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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X_X_ NO___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files. YES X_X_ NO___

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

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

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

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

Page 2

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

ASSETS

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

	September 30, 2015		June 30, 2015 *
Current Assets:
Cash and cash equivalents	$	10,973	$	9,449
Accounts receivable – net		4,591		3,791
Accounts receivable - related party		90		—
Medical receivable – net		9,442		9,082
Management and other fees receivable - net		14,484		14,058
Management and other fees receivable – related medical practices – net		3,600		3,507
Costs and estimated earnings in excess of billings on uncompleted contracts		682		682
Inventories		2,296		2,192
Prepaid expenses and other current assets		775		860
Total Current Assets		46,933		43,621
Deferred income tax asset		8,423		8,423
Property and equipment – net		12,439		12,901
Goodwill		1,767		1,767
Other intangible assets – net		8,647		8,950
Other assets		818		830
Total Assets	$	79,027	$	76,492

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

~~Page 3~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

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

~~(UNAUDITED)~~

~~LIABILITIES AND STOCKHOLDERS' EQUITY~~

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

*Condensed from audited financial statements.

~~See accompanying notes to condensed consolidated financial statements.~~

Page 43

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)

LIABILITIES AND ~~STOCKHOLDERS'~~STOCKHOLDERS’ EQUITY ~~(Continued)~~

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

	September 30, 2015		June 30, 2015 *
Current Liabilities:
Current portion of long-term debt and capital leases	$	2,478	$	2,490
Accounts payable		1,595		1,783
Other current liabilities		8,764		8,253
Unearned revenue on service contracts		4,714		4,187
Unearned revenue on service contracts – related party		83		—
Customer deposits		1,939		1,938
Billings in excess of costs and estimated earnings on uncompleted contracts		142		142
Total Current Liabilities		19,715		18,793
Long-Term Liabilities:
Deferred income tax liability		510		510
Due to related medical practices		233		237
Long-term debt and capital leases, less current portion		5,088		5,699
Other liabilities		485		469
Total Long-Term Liabilities		6,316		6,915
Total Liabilities		26,031		25,708

*Condensed from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

Page 54

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF INCOME~~BALANCE SHEETS

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

(UNAUDITED)

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

LIABILITIES AND STOCKHOLDERS’ EQUITY (Continued)

STOCKHOLDERS' EQUITY:	September 30, 2015			June 30, 2015 *
Class A non-voting preferred stock $.0001 par value; 453 shares authorized at September 30, 2015 and June 30, 2015, 313 issued and outstanding at September 30, 2015 and June 30, 2015	$	—		$	—
Preferred stock $.001 par value; 567 shares authorized at September 30, 2015 and June 30, 2015, issued and outstanding – none		—			—
Common Stock $.0001 par value; 8,500 shares authorized at September 30, 2015 and June 30, 2015, 6,062 issued at September 30, 2015 and June 30, 2015; 6,051 outstanding at September 30, 2015 and June 30, 2015		1			1
Class B Common Stock (10 votes per share) $.0001 par value; 227 shares authorized at September 30, 2015 and June 30, 2015; .146 issued and outstanding at September 30, 2015 and June 30, 2015		—			—
Class C Common Stock (25 votes per share) $.0001 par value; 567 shares authorized at September 30, 2015 and June 30, 2015, 383 issued and outstanding at September 30, 2015 and June 30, 2015		—			—
Paid-in capital in excess of par value		175,448			175,448
Accumulated deficit		(133,487	)		(136,349	)
Notes receivable from employee stockholders		(30	)		(32	)
Treasury stock, at cost - 12 shares of common stock at September 30, 2015 and June 30, 2015		(675	)		(675	)
Total Fonar Corporation’s Stockholders’ Equity		41,257			38,393
Noncontrolling interests		11,739			12,391
Total Stockholders' Equity		52,996			50,784
Total Liabilities and Stockholders' Equity	$	79,027		$	76,492

*Condensed from audited financial statements.

