FONAR (FONR) 10-Q 8 Nov 18 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2018	Nov. 06, 2018
Entity Registrant Name	Fonar Corporation
Entity Central Index Key	355,019
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,019
emerging growth company	false
small business	false
Common Shares
Entity Common Stock, Shares Outstanding		6,357,482
Class B Common Stock
Entity Common Stock, Shares Outstanding		146
Class C Common Stock
Entity Common Stock, Shares Outstanding		382,513
Preferred Stock Class A
Entity Common Stock, Shares Outstanding		313,438

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Current Assets:
Cash and cash equivalents	$ 21,187	$ 19,634
Accounts receivable - net	4,169	3,814
Accounts receivable - Related party	90	0
Medical receivables -net	13,709	13,351
Management and other fees receivable -net	21,973	21,863
Management and other fees receivable - related medical practices -net	6,162	5,535
Inventories	1,649	1,431
Costs and estimated earnings in excess of billings on uncompleted contracts	87	87
Prepaid expenses and other current assets	1,583	1,350
Total Current Assets	70,609	67,065
Income taxes receivable	1,200	1,200
Total Deferred tax assets	21,561	22,689
Property and equipment - net	16,264	16,492
Goodwill	3,985	3,985
Other intangible assets - net	5,378	5,602
Other assets	1,243	1,278
Total Assets	120,240	118,311
Current Liabilities:
Current portion of long-term debt and capital leases	39	39
Accounts payable	1,510	1,300
Other current liabilities	4,783	8,178
Unearned revenue on service contracts	4,381	4,192
Unearned revenue on service contracts - related parties	83	0
Customer advances	990	858
Total Current Liabilities	11,786	14,567
Long-Term Liabilities:
Deferred income tax liability	239	239
Due to related medical practices	227	227
Long-term debt and capital leases, less current portion	298	306
Other liabilities	748	737
Total Long-Term Liabilities	1,512	1,509
Total Liabilities	13,298	16,076
STOCKHOLDERS' EQUITY:
Common Stock	1	1
Paid-in capital in excess of par value	181,086	179,132
Accumulated deficit	(76,454)	(79,773)
Notes receivable from employee stockholders	(9)	(9)
Treasury stock, at cost - 12 shares of common stock at September 30, 2018 and June 30, 2018	(675)	(675)
Total Fonar Corporation's Stockholders' Equity	103,949	98,676
Noncontrolling interests	2,993	3,559
Total Stockholders' Equity	106,942	102,235
Total Liabilities and Stockholders' Equity	$ 120,240	$ 118,311

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Jun. 30, 2018
Class A Non-Voting Preferred
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	453,000	453,000
Preferred Stock, Issued	313,000	313,000
Preferred Stock, Outstanding	313,000	313,000
Preferred Stock
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Authorized	567,000	567,000
Preferred Stock, Issued	0	0
Preferred Stock, Outstanding	0	0
Common Shares
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	8,500,000	8,500,000
Common Stock, Issued	6,369,000	6,299,000
Common Stock, Outstanding	6,357,000	6,288,000
Class B Common Stock
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	227,000	227,000
Common Stock, Issued	146	146
Common Stock, Outstanding	146	146
Class C Common Stock
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	567,000	567,000
Common Stock, Issued	383,000	383,000
Common Stock, Outstanding	383,000	383,000

Consolidated Statements of Inco

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
REVENUES
Patient fee revenue, net of contractual allowances and discounts	$ 5,525	$ 8,653
Provision for bad debts for patient fee	0	(3,750)
Patient fee revenue - net	5,525	4,903
Product sales - net	50	162
Service and repair fees - net	2,131	2,264
Service and repair fees - related parties - net	28	28
Management and other fees - net	10,684	9,771
Management and other fees - related medical practices - net	2,287	2,206
Total Revenues - net	20,705	19,334
COSTS AND EXPENSES
Costs related to patient fee revenue	2,575	2,479
Costs related to product sales	5	143
Costs related to service and repair fees	745	780
Costs related to service and repair fees - related parties	9	9
Costs related to management and other fees	5,756	5,558
Costs related to management and other fees - related medical practices	1,382	1,150
Research and development	437	349
Selling, general and administrative	4,259	4,081
Total Costs and Expenses	15,168	14,549
INCOME
Income From Operations	5,537	4,785
Interest Expense	(25)	(43)
Investment Income	108	46
Other expense		(2)
Income Before Provision for Income Taxes and Noncontrolling Interests	5,620	4,786
Provision for Income Taxes	(1,128)	(185)
Net Income	4,492	4,601
Net Income - Noncontrolling Interests	(1,174)	(882)
Net Income - Controlling Interests	$ 3,318	$ 3,719
Weighted Average Basic Shares Outstanding - Common Shareholders	6,344,000	6,287,000
Common Shares
INCOME
Net Income - Controlling Interests	$ 3,113	$ 3,486
Basic Net Income Per Common Share	$ 0.49	$ 0.55
Diluted Net Income Per Common Share	$ 0.48	$ 0.54
Weighted Average Basic Shares Outstanding - Common Shareholders	6,344,000	6,287,000
Weighted Average Diluted Shares Outstanding - Common Shareholders	6,472,000	6,415,000
Preferred Stock Class A
INCOME
Net Income - Controlling Interests	$ 153	$ 174
Class C Common Stock
INCOME
Net Income - Controlling Interests	$ 52	$ 59
Basic Net Income Per Common Share	$ 0.14	$ 0.16
Diluted Net Income Per Common Share	$ 0.14	$ 0.16
Weighted Average Basic Shares Outstanding - Common Shareholders	383,000	383,000
Weighted Average Diluted Shares Outstanding - Common Shareholders	383,000	383,000
Weighted Average Basic and Diluted Shares Outstanding - Class C Common	383,000	383,000

