES - Significant Components Of Company's Deferred Tax Assets And Liabilities - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' |
Allowance for doubtful accounts | $6,961,016 | $6,139,291 |
Non Deductible Accruals | 65,108 | 264,062 |
Net operating carryforwards | 54,900,136 | 58,052,831 |
Tax credits | 5,644,097 | 5,873,204 |
Property and equipment and Depreciation | 195,408 | 1,070,291 |
Inventory | 130,822 | 84,136 |
Total Deferred Tax Assets | 67,896,587 | 71,483,815 |
Valuation allowance | -62,156,300 | -68,548,065 |
Total deferred tax assets | 5,740,287 | 2,935,750 |
Inventory | ' | ' |
Capitalized software development costs | -583,990 | -461,858 |
Total deferred tax liabilities | -583,990 | -461,858 |
Net deferred tax liabilities | $5,156,297 | $2,473,892 |
NOTE_12_OTHER_CURRENT_LIABILIT2
NOTE 12 - OTHER CURRENT LIABILITIES - Other Current Liabilities - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 |
Payables and Accruals [Abstract] | ' | ' |
Accrued salaries, commissions and payroll taxes | $834,324 | $710,897 |
Accrued interest | -117,480 | -117,480 |
Litigation accruals | 664,349 | 809,349 |
Sales tax payable | 2,665,181 | 2,858,652 |
Legal and other professional fees | 438,730 | 569,049 |
Accounting fees | 325,139 | 305,000 |
Purchase Scanners | 386,012 | 654,273 |
Insurance premiums | 306,092 | 13,443 |
Other | 848,399 | 390,968 |
Interest and penalty - sales tax | 2,374,339 | 2,321,858 |
Penalty - 401k plan | ' | 250,000 |
Rent | ' | 147,665 |
Other current liabilities | $9,024,033 | $8,494,361 |
NOTE_13_COMMITMENTS_AND_CONTIN2
NOTE 13 - COMMITMENTS AND CONTINGENCIES - Future Minimums Operating Lease Commitments - (Details) (USD $) | Jun. 30, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ' |
Facilities And Equipment (Operating Lease) Due in 2015 | $3,753,050 |
Facilities And Equipment (Operating Lease) Due in 2016 | 3,042,814 |
Facilities And Equipment (Operating Lease) Due in 2017 | 1,295,636 |
Facilities And Equipment (Operating Lease) Due in 2018 | 835,680 |
Facilities And Equipment (Operating Lease) Due in 2019 | 351,732 |
Facilities And Equipment (Operating Lease) Due Thereafter | 894,072 |
Total minimum obligations | $10,172,984 |
NOTE_13_COMMITMENTS_AND_CONTIN3
NOTE 13 - COMMITMENTS AND CONTINGENCIES - Stipulation Agreements - (Details) (USD $) | Jun. 30, 2014 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2015 | $152,166 |
2016 | 96,000 |
2017 | 57,750 |
Total Stipulation Agreements | $305,916 |
NOTE_14_OTHER_INCOME_Other_Inc
NOTE 14 - OTHER INCOME - Other Income - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Other Income and Expenses [Abstract] | ' | ' |
(Loss) income from investment | ' | ($48,777) |
Litigation settlement | ' | 755,000 |
Loss on disposition of equipment | 657,350 | ' |
Gain on sale of equipment | ' | 557,473 |
Impairment on management agreement | ' | 357,500 |
Other expense | -4,835 | -141,958 |
Total Other Income | ($608,599) | $725,488 |
NOTE_15_SUPPLEMENTAL_CASH_FLOW2
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION - Supplemental Cash Flow From Business Combination - (Details) (USD $) | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 05, 2013 | Mar. 05, 2013 | Mar. 05, 2013 |
Health Diagnostics Management LLC (HDM) | Health Diagnostics Management LLC (HDM) | Health Diagnostics Management LLC (HDM) | |||
Management fee receivable | Medical receivables | ||||
Assets acquired: | ' | ' | ' | ' | ' |
Account Receivable | ' | ' | ' | $6,667,259 | $7,389,953 |
Prepaid expenses and other current assets | 1,011,358 | 1,054,551 | 10,262 | ' | ' |
Property and equipment | ' | ' | 14,912,650 | ' | ' |
Intangible assets | ' | ' | 9,200,000 | ' | ' |
Goodwill | 1,767,098 | 1,767,098 | 1,767,098 | ' | ' |
Other assets | ' | ' | 332,949 | ' | ' |