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

Page 65

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(UNAUDITED)

FOR THE NINE MONTHS ENDED MARCH 31,
REVENUES 2015 2014
Product sales – net $ 1,806 $ 1,261
Service and repair fees – net 7,288 7,578
Service and repair fees – related parties - net 83 83
Patient fee revenue, net of contractual allowances and discounts 20,700 17,811
Provision for bad debts for patient fee (9,244 ) (7,130 )
Management and other fees – net 26,004 24,955
Management and other fees – related medical practices – net 5,536 6,923
Total Revenues – Net 52,173 51,481

COSTS AND EXPENSES
Costs related to product sales 1,674 902
Costs related to service and repair fees 1,611 1,755
Costs related to service and repair fees - related parties 18 19
Costs related to patient fee revenue 5,845 5,823
Costs related to management and other fees 15,665 15,591
Costs related to management and other fees – related medical practices 3,893 3,808
Research and development 1,116 1,128
Selling, general and administrative 11,108 12,024
Provision for bad debts 1,540 763
Total Costs and Expenses 42,470 41,813
Income From Operations 9,703 9,668
Interest Expense (545 ) (682 )
Investment Income 173 178
Other Expense (2 ) (113 )
Income Before Provision for Income Taxes 9,329 9,051
Provision for Income Taxes 99 235
Net Income 9,230 8,816
Net Income - Noncontrolling Interests (2,018 ) (2,497 )
Net Income - Controlling Interests $ 7,212 $ 6,319
Net Income Available to Common Stockholders $ 6,743 $ 5,907
Net Income Available to Class A Non-voting Preferred Stockholders $ 350 $ 307
Net Income Available to Class C Common Stockholders $ 119 $ 105
Basic Net Income Per Common Share Available to Common Stockholders $ 1.11 $ 0.98
Diluted Net Income Per Common Share Available to Common Stockholders $ 1.09 $ 0.96
Basic and Diluted Income Per Share - Class C Common $ 0.31 $ 0.27
Weighted Average Basic Shares Outstanding – Common Stockholders 6,050 6,002
Weighted Average Diluted Shares Outstanding – Common Stockholders 6,178 6,130
Weighted Average Basic Shares Outstanding – Class C Common 383 383
Weighted Average Diluted Shares Outstanding – Class C Common 383 383

	FOR THE THREE MONTHS ENDED SEPTEMBER 30,
REVENUES	2015			2014
Product sales - net	$	18		$	1,271
Service and repair fees - net		2,284			2,491
Service and repair fees - related parties - net		28			28
Patient fee revenue, net of contractual allowances and discounts		8,114			6,787
Provision for bad debts for patient fee		(3,507	)		(3,146	)
Management and other fees - net		8,829			8,738
Management and other fees - related medical practices - net		1,845			1,816
Total Revenues - Net		17,611			17,985
COSTS AND EXPENSES
Costs related to product sales		112			1,085
Costs related to service and repair fees		543			507
Costs related to service and repair fees - related parties		7			6
Costs related to patient fee revenue		2,228			1,899
Costs related to management and other fees		5,419			5,590
Costs related to management and other fees - related medical practices		1,058			979
Research and development		436			397
Selling, general and administrative		3,775			3,578
Provision for bad debts		418			506
Total Costs and Expenses		13,996			14,547
Income From Operations		3,615			3,438
Interest Expense		(150	)		(204	)
Investment Income		50			62
Income Before Provision for Income Taxes and Noncontrolling Interests		3,515			3,296
Provision for Income Taxes		50			40
Net Income		3,465			3,256
Net Income - Noncontrolling Interests		(603	)		(721	)
Net Income - Controlling Interests	$	2,862		$	2,535
Net Income Available to Common Stockholders	$	2,676		$	2,370
Net Income Available to Class A Non-Voting Preferred Stockholders	$	139		$	123
Net Income Available to Class C Common Stockholders	$	47		$	42
Basic Net Income Per Common Share Available to Common Stockholders	$	0.44		$	0.39
Diluted Net Income Per Common Share Available to Common Stockholders	$	0.43		$	0.38
Basic and Diluted Income Per Share - Class C Common	$	0.12		$	0.11
Weighted Average Basic Shares Outstanding - Common Stockholders		6,050			6,050
Weighted Average Diluted Shares Outstanding - Common Stockholders		6,178			6,178
Weighted Average Basic Shares Outstanding - Class C Common		383			383
Weighted Average Diluted Shares Outstanding - Class C Common		383			383

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

Page 76

FONAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(UNAUDITED)