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash Flows from Operating Activities:
Net income	$ 4,492	$ 4,601
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	922	959
Provision for bad debts	80	(164)
Deferred income tax - net	1,128
Stock issued for costs and expenses	1,955
(Increase) decrease in operating assets, net:
Accounts, medical and management fee receivable(s)	(1,621)	(1,297)
Notes receivable	(12)
Inventories	(218)	(64)
Prepaid expenses and other current assets	(186)	65
Other assets		(5)
Increase (decrease) in operating liabilities, net:
Accounts payable	210	183
Other current liabilities	(3,123)	(462)
Customer deposits	132	(51)
Other liabilities	10	(25)
Net cash provided by operating activities	3,769	3,740
Cash Flows from Investing Activities:
Purchases of property and equipment	(449)	(665)
Cost of patents	(20)	(30)
Net cash used in investing activities	(469)	(695)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations	(7)	(50)
Additional acquisition costs		(58)
Distributions to noncontrolling interests	(1,740)	(1,740)
Repayment of notes receivable from employee stockholders		2
Net cash used in financing activities	(1,747)	(1,846)
Net Increase in Cash and Cash Equivalents	1,553	1,199
Cash and Cash Equivalents - Beginning of Period	19,634	10,140
Cash and Cash Equivalents - End of Period	$ 21,187	$ 11,339

NOTE 1 - DESCRIPTION OF BUSINES

NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (USD $)	3 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Effective 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, operating under the name “Health Management Company of America”. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2019. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on September 21, 2018 for the fiscal year ended June 30, 2018.

NOTE 2 - SUMMARY OF SIGNIFICANT

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (USD $)	3 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Revenues On July 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue. The Company applied the modified retrospective approach to all contracts when adopting ASC 606. As a result, at the adoption of ASC 606 the majority of what was previously classified as the provision for bad debts in the statement of operations is now reflected as implicit price concessions (as defined in ASC 606) and therefore included as a reduction to net operating revenues in 2019. For changes in credit issues not assessed at the date of service, the Company will prospectively recognize those amounts in other operating expenses on the statement of operations. For periods prior to the adoption of ASC 606, the provision for bad debts has been presented consistent with the previous revenue recognition standards that required it to be presented separately as a component of net operating revenues. Additionally, upon adoption of ASC 606 the allowance for doubtful accounts of approximately $22.7 million as of July 1, 2018 was reclassified as a component of net patient accounts receivable. Other than these changes in presentation on the condensed consolidated statement of operations and condensed consolidated balance sheet, the adoption of ASC 606 did not have a material impact on the consolidated results of operations for the three months ended September 30, 2018, and the Company does not expect it to have a material impact on its consolidated results of operations for the remainder of 2019 and on a prospective basis. Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals. Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2018 and 2017. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2018 and 2017, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,318 $ 3,113 $ 52 $ 3,719 $ 3,486 $ 59 Denominator: Weighted average shares outstanding 6,344 6,344 383 6,287 6,287 383 Basic income per common share $ 0.52 $ 0.49 $ 0.14 $ 0.59 $ 0.55 $ 0.16 Diluted Denominator: 6,344 383 6,287 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,472 383 6,415 383 Diluted income per common share $ 0.48 $ 0.14 $ 0.54 $ 0.16 Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606). ASU 2014-09 requires an entity to recognize as revenue the amount that reflects the consideration which it expects to be entitled in exchange for goods and services as it transfers control to its customers. It also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company earns revenue from the sale of scanners, maintenance contracts, product upgrades, patient services and management fees. Under the new guidance, the reporting for patient services revenue is now reported differently. All other streams of revenue were not impacted by the new guidance. The primary change for healthcare providers under the new guidance relates to revenue generated from patient services, with patient responsibility for payment. Under the new guidance, the Company is required to report an implicit price concession (both initially and for the subsequent changes in estimates) as a reduction of revenues as opposed to bad debt expense as a component of operating expenses. The Company now records any changes in expectation of collection amounts due to patient specific events that suggests that the patient no longer has the ability and intent to pay the amount due through the bad debt expense, as that is more indicative of a change in the customer’s credit worthiness as opposed to change in the transaction price. The new standard supersedes most current revenue guidance, including industry-specific guidance. The guidance became effective for the Company on July 1, 2018 and as part of adopting the standard, the Company identified revenue streams of like contracts to allow for ease of implementation. The Company used primarily a portfolio approach to apply the new model to classes of customers with similar characteristics. The impact of adopting the new standard on our total revenue; and income from operations is not material. While the adoption of ASU 2014-09 did impact the presentation of net operating revenues in our Consolidated Statements of Operations and will impact certain disclosures, it did not materially impact our financial position, results of operations or cash flows. There was no cumulative effect of a change in accounting principle recorded related to the adoption of ASU 2014-09 on July 1, 2018. In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company has adopted this guidance on our consolidated condensed financial statements and it has no impact on the Company’s financial statements. 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 condensed financial statements. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of September 30, 2018 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 2018 or 2017, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented.