Total assets acquired | ' | ' | 40,280,171 | ' | ' |
Less liabilities assumed: | ' | ' | ' | ' | ' |
Other current liabilities | -9,024,033 | -8,494,361 | 6,323 | ' | ' |
Long term debt | ' | ' | 273,848 | ' | ' |
Total liabilities assumed | ' | ' | 280,171 | ' | ' |
Net assets acquired | ' | ' | $40,000,000 | ' | ' |
NOTE_17_SEGMENT_AND_RELATED_IN2
NOTE 17 - SEGMENT AND RELATED INFORMATION - Segment and Related Information - (Details) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Net revenues from external customers | $68,505,477 | $49,141,814 |
Intersegment net revenues | 1,963,750 | 1,200,000 |
Income from operations | 12,302,669 | 7,535,747 |
Depreciation and amortization | 3,817,205 | 2,421,177 |
Compensatory element of stock issuances | 223,000 | 415,021 |
Total identifiable assets | 76,789,843 | 73,150,650 |
Capital expenditures | 834,908 | 25,407,939 |
Manufacturing And Servicing Of Medical Equipment | ' | ' |
Net revenues from external customers | 12,070,563 | 14,891,075 |
Intersegment net revenues | 1,963,750 | 1,200,000 |
Income from operations | 468,793 | 139,390 |
Depreciation and amortization | 410,728 | 541,551 |
Compensatory element of stock issuances | 223,000 | 415,021 |
Total identifiable assets | 18,093,789 | 15,071,225 |
Capital expenditures | 234,275 | 237,636 |
Management of Diagnostic Imaging Centers | ' | ' |
Net revenues from external customers | 56,434,914 | 34,250,739 |
Intersegment net revenues | ' | ' |
Income from operations | 11,833,876 | 7,396,357 |
Depreciation and amortization | 3,406,477 | 1,879,626 |
Compensatory element of stock issuances | ' | ' |
Total identifiable assets | 58,696,054 | 58,079,425 |
Capital expenditures | $600,633 | $25,170,303 |
NOTE_17_SEGMENT_AND_RELATED_IN3
NOTE 17 - SEGMENT AND RELATED INFORMATION - Export Product Sales - (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Foreign Product Sales | 42.40% | 3.80% |
United Arab Emerites | ' | ' |
Foreign Product Sales | 29.80% | ' |
Switzerland | ' | ' |
Foreign Product Sales | 12.40% | ' |
England | ' | ' |
Foreign Product Sales | ' | 3.60% |
Germany | ' | ' |
Foreign Product Sales | ' | 0.10% |
Libya | ' | ' |
Foreign Product Sales | 0.20% | 0.10% |
NOTE_17_SEGMENT_AND_RELATED_IN4
NOTE 17 - SEGMENT AND RELATED INFORMATION - Foreign Service and Repair Fees - (Details) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Foreign Service and Repair fees | 8.80% | 8.20% |
Spain | ' | ' |
Foreign Service and Repair fees | 1.00% | 0.90% |
Puerto Rico | ' | ' |
Foreign Service and Repair fees | 1.10% | 1.00% |
Switzerland | ' | ' |
Foreign Service and Repair fees | 1.10% | 1.10% |
Germany | ' | ' |
Foreign Service and Repair fees | 0.40% | ' |
England | ' | ' |
Foreign Service and Repair fees | 2.60% | 2.00% |
Holland | ' | ' |
Foreign Service and Repair fees | 1.30% | 2.20% |
Canada | ' | ' |
Foreign Service and Repair fees | 0.20% | ' |
Australia | ' | ' |
Foreign Service and Repair fees | 1.10% | 1.00% |
NOTE_18_ALLOWANCE_FOR_DOUBTFUL2
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS - Allowance For Doubtful Accounts (Details) (USD $) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Receivables from equipment sales and service contracts | ' | ' |
Additions | ' | ($92,454) |
Deductions | ' | 1,503,171 |
Balance Beginning | 257,362 | 1,852,987 |
Balance Ending | 257,362 | 257,362 |
Management fee receivable | ' | ' |
Additions | 1,806,299 | 950,000 |
Deductions | ' | ' |
Balance Beginning | 9,095,320 | 7,458,345 |
Balance Ending | 10,901,619 | 9,095,320 |
Management fee receivable from related medical practices | ' | ' |
Additions | ' | ' |
Deductions | ' | ' |
Balance Beginning | 403,047 | 403,047 |
Balance Ending | 403,047 | 403,047 |
Medical receivables | ' | ' |
Additions | 10,333,082 | 2,584,669 |
Deductions | ' | ' |