	FOR THE NINE MONTHS ENDED MARCH 31,						FOR THE THREE MONTHS ENDED SEPTEMBER 30,
	2015			2014			2015			2014
Cash Flows from Operating Activities:
Net income	$	9,230		$	8,816		$	3,465		$	3,256
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,665			2,887			829			888
Provision for bad debts		10,784			7,894			418			506
Non cash considerations		76			407
Stock option exercised		—			31
Compensatory element of stock issuances		53			86			—			53
Stock issued for costs and expenses								—			76
(Increase) decrease in operating assets, net:
Accounts, management fee and medical receivable(s)		(13,554	)		(11,012	)
Accounts, medical and management fee receivable(s)								(2,186	)		(2,111	)
Notes receivable		118			75			11			81
Costs and estimated earnings in excess of billings on uncompleted contracts		79			(236	)		—			(860	)
Inventories		158			(433	)		(104	)		22
Prepaid expenses and other current assets		89			31			73			284
Other assets		18			63			12			(5	)
Increase (decrease) in operating liabilities, net:
Accounts payable		(178	)		110			(187	)		323
Other current liabilities		(501	)		964			1,120			865
Customer advances		(259	)		(67	)
Customer deposits								1			(357	)
Other liabilities		(230	)		(221	)		16			(123	)
Due to related medical practices		(2	)		1			(4	)		(6	)
Income tax payable		—			(20	)
Net cash provided by operating activities		8,546			9,376			3,464			2,892
Cash Flows from Investing Activities:
Purchases of property and equipment		(125	)		(375	)		(45	)		(26	)
Cost of patents		(108	)		(172	)		(19	)		(46	)

Net cash used in investing activities		(233	)		(547	)		(64	)		(72	)
Cash Flows from Financing Activities:
Repayment of borrowings and capital lease obligations		(2,166	)		(3,401	)		(623	)		(921	)
Distributions to noncontrolling interests		(3,306	)		(3,724	)		(1,255	)		(1,191	)
Buyout of noncontrolling interests		(4,971	)		—
Repayment of notes receivable from employee stockholders		6			14			2			2
Net cash used in financing activities		(10,437	)		(7,111	)		(1,876	)		(2,110	)
Net (Decrease) Increase in Cash and Cash Equivalents		(2,124	)		1,718
Cash and Cash Equivalents – Beginning of Period		9,952			7,871
Net Increase in Cash and Cash Equivalents								1,524			710
Cash and Cash Equivalents - Beginning of Period								9,449			9,952
Cash and Cash Equivalents - End of Period	$	7,828		$	9,589		$	10,973		$	10,662

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

Page 87

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

(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 ~~and nine~~ months ended ~~March 31,~~September 30, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2015.~~2016. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K filed on September 29, ~~2014~~2015 for the fiscal year ended June 30, ~~2014.~~2015.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based onupon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic ~~earnings~~income per share and applied the if converted method in calculating diluted ~~earnings~~income per share for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2015 and ~~March 31,~~ 2014.

Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three ~~and nine~~ months ended ~~March 31,~~September 30, 2015 and ~~March 31,~~ 2014, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

Page 98

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

~~NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~Earnings Per Share~~ ~~(Continued)~~

Three months ended
March 31, 2015

Three months ended
March 31, 2014
Basic Total Common Stock Class C Common Stock Total Common Stock Class C Common Stock
Numerator:
Net income Available to  common stockholders $ 2,019 $ 1,888 $ 33 $ 1,739 $ 1,625 $ 29
Denominator:
Weighted average shares  outstanding 6,050 6,050 383 6,022 6,022 383
Basic income per common  share $ 0.33 $ 0.31 $ 0.09 $ 0.29 $ 0.27 $ 0.08

Diluted

Denominator:
Weighted average shares  outstanding 6,050 383 6,022 383
Stock options —   —   —   —
Convertible Class C Stock 128 —   128 —
Total Denominator for diluted earnings per share 6,178 383 6,150 383
Diluted income per common share $ 0.31 $ 0.09 $ 0.26 $ 0.08

~~Page 10~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~(Continued)~~(CONTINUED)

Earnings Per Share (Continued)

Nine months ended
March 31, 2015

Nine months ended
March 31, 2014
Basic Total Common Stock Class C Common Stock Total Common Stock Class C Common Stock
Numerator:
Net income Available to  common stockholders $ 7,212 $ 6,743 $ 119 $ 6,319 $ 5,907 $ 105
Denominator:
Weighted average shares  outstanding 6,050 6,050 383 6,002 6,002 383
Basic income per common  share $ 1.19 $ 1.11 $ 0.31 $ 1.05 $ 0.98 $ 0.27