NOTE 3 - ACCOUNTS RECEIVABLE, M

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)	3 Months Ended
	Sep. 30, 2018
Receivables [Abstract]
NOTE 3 - ACCOUNTS RECEIVABLE. MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $)	FONAR CORPORATIO AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE Receivables, net is comprised of the following at September 30, 2018, and June 30, 2018: September 30, 2018 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,359 $ 190 $ 4,169 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 37,021 $ 23,312 $ 13,709 Management and other fees receivable $ 32,582 $ 10,609 $ 21,973 Management and other fees receivable from related medical practices ("PC’s") $ 8,328 $ 2,166 $ 6,162 June 30, 2018 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,004 $ 190 $ 3,814 Accounts receivable - related party $ — — $ — Medical receivable $ 36,079 $ 22,728 $ 13,351 Management and other fees receivable $ 32,846 $ 10,983 $ 21,863 Management and other fees receivable from related medical practices ("PC’s") $ 7,246 $ 1,711 $ 5,535 The Company's customers are concentrated in the healthcare industry. Accounts Receivable Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided. Medical Receivables Medical receivables are due under fee-for-service contracts from third party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. The carrying amount of the medical receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. The Company determines allowances for contractual adjustments and uncollectible accounts based on specific agings, specific payor collection issues that have been identified and based on payor classifications and historical experience at each site. Management and Other Fees Receivable The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the PC's of fees from third party medical reimbursement organizations, principally insurance companies and health management organizations. Payment of the management fee receivables from the PC’s may be impaired by the inability of the PC’s to collect in a timely manner their medical fees from the third party payors, particularly insurance carriers covering automobile no-fault and workers compensation claims due to longer payment cycles and rigorous informational requirements and certain other disallowed claims. Approximately 67% and 66% of the PCs’ net revenues for the three months ended September 30, 2018 and 2017, respectively, were derived from no-fault and personal injury protection claims. The Company considers the aging of its accounts receivable in determining the amount of allowance for doubtful accounts. The Company generally takes all legally available steps to collect its receivables. Credit losses associated with the receivables are provided for in the condensed consolidated financial statements and have historically been within management's expectations. Net revenues from management and other fees charged to the related PCs accounted for approximately 11.0% and 11.4% of the consolidated net revenues for the three months ended September 30, 2018 and 2017, respectively. Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement. Additional Company managed entities also operate under a guaranty agreement, pursuant to which management fees are payable to the Company. The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three months ended September 30, 2018 and 2017 are summarized in the following table. For the Three Months Ended September 30, 2018 2017 Commercial Insurance/ Managed Care $ 1,180 $ 1,198 Medicare/Medicaid 291 272 Workers' Compensation/Personal Injury 3,702 5,578 Other 352 1,605 Patient Fee Revenue, net of contractual allowances and discounts 5,525 8,653 Provision for Bad Debts — (3,750 ) Patient Fee Revenue - net $ 5,525 $ 4,903

NOTE 4 - INVENTORIES

NOTE 4 - INVENTORIES	3 Months Ended
	Sep. 30, 2018
Inventory Disclosure [Abstract]
NOTE 4 - INVENTORIES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 4 - INVENTORIES Inventories included in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2018 June 30, 2018 Purchased parts, components and supplies $ 1,437 $ 1,312 Work-in-process 212 119 TOTAL INVENTORIES $ 1,649 $ 1,431

NOTE 5 - COSTS AND ESTIMATED EA

NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS	3 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Information relating to uncompleted contracts is as follows: September 30, 2018 June 30, 2018 Costs incurred on uncompleted contracts $ 449 $ 449 Estimated earnings 309 309 Subtotal 758 758 Less: Billings to date 671 671 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 87 $ 87