Balance Beginning | 2,584,669 | ' |
Balance Ending | 12,917,751 | 2,584,669 |
Advance and notes to related parties | ' | ' |
Additions | ' | ' |
Deductions | ' | 37,412 |
Balance Beginning | 202,379 | 239,791 |
Balance Ending | 202,379 | 202,379 |
Notes Receivable | ' | ' |
Additions | ' | ' |
Deductions | ' | 65,000 |
Balance Beginning | ' | 65,000 |
Balance Ending | ' | ' |
NOTE_1_DESCRIPTION_OF_BUSINESS1
NOTE 1 - DESCRIPTION OF BUSINESS, LIQUIDITY AND CAPITAL RESOURCES (Details Narrative) (Health Diagnostics Management LLC (HDM), USD $) | Mar. 05, 2013 |
MRICenter | |
Health Diagnostics Management LLC (HDM) | ' |
Cost of Majority Interest for Health Diagnostics Management LLC | $40,000,000 |
Stand-Up MRI scanners being managed b Health Diagnostics Management LLC | 12 |
Recumbent MRI scanners being managed b Health Diagnostics Management LLC | 2 |
Diagnostic Imaging Facilities Managed by Imperial Management LLC | 11 |
NOTE_2_SUMMARY_OF_SIGNIFICANT_6
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
MRICenter | ||
Maintenance and Repair Expenses | $1,037,000 | $598,000 |
Impairment as a result of closing scanning center | ' | 357,500 |
Advertising Costs | 889,000 | 835,000 |
Shipping and Handling Expense | 1,885 | 5,838 |
Cash on Deposit in Bank | 8,035,000 | ' |
Cash FDIC insured Amount | 250,000 | ' |
Net revenues from related parties as a percentage of consolidated net revenues | 11.00% | 16.00% |
Net management fee receivables from the related medical practices as a percentage of the consolidated accounts receivable | 12.00% | 9.00% |
Management Agreements with Company - Non Related Medical Practices | 17 | ' |
Management Agreements with Company - Related Medical Practices | 3 | ' |
Management Agreements with Company - Total Medical Practices | 20 | ' |
Number of shares Upon Conversion of Class C Common Included in Diluted EPS for Common Shareholders | 127,504 | 127,504 |
Diagnostic Imaging Facility | ' | ' |
Contractual Fees for Services Rendered Minimum | 35,000 | ' |
Contractual Fees for Services Rendered Maximum | 242,000 | ' |
Medical Equipment | ' | ' |
Contractual Fees for Services Rendered Minimum | 2,000 | ' |
Contractual Fees for Services Rendered Maximum | $19,000 | ' |
NOTE_3_ACCOUNTS_RECEIVABLE_MED3
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - (Details Narrative) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Note 3 - Accounts Receivable Medical Receivable And Management And Other Fees Receivable - Details Narrative | ' | ' |
Percentage of PC's net revenue derived from no-fault and personal injury protection claims | 50.00% | 41.00% |
Percentage of consolidated net revenue from management fees | 11.00% | 16.00% |
NOTE_6_PROPERTY_AND_EQUIPMENT_2
NOTE 6 - PROPERTY AND EQUIPMENT- (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Depreciation and amortization | $3,817,205 | $2,421,177 |
Cost and accumulated depreciation basis of retired assets that were fully depreciated | 4,418,903 | ' |
Property and Equipment | ' | ' |
Depreciation and amortization | 2,458,113 | 1,554,458 |
Diagnostic Equipment Under Capital Lease | ' | ' |
Depreciation and amortization | 95,026 | 248,123 |
Accumulated depreciation and amortization | $620,307 | $525,281 |
NOTE_7_OTHER_INTANGIBLE_ASSETS5
NOTE 7 - OTHER INTANGIBLE ASSETS - (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Weighted average amortization period (years) | '11 years | ' |
Patents and Copyrights | ' | ' |
Amortization other intangible assets | $178,836 | $168,631 |
Capitalized software development costs | ' | ' |
Amortization other intangible assets | 407,876 | 335,350 |
Management Agreement | ' | ' |
Amortization other intangible assets | ' | 100,833 |
Non-competition agreements | ' | ' |
Amortization other intangible assets | 585,714 | 195,238 |
