Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Sep. 06, 2016 | Dec. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Fonar Corporation | ||
Entity Central Index Key | 355,019 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2016 | ||
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 | $ 104,000,000 | ||
Entity Common Stock, Shares Outstanding | 6,157,766 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 8,528,309 | $ 9,448,798 |
Accounts receivable - net of allowances for doubtful accounts of $284,279 and $362,362 at June 30, 2016 and 2015, respectively | 4,370,155 | 3,790,981 |
Medical receivables - net of allowances for doubtful accounts of $17,451,782 and $15,459,156 at June 30, 2016 and 2015, respectively | 10,126,397 | 9,082,319 |
Management and other fees receivable - net of allowances for doubtful accounts of $13,945,507 and $13,271,651 at June 30, 2016 and 2015, respectively | 15,637,831 | 14,057,962 |
Management and other fees receivable - related party medical practices - net of allowances for doubtful accounts of $392,505 and $403,047 at June 30, 2016 and 2015, respectively | 4,063,539 | 3,507,204 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 681,660 | |
Inventories | 2,074,300 | 2,191,849 |
Prepaid expenses and other current assets | 759,042 | 860,040 |
Total Current Assets | 45,559,573 | 43,620,813 |
Deferred income tax asset | 13,042,360 | 8,423,306 |
Property and equipment - net | 14,512,706 | 12,901,195 |
Goodwill | 3,322,158 | 1,767,098 |
Other intangible assets - net | 7,719,358 | 8,950,160 |
Other Assets | 731,451 | 829,505 |
Total Assets | 84,887,606 | 76,492,077 |
Current Liabilities: | ||
Current portion of long-term debt and capital leases | 2,447,693 | 2,490,146 |
Accounts payable | 1,254,485 | 1,782,442 |
Other current liabilities | 10,826,793 | 8,252,633 |
Unearned revenue on service contracts | 4,678,914 | 4,187,401 |
Customer deposits | 1,198,739 | 1,937,813 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 206,623 | 142,217 |
Total Current Liabilities | 20,613,247 | 18,792,652 |
Long-Term Liabilities: | ||
Deferred Income Tax Liability | 481,779 | 510,492 |
Due to related medical practices | 245,041 | 236,920 |
Long-Term Debt and Capital Leases, Less Current Portion | 2,059,236 | 5,699,302 |
Other Liabilities | 711,996 | 469,198 |
Total Long-Term Liabilities | 3,498,052 | 6,915,912 |
Total Liabilities | 24,111,299 | 25,708,564 |
Stockholders' Equity: | ||
Paid-in capital in excess of par value | 173,702,335 | 175,447,586 |
Accumulated deficit | (120,624,010) | (136,348,635) |
Notes receivable from employee stockholders | (23,879) | (31,495) |
Treasury stock, at cost - 11,643 shares of common stock at June 30, 2016 and 2015 | (675,390) | (675,390) |
Total Fonar Corporation Stockholder Equity | 52,379,732 | 38,392,742 |
Noncontrolling interests | 8,396,575 | 12,390,771 |
Total Stockholders' Equity | 60,776,307 | 50,783,513 |
Total Liabilities and Stockholders' Equity | 84,887,606 | 76,492,077 |
Class A Non-Voting Preferred | ||
Stockholders' Equity: | ||
Preferred Stock Value | 31 | 31 |
Class A Non-Voting Preferred Stock | ||
Stockholders' Equity: | ||
Preferred Stock Value | ||
Common Shares | ||
Stockholders' Equity: | ||
Common Stock Value | 607 | 607 |
Class B Common Stock | ||
Stockholders' Equity: | ||
Common Stock Value | ||
Class C Common Stock | ||
Stockholders' Equity: | ||
Common Stock Value | $ 38 | $ 38 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Jun. 30, 2015 |
Class A Non-Voting Preferred | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
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 | $ 0.001 | $ 0.001 |
Preferred Stock, Authorized | 567,000 | 567,000 |
Preferred Stock, Issued | ||
Preferred Stock, Outstanding | ||
Common Shares | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 8,500,000 | 8,500,000 |
Common Stock, Issued | 6,062,809 | 6,057,483 |
Common Stock, Outstanding | 6,051,166 | 6,045,840 |
Class B Common Stock | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 227,000 | 227,000 |
Common Stock, Issued | 146 | 146 |
Common Stock, Outstanding | 146 | 146 |
Class C Common Stock | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 567,000 | 567,000 |
Common Stock, Issued | 382,513 | 382,513 |
Common Stock, Outstanding | 382,513 | 382,513 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | |||
Product sales - net | $ 1,276,882 | $ 1,820,979 | $ 1,877,932 |
Service and repair fees - net | 9,396,736 | 9,549,316 | 10,082,631 |
Service and repair fees - related parties - net | 110,000 | 110,000 | 110,000 |
Patient revenue - net of contractual allowances and discounts | 32,985,809 | 28,153,598 | 24,307,192 |
Provision for bad debts for patient fee | (14,539,786) | (12,770,249) | (10,333,082) |
Management and other fees - net | 36,633,230 | 34,805,627 | 34,839,969 |
Management and other fees - related medical practices - net | 7,505,339 | 7,381,725 | 7,620,835 |
Total Revenues - Net | 73,368,210 | 69,050,996 | 68,505,477 |
Costs and Expenses | |||
Costs related to product sales | 1,254,328 | 1,882,230 | 1,067,120 |
Costs related to service and repair fees | 2,148,143 | 2,189,373 | 2,496,985 |
Costs related to service and repair fees -related parties | 25,147 | 25,220 | 27,242 |
Costs related to patient fee revenue | 9,418,935 | 7,939,524 | 7,670,484 |
Costs related to management and other fees | 21,949,583 | 20,970,116 | 20,851,065 |
Costs related to management and other fees - related medical practices | 4,074,762 | 3,883,953 | 3,744,446 |
Research and development | 1,631,846 | 1,812,398 | 1,760,821 |
Selling, general and administrative, inclusive of compensatory element of stock issuances of $2,006, $53,200 and $223,000 for the years ended June 30, 2016, 2015 and 2014, respectively | 18,509,850 | 17,448,305 | 18,584,645 |
Provision for bad debts | (201,949) | 2,475,032 | 1,806,299 |
Total Costs and Expenses | 59,012,594 | 56,151,119 | 56,202,808 |
Income from Operations | 14,355,616 | 12,899,877 | 12,302,669 |
Other Income and (Expenses): | |||
Interest expense | (262,193) | (702,095) | (884,541) |
Investment income | 224,263 | 225,270 | 238,928 |
Other income (expense) - net | 190,560 | 394,810 | (608,599) |
Income before benefit for income taxes and noncontrolling interests | 14,508,246 | 12,817,862 | 11,048,457 |
Benefit for Income Taxes | (4,287,271) | (2,612,521) | (2,348,312) |
Net Income | 18,795,517 | 15,430,383 | 13,396,769 |
Net Income - Noncontrolling Interests | (3,070,892) | (2,519,732) | (3,000,639) |
Net Income - Attributable to FONAR | $ 15,724,625 | $ 12,910,651 | $ 10,396,130 |
Basic Net Income Per Common Share | $ 2.6 | $ 2.13 | $ 1.73 |
Weighted Average Shares Outstanding - Basic | 6,050,893 | 6,050,632 | 6,009,822 |
Common Shares | |||
Other Income and (Expenses): | |||
Net Income - Attributable to FONAR | $ 14,702,834 | $ 12,071,670 | $ 9,720,030 |
Basic Net Income Per Common Share | $ 2.43 | $ 2 | $ 1.62 |
Diluted Net Income Per Common Share | $ 2.38 | $ 1.95 | $ 1.58 |
Weighted Average Shares Outstanding - Basic | 6,050,893 | 6,050,632 | 6,009,822 |
Weighted Average Shares Outstanding - Diluted | 6,178,397 | 6,178,136 | 6,137,326 |
Class A Non Voting Preferred Stock | |||
Other Income and (Expenses): | |||
Net Income - Attributable to FONAR | $ 761,561 | $ 625,309 | $ 503,911 |
Class C Common Stock | |||
Other Income and (Expenses): | |||
Net Income - Attributable to FONAR | $ 260,230 | $ 213,672 | $ 172,189 |
Basic Net Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Diluted Net Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Weighted Average Shares Outstanding - Basic | 382,513 | 382,513 | 382,513 |
Weighted Average Shares Outstanding - Diluted | 382,513 | 382,513 | 382,513 |
Statements of Operations (Paren
Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | |||
compensatory element of stock issuances | $ 2,006 | $ 53,200 | $ 223,000 |
Shareholders Equity and Compreh
Shareholders Equity and Comprehensive Income - USD ($) | Class A Non-Voting Preferred | Common Shares | Class C Common Stock | Paid-in Capital in Excess of Par Value | Accumulated Deficit | Notes Receivable from Employee Stockholders | Treasury Stock | Noncontrolling Interests | Total |
Balance - Beginning, Shares at Jun. 30, 2013 | 598 | ||||||||
Balance - Beginning, Value at Jun. 30, 2013 | $ 31 | $ 5,969,132 | $ 38 | $ 174,499,020 | $ (159,655,416) | $ (54,820) | $ (675,390) | $ 23,685,215 | $ 37,799,276 |
Net Income | $ 10,396,130 | $ 3,000,639 | $ 13,396,769 | ||||||
Stock issued to employees under stock bonus plans, Shares | 2 | ||||||||
Stock issued to employees under stock bonus plans, Value | $ 21,443 | $ 222,998 | $ 223,000 | ||||||
Payments on notes receivable from employee stockholders | $ 15,992 | $ 15,992 | |||||||
Issuance of stock for goods and services, Shares | 5 | ||||||||
Issuance of stock for goods and services, Value | $ 45,265 | $ 531,820 | $ 531,825 | ||||||
Redemption of noncontrolling interests | $ (1,125,100) | (1,125,100) | |||||||
Buyout of noncontrolling interests | |||||||||
Distributions to noncontrolling interests | (4,965,770) | (4,965,770) | |||||||
Proceeds from noncontrolling interests | |||||||||
Stock option exercised, Shares | 1 | ||||||||
Stock option exercised, Value | $ 10,000 | $ 30,599 | $ 30,600 | ||||||
Balance - Ending, Shares at Jun. 30, 2014 | 606 | ||||||||
Balance - Ending, Value at Jun. 30, 2014 | $ 31 | $ 6,045,840 | $ 38 | $ 175,284,437 | $ (149,259,286) | $ (38,828) | $ (675,390) | $ 20,594,984 | $ 45,906,592 |
Net Income | $ 12,910,651 | $ 2,519,732 | $ 15,430,383 | ||||||
Stock issued to employees under stock bonus plans, Shares | 1 | ||||||||
Stock issued to employees under stock bonus plans, Value | $ 5,000 | $ 53,199 | $ 53,200 | ||||||
Payments on notes receivable from employee stockholders | $ 7,333 | $ 7,333 | |||||||
Issuance of stock for goods and services, Shares | |||||||||
Issuance of stock for goods and services, Value | $ 109,950 | $ 109,950 | |||||||
Redemption of noncontrolling interests | (1,125,000) | (1,125,000) | |||||||
Buyout of noncontrolling interests | (4,971,094) | (4,971,094) | |||||||
Distributions to noncontrolling interests | $ (4,627,851) | $ (4,627,851) | |||||||
Stock option exercised, Shares | |||||||||
Stock option exercised, Value | |||||||||
Balance - Ending, Shares at Jun. 30, 2015 | 607 | ||||||||
Balance - Ending, Value at Jun. 30, 2015 | $ 31 | $ 6,050,840 | $ 38 | $ 175,447,586 | $ (136,348,635) | $ (31,495) | $ (675,390) | $ 12,390,771 | $ 50,783,513 |
Net Income | $ 11,272,442 | $ 3,070,892 | $ 18,795,517 | ||||||
Stock issued to employees under stock bonus plans, Shares | |||||||||
Stock issued to employees under stock bonus plans, Value | $ 146 | $ 2,006 | $ 2,006 | ||||||
Payments on notes receivable from employee stockholders | $ 7,616 | $ 7,616 | |||||||
Issuance of stock for goods and services, Shares | |||||||||
Issuance of stock for goods and services, Value | |||||||||
Redemption of noncontrolling interests | 1,155,988 | (2,905,000) | |||||||
Buyout of noncontrolling interests | |||||||||
Distributions to noncontrolling interests | (5,909,100) | (5,909,100) | |||||||
Proceeds from noncontrolling interests | |||||||||
Stock option exercised, Shares | |||||||||
Stock option exercised, Value | $ 180 | $ 1,755 | $ 1,755 | ||||||
Balance - Ending, Shares at Jun. 30, 2016 | 607 | ||||||||
Balance - Ending, Value at Jun. 30, 2016 | $ 31 | $ 6,051,166 | $ 38 | $ 173,702,335 | $ (120,624,010) | $ (23,879) | $ (675,390) | $ 8,396,575 | $ 60,776,307 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net Income | $ 18,795,517 | $ 15,430,383 | $ 13,396,769 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 3,297,289 | 3,544,470 | 3,817,205 |
Abandoned patents or software written off | 88,796 | 413,589 | 250,523 |
Provision for bad debts | (201,949) | 2,475,032 | 1,806,299 |
Deferred income tax benefit - net | (4,647,767) | (2,756,517) | (2,682,405) |
Loss on disposition of equipment | 657,350 | ||
Gain on acquisition | (192,999) | ||
Compensatory element of stock issuances | 2,006 | 53,200 | 223,000 |
Gain on extinguishment of debt | (394,797) | ||
Stock issued for costs and expenses | $ 109,950 | $ 531,825 | |
Stock option exercised | 1,755 | 30,600 | |
(Increase) decrease in operating assets, net: | |||
Accounts, medical and management fee receivables | $ (3,557,507) | $ (4,258,147) | $ (4,044,002) |
Notes receivable | 28,280 | 135,592 | 95,623 |
Costs and estimated earnings in excess of Billings on uncompleted contracts | 681,660 | 78,149 | (314,067) |
Inventories | 117,549 | 251,687 | (366,448) |
Prepaid expenses and other current assets | 72,718 | 67,192 | 46,967 |
Other assets | 18,054 | 41,125 | 131,811 |
Increase (decrease) in operating liabilities, net: | |||
Accounts payable | (527,957) | (699,555) | (270,482) |
Other current liabilities | 3,065,673 | (1,041,214) | 295,219 |
Customer advances | (739,074) | 11,000 | 68,943 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 64,406 | ||
Other Liabilities | 242,798 | (190,561) | (268,261) |
Due to related medical practices | 8,121 | 2,339 | 3,955 |
Income tax payable | (19,501) | ||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 16,617,369 | 13,272,917 | 13,390,923 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (712,216) | (131,308) | (620,697) |
Cost of acquisition | (4,223,567) | ||
Cost of patents | (113,072) | (139,534) | (214,211) |
NET CASH USED IN INVESTING ACTIVITIES | (5,048,855) | (270,842) | (834,908) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Repayment of borrowings and capital lease obligations | (3,682,519) | (2,788,401) | (4,400,128) |
Repayment of notes receivable from employee stockholders | 7,616 | 7,333 | 15,992 |
Distributions to noncontrolling interests | (5,909,100) | (4,627,851) | (4,965,770) |
Redemption of noncontroling Interests | (2,905,000) | (1,125,000) | (1,125,100) |
Buyout of noncontroling Interest | (4,971,094) | ||
NET CASH USED IN FINANCING ACTIVITIES | (12,489,003) | (13,505,013) | (10,475,006) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (920,489) | (502,938) | 2,081,009 |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 9,448,798 | 9,951,736 | 7,870,727 |
CASH AND CASH EQUIVALENTS - END OF YEAR | $ 8,528,309 | $ 9,448,798 | $ 9,951,736 |
NOTE 1 - DESCRIPTION OF BUSINES