Diluted

Denominator:
Weighted average shares  outstanding 6,050 383 6,002 383
Stock options —   —   —   —
Convertible Class C Stock 128 —   128 —
Total Denominator for diluted earnings per share 6,178 383 6,130 383
Diluted income per common share $ 1.09 $ 0.31 $ 0.96 $ 0.27

	Three months ended September 30, 2015						Three months ended September 30, 2014
	Total		Common Stock		Class C CommonStock		Total		Common Stock		Class C CommonStock
Basic Numerator: Net income available to common stockholders	$	2,862	$	2,676	$	47	$	2,535	$	2,370	$	42
Denominator: Weighted average shares outstanding		6,050		6,050		383		6,050		6,050		383
Basic income per common share	$	0.47	$	0.44	$	0.12	$	0.42	$	0.39	$	0.11
Diluted Denominator: Weighted average shares outstanding				6,050		383				6,050		383
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,178		383				6,178		383
Diluted income per common share			$	0.43	$	0.12			$	0.38	$	0.11

~~Page 11~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

~~NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

Recent Accounting Pronouncements

The FASB has issued ASU No. 2014-09,Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective ~~on January 1,~~for annual reporting periods beginning after December 15, 2017, 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 adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of ~~operations~~operations.

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. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial position and results of operations.

Page 9

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of ~~March 31,~~September 30, 2015 that will become effective in subsequent periods; however, management does not believe that any of those updates would have significantly affected our financial accounting measures or disclosures had they been in effect during 2015 or 2014, and it does not believe that any of those pronouncements will have a significant impact on our ~~condensed~~ consolidated financial statements at the time they become effective.

Reclassifications

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

~~Page 12~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

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

~~Receivables, net is comprised of the following at March 31, 2015:~~Accounts Receivable, Medical Receivable and Management and Other Fees Receivable

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

Receivables, net is comprised of the following atSeptember 30, 2015, and June 30, ~~2014:~~2015:

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

	September 30, 2015
		Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,953	$	362	$	4,591
Accounts receivable - related party	$	90		—	$	90
Medical receivable	$	28,408	$	18,966	$	9,442
Management and other fees receivable	$	28,174	$	13,690	$	14,484
Management and other fees receivable from related medical practices ("PC’s")	$	4,003	$	403	$	3,600

	June 30, 2015
		Gross Receivable		Allowance for doubtful accounts		Net
Accounts receivable	$	4,153	$	362	$	3,791
Accounts receivable - related party	$	—		—	$	—
Medical receivable	$	24,541	$	15,459	$	9,082
Management and other fees receivable	$	27,330	$	13,272	$	14,058
Management and other fees receivable from related medical practices ("PC’s")	$	3,910	$	403	$	3,507

The Company's customers are concentrated in the healthcare industry.

Page 10

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

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

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.

~~Page 13~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

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

Medical ~~Receivable~~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 ~~55%~~60% and ~~50%~~54% of the PCs’ net revenues for the three months ended ~~March 31, 2015 and 2014, respectively, were derived from no-fault and personal injury protection claims. Approximately 54% and 50% of the PCs’ net revenues for the nine months ended March 31,~~September 30, 2015 and 2014, respectively, were derived from no-fault and personal injury protection claims. The Company considers the aging of its accounts receivable in determining the amount of allowance for doubtful accounts. The Company generally takes all legally available steps to collect its receivables. Credit losses associated with the receivables are provided for in the condensed consolidated financial statements and have historically been within management's expectations.

Net revenues from management and other fees charged to the related PCs accounted for approximately ~~11%~~10.5% and ~~13.2%~~10.1% of the consolidated net revenues for the three months ended March 31, 2015 and 2014, respectively. Net revenues from management and other fees charged to the related PCs accounted for approximately 10.6% and 13.4% of the consolidated net revenues for the nine months ended March 31,September 30, 2015 and 2014, respectively.

Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement.

~~Page 14~~

Page 11

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

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

Management and Other Fees Receivable (Continued)

The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2015 and 2014 are summarized in the following ~~tables.~~table.