Customer Relationships | ' | ' |
Amortization other intangible assets | $186,667 | $66,667 |
NOTE_8_CAPITAL_STOCK_Details_N
NOTE 8 - CAPITAL STOCK - (Details Narrative) | 12 Months Ended | |||||
Jun. 30, 2014 | Jun. 30, 2013 | Aug. 10, 2010 | Apr. 23, 2010 | Feb. 16, 2005 | Jul. 01, 2002 | |
Shares reserved for 2010 Stock Bonus Plan | ' | ' | ' | 2,000,000 | ' | ' |
Shares Registered under Form S-8 for 2010 Stock Bonus Plan | ' | ' | 2,000,000 | ' | ' | ' |
Common Stock available under2010 Stock Bonus Plan | 958,367 | ' | ' | ' | ' | ' |
Shares issued under 2010 Stock Bonus Plan | 46,708 | 67,870 | ' | ' | ' | ' |
Issuance of stock options for 2002 Stock Option Plan | ' | ' | ' | ' | ' | 100,000 |
Stock options expired under 2002 Stock Option Plan | 6,610 | ' | ' | ' | ' | ' |
Options outstanding under 2002 Stock Option Plan | 0 | ' | ' | ' | ' | ' |
Common stock available under 2005 Stock Option Plan | 70,000 | ' | ' | ' | ' | ' |
Common stock authorized under 2005 Stock Option Plan | ' | ' | ' | ' | 80,000 | ' |
Common Stock | ' | ' | ' | ' | ' | ' |
Dividends Payable Nature | 'Cash dividends payable on the common stock shall, in all cases, be on a per share basis, one hundred twenty percent (120%) of the cash dividend payable on shares of Class B common stock and three hundred sixty percent (360%) of the cash dividend payable on a share of Class C common stock. | ' | ' | ' | ' | ' |
Class B Members | ' | ' | ' | ' | ' | ' |
Terms of Conversion | 'Class B common stock is convertible into shares of common stock on a one-for-one basis. | ' | ' | ' | ' | ' |
Shares Outstanding | 'There were 146 and 146 of such shares outstanding at June 30, 2014 and 2013, respectively. | ' | ' | ' | ' | ' |
Votes Per Share | 'Class B common stock has 10 votes per share. | ' | ' | ' | ' | ' |
Class C Common | ' | ' | ' | ' | ' | ' |
Terms of Conversion | 'On April 3, 1995, the stockholders ratified a proposal creating a new Class C common stock and authorized the exchange offering of three shares of Class C common stock for each share of the Companys outstanding Class B common stock. The Class C common stock was offered on a three-for-one basis to the holders of the Class B common stock. Although having greater voting power, each share of Class C common stock has only one-third of the rights of a share of Class B common stock to dividends and distributions. Class C common stock is convertible into shares of common stock on a three-for-one basis. | ' | ' | ' | ' | ' |
Votes Per Share | 'The Class C common stock has 25 votes per share, as compared to 10 votes per share for the Class B common stock and one vote per share for the common stock. | ' | ' | ' | ' | ' |
Class A Non Voting Preferred Stock | ' | ' | ' | ' | ' | ' |
Dividends Payable Nature | 'On April 3, 1995, the stockholders ratified a proposal consisting of the creation of a new class of Class A non-voting preferred stock with special dividend rights and the declaration of a stock dividend on the Companys common stock consisting of one share of Class A non-voting preferred stock for every five shares of common stock. The stock dividend was payable to holders of common stock on October 20, 1995. The Class A non-voting preferred stock is entitled to a special dividend equal to 3-1/4% of first $10 million, 4-1/2% of next $20 million and 5-1/2% on amounts in excess of $30 million of the amount of any cash awards or settlements received by the Company in connection with the enforcement of five of the Companys patents in its patent lawsuits, less the revised special dividend payable on the common stock with respect to one of the Companys patents. The Class A non-voting preferred stock participates on an equal per share basis with the common stock in any dividends declared and ranks equally with the common stock on distribution rights, liquidation rights and other rights and preferences (other than the voting rights). | ' | ' | ' | ' | ' |