NOTE 1 - DESCRIPTION OF BUSINESS AND LIQUIDITY AND CAPITAL RESOURCES | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
NOTE 1 - DESCRIPTION OF BUSINESS AND LIQUIDITY AND CAPITAL RESOURCES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 June 30, 2016, the Company purchased 100% of the equity in Turnkey Services of New York, LLC and 100% of the equity in TK2 Equipment Management, LLC. Turnkey Service of New York, LLC and TK2 Equipment Management, LLC. These entities had provided the Company with ancillary diagnostic imaging equipment (under operating leases) to our managed MRI facilities. The Company paid $4,223,567 to acquire these two entities with net assets at fair value of $2,861,506. On July 1, 2015, the Company restructured the corporate organization of the management of diagnostic imaging centers segment of our business. The reorganization was structured to more completely integrate the operations of Health Management Corporation of America and HDM. Imperial contributed all of its assets (which were utilized in the business of Health Management Corporation of America) to HDM and received a 24.2% interest in HDM. Health Management Corporation of America retained a direct ownership interest of 45.8% in HDM, and the original investors in HDM retained a 30.0% ownership interest in the newly expanded HDM. The entire management of diagnostic imaging centers business segment is now being conducted by HDM. 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, 2015, 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, 2016 | |
Accounting Policies [Abstract] | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 $1,113,000, $1,200,000 and $1,037,000 for the years ended June 30, 2016, 2015 and 2014, 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 3-7 Machinery and equipment 2-7 Furniture and fixtures 3-9 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 15 years. 3) Non-Competition Agreements The non-competition agreements are being amortized on the straight line basis over the length of the agreement (7 years). 4) 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 product and related (upgrades and supplies) sales 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, 2016, the Company has twenty one management agreements of which three are with PC’s owned by Raymond V. Damadian, M.D., Chairman of the Board of FONAR (“the Related medical practices”) and eighteen 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 $69,000 to $277,000. 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 fee for the medical equipment consists of a fixed monthly fee of $2,000. 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 revenues, net of contractual allowances and discounts less the provision for bad debts for the years ended June 30, 2016, 2015 and 2014 are summarized in the following table. For the Year Ended June 30, 2016 2015 2014 Commercial Insurance/ Managed Care $ 4,659,322 $ 4,398,589 $ 4,217,088 Medicare/Medicaid 1,182,552 1,187,690 1,443,020 Workers' Compensation/Personal Injury 20,888,856 15,978,243 13,369,956 Other 6,255,079 6,589,076 5,277,128 Patient Fee Revenue, net of contractual allowances and discounts 32,985,809 28,153,598 24,307,192 Provision for Bad Debts (14,539,786 ) (12,770,249 ) (10,333,082 ) Net Patient Fee Revenue $ 18,446,023 $ 15,383,349 $ 13,974,110 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, increased 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 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 $535,000, $894,000 and $889,000 for the years ended June 30, 2016, 2015 and 2014, 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 $11,077, $9,293 and $1,885 for the years ended June 30, 2016, 2015 and 2014, 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 occurs. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. 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, 2016, 2015 and 2014. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the years ended June 30, 2016, 2015 and 2014, diluted EPS for common shareholders includes 127,504 shares upon conversion of Class C Common. June 30, 2016 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 15,724,625 $ 14,702,834 $ 260,230 Denominator: Weighted average shares outstanding 6,050,893 6,050,893 382,513 Basic income per common share $ 2.60 $ 2.43 $ 0.68 Diluted Denominator: Weighted average shares outstanding 6,050,893 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178.397 382,513 Diluted income per common share $ 2.38 $ 0.68 June 30, 2015 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 12,910,651 $ 12,071,670 $ 213,672 Denominator: Weighted average shares outstanding 6,050,632 6,050,632 382,513 Basic income per common share $ 2.13 $ 2.00 $ 0.56 Diluted Denominator: Weighted average shares outstanding 6,050,632 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178,136 382,513 Diluted income per common share $ 1.95 $ 0.56 June 30, 2014 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 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, 2016, the Company had cash on deposit of approximately $5,804,000 in excess of federally insured limits of $250,000. Related Parties: Net revenues from related parties accounted for approximately 10%, 11% and 11% of the consolidated net revenues for the years ended June 30, 2016, 2015 and 2014, respectively. Net management fee receivables from the related party medical practices accounted for approximately 12%, 12% and 12% of the consolidated accounts receivable for the years ended June 30, 2016, 2015 and 2014, 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, 2016 and 2015, 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 and notes 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 In March 2016, the FASB issued ASU No. 2016-09,”Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This update includes provisions intended to simplify various aspects of accounting for share-based compensation. ASU No. 2016-09 will take effect for public companies for the annual periods beginning after December 15, 2016. The Company is currently assessing the potential impact of ASU No. 2016-09 on the Company’s financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which will require entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. The ASU simplified the current guidance, which requires entities to separately present deferred tax assets and deferred tax liabilities as current and non-current in a classified balance sheet. This standard is effective for annual periods and interim periods within those fiscal years, beginning after December 15, 2016 but permits entities to early adopt at the beginning of any interim or annual period. During the quarter ended December 31, 2015, the Company elected to early adopt ASU 2015-17 and applied the change retrospectively to all periods present. As a result, the Company presented all deferred assets and liabilities as non-current in its consolidated balance sheet. The adoption of this ASU did not result in a reclassification of the Company’s net deferred tax assets and liabilities as of June 30, 2015. As of June 30, 2016, there was no impact on the Company’s results of operations as a result of the adoption of ASU No. 2015-17 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 for annual reporting periods beginning after December 15, 2017, as deferred including interim periods within the reporting period 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 Company is currently evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on it ongoing financial reporting. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. It is effective for annual reporting periods beginning after December 15, 2016. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of June 30, 2016 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 2016 or 2015, 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. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Company’s consolidated financial statements. 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, M
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | 12 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE 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 59%, 54% and 50%, respectively, of the PCs’ 2016, 2015 and 2014 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 party medical practices accounted for approximately 10%, 11% and 11%, of the consolidated net revenues for the years ended June 30, 2016, 2015 and 2014, respectively. Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related party 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 years ended June 30, 2016, 2015 and 2014. For The Year Ended June 30, 2016 2015 2014 Total Facilities Owned or Managed (at Beginning of Year) 24 24 24 Facilities Added by: Acquisition 1 — — Internal development — — 1 Managed Facilities Closed — — (1 ) Total Facilities Owned or Managed (at End of Year) 25 24 24 |
NOTE 4 - COSTS AND ESTIMATED EA
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS AND CUSTOMER ADVANCES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Information relating to uncompleted contracts as of June 30, 2016 and 2015 is as follows: As of June 30, 2016 2015 Costs incurred on uncompleted contracts $ 893,976 $ 1,861,350 Estimated earnings 491,476 1,371,093 1,385,452 3,232,443 Less: Billings to date 1,592,075 2,693,000 $ (206,623 ) $ 539,443 Included in the accompanying consolidated balance sheets under the following captions: As of June 30, 2016 2015 Costs and estimated earnings in excess of billings on uncompleted contracts $ — $ 681,660 Less: Billings in excess of costs and estimated earnings on uncompleted contracts 206,623 142,217 $ (206,623 ) $ 539,443 |
NOTE 5 - INVENTORIES
NOTE 5 - INVENTORIES | 12 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
NOTE 5 - INVENTORIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 5 – INVENTORIES Inventories included in the accompanying consolidated balance sheets consist of: As of June 30, 2016 2015 Purchased parts, components and supplies $ 1,862,605 $ 2,043,411 Work-in-process 211,695 148,438 $ 2,074,300 $ 2,191,849 |
NOTE 6 - PROPERTY AND EQUIPMENT
NOTE 6 - PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
NOTE 6 - PROPERTY AND EQUIPMENT | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment, at cost, less accumulated depreciation and amortization, at June 30, 2016 and 2015, is comprised of: As of June 30, 2016 2015 Diagnostic equipment under capital leases $ 620,307 $ 620,307 Diagnostic equipment 19,213,472 17,396,797 Research, development and demonstration equipment 3,904,846 3,580,224 Machinery and equipment 2,069,055 2,069,055 Furniture and fixtures 2,949,824 2,550,627 Leasehold improvements 5,616,143 4,502,915 Building 939,614 939,614 35,313,261 31,659,539 Less: Accumulated depreciation and amortization 20,800,555 18,758,344 $ 14,512,706 $ 12,901,195 Depreciation and amortization of property and equipment for the years ended June 30, 2016, 2015 and 2014 was $2,042,211, $2,259,842 and $2,458,113, respectively. Depreciation and amortization of diagnostic equipment under capital leases for the years ended June 30, 2016, 2015 and 2014 was $0, $0 and $95,026, respectively. Accumulated depreciation and amortization of diagnostic equipment under capital leases was $620,307, $620,307 and $620,307 for the years ended June 30, 2016, 2015 and 2014, respectively. During the year ended June 30, 2015, the Company has retired assets that were fully depreciated with a cost and accumulated depreciation basis of $1,151,541. |
NOTE 7 - OTHER INTANGIBLE ASSET
NOTE 7 - OTHER INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 7 - OTHER INTANGIBLE ASSETS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 7 - OTHER INTANGIBLE ASSETS Other intangible assets, net of accumulated amortization, at June 30, 2016 and 2015 are comprised of: As of June 30, 2016 2015 Capitalized software development costs $ 7,004,847 $ 7,004,847 Patents and copyrights 4,571,821 4,547,545 Non-competition agreements 4,100,000 4,100,000 Customer relationships 3,800,000 3,800,000 19,476,668 19,452,392 Less: Accumulated amortization 11,757,310 10,502,232 $ 7,719,358 $ 8,950,160 Information related to the above intangible assets for the years ended June 30, 2016, 2015 and 2014 is as follows: As of June 30, 2016 2015 2014 Balance – Beginning of Year $ 8,950,160 $ 10,508,843 $ 11,904,248 Amounts capitalized 113,072 139,534 214,211 Software or patents written off (88,796 ) (413,589 ) (250,523 ) Amortization (1,255,078 ) (1,284,628 ) (1,359,093 ) Balance – End of Year $ 7,719,358 $ 8,950,160 $ 10,508,843 Amortization of patents and copyrights for the years ended June 30, 2016, 2015 and 2014 amounted to $187,553, $183,272 and $178,836, respectively. Amortization of capitalized software development costs for the years ended June 30, 2016, 2015 and 2014 was $291,810, $325,642 and $407,876, respectively. Amortization of non-competition agreements for the years ended June 30, 2016, 2015 and 2014 amounted to $585,714, $585,714 and $585,714, respectively. Amortization of customer relationships for the years ended June 30, 2016, 2015 and 2014 amounted to $190,000, $190,000 and $186,667, respectively. The estimated amortization of other intangible assets for the five years ending June 30, 2021 and thereafter is as follows: For the Years Ending June 30, Total Patents and Copyrights Capitalized Software Development Costs Non- competition Customer Relation-ships 2017 $ 1,232,261 $ 196,547 $ 260,000 $ 585,714 $ 190,000 2018 1,155,571 206,524 173,333 585,714 190,000 2019 988,324 212,610 — 585,714 190,000 2020 791,112 210,635 — 390,477 190,000 2021 393,075 203,075 — — 190,000 Thereafter 3,159,015 942,348 — — 2,216,667 $ 7,719,358 $ 1,971,739 $ 433,333 $ 2,147,619 $ 3,166,667 The weighted average amortization period for other intangible assets is 10.7 years and they have no expected residual value. |
NOTE 8 - CAPITAL STOCK
NOTE 8 - CAPITAL STOCK | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