NOTE 6 - OTHER INTANGIBLE ASSET

NOTE 6 - OTHER INTANGIBLE ASSETS	3 Months Ended
	Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
NOTE 6 - OTHER INTANGIBLE ASSETS	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 6 – OTHER INTANGIBLE ASSETS Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2018 June 30, 2018 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 4,856 4,836 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,761 19,741 Less: Accumulated amortization 14,383 14,139 Other Intangible Assets $ 5,378 $ 5,602 Amortization of patents and copyrights for the three months ended September 30, 2018 and 2017 amounted to $50 and $50, respectively. Amortization of capitalized software development costs for the three months ended September 30, 2018 and 2017 amounted to $0 and $65, respectively. Amortization of non-compete for the three months ended September 30, 2018 and 2017 amounted to $146 and $146, respectively. Amortization of customer relationships for the three months ended September 30, 2018 and 2017 amounted to $48 and $48, respectively.

NOTE 7 - OTHER CURRENT LIABILIT

NOTE 7 - OTHER CURRENT LIABILITIES	3 Months Ended
	Sep. 30, 2018
Payables and Accruals [Abstract]
NOTE 7 - OTHER CURRENT LIABILITIES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 7 – OTHER CURRENT LIABILITIES Other current liabilities in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2018 June 30, 2018 Accrued salaries, commissions and payroll taxes $ 1,121 $ 3,438 Litigation accruals 145 145 Sales tax payable 1,707 2,092 Legal and other professional fees 128 119 Accounting fees 30 125 Self-funded health insurance reserve 20 79 Accrued interest and penalty 1,218 1,498 Other 414 682 Other Current Liabilities $ 4,783 $ 8,178

NOTE 8 - STOCKHOLDERS EQUITY

NOTE 8 - STOCKHOLDERS EQUITY	3 Months Ended
	Sep. 30, 2018
STOCKHOLDERS' EQUITY:
NOTE 8 - STOCKHOLDERS EQUITY	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 8 – STOCKHOLDERS EQUITY Common Stock During the three months ended September 30, 2018, the Company issued 70 shares of common stock for costs and expenses of $1,955.

NOTE 9 - SEGMENT AND RELATED IN

NOTE 9 - SEGMENT AND RELATED INFORMATION	3 Months Ended
	Sep. 30, 2018
Segment Reporting [Abstract]
NOTE 9 - SEGMENT AND RELATED INFORMATION	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 9 - SEGMENT AND RELATED INFORMATION The Company operates in two industry segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as disclosed in the Company’s 10-K as of June 30, 2018. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations. Summarized financial information concerning the Company's reportable segments is shown in the following table: Medical Management Totals For the three months ended Sept. 30, 2018 Net revenues from external customers $ 2,209 $ 18,496 $ 20,705 Inter-segment net revenues $ 228 $ — $ 228 (Loss) Income from operations $ (230 ) $ 5,767 $ 5,537 Depreciation and amortization $ 93 $ 829 $ 922 Capital expenditures $ 20 $ 449 $ 469 For the three months ended Sept. 30, 2017 Net revenues from external customers $ 2,454 $ 16,880 $ 19,334 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (197 ) $ 4,982 $ 4,785 Depreciation and amortization $ 82 $ 877 $ 959 Capital expenditures $ 44 $ 650 $ 694

NOTE 10 - SUPPLEMENTAL CASH FLO

NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION	3 Months Ended
	Sep. 30, 2018
Supplemental Cash Flow Elements [Abstract]
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION During the three months ended September 30, 2018 and September 30, 2017, the Company paid $139 and $10 for interest, respectively. During the three months ended September 30, 2018 and September 30, 2017, the Company paid $180 and $185 for income taxes, respectively.

NOTE 11 - COMMITMENTS AND CONTI

NOTE 11 - COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
NOTE 11 - COMMITMENTS AND CONTINGENCIES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 11 – COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions, will not have a material adverse effect on the consolidated financial position or results of operations of the Company. There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, 2018. Other Matters The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of September 30, 2018, the Company has recorded tax obligations of approximately $1,707 plus interest and penalties of approximately $1,173. The Company is in the process of determining the regulatory requirements in order to become compliant. The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $100 per person and for a maximum potential claim liability based on member enrollment. With respect to this program, the Company considers historical and projected medical utilization data when estimating its health insurance program liability and related expense. As of September 30, 2018 and June 30, 2018, the Company had approximately $20 and $79, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets. The Company regularly analyzes its reserves for incurred but not reported claims, and for reported but not paid claims related to its reinsurance and self-funded insurance programs. The Company believes its reserves are adequate. However, significant judgment is involved in assessing these reserves such as assessing historical paid claims, average lags between the claims’ incurred date, reported dates and paid dates, and the frequency and severity of claims. There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known. There were no significant adjustments recorded in the periods covered by this report.