Shares Outstanding | 'Class A non-voting preferred stock issued pursuant to such stock dividend approximates 313,000 shares. | ' | ' | ' | ' | ' |
Votes Per Share | 'The Class A non-voting preferred stock has no voting rights. | ' | ' | ' | ' | ' |
NOTE_9_CONTROLLING_AND_NONCONT7
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - (Details Narrative) (USD $) | 30 Months Ended | 60 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2014 | Sep. 01, 2018 | 1-May-14 | Jun. 30, 2013 | 1-May-13 | Feb. 13, 2013 | 2-May-11 | Jan. 01, 2011 | 1-May-10 | Feb. 13, 2013 | Feb. 13, 2013 | Jun. 30, 2014 | Mar. 05, 2013 | |
Installments | Class A Member | Class B Member | Private Placement | Health Diagnostics Management LLC (HDM) | |||||||||
Health Diagnostics Management LLC (HDM) | HDM Equity | MRICenter | |||||||||||
Controlling Interest acquired by Company of Health Diagnostics Management, LLC, (HDM) | ' | ' | ' | ' | ' | 50.50% | ' | ' | ' | ' | ' | ' | ' |
Health Diagnostics Management (HDM) Class A Members ownership interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | 49.50% | ' | ' | ' |
Health Diagnostics Management (HDM) Class B Members ownership interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.50% | ' | ' |
Health Diagnostics Management (HDM) Class A (Outside Investors) Members contribution | ' | ' | ' | ' | ' | $19,800,000 | ' | ' | ' | ' | ' | ' | ' |
Health Diagnostics Management (HDM) Class B (Company) Members contribution | ' | ' | ' | ' | ' | 20,200,000 | ' | ' | ' | ' | ' | ' | ' |
Total Capital Contribution | ' | ' | ' | ' | ' | 14,000,000 | ' | ' | ' | ' | ' | ' | ' |
Bank Term loan | ' | ' | ' | ' | ' | 11,000,000 | ' | ' | ' | ' | ' | ' | ' |
Interest Rate of Term Loan | ' | ' | ' | ' | ' | 4.75% | ' | ' | ' | ' | ' | ' | ' |
Number of Consecutive Installments | ' | 60 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Bank Revolving Credit Loan | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' |
Interest Rate of Revolving Credit Loan | ' | ' | ' | ' | ' | 4.00% | ' | ' | ' | ' | ' | ' | ' |
Health Diagnostics Management (HDM) purchase of Stand-Up MRI Centers from Health Diagnostics, LLC (HD) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 |
Health Diagnostics Management (HDM) purchase of Other MRI Centers from Health Diagnostics, LLC (HD) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 |
Total Cost of Health Diagnostics Management (HDM) purchase of the MRI Centers from Health Diagnostics, LLC (HD) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35,900,000 |
Consideration to Outside Investors Regarding Health Diagnostics Management (HDM) purchase of the MRI Centers from Health Diagnostics, LLC (HD) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,500,000 |
Consideration For Non-Competition and Consulting Agreements Regarding Health Diagnostics Management (HDM) purchase of the MRI Centers from Health Diagnostics, LLC (HD) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,100,000 |
Cost of Majority Interest for Health Diagnostics Management LLC (HDM) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40,000,000 |
Private Placement of Equity and Capital Raise (Imperial) | ' | ' | ' | ' | ' | ' | 6,000,000 | ' | ' | ' | ' | ' | ' |