NOTE 8 - CAPITAL STOCK | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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, 146 and 146 of such shares outstanding at June 30, 2016, 2015 and 2014, 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, 2016, 953,221 shares of common stock of FONAR were available for future grant under this plan. For the years ended June 30, 2016, 2015 and 2014, 146, 5,000 and 46,708 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 terminated on February 14, 2015 and no options remain outstanding. Stock option activity and weighted average exercise prices under these plans and grants for the years ended June 30, 2016, 2015 and 2014 was as follows: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding, June 30, 2013 6,610 29.00 — Granted — — — Exercised — — — Forfeited / Expired (6,610 ) 29.00 Outstanding, June 30, 2014 — — — Granted — — — Exercised — — — Forfeited / Expired — — — Outstanding, June 30, 2015 — — — Outstanding, June 30, 2016 — — — Exercisable at: June 30, 2014 — $ — June 30, 2015 — $ — June 30, 2016 — $ — |
NOTE 9 - CONTROLLING AND NONCON
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS | 12 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
NOTE 9 - CONTROLLING AND NON CONTROLLING INTERESTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 on 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. The Company contributed $20,200,000 to HDM and the group of outside investors contributed $19,800,000 for its non-controlling membership interest. 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 Company recognized and measured 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. On January 8, 2015, the Company purchased 20% of the Class A members ownership interest at a cost of $4,971,094. The Company has a 60.4% ownership interest in HDM after this transaction. Amount of each class of HDM members’ equity as of June 30, 2016, 2015 and 2014 June 30, 2016 June 30, 2015 June 30, 2014 Class A Member Class B Members Class A Member Class B Members Class A Member Class B Members Opening Members’ Equity $ 10,752,169 $22,043,621 $ 17,659,698 $ 21,113,266 $ 19,526,475 $ 20,763,830 Share of Net Income 2,886,006 13,229,621 1,988,915 5,704,999 2,266,473 4,566,186 Buyout — — (4,971,094 ) — — — Distributions (5,241,600 ) (11,958,400) (3,925,350 ) (4,774,644 ) (4,133,250 ) (4,216,750 ) Ending Members’ Equity $ 8,396,575 $ 23,314,842 $ 10,752,169 $ 22,043,621 $ 17,659,698 $ 21,113,266 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 2, 2016, May 1, 2015 and on May 1, 2014, the Company returned a portion of the Class A Members capital contribution in the amount of $1,125,000, $1,125,000 and $1,125,100, respectively. As of June 30, 2016, the Company’s subsidiary, HMCA, now owns approximately 100% interest in Imperial Management Services. Amount of each class of Imperial members’ equity as of June 30, 2016, 2015 and 2014 June 30, 2016 June 30, 2015 June 30, 2014 Class A Member Class B Members Class A Member Class B Members Class A Member Class B Members Opening Members’ Equity $ 1,279,446 $ 15,000,446 $ 2,403,812 $ 11,079,317 $ 3,599,519 $ 7,772,781 Share of Net Income — — 405,634 3,921,129 536,913 3,306,536 Distributions (202,500 ) — (405,000 ) — (607,520 ) - Buyout 48,054 Redemption (1,125,000 ) — (1,125,000 ) — (1,125,100 ) - Ending Members’ Equity $ — $ 15,000,446 $ 1,279,446 $ 15,000,446 $ 2,403,812 $ $11,079,317 The Company 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. On June 30, 2016, the Company purchased the remaining 50% interest in the entity making it a wholly owned subsidiary for the Company. The Company paid $1,780,000 to acquire this additional ownership interest. |
NOTE 10 - LONG-TERM DEBT, NOTES
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES Long-term debt, notes payable and capital leases consist of the following: 2016 2015 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 $584,170 as of June 30, 2016. $392,096 $416,844 The revolving credit note was extended to September 2018. 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. The note was paid in full September 2, 2014. The Company still has the ability to draw down on the line. - - 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. 3,749,978 7,149,986 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. 316,088 488,499 Other (including capital leases for property and equipment). 48,767 134,119 4,506,929 8,189,448 Less: Current portion 2,447,693 2,490,146 $2,059,236 $5,699,302 The maturities of long-term debt over the next five years and thereafter are as follows: Years Ending June 30, 2017 $ 2,447,693 2018 1,722,474 2019 30,746 2020 32,944 2021 35,416 Thereafter 237,656 $ 4,506,929 |
NOTE 11 - INCOME TAXES
NOTE 11 - INCOME TAXES | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
NOTE 11 - INCOME TAXES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 2010. The Company has recorded a deferred tax asset of $13,042,360 and a deferred tax liability of $481,779 as of June 30, 2016, primarily relating to its net operating loss carryforwards of approximately $110,029,000 available to offset future taxable income through 2031. The net operating losses begin to expire in 2021 for federal tax purposes and in 2016 for state income tax purposes. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of year end, in part due to our ability to sustain profitable levels of income in the U.S. federal tax jurisdiction, management determined that there is sufficient positive evidence to conclude that it is more than likely than not that additional deferred taxes of $4.6 million are realizable. It therefore reduced the valuation allowance accordingly. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which temporary differences become deductible or when such net operating losses can be utilized. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company believes that it is more likely than not that the benefits from certain NOL carryforwards, will not be fully realized. In recognition of this inherent risk, 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. Components of the current benefit for income taxes are as follows: Years Ended June 30, 2016 2015 2014 Current: Federal $ 360,496 $ 114,683 $ 310,000 State — 29,313 24,093 Federal deferred taxes (4,368,901 ) (2,353,124 ) (2,280,044 ) State deferred taxes (278,866 ) (403,393 ) (402,361 ) $ (4,287,271 ) $ (2,612,521 ) $ (2,348,312 ) 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, 2016 2015 2014 Taxes at federal statutory rate 35.0 % 35.0 % 34.0 % State and local income taxes (benefit), net of federal benefit 6.0 % 6.0 % 6.0 % Permanent differences 0.2 % 0.2 % (0.9 )% (Decrease) increase in the valuation allowance (89.8 )% (65.4 )% (65.5 )% True ups (0.0 )% (3.2 )% (2.8 )% Effective income tax rate (48.6 )% (27.4 )% (29.2 )% As of June 30, 2016, the Company has net operating loss (“NOL”) carryforwards of approximately $110,029,000 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 $4,528,000. The Company also has $1,118,000 in alternative minimum tax credits. In addition, for New York State income tax purposes, the Company has tax credit carryforwards aggregating approximately $1,112,000 which, are accounted for under the flow-through method. The tax credit carryforwards expire during the years ending June 30, 2016 to June 30, 2034. Significant components of the Company's deferred tax assets and liabilities at June 30, 2016 and 2015 are as follows: June 30, 2016 2015 Deferred tax assets: Allowance for doubtful accounts $ 6,495,094 $ 6,607,107 Non-deductible accruals 962,867 115,346 Net operating carryforwards 44,011,554 49,170,420 Tax credits 6,770,099 6,751,692 Inventory 105,250 111,190 Property and equipment and depreciation — 1,093,401 58,344,864 63,849,156 Valuation allowance (45,302,504 ) (55,425,850 ) Total deferred tax assets 13,042,360 8,423,306 Capitalized software development costs (481,779 ) (510,492 ) Total deferred tax liabilities (481,779 ) (510,492 ) Net deferred tax asset $ 12,560,581 $ 7,912,814 The valuation allowance for deferred tax assets decreased by approximately $10,123,000 during the year ended June 30, 2016 and decreased by approximately $6,730,000 during the year ended June 30, 2015. |
NOTE 12 - OTHER CURRENT LIABILI
NOTE 12 - OTHER CURRENT LIABILITIES | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
NOTE 12 - OTHER CURRENT LIABILITIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 12 - OTHER CURRENT LIABILITIES Included in other current liabilities are the following: June 30, 2016 2015 Accrued salaries, commissions and payroll taxes $ 3,188,665 $ 991,603 Accrued interest 45,479 117,480 Litigation accruals 545,029 521,149 Sales tax payable 2,402,448 2,538,340 Legal and other professional fees 384,810 344,060 Accounting fees 241,400 235,000 Self-funded health insurance reserve 392,178 510,150 Interest and penalty – sales tax 2,486,927 2,508,840 Other 1,139,857 486,011 $ 10,826,793 $ 8,252,633 |
NOTE 13 - COMMITMENTS AND CONTI
NOTE 13 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 13 - COMMITMENTS AND CONTINGENCIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 November 2026. 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, 2016: Year Ending June 30, Facilities And Equipment (Operating Lease) 2017 $ 3,839,635 2018 3,295,963 2019 2,704,324 2020 2,178,791 2021 1,848,522 Thereafter 6,733,116 Total minimum obligations $ 20,600,351 Rent expense for operating leases approximated $4,222,000, $4,266,000 and $4,571,000, for the years ended June 30, 2016, 2015 and 2014, respectively. The Company received approval from the Suffolk County IDA on February 29, 2016 of a 50% property tax abatement, valued at $440,000, over a 10 year period commencing January 2017. 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, 2016, 2015 and 2014. 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, 2016. Stipulation Agreements The Company has entered into stipulation agreements with a number of its creditors that in the aggregate total $297,339, which is included in other current liabilities and other liabilities on the Company’s balance sheet as of June 30, 2016. The monthly payments total $15,859. 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. 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. The Company 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 the Company’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; the Company’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. The Company 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. The Company 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, 2016 and 2015, $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. As of June 30, 2015, the Company has paid the $150,000. 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. Shapiro v. Fonar Corporation, New York Supreme Court, Suffolk County. Previously, The Company and Dr. Shapiro had settled an action commenced in Nassau County under the same name. The amount remaining payable under the settlement agreement according to the Company’s records is $258,400, but the payment and timing of the payment was dependent on obtaining an order for an Upright® MRI Scanner for the Company and the making of installment payments thereunder by the customer. Briefly stated, the balance of $258,400 was and is not yet due. Dr. Shapiro claims that the Company was in breach of the settlement agreement and seeks payment of no less than $307,000 plus interest and attorneys’ fees. The Company believes it has scrupulously observed the terms of the settlement agreement and that Dr. Shapiro’s claims are without merit. The Company answered the Complaint and the one is now in discovery. The case was settled for $258,400 plus interest on February 18, 2016. 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 approximately $2,402,000 plus interest and penalties of approximately $2,487,000. The Company is in the process of determining its regulatory requirements in order to become compliant. The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $100,000 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, 2016 and 2015, the Company had approximately $392,000 and $510,000, 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 years covered by this report. |
NOTE 14 - OTHER INCOME (EXPENSE
NOTE 14 - OTHER INCOME (EXPENSE) | 12 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
NOTE 14 - OTHER (EXPENSE) INCOME | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 14 - OTHER INCOME (EXPENSE) Other income (expense) consists of: For the Years Ended June 30, 2016 2015 2014 Loss on disposition of equipment $ — $ — $ (657,350 ) Litigation settlement — — 13,586 Gain on extinguishment of debt — 394,797 — Gain on sale of equipment — — 40,000 Other income (expense) 190,560 13 (4,835 ) $ 190,560 $ 394,810 $ (608,599 ) |
NOTE 15 - SUPPLEMENTAL CASH FLO
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Jun. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION During the years ended June 30, 2016, 2015 and 2014, the Company paid $356,106, $516,385 and $668,475 for interest, respectively. During the years ended June 30, 2016, 2015 and 2014, the Company paid $360,496, $143,996 and $349,501 for income taxes, respectively. |
NOTE 16 - DUE TO RELATED MEDICA
NOTE 16 - DUE TO RELATED MEDICAL PRACTICES | 12 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