NOTE 12 - INCOME TAXES

NOTE 12 - INCOME TAXES	3 Months Ended
	Sep. 30, 2018
Income Tax Disclosure [Abstract]
NOTE 12 - INCOME TAXES	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 12 - INCOME TAXES In accordance with ASC 740-270, Income Taxes – Interim Reporting, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate and apply that rate to year-to-date ordinary income or loss. The resulting tax expense (or benefit) is adjusted for the tax effect of specific events, if any, required to be discretely recognized in the interim period as they occur. For the three months ended September 30, 2018 and 2017, the Company recorded income tax expense of $1,128 in 2018 as compared to $185 in 2017. The 2018 provision is comprised of a current income tax component of $587 and a deferred income tax component of $541. Obligations for any liability associated with the current income tax provision, has been reduced, primarily resulting from the benefits and utilization of net operating loss carryforwards. 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. The Company believes there are no uncertain tax positions in prior years tax filings and therefore it has not recorded a liability for unrecognized tax benefits. 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 2014. The Company recorded a deferred tax asset of $21,561 and a deferred tax liability of $239 as of September 30, 2018, primarily relating to net operating loss carryforwards of approximately $80,312 available to offset future taxable income through 2030. The net operating losses begin to expire in 2021 for federal tax and state income tax purposes. Future ownership changes as determined under Section 382 of the Internal Revenue code could further limit the utilization of net operating loss carryforwards. As of September 30, 2018, no such changes in ownership have occurred. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible or when such net operating losses can be utilized. The Company considers projected future taxable income, the regulatory environment of the industry 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 deferred tax asset carryforwards, will not all be fully realized. In recognition of this inherent risk, a valuation allowance was established for the partial value of the deferred tax asset, (principally related to research and development tax credits and allowance for doubtful accounts). A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. The Tax Cuts and Jobs Act was signed into law on December 22, 2017 and makes numerous changes to the Internal Revenue Code. Among other changes, the Act reduces the US corporate income tax rate to 21% effective January 1, 2018. Under ASC topic 740, Accounting for Income Taxes, the enactment of the Tax Act also requires companies, to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets and liabilities were revalued from 35% to 21%. Deferred tax assets of $46.2 million (as of the enactment effective date) were revalued to approximately $30.2 million with a corresponding decrease to the Company’s valuation allowance.

NOTE 13 - SUBSEQUENT EVENTS

NOTE 13 - SUBSEQUENT EVENTS	3 Months Ended
	Sep. 30, 2018
Subsequent Events [Abstract]
NOTE 13 - SUBSEQUENT EVENTS	FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018 and 2017 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 13 – SUBSEQUENT EVENTS The Company has evaluated events that occurred subsequent to September 30, 2018 and through the date the condensed consolidated financial statements were issued.

NOTE 2 - SUMMARY OF SIGNIFICA_2

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Sep. 30, 2018
Note 2 - Summary Of Significant Accounting Policies
Principles of Consolidation	Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.
Revenue	Revenues On July 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue. The Company applied the modified retrospective approach to all contracts when adopting ASC 606. As a result, at the adoption of ASC 606 the majority of what was previously classified as the provision for bad debts in the statement of operations is now reflected as implicit price concessions (as defined in ASC 606) and therefore included as a reduction to net operating revenues in 2019. For changes in credit issues not assessed at the date of service, the Company will prospectively recognize those amounts in other operating expenses on the statement of operations. For periods prior to the adoption of ASC 606, the provision for bad debts has been presented consistent with the previous revenue recognition standards that required it to be presented separately as a component of net operating revenues. Additionally, upon adoption of ASC 606 the allowance for doubtful accounts of approximately $22.7 million as of July 1, 2018 was reclassified as a component of net patient accounts receivable. Other than these changes in presentation on the condensed consolidated statement of operations and condensed consolidated balance sheet, the adoption of ASC 606 did not have a material impact on the consolidated results of operations for the three months ended September 30, 2018, and the Company does not expect it to have a material impact on its consolidated results of operations for the remainder of 2019 and on a prospective basis. Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide diagnostic services to the patients. Revenues are recorded during the period our obligations to provide diagnostic services are satisfied. Our performance obligations for diagnostic services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates per diagnostic services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.
Earnings Per Share	Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2018 and 2017. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2018 and 2017, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,318 $ 3,113 $ 52 $ 3,719 $ 3,486 $ 59 Denominator: Weighted average shares outstanding 6,344 6,344 383 6,287 6,287 383 Basic income per common share $ 0.52 $ 0.49 $ 0.14 $ 0.59 $ 0.55 $ 0.16 Diluted Denominator: 6,344 383 6,287 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,472 383 6,415 383 Diluted income per common share $ 0.48 $ 0.14 $ 0.54 $ 0.16
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606). ASU 2014-09 requires an entity to recognize as revenue the amount that reflects the consideration which it expects to be entitled in exchange for goods and services as it transfers control to its customers. It also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company earns revenue from the sale of scanners, maintenance contracts, product upgrades, patient services and management fees. Under the new guidance, the reporting for patient services revenue is now reported differently. All other streams of revenue were not impacted by the new guidance. The primary change for healthcare providers under the new guidance relates to revenue generated from patient services, with patient responsibility for payment. Under the new guidance, the Company is required to report an implicit price concession (both initially and for the subsequent changes in estimates) as a reduction of revenues as opposed to bad debt expense as a component of operating expenses. The Company now records any changes in expectation of collection amounts due to patient specific events that suggests that the patient no longer has the ability and intent to pay the amount due through the bad debt expense, as that is more indicative of a change in the customer’s credit worthiness as opposed to change in the transaction price. The new standard supersedes most current revenue guidance, including industry-specific guidance. The guidance became effective for the Company on July 1, 2018 and as part of adopting the standard, the Company identified revenue streams of like contracts to allow for ease of implementation. The Company used primarily a portfolio approach to apply the new model to classes of customers with similar characteristics. The impact of adopting the new standard on our total revenue; and income from operations was not material. While the adoption of ASU 2014-09 did impact the presentation of net operating revenues in our Consolidated Statements of Operations and will impact certain disclosures, it did not materially impact our financial position, results of operations or cash flows. There was no cumulative effect of a change in accounting principle recorded related to the adoption of ASU 2014-09 on July 1, 2018. In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company has adopted this guidance on our consolidated condensed financial statements and it has no impact on the Company’s financial statements. 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 condensed financial statements. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of September 30, 2018 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 2018 or 2017, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective.
Reclassifications	Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented.