Private Placement Description (Imperial) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'On May 2, 2011, the Company completed a private placement of equity and succeeded in raising $6,000,000. The offering consisted Of Preferred Class A membership interests in a newly formed limited liability company, Imperial Management Services, LLC (Imperial). The Class B membership interests in Imperial, all of which were retained by the Company's subsidiary, HMCA, hold a 75 percent equity interest in Imperial. The Class A membership interests are entitled to receive a dividend of 18 percent per annum of their cash capital contribution of $6,000,000. HMCA contributed all of its assets, together with its liabilities, to Imperial as HMCAs capital contribution. The Imperial operating agreement provides for the Class A members to receive priority distributions until their original capital contributions are returned. Dividends are payable quarterly beginning August 1, 2011. On May 1, 2014 and on May 1, 2013, the Company returned a portion of the Class A Members capital contribution in the amount of $1,125,100 and $1,424,900, respectively. As of June 30, 2014, the Companys subsidiary, HMCA, now owns approximately 91 percent interest in Imperial Management Services. | ' |
HMCA ownership percentage of Imperial | 91.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption of Class A Members Capital Contribution (Imperial) | ' | ' | 1,125,100 | ' | 14,244,900 | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase of Interest from Unrelated party of Entity that provides management services to a diagnostic center in the NY Metropolitan Area, Percentage Acquired | ' | ' | ' | 50.00% | ' | ' | ' | 34.80% | 15.20% | ' | ' | ' | ' |
Purchase of Interest from Unrelated party of Entity that provides management services to a diagnostic center in the NY Metropolitan Area, Note Issued for Purchase | ' | ' | ' | $700,000 | ' | ' | ' | $400,000 | ' | ' | ' | ' | ' |
Description of Controlling interest in an entity which the Company consolidates | 'The Company also has a 50% controlling interest in an entity which the Company consolidates, that provides management services to a diagnostic center in the New York Metropolitan area. The center began operations during January 2012. The noncontrolling interest as of June 30, 2014 and 2013 aggregated $531,474 and $559,221, respectively. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NOTE_11_INCOME_TAXES_Details_N
NOTE 11 - INCOME TAXES - (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Note 11 - Income Taxes - Details Narrative | ' | ' |
Deferred Tax Asset | $5,740,287 | ' |
Deferred Tax Liability | 583,990 | ' |
Net Operating Loss (NOL) Carryforwards Available to Offset Future Taxable Income | 137,252,000 | ' |
Research and Development Tax Credit Carryforwards | 3,742,000 | ' |
Alternate Minimum Tax Credits | 578,000 | ' |
NY State Tax Credit Carryforwards | 1,133,000 | ' |
Decrease in Valuation Allowance for Deferred Tax Assets | $6,392,000 | $5,206,000 |
NOTE_13_COMMITMENTS_AND_CONTIN4
NOTE 13 - COMMITMENTS AND CONTINGENCIES - (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Rent Expense | $4,571,000 | $4,035,000 |
Early termination Expense rent | ' | 690,000 |
Employer Contributions to 401(k) Plan | ' | ' |
Average Monthly Payment for Stipulation Agreements | 19,552 | ' |
Settlement of Case (value) | ' | -755,500 |
Recorded sales tax obligations - principal | 2,665,000 | ' |
Recorded sales tax obligations - interest and penalties | 2,374,000 | ' |
Recorded provisions for penalties - Department of Labor and Internal Revenue Service regulations concerning the requirements to file Form 5500 to report activity of its 401K Employee Benefit Plan. | 250,000 | ' |
Reserve for Self-Funded Health Insurance Program | 344,000 | ' |
Stop-Loss Umbrella Policy with 3rd ParyInsurer to Limit Maximum Potential Liability for individual Claims | 100,000 | ' |
2000 Employee Stock Purchase Plan | ' | ' |
2000 Employee Stock Purchase Plan (ESPP) | 'The stockholders of the Company approved the 2000 Employee Stock Purchase Plan (ESPP) at the Companys annual stockholders meeting in April 2000. The ESPP provides for eligible employees to acquire common stock of the Company at a discount, not to exceed 15%. This plan has not been put into effect as of June 30, 2014. | ' |