NOTE 16 - DUE TO RELATED MEDICAL PRACTICES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 16 – DUE TO RELATED PARTY 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, 2016 and 2015 was $134,880. Other Related Party Transactions A son of the Company’s Chairman of the Board and CEO and President of the Company is one of the minority owners of a billing company, which performs billing and collection services with respect to No-Fault and Workers’ Compensation claims of the Company’s clients. The monthly fee charged to the Company is $85,000. Bensonhurst MRI Limited Partnership, in which a son of the Company’s Chairman of the Board and CEO and President of the Company holds an interest, is party to an agreement with the Company for the service and maintenance of its Upright MRI Scanner for a price of $110,000 per annum. A limited liability company of which a son of the Company’s Chairman of the Board and CEO and President of the Company is an owner also had a 1.375% interest in Yonkers Diagnostic Management, LLC, a 4.5% interest in Turnkey Services of New York, LLC and a 4.3% interest in TK2 Equipment Management, LLC. Entities in which the Executive Vice President and COO and his family had an interest had a 0.75% in Yonkers and a 5.9% in TK2 Equipment Management. The Company acquired these entities, or the portion thereof not already owned by the Company, through a series of merger transactions for $1,780,000 in the case of Yonkers, $1,147,715 in the case of Turnkey Services and $3,075,852 in the case of TK2 Equipment Management. A company of which a son of the Company’s Chairman of the Board and CEO and President of the Company is an owner and a company in which the Executive Vice President and COO has an interest also hold a 1.7% and 2.8% interest, respectively, in Turnkey Management of Great Neck, LLC, an entity for which the Company will perform management services. No services were performed and no fees were due in fiscal 2016. A company in which a son of the Company’s Chairman of the Board and CEO and President of the Company is an owner, also had a 14.967% interest in Imperial’s Class A membership interests and has a 6.06% interest in Health Management Company of America’s Class A membership interests. A company in which the Executive Vice President and COO and his family have an interest, had a 12.917% interest in Imperial’s Class A membership interests and has a 2.5% interest in Health Management Company of America’s Class A membership interests. The Company repurchased Imperial’s outstanding Class A memberships on May 1, 2016. An entity of a son of the Company’s Chairman of the Board and CEO and President of the Company received $179,000 for its interests and the Executive Vice President and COO company received $105,000 for its interests. |
NOTE 17 - SEGMENT AND RELATED I
NOTE 17 - SEGMENT AND RELATED INFORMATION | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
NOTE 17 - SEGMENT AND RELATED INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 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 2016: Net revenues from external customers $ 10,783,618 $ 62,584,592 $ 73,368,210 Intersegment net revenues * $ 2,140,000 $ — $ 2,140,000 (Loss) Income from operations $ (1,979,497 ) $ 16,335,113 $ 14,355,616 Depreciation and amortization $ 320,843 $ 2,976,446 $ 3,297,289 Compensatory element of stock issuances $ 2,006 $ — $ 2,006 Total identifiable assets $ 28,241,501 $ 56,646,105 $ 84,887,606 Capital expenditures $ 437,695 $ 387,593 $ 825,288 Fiscal 2015: Net revenues from external customers $ 11,480,295 $ 57,570,701 $ 69,050,996 Intersegment net revenues * $ 2,005,000 $ — $ 2,005,000 Income from operations $ 504,895 $ 12,394,982 $ 12,899,877 Depreciation and amortization $ 306,183 $ 3,238,287 $ 3,544,470 Compensatory element of stock issuances $ 53,200 $ — $ 53,200 Total identifiable assets $ 18,997,142 $ 57,494,935 $ 76,492,077 Capital expenditures $ 209,534 $ 61,308 $ 270,842 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 * 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 19.6%, 74.2% and 42.4% of product sales revenues to third parties for the years ended June 30, 2016, 2015 and 2014, 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, 2016 2015 2014 United Arab Emirates -% -% 29.8 % Switzerland — 2.2 12.4 Canada 0.3 0.1 — England 18.5 — — Germany .6 71.9 — Puerto Rico .2 — — Libya — — 0.2 19.6 % 74.2 % 42.4 % 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 5.8%, 7.4% and 8.8% of consolidated net service and repair fees for the years ended June 30, 2016, 2015 and 2014, respectively. 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, 2016 2015 2014 Spain 0.3 % 1.0 % 1.0 % Puerto Rico 1.5 1.2 1.1 Switzerland 0.3 0.7 1.1 Germany 1.5 0.7 0.4 England 0.5 1.7 2.6 Holland — 0.6 1.3 Canada 0.3 0.1 0.2 Greece 0.2 0.2 — Australia 1.2 1.2 1.1 5.8 % 7.4 % 8.8 % The Company does not have any material assets outside of the United States. |
NOTE 18 - ALLOWANCE FOR DOUBTFU
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS | 12 Months Ended |
Jun. 30, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 18 – ALLOWANCE FOR DOUBTFUL ACCOUNTS The following represents a summary of allowance for doubtful accounts for the years ended June 30, 2016, 2015 and 2014, respectively: Description Balance June 30, 2015 Additions Deductions Balance June 30, 2016 Accounts receivable $ 362,362 $ (1) $ 78,083 $ 84,279 Management and other fees receivable 13,271,651 (1) 673,856 — 13,945,507 Management and other fees receivable - related medical practices 403,047 — 10,542 392,505 Medical receivables 15,459,156 (1)14,539,786 12,547,160 17,451,782 Description Balance June 30, 2014 Additions Deductions Balance June 30, 2015 Accounts receivables $ 257,362 $ (1)105,000 $ $ 62,362 Management and other fees receivable 10,901,619 (1)2,370,032 — 13,271,651 Management and other fees receivable - related medical practices 403,047 — — 403,047 Medical receivables 14,032,067 (1)12,770,249 11,343,160 15,459,156 Advance and notes to related parties 202,379 — 202,379 — Description Balance June 30, 2013 Additions Deductions Balance June 30, 2014 Accounts receivables $ 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 (1,114,316 ) 14,032,067 Advance and notes to related parties 202,379 — — 202,379 Notes receivable 65,000 — 65,000 — (1) Included in provision for bad debts. |
NOTE 19 - QUARTERLY FINANCIAL D
NOTE 19 - QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Jun. 30, 2016 | |
Note 19 - Quarterly Financial Data | |
NOTE 19 - QUARTERLY FINANCIAL DATA (UNAUDITED) | Quarterly Financial Data (Unaudited) (000’s omitted, except per share data) September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 Total Total Revenues – Net $ 17,611 $ 18,369 $ 18,619 $ 18,769 $ 73,368 Total Costs and Expenses 13,996 14,144 14,522 16,351 59,013 Net Income 3,465 4,104 3,881 7,346 18,796 Basic Net Income Per Common Share Available to Common Stockholders $ 0.44 $ 0.54 $ 0.46 $ 0.99 $ 2.43 Diluted Net Income Per Common Share Available to Common Stockholders $ 0.43 $ 0.53 $ 0.45 $ 0.97 $ 2.38 September 30, 2014 December 31, 2014 March 31, 2015 June 30, 2015 Total Total Revenues – Net $ 17,985 $ 17,092 $ 17,096 $ 16,878 $ 69,051 Total Costs and Expenses 14,547 13,494 14,430 13,680 56,151 Net Income 3,256 3,455 2,519 6,200 15,430 Basic Net Income Per Common Share Available to Common Stockholders $ 0.39 $ 0.41 $ 0.31 $ 0.89 $ 2.00 Diluted Net Income Per Common Share Available to Common Stockholders $ 0.39 $ 0.40 $ 0.31 $ 0.86 $ 1.95 |
NOTE 20 - BUSINESS COMBINATIONS
NOTE 20 - BUSINESS COMBINATIONS | 12 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
NOTE 20 - BUSINESS COMBINATIONS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 20 – BUSINESS COMBINATIONS Acquisitions On June 30, 2016, the Company purchased 100% interest in TK2 Equipment Management, LLC and Turnkey Services of New York, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 4,223,567 Net assets at Fair Value 2,861,507 Goodwill $ 1,555,060 Pro forma Results The following unaudited pro forma results of operations for the twelve months ended June 30, 2016, 2015 and 2014 assumes that the above acquisitions were made at the beginning of the year prior to 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 June 30, 2016 Year ended June 30, 2015 Year ended June 30, 2014 Total Revenues – Net $ 73,368,210 $ 69,050,996 $ 68,505,477 Net Income - Controlling Interests $ 16,088,263 $ 13,175,717 $ 10,456,315 Net Income Available to Common Stockholders $ 15,042,842 $ 12,319,511 $ 9,776,301 Net Income Available to Class A Non-Voting Preferred Stockholders $ 779,173 $ 638,147 $ 506,828 Net Income Available to Class C Common Stockholders $ 266,248 $ 218,059 $ 173,186 Basic Net Income Per Common Share Available to Common Stockholders $ 2.49 $ 2.04 $ 1.63 Diluted Net Income Per Common Share Available to Common Stockholders $ 2.43 $ 1.99 $ 1.59 Basic and Diluted Income Per Share - Common C $ 0.70 $ 0.57 $ 0.45 Weighted Average Basic Shares Outstanding 6,050,893 6,050,632 6,009,822 Weighted Average Diluted Shares Outstanding 6,178,397 6,178,136 6,137,326 Weighted Average Basic and Diluted Shares Outstanding - Class C Common 382,513 382,513 382,513 |
NOTE 21 - SUBSEQUENT EVENTS
NOTE 21 - SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
NOTE 20 - SUBSEQUENT EVENTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2016, 2015 and 2014 NOTE 21 – SUBSEQUENT EVENTS The Company evaluates events that have occurred after the balance sheet date, but before the consolidated financial statements are issued. Subsequent to June 30, 2016, the Company issued 106,600 shares of common stock in settlement of liabilities of approximately $2 million in other current liabilities. |
NOTE 2 - SUMMARY OF SIGNIFICA29
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
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 $1,113,000, $1,200,000 and $1,037,000 for the years ended June 30, 2016, 2015 and 2014, 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 3-7 Machinery and equipment 2-7 Furniture and fixtures 3-9 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 15 years. 3) Non-Competition Agreements The non-competition agreements are being amortized on the straight line basis over the length of the agreement (7 years). 4) 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 product and related (upgrades and supplies) sales 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, 2016, the Company has twenty one management agreements of which three are with PC’s owned by Raymond V. Damadian, M.D., Chairman of the Board of FONAR (“the Related medical practices”) and eighteen 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 $69,000 to $277,000. 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 fee for the medical equipment consists of a fixed monthly fee of $2,000. 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 revenues, net of contractual allowances and discounts less the provision for bad debts for the years ended June 30, 2016, 2015 and 2014 are summarized in the following table. For the Year Ended June 30, 2016 2015 2014 Commercial Insurance/ Managed Care $ 4,659,322 $ 4,398,589 $ 4,217,088 Medicare/Medicaid 1,182,552 1,187,690 1,443,020 Workers' Compensation/Personal Injury 20,888,856 15,978,243 13,369,956 Other 6,255,079 6,589,076 5,277,128 Patient Fee Revenue, net of contractual allowances and discounts 32,985,809 28,153,598 24,307,192 Provision for Bad Debts (14,539,786 ) (12,770,249 ) (10,333,082 ) Net Patient Fee Revenue $ 18,446,023 $ 15,383,349 $ 13,974,110 |
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, increased 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 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 $535,000, $894,000 and $889,000 for the years ended June 30, 2016, 2015 and 2014, 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 $11,077, $9,293 and $1,885 for the years ended June 30, 2016, 2015 and 2014, 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 occurs. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. 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, 2016, 2015 and 2014. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the years ended June 30, 2016, 2015 and 2014, diluted EPS for common shareholders includes 127,504 shares upon conversion of Class C Common. June 30, 2016 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 15,724,625 $ 14,702,834 $ 260,230 Denominator: Weighted average shares outstanding 6,050,893 6,050,893 382,513 Basic income per common share $ 2.60 $ 2.43 $ 0.68 Diluted Denominator: Weighted average shares outstanding 6,050,893 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178.397 382,513 Diluted income per common share $ 2.38 $ 0.68 June 30, 2015 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 12,910,651 $ 12,071,670 $ 213,672 Denominator: Weighted average shares outstanding 6,050,632 6,050,632 382,513 Basic income per common share $ 2.13 $ 2.00 $ 0.56 Diluted Denominator: Weighted average shares outstanding 6,050,632 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178,136 382,513 Diluted income per common share $ 1.95 $ 0.56 June 30, 2014 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 |
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, 2016, the Company had cash on deposit of approximately $5,804,000 in excess of federally insured limits of $250,000. Related Parties: Net revenues from related parties accounted for approximately 10%, 11% and 11% of the consolidated net revenues for the years ended June 30, 2016, 2015 and 2014, respectively. Net management fee receivables from the related party medical practices accounted for approximately 12%, 12% and 12% of the consolidated accounts receivable for the years ended June 30, 2016, 2015 and 2014, 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, 2016 and 2015, 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 and notes 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 In March 2016, the FASB issued ASU No. 2016-09,”Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This update includes provisions intended to simplify various aspects of accounting for share-based compensation. ASU No. 2016-09 will take effect for public companies for the annual periods beginning after December 15, 2016. The Company is currently assessing the potential impact of ASU No. 2016-09 on the Company’s financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which will require entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. The ASU simplified the current guidance, which requires entities to separately present deferred tax assets and deferred tax liabilities as current and non-current in a classified balance sheet. This standard is effective for annual periods and interim periods within those fiscal years, beginning after December 15, 2016 but permits entities to early adopt at the beginning of any interim or annual period. During the quarter ended December 31, 2015, the Company elected to early adopt ASU 2015-17 and applied the change retrospectively to all periods present. As a result, the Company presented all deferred assets and liabilities as non-current in its consolidated balance sheet. The adoption of this ASU did not result in a reclassification of the Company’s net deferred tax assets and liabilities as of June 30, 2015. As of June 30, 2016, there was no impact on the Company’s results of operations as a result of the adoption of ASU No. 2015-17 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 for annual reporting periods beginning after December 15, 2017, as deferred including interim periods within the reporting period 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 Company is currently evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on it ongoing financial reporting. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. It is effective for annual reporting periods beginning after December 15, 2016. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of June 30, 2016 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 2016 or 2015, 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. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Company’s consolidated financial statements. |