NOTE 2 - SUMMARY OF SIGNIFICA_3

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Earnings Per Share	Three months ended Three months ended Total Common Stock Class C Common Total Common Stock Class C Common Basic Numerator: $ 3,318 $ 3,113 $ 52 $ 3,719 $ 3,486 $ 59 Denominator: Weighted average shares outstanding 6,344 6,344 383 6,287 6,287 383 Basic income per common share $ 0.52 $ 0.49 $ 0.14 $ 0.59 $ 0.55 $ 0.16 Diluted Denominator: 6,344 383 6,287 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,472 383 6,415 383 Diluted income per common share $ 0.48 $ 0.14 $ 0.54 $ 0.16

NOTE 3 - ACCOUNTS RECEIVABLE,_2

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) (Tables)	3 Months Ended
	Sep. 30, 2018
Receivables [Abstract]
Receivables - net	September 30, 2018 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,359 $ 190 $ 4,169 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 37,021 $ 23,312 $ 13,709 Management and other fees receivable $ 32,582 $ 10,609 $ 21,973 Management and other fees receivable from related medical practices ("PC’s") $ 8,328 $ 2,166 $ 6,162 June 30, 2018 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,004 $ 190 $ 3,814 Accounts receivable - related party $ — — $ — Medical receivable $ 36,079 $ 22,728 $ 13,351 Management and other fees receivable $ 32,846 $ 10,983 $ 21,863 Management and other fees receivable from related medical practices ("PC’s") $ 7,246 $ 1,711 $ 5,535
Patient fee revenue - net	For the Three Months Ended September 30, 2018 2017 Commercial Insurance/ Managed Care $ 1,180 $ 1,198 Medicare/Medicaid 291 272 Workers' Compensation/Personal Injury 3,702 5,578 Other 352 1,605 Patient Fee Revenue, net of contractual allowances and discounts 5,525 8,653 Provision for Bad Debts — (3,750 ) Patient Fee Revenue - net $ 5,525 $ 4,903

NOTE 4 - INVENTORIES (Tables)

NOTE 4 - INVENTORIES (Tables)	3 Months Ended
	Sep. 30, 2018
Inventory Disclosure [Abstract]
Inventories	September 30, 2018 June 30, 2018 Purchased parts, components and supplies $ 1,437 $ 1,312 Work-in-process 212 119 TOTAL INVENTORIES $ 1,649 $ 1,431

NOTE 5 - COSTS AND ESTIMATED _2

NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables)	3 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Information relating to uncompleted contracts	September 30, 2018 June 30, 2018 Costs incurred on uncompleted contracts $ 449 $ 449 Estimated earnings 309 309 Subtotal 758 758 Less: Billings to date 671 671 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 87 $ 87

NOTE 6 - OTHER INTANGIBLE ASS_2

NOTE 6 - OTHER INTANGIBLE ASSETS (Tables)	3 Months Ended
	Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Other intangible assets - net	September 30, 2018 June 30, 2018 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 4,856 4,836 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,761 19,741 Less: Accumulated amortization 14,383 14,139 Other Intangible Assets $ 5,378 $ 5,602