Golden Triangle | ' | ' |
Details of Case | 'On or about June 30, 2010, one of Fonars customers, Golden Triangle Company, Golden Triangle Company v. Fonar Corporation et al, Plaintiff sought up to $5,000,000. Fonar made a motion to dismiss the complaint, the outcome of which left Plaintiff with only a cause of action for breach of contract. The case was settled in June 2013 for $480,000 in cash and 30,000 shares of Fonars common stock payable in installments. The Company recorded a gain of $755,500 on the statements of income for the year ended June 30, 2013. | ' |
Settlement of Case (value) | 480,000 | ' |
Settlement of Case (shares) | 30,000 | ' |
Jack Shapiro | ' | ' |
Details of Case | 'Jack Shapiro v. Fonar Corporation, July, 2009 to recover $500,000 based on Fonars failure to refund a deposit on an MRI scanner and termination of plaintiffs sales representative agreement. During the year ended June 30, 2013 the case has been settled for $323,000 payable in installments, subject to the plaintiff obtaining a sale for Fonar and the payment of installments of the purchase price by the customer. | ' |
Settlement of Case (value) | 323,000 | ' |
Matt Malek Madison | ' | ' |
Details of Case | 'Matt Malek Madison v. Fonar Corporation, August 27, 2007 to recover a down payment for a scanner in the amount of $300,000, with interest. Fonar answered the complaint and sued the plaintiff for breach of contract in the amount of $450,000. Although the case has been concluded, the plaintiff has not taken any steps to collect the judgment. As of June 30, 2014 and 2013, $300,000 was included in the Companys accrued expenses. | ' |
Settlement of Case (value) | 300,000 | ' |
Bonutti Research and Bolt MRI Technology | ' | ' |
Details of Case | 'Bonutti Research v. Fonar Corporation, Bonutti Research filed a patent infringement action in the U.S. District Court for the Eastern District Court of New York, The parties have settled the case for $150,000 payable by Fonar in twelve installments and certain licenses and covenants not to sue. The $150,000 has been recorded in the Companys consolidated statements of income for the year ended June 30, 2014. In Bolt MRI Technologies v. Fonar Corporation, The settlement of the Bonutti case covers this case as well. | ' |
Settlement of Case (value) | $150,000 | ' |
NOTE_15_SUPPLEMENTAL_CASH_FLOW3
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION - (Details Narrative) (USD $) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Note 15 - Supplemental Cash Flow Information - Details Narrative | ' | ' |
Interest paid | $668,475 | $389,907 |
Income taxes paid | $349,501 | $277,000 |
NOTE_16_DUE_TO_RELATED_MEDICAL1
NOTE 16 - DUE TO RELATED MEDICAL PRACTICES - (Details Narrative) (Tallahassee Scanning Services, PA, USD $) | 1 Months Ended | ||
Jun. 30, 2010 | Jun. 30, 2014 | Jun. 30, 2013 | |
Tallahassee Scanning Services, PA | ' | ' | ' |
Equipment Purchased | $550,000 | ' | ' |
interest rate/ annum | 10.41% | ' | ' |
monthly payment amount | 18,769 | ' | ' |
payment period | '3 years | ' | ' |
Payment start date | 18-Oct-09 | ' | ' |
Unpaid Balance | ' | $134,880 | $134,880 |
NOTE_17_SEGMENT_AND_RELATED_IN5
NOTE 17 - SEGMENT AND RELATED INFORMATION - (Details Narrative) | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Note 17 - Segment And Related Information - Details Narrative | ' | ' |
Export Sales of Medical Equipment | 42.40% | 3.80% |
NOTE_19_SUBSEQUENT_EVENTS_Deta
NOTE 19 - SUBSEQUENT EVENTS - (Details Narrative) (USD $) | 3 Months Ended |
Sep. 29, 2014 | |
Note 19 - Subsequent Events - Details Narrative | ' |
Common shares issued | 5,000 |
Shares value (USD$) | $53,200 |