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 SIGNIFICA30
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Estimated Useful Life in Years for Property and Equipment | Property and Equipment 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 3-7 Machinery and equipment 2-7 Furniture and fixtures 3-9 Leasehold improvements 2–10 Building 28 |
Patient Fee Revenue - Net | Revenue Recognition The Company’s patient fee revenues, net of contractual allowances and discounts less the provision for bad debts for the years ended June 30, 2016, 2015 and 2014 are summarized in the following table. For the Year Ended June 30, 2016 2015 2014 Commercial Insurance/ Managed Care $ 4,659,322 $ 4,398,589 $ 4,217,088 Medicare/Medicaid 1,182,552 1,187,690 1,443,020 Workers' Compensation/Personal Injury 20,888,856 15,978,243 13,369,956 Other 6,255,079 6,589,076 5,277,128 Patient Fee Revenue, net of contractual allowances and discounts 32,985,809 28,153,598 24,307,192 Provision for Bad Debts (14,539,786 ) (12,770,249 ) (10,333,082 ) Net Patient Fee Revenue $ 18,446,023 $ 15,383,349 $ 13,974,110 |
Earnings Per Share | Earnings Per Share June 30, 2016 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 15,724,625 $ 14,702,834 $ 260,230 Denominator: Weighted average shares outstanding 6,050,893 6,050,893 382,513 Basic income per common share $ 2.60 $ 2.43 $ 0.68 Diluted Denominator: Weighted average shares outstanding 6,050,893 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178.397 382,513 Diluted income per common share $ 2.38 $ 0.68 June 30, 2015 Basic Total Common Stock Class C Common Stock Numerator: Net income available to common stockholders $ 12,910,651 $ 12,071,670 $ 213,672 Denominator: Weighted average shares outstanding 6,050,632 6,050,632 382,513 Basic income per common share $ 2.13 $ 2.00 $ 0.56 Diluted Denominator: Weighted average shares outstanding 6,050,632 382,513 Class C Common Stock 127,504 — Total Denominator for diluted earnings per share 6,178,136 382,513 Diluted income per common share $ 1.95 $ 0.56 June 30, 2014 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 |
NOTE 3 - ACCOUNTS RECEIVABLE,31
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Total Facilities | Management and Other Fees Receivable The following table sets forth the number of our facilities for the years ended June 30, 2016, 2015 and 2014. For The Year Ended June 30, 2016 2015 2014 Total Facilities Owned or Managed (at Beginning of Year) 24 24 24 Facilities Added by: Acquisition 1 — — Internal development — — 1 Managed Facilities Closed — — (1 ) Total Facilities Owned or Managed (at End of Year) 25 24 24 |
NOTE 4 - COSTS AND ESTIMATED 32
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Costs and Estimated Earnings on Uncompleted Contracts | Information relating to uncompleted contracts as of June 30, 2016 and 2015 is as follows: As of June 30, 2016 2015 Costs incurred on uncompleted contracts $ 893,976 $ 1,861,350 Estimated earnings 491,476 1,371,093 1,385,452 3,232,443 Less: Billings to date 1,592,075 2,693,000 $ (206,623 ) $ 539,443 |
Costs and Estimated Earnings | Included in the accompanying consolidated balance sheets under the following captions: As of June 30, 2016 2015 Costs and estimated earnings in excess of billings on uncompleted contracts $ — $ 681,660 Less: Billings in excess of costs and estimated earnings on uncompleted contracts 206,623 142,217 $ (206,623 ) $ 539,443 |
NOTE 5 - INVENTORIES (Tables)
NOTE 5 - INVENTORIES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories included in the accompanying consolidated balance sheets consist of: As of June 30, 2016 2015 Purchased parts, components and supplies $ 1,862,605 $ 2,043,411 Work-in-process 211,695 148,438 $ 2,074,300 $ 2,191,849 |
NOTE 6 - PROPERTY AND EQUIPME34
NOTE 6 - PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment, at cost, less accumulated depreciation and amortization, at June 30, 2016 and 2015, is comprised of: As of June 30, 2016 2015 Diagnostic equipment under capital leases $ 620,307 $ 620,307 Diagnostic equipment 19,213,472 17,396,797 Research, development and demonstration equipment 3,904,846 3,580,224 Machinery and equipment 2,069,055 2,069,055 Furniture and fixtures 2,949,824 2,550,627 Leasehold improvements 5,616,143 4,502,915 Building 939,614 939,614 35,313,261 31,659,539 Less: Accumulated depreciation and amortization 20,800,555 18,758,344 $ 14,512,706 $ 12,901,195 |
NOTE 7 - OTHER INTANGIBLE ASS35
NOTE 7 - OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intagible Assets - Net | Other intangible assets, net of accumulated amortization, at June 30, 2016 and 2015 are comprised of: As of June 30, 2016 2015 Capitalized software development costs $ 7,004,847 $ 7,004,847 Patents and copyrights 4,571,821 4,547,545 Non-competition agreements 4,100,000 4,100,000 Customer relationships 3,800,000 3,800,000 19,476,668 19,452,392 Less: Accumulated amortization 11,757,310 10,502,232 $ 7,719,358 $ 8,950,160 |
Schedule Of Other Intangle Assets | Information related to the above intangible assets for the years ended June 30, 2016, 2015 and 2014 is as follows: As of June 30, 2016 2015 2014 Balance – Beginning of Year $ 8,950,160 $ 10,508,843 $ 11,904,248 Amounts capitalized 113,072 139,534 214,211 Software or patents written off (88,796 ) (413,589 ) (250,523 ) Amortization (1,255,078 ) (1,284,628 ) (1,359,093 ) Balance – End of Year $ 7,719,358 $ 8,950,160 $ 10,508,843 |
Amortization of Other Intangible Assets | The estimated amortization of other intangible assets for the five years ending June 30, 2021 and thereafter is as follows: For the Years Ending June 30, Total Patents and Copyrights Capitalized Software Development Costs Non- competition Customer Relation-ships 2017 $ 1,232,261 $ 196,547 $ 260,000 $ 585,714 $ 190,000 2018 1,155,571 206,524 173,333 585,714 190,000 2019 988,324 212,610 — 585,714 190,000 2020 791,112 210,635 — 390,477 190,000 2021 393,075 203,075 — — 190,000 Thereafter 3,159,015 942,348 — — 2,216,667 $ 7,719,358 $ 1,971,739 $ 433,333 $ 2,147,619 $ 3,166,667 |
NOTE 8 - CAPITAL STOCK (Tables)
NOTE 8 - CAPITAL STOCK (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Stock Option Activity and Exercise Prices | Options Stock option activity and weighted average exercise prices under these plans and grants for the years ended June 30, 2016, 2015 and 2014 was as follows: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding, June 30, 2013 6,610 29.00 — Granted — — — Exercised — — — Forfeited / Expired (6,610 ) 29.00 Outstanding, June 30, 2014 — — — Granted — — — Exercised — — — Forfeited / Expired — — — Outstanding, June 30, 2015 — — — Outstanding, June 30, 2016 — — — Exercisable at: June 30, 2014 — $ — June 30, 2015 — $ — June 30, 2016 — $ — |
NOTE 9 - CONTROLLING AND NONC37
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Class A And B Members' Equity (HDM Acquisition) | Amount of each class of HDM members’ equity as of June 30, 2016, 2015 and 2014 June 30, 2016 June 30, 2015 June 30, 2014 Class A Member Class B Members Class A Member Class B Members Class A Member Class B Members Opening Members’ Equity $ 10,752,169 $22,043,621 $ 17,659,698 $ 21,113,266 $ 19,526,475 $ 20,763,830 Share of Net Income 2,886,006 13,229,621 1,988,915 5,704,999 2,266,473 4,566,186 Buyout — — (4,971,094 ) — — — Distributions (5,241,600 ) (11,958,400) (3,925,350 ) (4,774,644 ) (4,133,250 ) (4,216,750 ) Ending Members’ Equity $ 8,396,575 $ 23,314,842 $ 10,752,169 $ 22,043,621 $ 17,659,698 $ 21,113,266 |
Class A And B Members' Equity (Imperial Management Services) | Amount of each class of Imperial members’ equity as of June 30, 2016, 2015 and 2014 June 30, 2016 June 30, 2015 June 30, 2014 Class A Member Class B Members Class A Member Class B Members Class A Member Class B Members Opening Members’ Equity $ 1,279,446 $ 15,000,446 $ 2,403,812 $ 11,079,317 $ 3,599,519 $ 7,772,781 Share of Net Income — — 405,634 3,921,129 536,913 3,306,536 Distributions (202,500 ) — (405,000 ) — (607,520 ) - Buyout 48,054 Redemption (1,125,000 ) — (1,125,000 ) — (1,125,100 ) - Ending Members’ Equity $ — $ 15,000,446 $ 1,279,446 $ 15,000,446 $ 2,403,812 $ $11,079,317 |
NOTE 10 - LONG-TERM DEBT, NOT38
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE AND CAPITAL LEASES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt, Notes Payable And Capital Leases | Long-term debt, notes payable and capital leases consist of the following: 2016 2015 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 $584,170 as of June 30, 2016. $392,096 $416,844 The revolving credit note was extended to September 2018. 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. The note was paid in full September 2, 2014. The Company still has the ability to draw down on the line. - - 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. 3,749,978 7,149,986 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. 316,088 488,499 Other (including capital leases for property and equipment). 48,767 134,119 4,506,929 8,189,448 Less: Current portion 2,447,693 2,490,146 $2,059,236 $5,699,302 |
Maturities Of Long-Term Debt | The maturities of long-term debt over the next five years and thereafter are as follows: Years Ending June 30, 2017 $ 2,447,693 2018 1,722,474 2019 30,746 2020 32,944 2021 35,416 Thereafter 237,656 $ 4,506,929 |
NOTE 11 - INCOME TAXES (Tables)
NOTE 11 - INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Components Of Current (Benefit) Provision For Income Taxes | Components of the current benefit for income taxes are as follows: Years Ended June 30, 2016 2015 2014 Current: Federal $ 360,496 $ 114,683 $ 310,000 State — 29,313 24,093 Federal deferred taxes (4,368,901 ) (2,353,124 ) (2,280,044 ) State deferred taxes (278,866 ) (403,393 ) (402,361 ) $ (4,287,271 ) $ (2,612,521 ) $ (2,348,312 ) |
Reconciliation Of Federal Statutory Income Tax Rate To Company's Effective Tax Rate | 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, 2016 2015 2014 Taxes at federal statutory rate 35.0 % 35.0 % 34.0 % State and local income taxes (benefit), net of federal benefit 6.0 % 6.0 % 6.0 % Permanent differences 0.2 % 0.2 % (0.9 )% (Decrease) increase in the valuation allowance (89.8 )% (65.4 )% (65.5 )% True ups (0.0 )% (3.2 )% (2.8 )% Effective income tax rate (48.6 )% (27.4 )% (29.2 )% |
Components Of Company's Deferred Tax Assets And Liabilities | Significant components of the Company's deferred tax assets and liabilities at June 30, 2016 and 2015 are as follows: June 30, 2016 2015 Deferred tax assets: Allowance for doubtful accounts $ 6,495,094 $ 6,607,107 Non-deductible accruals 962,867 115,346 Net operating carryforwards 44,011,554 49,170,420 Tax credits 6,770,099 6,751,692 Inventory 105,250 111,190 Property and equipment and depreciation — 1,093,401 58,344,864 63,849,156 Valuation allowance (45,302,504 ) (55,425,850 ) Total deferred tax assets 13,042,360 8,423,306 Capitalized software development costs (481,779 ) (510,492 ) Total deferred tax liabilities (481,779 ) (510,492 ) Net deferred tax asset $ 12,560,581 $ 7,912,814 |
NOTE 12 - OTHER CURRENT LIABI40
NOTE 12 - OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Other Current Liabilities | Included in other current liabilities are the following: June 30, 2016 2015 Accrued salaries, commissions and payroll taxes $ 3,188,665 $ 991,603 Accrued interest 45,479 117,480 Litigation accruals 545,029 521,149 Sales tax payable 2,402,448 2,538,340 Legal and other professional fees 384,810 344,060 Accounting fees 241,400 235,000 Self-funded health insurance reserve 392,178 510,150 Interest and penalty – sales tax 2,486,927 2,508,840 Other 1,139,857 486,011 $ 10,826,793 $ 8,252,633 |
NOTE 13 - COMMITMENTS AND CON41
NOTE 13 - COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Operating Lease Commitments | Leases Future minimum operating lease commitments consisted of the following at June 30, 2016: Year Ending June 30, Facilities And Equipment (Operating Lease) 2017 $ 3,839,635 2018 3,295,963 2019 2,704,324 2020 2,178,791 2021 1,848,522 Thereafter 6,733,116 Total minimum obligations $ 20,600,351 |
NOTE 14 - OTHER INCOME (EXPEN42
NOTE 14 - OTHER INCOME (EXPENSE) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense) - Net | Other income (expense) consists of: For the Years Ended June 30, 2016 2015 2014 Loss on disposition of equipment $ — $ — $ (657,350 ) Litigation settlement — — 13,586 Gain on extinguishment of debt — 394,797 — Gain on sale of equipment — — 40,000 Other income (expense) 190,560 13 (4,835 ) $ 190,560 $ 394,810 $ (608,599 ) |
NOTE 17 - SEGMENT AND RELATED43
NOTE 17 - SEGMENT AND RELATED INFORMATION (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Summarized Segment Financial Information | 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 2016: Net revenues from external customers $ 10,783,618 $ 62,584,592 $ 73,368,210 Intersegment net revenues * $ 2,140,000 $ — $ 2,140,000 (Loss) Income from operations $ (1,979,497 ) $ 16,335,113 $ 14,355,616 Depreciation and amortization $ 320,843 $ 2,976,446 $ 3,297,289 Compensatory element of stock issuances $ 2,006 $ — $ 2,006 Total identifiable assets $ 28,241,501 $ 56,646,105 $ 84,887,606 Capital expenditures $ 437,695 $ 387,593 $ 825,288 Fiscal 2015: Net revenues from external customers $ 11,480,295 $ 57,570,701 $ 69,050,996 Intersegment net revenues * $ 2,005,000 $ — $ 2,005,000 Income from operations $ 504,895 $ 12,394,982 $ 12,899,877 Depreciation and amortization $ 306,183 $ 3,238,287 $ 3,544,470 Compensatory element of stock issuances $ 53,200 $ — $ 53,200 Total identifiable assets $ 18,997,142 $ 57,494,935 $ 76,492,077 Capital expenditures $ 209,534 $ 61,308 $ 270,842 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 |