NOTE 7 - OTHER CURRENT LIABIL_2

NOTE 7 - OTHER CURRENT LIABILITIES (Tables)	3 Months Ended
	Sep. 30, 2018
Payables and Accruals [Abstract]
Other current liabilities	September 30, 2018 June 30, 2018 Accrued salaries, commissions and payroll taxes $ 1,121 $ 3,438 Litigation accruals 145 145 Sales tax payable 1,707 2,092 Legal and other professional fees 128 119 Accounting fees 30 125 Self-funded health insurance reserve 20 79 Accrued interest and penalty 1,218 1,498 Other 414 682 Other Current Liabilities $ 4,783 $ 8,178

NOTE 9 - SEGMENT AND RELATED _2

NOTE 9 - SEGMENT AND RELATED INFORMATION (Tables)	3 Months Ended
	Sep. 30, 2018
Segment Reporting [Abstract]
Segment information	Medical Management Totals For the three months ended Sept. 30, 2018 Net revenues from external customers $ 2,209 $ 18,496 $ 20,705 Inter-segment net revenues $ 228 $ — $ 228 (Loss) Income from operations $ (230 ) $ 5,767 $ 5,537 Depreciation and amortization $ 93 $ 829 $ 922 Capital expenditures $ 20 $ 449 $ 469 For the three months ended Sept. 30, 2017 Net revenues from external customers $ 2,454 $ 16,880 $ 19,334 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (197 ) $ 4,982 $ 4,785 Depreciation and amortization $ 82 $ 877 $ 959 Capital expenditures $ 44 $ 650 $ 694

NOTE 2 - SUMMARY OF SIGNIFICA_4

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Basic Numerator: Net income available to common stockholders	$ 3,318	$ 3,719
Basic Denominator: Weighted average shares outstanding	6,344,000	6,287,000
Common Shares
Basic Numerator: Net income available to common stockholders	$ 3,113	$ 3,486
Basic Denominator: Weighted average shares outstanding	6,344,000	6,287,000
Basic income per common share	$ 0.49	$ 0.55
Shares included upon conversion of Class C Common to calculate a diluted EPS	128,000	128,000
Total Denominator for diluted earnings per share	6,472,000	6,415,000
Diluted income per common share	$ 0.48	$ 0.54
Class C Common Stock
Basic Numerator: Net income available to common stockholders	$ 52	$ 59
Basic Denominator: Weighted average shares outstanding	383,000	383,000
Basic income per common share	$ 0.14	$ 0.16
Total Denominator for diluted earnings per share	383,000	383,000
Diluted income per common share	$ 0.14	$ 0.16

NOTE 3 - ACCOUNTS RECEIVABLE,_3

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Receivables, Net - (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Accounts receivable	$ 4,169	$ 3,814
Accounts receivable - Related party	90	0
Medical Receivables	13,709	13,351
Management and other fees receivable	21,973	21,863
Management and other fees receivable from related medical practices ("PC's")	6,162	5,535
Gross Receivable
Accounts receivable	4,359	4,004
Accounts receivable - Related party	90
Medical Receivables	37,021	36,079
Management and other fees receivable	32,582	32,846
Management and other fees receivable from related medical practices ("PC's")	8,328	7,246
Allowance for Doubtful Accounts
Accounts receivable	190	190
Medical Receivables	23,312	22,728
Management and other fees receivable	10,609	10,983
Management and other fees receivable from related medical practices ("PC's")	$ 2,166	$ 1,711

NOTE 3 - ACCOUNTS RECEIVABLE,_4

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Patient Fees Revenue - (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Patient fee revenue, net of contractual allowances and discounts	$ 5,525	$ 8,653
Provision for bad debts for patient fee and bad debt expense	0	(3,750)
Net patient fee revenue	5,525	4,903
Commercial Insurance / Managed Care
Patient fee revenue, net of contractual allowances and discounts	1,180	1,198
Medicare/Medicaid
Patient fee revenue, net of contractual allowances and discounts	291	272
Workers Compensation/Personal Injury
Patient fee revenue, net of contractual allowances and discounts	3,702	5,578
Other
Patient fee revenue, net of contractual allowances and discounts	$ 352	$ 1,605

NOTE 4 - INVENTORIES (Details)

NOTE 4 - INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Inventory Disclosure [Abstract]
Purchased parts, components and supplies	$ 1,437	$ 1,312
Work-in-process	212	119
Total inventories	$ 1,649	$ 1,431

NOTE 5 - COSTS AND ESTIMATED _3

NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Information relating to uncompleted contracts - (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Notes to Financial Statements
Costs incurred on uncompleted contracts	$ 449	$ 449
Estimated earnings	309	309
Costs and estimated earnings on uncompleted contracts	758	758
Less: Billings to date	671	671
Net billings in excess of costs and estimated earnings on uncompleted contracts	$ 87	$ 87