Export Product Sales | Export Product Sales 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, 2016 2015 2014 United Arab Emirates -% -% 29.8 % Switzerland — 2.2 12.4 Canada 0.3 0.1 — England 18.5 — — Germany .6 71.9 — Puerto Rico .2 — — Libya — — 0.2 19.6 % 74.2 % 42.4 % |
Foreign Service and Repair Fees | Foreign Service and Repair Fees 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, 2016 2015 2014 Spain 0.3 % 1.0 % 1.0 % Puerto Rico 1.5 1.2 1.1 Switzerland 0.3 0.7 1.1 Germany 1.5 0.7 0.4 England 0.5 1.7 2.6 Holland — 0.6 1.3 Canada 0.3 0.1 0.2 Greece 0.2 0.2 — Australia 1.2 1.2 1.1 5.8 % 7.4 % 8.8 % |
NOTE 18 - ALLOWANCE FOR DOUBT44
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Summary of Allowance For Doubtful Accounts | The following represents a summary of allowance for doubtful accounts for the years ended June 30, 2016, 2015 and 2014, respectively: Description Balance June 30, 2015 Additions Deductions Balance June 30, 2016 Accounts receivable $ 362,362 $ (1) $ 78,083 $ 84,279 Management and other fees receivable 13,271,651 (1) 673,856 — 13,945,507 Management and other fees receivable - related medical practices 403,047 — 10,542 392,505 Medical receivables 15,459,156 (1)14,539,786 12,547,160 17,451,782 Description Balance June 30, 2014 Additions Deductions Balance June 30, 2015 Accounts receivables $ 257,362 $ (1)105,000 $ $ 62,362 Management and other fees receivable 10,901,619 (1)2,370,032 — 13,271,651 Management and other fees receivable - related medical practices 403,047 — — 403,047 Medical receivables 14,032,067 (1)12,770,249 11,343,160 15,459,156 Advance and notes to related parties 202,379 — 202,379 — Description Balance June 30, 2013 Additions Deductions Balance June 30, 2014 Accounts receivables $ 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 (1,114,316 ) 14,032,067 Advance and notes to related parties 202,379 — — 202,379 Notes receivable 65,000 — 65,000 — |
NOTE 19 - QUARTERLY FINANCIAL45
NOTE 19 - QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Quarterly Financial Data | Quarterly Financial Data (Unaudited) (000’s omitted, except per share data) September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 Total Total Revenues – Net $ 17,611 $ 18,369 $ 18,619 $ 18,769 $ 73,368 Total Costs and Expenses 13,996 14,144 14,522 16,351 59,013 Net Income 3,465 4,104 3,881 7,346 18,796 Basic Net Income Per Common Share Available to Common Stockholders $ 0.44 $ 0.54 $ 0.46 $ 0.99 $ 2.43 Diluted Net Income Per Common Share Available to Common Stockholders $ 0.43 $ 0.53 $ 0.45 $ 0.97 $ 2.38 September 30, 2014 December 31, 2014 March 31, 2015 June 30, 2015 Total Total Revenues – Net $ 17,985 $ 17,092 $ 17,096 $ 16,878 $ 69,051 Total Costs and Expenses 14,547 13,494 14,430 13,680 56,151 Net Income 3,256 3,455 2,519 6,200 15,430 Basic Net Income Per Common Share Available to Common Stockholders $ 0.39 $ 0.41 $ 0.31 $ 0.89 $ 2.00 Diluted Net Income Per Common Share Available to Common Stockholders $ 0.39 $ 0.40 $ 0.31 $ 0.86 $ 1.95 |
NOTE 20 - BUSINESS COMBINATIO46
NOTE 20 - BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisition | Acquisitions On June 30, 2016, the Company purchased 100% interest in TK2 Equipment Management, LLC and Turnkey Services of New York, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 4,223,567 Net assets at Fair Value 2,861,507 Goodwill $ 1,555,060 |
Proforma Results | Pro forma Results Unaudited Pro forma results of operations assumes that the acquisitions were made at the beginning of the year prior to 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 June 30, 2016 Year ended June 30, 2015 Year ended June 30, 2014 Total Revenues – Net $ 73,368,210 $ 69,050,996 $ 68,505,477 Net Income - Controlling Interests $ 16,088,263 $ 13,175,717 $ 10,456,315 Net Income Available to Common Stockholders $ 15,042,842 $ 12,319,511 $ 9,776,301 Net Income Available to Class A Non-Voting Preferred Stockholders $ 779,173 $ 638,147 $ 506,828 Net Income Available to Class C Common Stockholders $ 266,248 $ 218,059 $ 173,186 Basic Net Income Per Common Share Available to Common Stockholders $ 2.49 $ 2.04 $ 1.63 Diluted Net Income Per Common Share Available to Common Stockholders $ 2.43 $ 1.99 $ 1.59 Basic and Diluted Income Per Share - Common C $ 0.70 $ 0.57 $ 0.45 Weighted Average Basic Shares Outstanding 6,050,893 6,050,632 6,009,822 Weighted Average Diluted Shares Outstanding 6,178,397 6,178,136 6,137,326 Weighted Average Basic and Diluted Shares Outstanding - Class C Common 382,513 382,513 382,513 |
NOTE 2 - SUMMARY OF SIGNIFICA47
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Useful Life in Years - (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Diagnostic Equipment Under Capital Lease | Weighted Average | |
Property, Plant and Equipment | 2 years 5 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 SIGNIFICA48
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Patient Fee Revenue Recognition - (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Patient fee revenue, net of contractual allowances and discounts | $ 32,985,809 | $ 28,153,598 | $ 24,307,192 |
Less: Patient fee revenue provision for bad debts | (14,539,786) | (12,770,249) | (10,333,082) |
Net patient fee revenue | 18,446,023 | 15,383,349 | 13,974,110 |
Commercial Insurance / Managed Care | |||
Patient fee revenue, net of contractual allowances and discounts | 4,659,322 | 4,398,589 | 4,217,088 |
Medicare/Medicaid | |||
Patient fee revenue, net of contractual allowances and discounts | 1,182,552 | 1,187,690 | 1,443,020 |
Workers Compensation/Personal Injury | |||
Patient fee revenue, net of contractual allowances and discounts | 20,888,856 | 15,978,243 | 13,369,956 |
Other | |||
Patient fee revenue, net of contractual allowances and discounts | $ 6,255,079 | $ 6,589,076 | $ 5,277,128 |
NOTE 2 - SUMMARY OF SIGNIFICA49
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share - (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Basic Numerator: Net income available to common stockholders | $ 15,724,625 | $ 12,910,651 | $ 10,396,130 |
Basic Denominator: Weighted average shares outstanding | 6,050,893 | 6,050,632 | 6,009,822 |
Basic Income Per Common Share | $ 2.6 | $ 2.13 | $ 1.73 |
Common Shares | |||
Basic Numerator: Net income available to common stockholders | $ 14,702,834 | $ 12,071,670 | $ 9,720,030 |
Basic Denominator: Weighted average shares outstanding | 6,050,893 | 6,050,632 | 6,009,822 |
Basic Income Per Common Share | $ 2.43 | $ 2 | $ 1.62 |
Class C Common Stock | 127,504 | 127,504 | 127,504 |
Total Denominator for diluted earnings per share | 6,178,397 | 6,178,136 | 6,137,326 |
Diluted Income Per Common Share | $ 2.38 | $ 1.95 | $ 1.58 |
Class C Common Stock | |||
Basic Numerator: Net income available to common stockholders | $ 260,230 | $ 213,672 | $ 172,189 |
Basic Denominator: Weighted average shares outstanding | 382,513 | 382,513 | 382,513 |
Basic Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Class C Common Stock | |||
Total Denominator for diluted earnings per share | 382,513 | 382,513 | 382,513 |
Diluted Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Total | |||
Basic Numerator: Net income available to common stockholders | $ 15,724,625 | $ 12,910,651 | $ 10,396,130 |
Basic Denominator: Weighted average shares outstanding | 6,050,893 | 6,050,632 | 6,009,822 |
Basic Income Per Common Share | $ 2.6 | $ 2.13 | $ 1.73 |
NOTE 3 - ACCOUNTS RECEIVABLE,50
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE-Total Facilities (Details) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
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 | 24 | 24 |
Managed Facilities Added Acquisition | 1 | 0 | 0 |
Managed Facilities Added By Internal development | 0 | 0 | 1 |
Managed Facilities Closed During year | 0 | 0 | (1) |
Total Facilities Owned or Managed (at End of Year) | 25 | 24 | 24 |
NOTE 4 - COSTS AND ESTIMATED 51
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Costs, Earnings, Billings, Uncompleted Contracts - (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Notes to Financial Statements | ||
Costs incurred on uncompleted contracts | $ 893,976 | $ 1,861,350 |
Estimated earnings | 491,476 | 1,371,093 |
Less: billings to date | 1,385,452 | 3,232,443 |
Unbilled contracts receivable | 1,592,075 | 2,693,000 |
Uncompleted Contracts | $ (206,623) | $ 539,443 |
NOTE 4 - COSTS AND ESTIMATED 52
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Costs, Billings and Uncompleted Contracts (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Notes to Financial Statements | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 681,660 | |
Less: Billings in excess of costs and estimated earnings on uncompleted contracts | 206,623 | 142,217 |
Uncompleted Contracts | $ (206,623) | $ 539,443 |
NOTE 5 - INVENTORIES - Inventor
NOTE 5 - INVENTORIES - Inventories (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Inventory Disclosure [Abstract] | ||
Purchased parts, components and supplies | $ 1,862,605 | $ 2,043,411 |
Work-in-process | 211,695 | 148,438 |
Inventories | $ 2,074,300 | $ 2,191,849 |
NOTE 6 - PROPERTY AND EQUIPME54
NOTE 6 - PROPERTY AND EQUIPMENT - Property and Equipment (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Property and Equipment Before Accumulated depreciation and amortization | $ 35,313,261 | $ 31,659,539 |
Less: Accumulated depreciation and amortization of property and equipment | 20,800,555 | 18,758,344 |
Property and Equipment AfterAccumulated depreciation and amortization | 14,512,706 | 12,901,195 |
Diagnostic Equipment under capital leases | ||
Property and Equipment Before Accumulated depreciation and amortization | 620,307 | 620,307 |
Diagnostic Equipment | ||
Property and Equipment Before Accumulated depreciation and amortization | 19,213,472 | 17,396,797 |
Research, development and demonstration equipment [Member] | ||
Property and Equipment Before Accumulated depreciation and amortization | 3,904,846 | 3,580,224 |
machinery and equipment [Member] | ||
Property and Equipment Before Accumulated depreciation and amortization | 2,069,055 | 2,069,055 |
Furniture and Fixtures | ||
Property and Equipment Before Accumulated depreciation and amortization | 2,949,824 | 2,550,627 |
Leasehold Improvements [Member] | ||
Property and Equipment Before Accumulated depreciation and amortization | 5,616,143 | 4,502,915 |
Building | ||
Property and Equipment Before Accumulated depreciation and amortization | $ 939,614 | $ 939,614 |
NOTE 7 - OTHER INTANGIBLE ASS55
NOTE 7 - OTHER INTANGIBLE ASSETS - Other Intagible Assets Net of Amoritization (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Capitalized software development costs | $ 7,004,847 | $ 7,004,847 |
Patents and copyrights | 4,571,821 | 4,547,545 |
Non-competition agreements | 4,100,000 | 4,100,000 |
Customer Relationships | 3,800,000 | 3,800,000 |
Less: Accumulated amortization | 11,757,310 | 10,502,232 |
Other intangible assets - net | $ 7,719,358 | $ 8,950,160 |
NOTE 7 - OTHER INTANGIBLE ASS56
NOTE 7 - OTHER INTANGIBLE ASSETS - Schedule Of Intangle Assets - (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Balance - Beginning of Year | $ 8,950,160 | $ 10,508,843 | $ 11,904,248 |
Amounts capitalized | 113,072 | 139,534 | 214,211 |
Software or patents written off | (88,796) | (413,589) | (250,523) |
Amortization | (1,255,078) | (1,284,628) | (1,359,093) |
Balance - End of Year | $ 7,719,358 | $ 8,950,160 | $ 10,508,843 |
NOTE 7 - OTHER INTANGIBLE ASS57
NOTE 7 - OTHER INTANGIBLE ASSETS - Forward Looking Schedule of Other Intangible Assets - (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
2,017 | $ 1,232,261 | |
2,018 | 1,155,571 | |
2,019 | 988,324 | |
2,020 | 791,112 | |
2,021 | 393,075 | |
Thereafter | 3,159,015 | |
Other intangible assets - net | 7,719,358 | $ 8,950,160 |
Patents and Copyrights | ||
2,017 | 196,547 | |
2,018 | 206,524 | |
2,019 | 212,610 | |
2,020 | 210,635 | |
2,021 | 203,075 | |
Thereafter | 942,348 | |
Other intangible assets - net | 1,971,739 | |
Capitalized software development costs | ||
2,017 | 260,000 | |
2,018 | 173,333 | |
2,019 | ||
2,020 | ||
2,021 | ||
Thereafter | ||
Other intangible assets - net | 433,333 | |
Non-competition agreements | ||
2,017 | 585,714 | |
2,018 | 585,714 | |
2,019 | 585,714 | |
2,020 | 390,477 | |
2,021 | ||
Thereafter | ||
Other intangible assets - net | 2,147,619 | |
Customer Relationships | ||
2,017 | 190,000 | |
2,018 | 190,000 | |
2,019 | 190,000 | |
2,020 | 190,000 | |
2,021 | 190,000 | |
Thereafter | 2,216,667 | |
Other intangible assets - net | $ 3,166,667 |
NOTE 8 - CAPITAL STOCK - Stock
NOTE 8 - CAPITAL STOCK - Stock Option Activity - (Details) - $ / shares | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Number of Options | |||
Options Outstanding, beginning balance | 6,610 | ||
Shares Granted | |||
Shares Exercised | |||
Shares Expired | 6,610 | ||
Options Outstanding, ending balance | |||
Weighted Average Exercise Price | |||
Options Outstanding, beginning balance | $ 29 | ||
Shares Granted | |||
Forfeited / Expired | |||
Options Outstanding, ending balance | |||
Aggregate Intrinsic Value | |||
Outstanding, beginning balance | |||
Granted | |||
Exercised |
NOTE 9 - CONTROLLING AND NONC59
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - HDM Members Equity (Details) - HDM Equity - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 |
Class A Members | |||
Opening Members Equity | $ 10,752,169 | $ 17,659,698 | $ 19,526,475 |
Share of Net Income | 2,886,006 | 1,988,915 | 2,266,473 |
Buyout | (4,971,094) | ||
Distributions | (5,241,600) | (3,925,350) | (4,133,250) |
Ending Members Equity | 8,396,575 | 10,752,169 | 17,659,698 |
Class B Common Stock | |||
Opening Members Equity | 22,043,621 | 21,113,266 | 20,763,830 |
Share of Net Income | 13,229,621 | 5,704,999 | 4,566,186 |
Buyout | |||
Distributions | (11,958,400) | (4,774,644) | (4,216,750) |
Ending Members Equity | $ 23,314,842 | $ 22,043,621 | $ 21,113,266 |
NOTE 9 - CONTROLLING AND NONC60
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - Imperial Members Equity (Details) - Imperial Equity - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 |
Class A Members | |||
Opening Members Equity | $ 1,279,446 | $ 2,403,812 | $ 3,599,519 |
Share of Net Income | 405,634 | 536,913 | |
Distributions | (202,500) | (405,000) | (607,520) |
Buyout | 48,054 | ||
Redemption | (1,125,000) | (1,125,000) | (1,125,100) |
Ending Members Equity | 1,279,446 | 2,403,812 | |
Class B Common Stock | |||
Opening Members Equity | 15,000,446 | 11,079,317 | 7,772,781 |
Share of Net Income | 3,921,129 | 3,306,536 | |
Distributions | |||
Buyout | |||
Redemption | |||
Ending Members Equity | $ 15,000,446 | $ 15,000,446 | $ 11,079,317 |
NOTE 10 - LONG-TERM DEBT, NOT61
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, 2016 | Jun. 30, 2015 | |
Current portion of Long Term Debt, Notes Payable and Capital Leases | $ 2,447,693 | $ 2,490,146 |
Long Term Debt, Notes Payable and Capital Leases less Current Portion | 2,059,236 | 5,699,302 |
Long Term Note 1 | ||
Long Term Debt, Notes Payable and Capital Leases | $ 392,096 | 416,844 |
Long Term Debt, Notes Payable and Capital Leases 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 $584,170 as of June 30, 2016. | |
Long Term Note 2 | ||
Long Term Debt, Notes Payable and Capital Leases | $ 0 | 0 |
Long Term Debt, Notes Payable and Capital Leases Description | The revolving credit note was extended to September 2018. 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. The note was paid in full September 2, 2014. The Company still has the ability to draw down on the line. | |
Long Term Note 3 | ||
Long Term Debt, Notes Payable and Capital Leases | $ 3,749,978 | 7,149,986 |
Long Term Debt, Notes Payable and Capital Leases 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 Company's assets. The loan also contains certain financial covenants that must be met on a periodic basis. | |
Long Term Note 4 | ||
Long Term Debt, Notes Payable and Capital Leases | $ 316,088 | 488,499 |
Long Term Debt, Notes Payable and Capital Leases 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. | |
Long Term Note 5 | ||
Long Term Debt, Notes Payable and Capital Leases | $ 48,767 | $ 134,119 |
Long Term Debt, Notes Payable and Capital Leases Description | Other (including capital leases for property and equipment). |
NOTE 10 - LONG-TERM DEBT, NOT62
NOTE 10 - LONG-TERM DEBT, NOTES PAYABLE & CAPITAL LEASES - Maturities Of Long-Term Debt Over 5 Years - (Details) | Jun. 30, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 2,447,693 |
2,018 | 1,722,474 |
2,019 | 30,746 |
2,020 | 32,944 |
2,021 | 35,416 |
Thereafter | 237,656 |
Long-Term Debt Over Five Years and Thereafter | $ 4,506,929 |
NOTE 11 - INCOME TAXES - Compon
NOTE 11 - INCOME TAXES - Components Of Current Benefit For Income Taxes - (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | |||
Current: Federal | $ 360,496 | $ 114,683 | $ 310,000 |
Current: State | 29,313 | 24,093 | |
Federal deferred taxes | (4,368,901) | (2,353,124) | (2,280,044) |
State deferred taxes | (278,866) | (403,393) | (402,361) |
Benefit for Income Taxes | $ (4,287,271) | $ (2,612,521) | $ (2,348,312) |
NOTE 11 - INCOME TAXES - Reconc
NOTE 11 - INCOME TAXES - Reconciliation of federal statutory income tax rate (Details) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Note 11 - Income Taxes - Reconciliation Of Federal Statutory Income Tax Rate Details | |||
Taxes at federal statutory rate | 3500.00% | 3500.00% | 3400.00% |
State and local income taxes (benefit), net of federal benefit | 600.00% | 600.00% | 600.00% |
Permanent differences (taxes) | 20.00% | 20.00% | 90.00% |
(Decrease) increase in the valuation allowance | 8980.00% | (6540.00%) | (6550.00%) |
True ups | (320.00%) | (280.00%) | |
Effective income tax rate | (4860.00%) | (2740.00%) | (2920.00%) |
NOTE 11 - INCOME TAXES - Signif
NOTE 11 - INCOME TAXES - Significant Components Of Company's Deferred Tax Assets And Liabilities - (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Deferred Tax Assets: | ||
Allowance for doubtful accounts | $ 6,495,094 | $ 6,607,107 |
Non Deductible Accruals | 962,867 | 115,346 |
Net operating carryforwards | 44,011,554 | 49,170,420 |
Tax credits | 6,770,099 | 6,751,692 |
Inventory | 105,250 | 111,190 |
Property and equipment and depreciation | 1,093,401 | |
Deferred Tax Assets - gross | 58,344,864 | 63,849,156 |
Valuation allowance | (45,302,504) | (55,425,850) |
Deferred tax assets - net | 13,042,360 | 8,423,306 |
Deferred tax liabilities: | ||
Capitalized software development costs | (481,779) | (510,492) |
Total deferred tax liabilities | (481,779) | (510,492) |
Net deferred tax liabilities | $ 12,560,581 | $ 7,912,814 |
NOTE 12 - OTHER CURRENT LIABI66
NOTE 12 - OTHER CURRENT LIABILITIES - Other Current Liabilities - (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Payables and Accruals [Abstract] | ||
Accrued salaries, commissions and payroll taxes | $ 3,188,665 | $ 991,603 |
Accrued interest | 45,479 | 117,480 |
Litigation accruals | 545,029 | 521,149 |
Sales tax payable | 2,402,448 | 2,538,340 |
Legal and other professional fees | 384,810 | 344,060 |
Accounting fees | 241,400 | 235,000 |
Self-funded health insurance reserve | 392,178 | 510,150 |
Interest and penalty - sales tax | 2,486,927 | 2,508,840 |
Other | 1,139,857 | 486,011 |
Other current liabilities | $ 10,826,793 | $ 8,252,633 |
NOTE 13 - COMMITMENTS AND CON67
NOTE 13 - COMMITMENTS AND CONTINGENCIES - Future Minimums Operating Lease Commitments - (Details) | Jun. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Facilities And Equipment (Operating Lease) Due in 2017 | $ 3,839,635 |
Facilities And Equipment (Operating Lease) Due in 2018 | 3,295,963 |
Facilities And Equipment (Operating Lease) Due in 2019 | 2,704,324 |
Facilities And Equipment (Operating Lease) Due in 2020 | 2,178,791 |
Facilities And Equipment (Operating Lease) Due in 2021 | 1,848,522 |
Facilities And Equipment (Operating Lease) Due Thereafter | 6,733,116 |
Total minimum obligations | $ 20,600,351 |
NOTE 14 - OTHER INCOME (EXPEN68
NOTE 14 - OTHER INCOME (EXPENSE) - Other Income (Expense) - (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Other Income and Expenses [Abstract] | |||
Loss on disposition of equipment | $ (657,350) | ||
Litigation settlement | 13,586 | ||
Gain on extinguishment of debt | 394,797 | ||
Gain on sale of equipment | 40,000 | ||
Other Income - net | (2,439) | 13 | (4,835) |
Other income (expense) - net | $ 190,560 | $ 394,810 | $ (608,599) |
NOTE 17 - SEGMENT AND RELATED69
NOTE 17 - SEGMENT AND RELATED INFORMATION - Sumarized Segments - (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net revenues from external customers | $ 73,368,210 | $ 69,050,996 | $ 68,505,477 |
Intersegment net revenues | 2,140,000 | 2,005,000 | 1,963,750 |
Income from operations | 14,355,616 | 12,899,877 | 12,302,669 |
Depreciation and amortization | 3,297,289 | 3,544,470 | 3,817,205 |
Compensatory element of stock issuances | 2,006 | 53,200 | 223,000 |
Total identifiable assets | 84,887,606 | 76,492,077 | 76,789,843 |
Capital expenditures | 825,288 | 270,842 | 834,908 |
Manufacturing And Servicing Of Medical Equipment | |||
Net revenues from external customers | 10,783,618 | 11,480,295 | 12,070,563 |
Intersegment net revenues | 2,140,000 | 2,005,000 | 1,963,750 |
Income from operations | (1,979,497) | 504,895 | 468,793 |
Depreciation and amortization | 320,843 | 306,183 | 410,728 |
Compensatory element of stock issuances | 2,006 | 53,200 | 223,000 |
Total identifiable assets | 28,241,501 | 18,997,142 | 18,093,789 |
Capital expenditures | 437,695 | 209,534 | 234,275 |
Management of Diagnostic Imaging Centers | |||
Net revenues from external customers | 62,584,592 | 57,570,701 | 56,434,914 |
Intersegment net revenues | |||
Income from operations | 16,335,113 | 12,394,982 | 11,833,876 |
Depreciation and amortization | 2,976,446 | 3,238,287 | 3,406,477 |
Compensatory element of stock issuances | |||
Total identifiable assets | 56,646,105 | 57,494,935 | 58,696,054 |
Capital expenditures | $ 387,593 | $ 61,308 | $ 600,633 |
NOTE 17 - SEGMENT AND RELATED70
NOTE 17 - SEGMENT AND RELATED INFORMATION - Foreign Product Sales - (Details) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Foreign Product Sales | 19.60% | 74.20% | 42.40% |
United Arab Emerites | |||
Foreign Product Sales | 29.80% | ||
Switzerland | |||
Foreign Product Sales | 2.20% | 12.40% | |
Canada | |||
Foreign Product Sales | 0.30% | 0.10% | |
England | |||
Foreign Product Sales | 18.50% | ||
Germany | |||
Foreign Product Sales | 0.60% | 71.90% | |
Puerto Rico | |||
Foreign Product Sales | 0.20% | ||
Libya | |||
Foreign Product Sales | 0.20% |
NOTE 17 - SEGMENT AND RELATED71
NOTE 17 - SEGMENT AND RELATED INFORMATION - Foreign Service and Repair Fees - (Details) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Foreign Service and Repair fees | 5.80% | 7.40% | 8.80% |
Spain | |||
Foreign Service and Repair fees | 0.30% | 1.00% | 1.00% |
Puerto Rico | |||
Foreign Service and Repair fees | 1.50% | 1.20% | 1.10% |
Switzerland | |||
Foreign Service and Repair fees | 0.30% | 0.70% | 1.10% |
Germany | |||
Foreign Service and Repair fees | 1.50% | 0.70% | 0.40% |
England | |||
Foreign Service and Repair fees | 0.50% | 1.70% | 2.60% |
Holland | |||
Foreign Service and Repair fees | 0.60% | 1.30% | |
Canada | |||
Foreign Service and Repair fees | 0.30% | 0.10% | 0.20% |
Greece | |||
Foreign Service and Repair fees | 0.20% | 0.20% | |
Australia | |||
Foreign Service and Repair fees | 1.20% | 1.20% | 1.10% |
NOTE 18 - ALLOWANCE FOR DOUBT72
NOTE 18 - ALLOWANCE FOR DOUBTFUL ACCOUNTS - Allowance For Doubtful Accounts (Details) (USD $) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Receivables from equipment sales and service contracts | |||
Beginning Balance | $ 362,362 | $ 257,362 | $ 257,362 |
Additions (Included in provision for bad debts) | 105,000 | ||
Deductions | 78,083 | ||
Ending Balance | 284,279 | 362,362 | 257,362 |
Management fee receivable | |||
Beginning Balance | 13,271,651 | 10,901,619 | 9,095,320 |
Additions (Included in provision for bad debts) | 673,856 | 2,370,032 | 1,806,299 |
Deductions | |||
Ending Balance | 13,945,507 | 13,271,651 | 10,901,619 |
Management fee receivable from related medical practices | |||
Beginning Balance | 403,047 | 403,047 | 403,047 |
Additions (Included in provision for bad debts) | |||
Deductions | 10,542 | ||
Ending Balance | 392,505 | 403,047 | 403,047 |
Medical receivables | |||
Beginning Balance | 15,459,156 | 14,032,067 | 2,584,669 |
Additions (Included in provision for bad debts) | 14,539,786 | 12,770,249 | 10,333,082 |
Deductions | 12,547,160 | 11,343,160 | (1,114,316) |
Ending Balance | 17,451,782 | 15,459,156 | 14,032,067 |
Advance and notes to related parties | |||
Beginning Balance | 202,379 | 202,379 | |
Additions (Included in provision for bad debts) | |||
Deductions | 202,379 | ||
Ending Balance | 202,379 | ||
Notes Receivable from MRI Customers | |||
Beginning Balance | 65,000 | ||
Additions (Included in provision for bad debts) | |||
Deductions | 65,000 | ||
Ending Balance |
NOTE 19 - QUARTERLY FINANCIAL73
NOTE 19 - QUARTERLY FINANCIAL DATA (UNAUDITED) - Unaudited Quarterly Financial Tables- (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Total Revenues - Net | $ 73,368,210 | $ 69,050,996 | $ 68,505,477 | ||||||||
Total Costs and Expenses | 59,012,594 | 56,151,119 | 56,202,808 | ||||||||
Net Income | $ 18,795,517 | $ 15,430,383 | $ 13,396,769 | ||||||||
Basic Net Income Per Common Share Available to Common Stockholders | $ 2.6 | $ 2.13 | $ 1.73 | ||||||||
Quarterly Financial Data [Member] | |||||||||||
Total Revenues - Net | $ 18,769,000 | $ 18,619,000 | $ 18,369,000 | $ 17,611,000 | $ 16,878,000 | $ 17,096,000 | $ 17,092,000 | $ 17,985,000 | $ 73,368,000 | $ 69,051,000 | |
Total Costs and Expenses | 16,351,000 | 14,522,000 | 14,144,000 | 13,996,000 | 13,680,000 | 14,430,000 | 13,494,000 | 14,547,000 | 59,013,000 | 56,151,000 | |
Net Income | $ 7,346,000 | $ 3,881,000 | $ 4,104,000 | $ 3,465,000 | $ 6,200,000 | $ 2,519,000 | $ 3,455,000 | $ 3,256,000 | $ 18,796,000 | $ 15,430,000 | |
Basic Net Income Per Common Share Available to Common Stockholders | $ 0.99 | $ 0.46 | $ 0.54 | $ 0.44 | $ 0.89 | $ 0.31 | $ 0.41 | $ 0.39 | $ 2.43 | $ 2 | |
Diluted Net Income Per Common Share Available to Common Stockholders | $ 0.97 | $ 0.45 | $ 0.53 | $ 0.43 | $ 0.86 | $ 0.31 | $ 0.4 | $ 0.39 | $ 2.38 | $ 1.95 |
NOTE 20 - BUSINESS COMBINATIO74
NOTE 20 - BUSINESS COMBINATIONS - Acquisition (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Goodwill | $ 3,322,158 | $ 1,767,098 |
TK2 Equipment Management | ||
Cash Paid | 4,223,567 | |
Net assets at Fair Value | 2,861,507 | |
Goodwill | $ 1,555,060 |
NOTE 20 - BUSINESS COMBINATIO75
NOTE 20 - BUSINESS COMBINATIONS - Proforma Results (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Total Revenues - Net | $ 73,368,210 | $ 69,050,996 | $ 68,505,477 |
TK2 Equipment Management, LLP Pro forma | |||
Basic Net Income Per Common Share | $ 2.6 | $ 2.13 | $ 1.73 |
Weighted Average Shares Outstanding - Basic | 6,050,893 | 6,050,632 | 6,009,822 |
Common Shares | |||
TK2 Equipment Management, LLP Pro forma | |||
Basic Net Income Per Common Share | $ 2.43 | $ 2 | $ 1.62 |
Diluted Net Income Per Common Share | $ 2.38 | $ 1.95 | $ 1.58 |
Weighted Average Shares Outstanding - Basic | 6,050,893 | 6,050,632 | 6,009,822 |
Weighted Average Shares Outstanding - Diluted | 6,178,397 | 6,178,136 | 6,137,326 |
Class C Common Stock | |||
TK2 Equipment Management, LLP Pro forma | |||
Basic Net Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Diluted Net Income Per Common Share | $ 0.68 | $ 0.56 | $ 0.45 |
Weighted Average Shares Outstanding - Basic | 382,513 | 382,513 | 382,513 |
Weighted Average Shares Outstanding - Diluted | 382,513 | 382,513 | 382,513 |
TK2 Equipment Management, LLC | |||
Total Revenues - Net | $ 73,368,210 | $ 69,050,996 | $ 68,505,477 |
TK2 Equipment Management, LLP Pro forma | |||
Net Income (TK2 Equipment Management, LLP Pro forma) | 16,088,263 | 13,175,717 | 10,456,315 |
TK2 Equipment Management, LLC | Common Shares | |||
TK2 Equipment Management, LLP Pro forma | |||
Net Income (TK2 Equipment Management, LLP Pro forma) | $ 15,042,842 | $ 12,319,511 | $ 9,776,301 |
Basic Net Income Per Common Share | $ 2.49 | $ 2.04 | $ 1.63 |
Diluted Net Income Per Common Share | $ 2.43 | $ 1.99 | $ 1.59 |
Weighted Average Shares Outstanding - Basic | 6,050,893 | 6,050,632 | 6,009,822 |
Weighted Average Shares Outstanding - Diluted | 6,178,397 | 6,178,136 | 6,137,326 |