NOTE 6 - OTHER INTANGIBLE ASS_3

NOTE 6 - OTHER INTANGIBLE ASSETS - (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Gross Other intangible assets	$ 19,761	$ 19,741
Accumulated amortization	14,383	14,139
Other Intangible Assets - net	5,378	5,602
Capitalized software development costs
Gross Other intangible assets	7,005	7,005
Patents and copyrights
Gross Other intangible assets	4,856	4,836
Non-compete
Gross Other intangible assets	4,100	4,100
Customer relationships
Gross Other intangible assets	$ 3,800	$ 3,800

NOTE 7 - OTHER CURRENT LIABIL_3

NOTE 7 - OTHER CURRENT LIABILITIES - (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Payables and Accruals [Abstract]
Accrued salaries, commissions and payroll taxes	$ 1,121	$ 3,438
Litigation accruals	145	145
Sales tax payable	1,707	2,092
Legal and other professional fees	128	119
Accounting fees	30	125
Self-funded health insurance reserve	20	79
Accrued Interest and penalty - sales tax	1,218	1,498
Other	414	682
Total Other current liabilities	$ 4,783	$ 8,178

NOTE 9 - SEGMENT AND RELATED _3

NOTE 9 - SEGMENT AND RELATED INFORMATION - Segment Information - (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Net revenues from external customers	$ 20,705	$ 19,334
Inter-segment net revenues	228	219
Income from operations	5,537	4,785
Depreciation and amortization	922	959
Capital expenditures	469	694
Medical Equipment
Net revenues from external customers	2,209	2,454
Inter-segment net revenues	228	219
Income from operations	(230)	(197)
Depreciation and amortization	93	82
Capital expenditures	20	44
Management Of Diagnostic Imaging Centers
Net revenues from external customers	18,496	16,880
Income from operations	5,767	4,982
Depreciation and amortization	829	877
Capital expenditures	$ 449	$ 650

NOTE 1 - DESCRIPTION OF BUSIN_2

NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION - (Details Narrative)	Jul. 01, 2015
Note 1 - Description Of Business And Basis Of Presentation -
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%

NOTE 2 - SUMMARY OF SIGNIFICA_5

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Details Narrative) - shares	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Common Shares
Shares included upon conversion of Class C Common to calculate a diluted EPS	128,000	128,000

NOTE 3 - ACCOUNTS RECEIVABLE,_5

NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - (Details Narrative)	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Note 3 - Accounts Receivable Medical Receivable And Management And Other Fees Receivable -
Net revenues derived from no-fault and personal injury protection claims	67.00%	66.00%
Net revenues from management and other fees charged to related PCs	11.00%	11.40%

NOTE 6 - OTHER INTANGIBLE ASS_4

NOTE 6 - OTHER INTANGIBLE ASSETS - (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Patents and copyrights
Amortization of intangible assets	$ 50	$ 50
Capitalized software development costs
Amortization of intangible assets	0	65
Non-compete
Amortization of intangible assets	146	146
Customer relationships
Amortization of intangible assets	$ 48	$ 48

Note 8 - STOCKHOLDERS EQUITY -

Note 8 - STOCKHOLDERS EQUITY - (Details Narrative) (USD $) $ in Thousands	3 Months Ended
	Sep. 30, 2018USD ($)shares
STOCKHOLDERS' EQUITY:
Issuance of stock for goods and services, Value | $	$ 1,955
Issuance of stock for goods and services, Shares | shares	70,000

NOTE 10 - SUPPLEMENTAL CASH F_2

NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION ($)- (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Note 10 - Supplemental Cash Flow Information -
Interest paid	$ 139	$ 10
Income Taxes Paid	$ 180	$ 185

NOTE 11 - COMMITMENTS AND CON_2

NOTE 11 - COMMITMENTS AND CONTINGENCIES - (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Recorded tax obligations	$ 1,707
Tax interest and penalties	1,173
Maximum limit for individual claims under stop-loss umbrella policy for health insurance	100
Self-funded health insurance reserve	$ 20	$ 79

NOTE 12 - INCOME TAXES - (Detai

NOTE 12 - INCOME TAXES - (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Jun. 30, 2019	Jun. 30, 2018
Note 12 - Income Taxes -
Income Tax expense	$ 1,128	$ 185
Income Tax component - current	587
Income Tax component - deferred	541
Total Deferred tax assets	21,561			$ 22,689
Deferred Tax Liability	239
Net Operating Loss (NOL) Carryforwards Available to Offset Future Taxable Income	$ 82,662
Effective income tax rate continuing operations			21.00%
Deferred Tax Asset before Revaluation for Tax Cut and Jobs Act				46,200
Revalued Deferred Tax Assets after accounting for Tax Cut and Jobs Act				$ 30,200