TK2 Equipment Management, LLC | Class C Common Stock | |||
TK2 Equipment Management, LLP Pro forma | |||
Net Income (TK2 Equipment Management, LLP Pro forma) | $ 266,248 | $ 218,059 | $ 173,186 |
Basic Net Income Per Common Share | $ 0.7 | $ 0.57 | $ 0.45 |
Diluted Net Income Per Common Share | $ 0.7 | $ 0.57 | $ 0.45 |
Weighted Average Shares Outstanding - Basic | 382,513 | 382,513 | 382,513 |
Weighted Average Shares Outstanding - Diluted | 382,513 | 382,513 | 382,513 |
TK2 Equipment Management, LLC | Class A Non-Voting Preferred | |||
TK2 Equipment Management, LLP Pro forma | |||
Net Income (TK2 Equipment Management, LLP Pro forma) | $ 779,173 | $ 638,147 | $ 506,828 |
NOTE 1 - DESCRIPTION OF BUSIN76
NOTE 1 - DESCRIPTION OF BUSINESS, LIQUIDITY AND CAPITAL RESOURCES (Details Narrative) | Jun. 30, 2016USD ($) | Jul. 01, 2015 | Jun. 30, 2015 | Mar. 05, 2013RecumbentMRIScanners | May 01, 2011 |
Purchase % of equity in Turnkey Services of New York, LLC | 100.00% | ||||
Purchase % of equity in TK2 Equipment Management, LLC | 100.00% | ||||
Purchase amount by company for Turnkey Services of New York, LLC., and TK2 Equipment, LLC. | $ 4,223,567 | ||||
Net assets attributed to Turnkey Services of New York, LLC., and TK2 Equipment, LLC. | $ 2,861,506 | ||||
Contribution percent of its assets by Imperial (which were utilized in the business of Health Management Corporation of America) to HDM | 100.00% | ||||
The ownership interest of Imperial Management Services after reorganization of newly expanded HDM (percent). | 24.20% | ||||
The ownership interest of Health Management Corporation of America after reorganization of newly expanded HDM (percent). | 45.80% | ||||
The ownership interest of the original investors of HDM after reorganization of newly expanded HDM (percent). | 30.00% | ||||
Contribution by HMCA of all its assets and liabilities to Imperial Management Services, LLC (Imperial) | 100.00% | ||||
Number of diagnostic imaging facilities managed by Imperial | 11 | ||||
Health Diagnostics Management LLC (HDM) | |||||
Stand-Up MRI scanners being managed by Health Diagnostics Management LLC | 12 | ||||
Recumbent MRI scanners being managed by Health Diagnostics Management LLC | RecumbentMRIScanners | 2 |
NOTE 2 - SUMMARY OF SIGNIFICA77
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | ||
Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($)shares | Jun. 30, 2014USD ($)shares | |
Maintenance and Repair Expenses | $ 1,113,000 | $ 1,200,000 | $ 1,037,000 |
Management Agreements with Company - Total Medical Practices | 21 | ||
Management Agreements with Company - Related Medical Practices | 3 | ||
Management Agreements with Company - Located in New York State | 18 | ||
Advertising Costs | $ 535,000 | 894,000 | 889,000 |
Shipping and Handling Expense | $ 11,077 | $ 9,293 | $ 1,885 |
Number of shares added to diluted EPS upon conversion of Class C Common | shares | 127,504 | 127,504 | 127,504 |
Cash on Deposit in Bank in excess of federally insured limits | $ 5,804,000 | ||
Federally insured limit (FDIC) | $ 250,000 | ||
Net revenues from related parties as a percentage of consolidated net revenues | 10.00% | 11.00% | 11.00% |
Net management fee receivables from the related medical practices as a percentage of the consolidated accounts receivable | 12.00% | 12.00% | 12.00% |
Diagnostic Imaging Facility | |||
Contractual fees per month for services rendered minimum | $ 69,000 | ||
Contractual fees per month for services rendered maximum | 277,000 | ||
Lease fee per month for medical equipment for managed centers | $ 2,000 |
NOTE 3 - ACCOUNTS RECEIVABLE,78
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - (Details Narrative) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
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 | 59.00% | 54.00% | 50.00% |
Percentage of consolidated net revenue from management fees charged to related party medical practices | 10.00% | 11.00% | 11.00% |
NOTE 6 - PROPERTY AND EQUIPME79
NOTE 6 - PROPERTY AND EQUIPMENT- (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accumulated depreciation and amortization of property and equipment | $ 20,800,555 | $ 18,758,344 | |
Cost and accumulated depreciation basis of retired assets that were fully depreciated | 1,151,541 | ||
Property, Plant and Equipment [Member] | |||
Depreciation and amortization of property and equipment | 2,042,211 | 2,259,842 | $ 2,458,113 |
Diagnostic Equipment Under Capital Lease | |||
Depreciation and amortization of property and equipment | 0 | 0 | 95,026 |
Accumulated depreciation and amortization of property and equipment | $ 620,307 | $ 620,307 | $ 620,307 |
NOTE 7 - OTHER INTANGIBLE ASS80
NOTE 7 - OTHER INTANGIBLE ASSETS - (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Weighted average amortization period (years) | 10 years 256 days | ||
Patents and Copyrights | |||
Amortization other intangible assets | $ 187,553 | $ 183,272 | $ 178,836 |
Capitalized software development costs | |||
Amortization other intangible assets | 291,810 | 325,642 | 407,876 |
Non-competition agreements | |||
Amortization other intangible assets | 585,714 | 585,714 | 585,714 |
Customer Relationships | |||
Amortization other intangible assets | $ 190,000 | $ 190,000 | $ 186,667 |
NOTE 8 - CAPITAL STOCK - (Detai
NOTE 8 - CAPITAL STOCK - (Details Narrative) - shares | 12 Months Ended | ||||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | 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 under 2010 Stock Bonus Plan | 953,367 | ||||||
Shares issued under 2010 Stock Bonus Plan | 146 | 5,000 | 46,708 | ||||
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 | ||||||
Issuance of stock options for 2005 Stock Option Plan | 80,000 | ||||||
Common Shares | |||||||
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. | ||||||
Terms of Conversion | Class C common stock is convertible into shares of common stock on a three-for-one basis. | ||||||
Votes Per Share | The Common stock has 1 vote per share. | ||||||
Class B Common Stock | |||||||
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, 146 and 146 of such shares outstanding at June 30, 2016, 2015 and 2014, respectively. | ||||||
Votes Per Share | The Class B common stock has 10 votes per share. | ||||||
Class C Common Stock | |||||||
Dividends Payable Nature | 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. | ||||||
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 Company's 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. | ||||||
Votes Per Share | The Class C common stock has 25 votes per share. | ||||||
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 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. 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 $30 million of the amount of any cash awards or settlements received by the Company in connection with the enforcement of five of the Company's patents in its patent lawsuits, less the revised special dividend payable on the common stock with respect to one of the Company's patents. The Class A non-voting preferred stock participates on an equal per share basis with the common stock in any dividends declared and ranks equally with the common stock on distribution rights, liquidation rights and other rights and preferences (other than the voting rights). | ||||||
Shares Outstanding | Class A non-voting preferred stock issued pursuant to such stock dividend approximates 313,000 shares. | ||||||
Votes Per Share | The Class A non-voting preferred stock has no voting rights. |
NOTE 9 - CONTROLLING AND NONC82
NOTE 9 - CONTROLLING AND NONCONTROLLING INTERESTS - (Details Narrative) | 12 Months Ended | |||||||
Jun. 30, 2016USD ($) | May 01, 2015USD ($) | Jan. 08, 2015USD ($) | May 01, 2014USD ($) | Mar. 31, 2013USD ($) | Mar. 05, 2013USD ($)MRICenter | Feb. 13, 2013 | May 02, 2011USD ($) | |
Controlling Interest acquired by Company of Health Diagnostics Management, LLC, (HDM) | 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 | |||||||
Private Placement of Equity and Capital Raise (Imperial Management Services, LLC) | $ 6,000,000 | |||||||
HMCA ownership percentage of Imperial Management Services | 100.00% | 75.00% | ||||||
Redemption of Class A Members Capital Contribution (Imperial) | $ 1,125,100 | $ 1,125,100 | $ 1,125,100 | |||||
Company purchased remaining 50% balance in a management service company in New York Metropolitan area | $ 1,780,000 | |||||||
Class A Member | Health Diagnostics Management LLC (HDM) | ||||||||
Health Diagnostics Management (HDM) Class A Members ownership interest | 60.40% | 49.50% | ||||||
Company purchase price for 20% ownership in Health Diagnostic Management, LLC ($) | $ 4,971,094 | |||||||
Class B Member | HDM Equity | ||||||||
Health Diagnostics Management (HDM) Class B Members ownership interest | 50.50% | |||||||
Health Diagnostics Management LLC (HDM) | ||||||||
Health Diagnostics Management (HDM) purchase of Stand-Up MRI Centers from Health Diagnostics, LLC (HD) | MRICenter | 12 | |||||||
Health Diagnostics Management (HDM) purchase of Other MRI Centers from Health Diagnostics, LLC (HD) | MRICenter | 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 | |||||||
Private Placement | ||||||||
Private Placement Description (Imperial Manaagement Services, LLC) | 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 2, 2016, May 1, 2015 and on May 1, 2014, the Company returned a portion of the Class A Members capital contribution in the amount of $1,125,000, $1,125,000 and $1,125,100, respectively. As of June 30, 2016, the Company's subsidiary, HMCA, now owns approximately 100% interest in Imperial Management Services. |
NOTE 11 - INCOME TAXES - (Detai
NOTE 11 - INCOME TAXES - (Details Narrative) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Note 11 - Income Taxes - Details Narrative | ||
Deferred Tax Asset | $ 13,042,360 | |
Deferred Tax Liability | 481,779 | |
Net Operating Loss (NOL) Carryforwards Available to Offset Future Taxable Income | 110,029,000 | |
Reduction in valuation allowance | 4,600,000 | |
Research and Development Tax Credit Carryforwards | 4,528,000 | |
Alternate Minimum Tax Credits | 1,118,000 | |
NY State Tax Credit Carryforwards | 1,112,000 | |
Decrease in Valuation Allowance for Deferred Tax Assets | $ 10,123,000 | $ 6,730,000 |
NOTE 13 - COMMITMENTS AND CON84
NOTE 13 - COMMITMENTS AND CONTINGENCIES - (Details Narrative) - USD ($) | 12 Months Ended | 120 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2026 | |
Rent Expense | $ 4,222,000 | $ 4,266,000 | $ 4,571,000 | |
Property Tax Abatement from Suffolk County IDA (dollars) | $ 440,000 | |||
Property Tax Abatement from Suffolk County IDA (%) | 50.00% | |||
Employer Contributions to 401(k) Plan | 0 | 0 | $ 0 | |
Stipulation agreement with creditors | 297,339 | |||
Average Monthly Payment for Stipulation Agreements | 15,859 | |||
Included in Company's Accrued Expenses As Result of Lawsuit | 300,000 | 300,000 | ||
Recorded sales tax obligations - principal | 2,402,000 | |||
Recorded sales tax obligations - interest and penalties | 2,487,000 | |||
Reserve for Self-Funded Health Insurance Program | 392,000 | $ 510,000 | ||
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 Company's annual stockholders' meeting in April 2000. The ESPP provides for eligible employees to acquire common stock of the Company at 15% discount This plan has not been put into effect as of June 30, 2016. | |||
Matt Malek Madison | ||||
Details of Case | 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. The Company 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 the Company'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; the Companys 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. The Company appealed the trial courts 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. The Company 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, 2016 and 2015, $300,000 was included in the Company's accrued expenses. | |||
Settlement of Case (value) | $ 300,000 | |||
Bonutti Research and Bolt MRI Technology | ||||
Details of Case | 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. As of June 30, 2015, the Company has paid the $150,000. 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. | |||
Settlement of Case (value) | $ 150,000 | |||
Jack Shapiro | ||||
Details of Case | Shapiro v. Fonar Corporation, New York Supreme Court, Suffolk County. Previously, The Company and Dr. Shapiro had settled an action commenced in Nassau County under the same name. The amount remaining payable under the settlement agreement according to The Company's records is $258,400, but the payment and timing of the payment was dependent on obtaining an order for an Upright MRI Scanner for the Company and the making of installment payments thereunder by the customer. Briefly stated, the balance of $258,400 was and is not yet due. Dr. Shapiro claims that the Company was in breach of the settlement agreement and seeks payment of no less than $307,000 plus interest and attorneys' fees. The Company believes it has scrupulously observed the terms of the settlement agreement and that Dr. Shapiro's claims are without merit. The Company answered the Complaint and the one is now in discovery. The case was settled for $258,400 plus interest on February 18, 2016. | |||
Settlement of Case (value) | $ 258,400 |
NOTE 15 - SUPPLEMENTAL CASH F85
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION - (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Note 15 - Supplemental Cash Flow Information - Details Narrative | |||
Interest paid | $ 356,106 | $ 516,385 | $ 668,475 |
Income taxes paid | $ 360,496 | $ 143,996 | $ 349,501 |
NOTE 17 - SEGMENT AND RELATED86
NOTE 17 - SEGMENT AND RELATED INFORMATION - (Details Narrative) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Note 17 - Segment And Related Information - Details Narrative | |||
Export Sales of medical equipment | 19.60% | 74.20% | 42.40% |
Foreign Revenues of service and repair of medical equipment | 5.80% | 7.40% | 8.80% |
NOTE 21 - SUBSEQUENT EVENTS - (
NOTE 21 - SUBSEQUENT EVENTS - (Details Narrative) | 3 Months Ended |
Sep. 28, 2016USD ($)shares | |
Note 21 - Subsequent Events - Details Narrative | |
Shares of common stock issued in settlement of liabilities (Shares). | shares | 106,600 |
Value of Shares Issued in Settlement of Liabilities (Value) | $ | $ 2,000,000 |