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

	For the Nine Months Ended March 31,						For the Three Months Ended September 30,
	2015			2014			2015			2014
Commercial Insurance/ Managed Care	$	3,245		$	3,144		$	1,071		$	1,080
Medicare/Medicaid		896			1,161			275			297
Workers' Compensation/Personal Injury		11,354			9,679			5,308			3,695
Other		5,205			3,827			1,460			1,715
Patient Fee Revenue, net of contractual allowances and discounts		20,700			17,811			8,114			6,787
Provision for Bad Debts		(9,244	)		(7,130	)		(3,507	)		(3,146	)
Net Patient Fee for Revenue	$	11,456		$	10,681		$	4,607		$	3,641

~~Page 15~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

NOTE 4 - INVENTORIES

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

	March 31, 2015		June 30, 2014		September 30, 2015		June 30, 2015
Purchased parts, components and supplies	$	2,091	$	2,094	$	2,207	$	2,043
Work-in-process		195		350		89		149
Total Inventories	$	2,286	$	2,444
TOTAL INVENTORIES					$	2,296	$	2,192

NOTE 5 –- COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Information relating to uncompleted contracts is as follows:

		March 31, 2015		June 30, 2014	September 30, 2015		June 30, 2015
Costs incurred on uncompleted contracts	$	1,859	$	1,885	$	1,862	$	1,862
Estimated earnings		1,373		1,746		1,371		1,371
Subtotal		3,232		3,631		3,233		3,233
Less: Billings to date		2,693		3,013		2,693		2,693
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618	$	540	$	540

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

		March 31, 2015		June 30, 2014	September 30, 2015		June 30, 2015
Costs and estimated earnings in excess of billings on uncompleted contracts	$	681	$	760	$	682	$	682
Less: Billings in excess of costs and estimated earnings on uncompleted contracts		142		142		142		142
Total Costs and estimated earnings in excess of billings on uncompleted contracts	$	539	$	618	$	540		540

Page 1612

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

NOTE 6 – OTHER INTANGIBLE ASSETS

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

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

	September 30, 2015		June 30, 2015
Capitalized software development costs	$	7,005	$	7,005
Patents and copyrights		4,566		4,547
Non-compete		4,100		4,100
Customer relationships		3,800		3,800
Gross Other intangible assets		19,471		19,452
Less: Accumulated amortization		10,824		10,502
Other Intangible Assets	$	8,647	$	8,950

Amortization of patents and copyrights for the three months ended ~~March 31,~~September 30, 2015 and 2014 amounted to ~~$46~~$47 and ~~$44,~~$45, respectively.

Amortization of capitalized software development costs for the three months ended ~~March 31,~~September 30, 2015 and 2014 amounted to $81 and ~~$104,~~$83, respectively.

Amortization of non-compete for the three months ended ~~March 31,~~September 30, 2015 and 2014 amounted to $146 and $146, respectively.

Amortization of customer relationships for the three months ended ~~March 31,~~September 30, 2015 and 2014 amounted to ~~$47~~$48 and ~~$47,~~$48, respectively.

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

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

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

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

~~Page 17~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED~~

NOTE 7 – OTHER CURRENT LIABILITIES

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

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

	September 30, 2015		June 30, 2015
Accrued salaries, commissions and payroll taxes	$	807	$	992
Accrued interest		117		117
Litigation accruals		497		521
Sales tax payable		2,597		2,539
Legal and other professional fees		412		344
Accounting fees		162		235
Self-funded health insurance reserve		450		510
Interest and penalty - sales tax		2,556		2,509
Other		1,166		486
Other Current Liabilities	$	8,764	$	8,253

~~NOTE 8 – STOCKHOLDERS EQUITY~~

~~Common Stock~~

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

~~NOTE 9 – CONTROLLING AND NONCONTROLLING INTERESTS~~

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

Page 1813

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

NOTE 108 - SEGMENT AND RELATED INFORMATION

The Company operates in two industry segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies as disclosed in the Company’s 10-K as of June 30, ~~2014.~~2015. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations.

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

Medical
Equipment

Management
of
Diagnostic
Imaging
Centers
Totals
For the three months ended March 31, 2015
Net revenues from external customers $ 2,486 $ 14,610 $ 17,096
Inter-segment net revenues $ 502 $ —   $ 502
(Loss) income from operations $ (367 ) $ 3,033 $ 2,666
Depreciation and amortization $ 78 $ 811 $ 889
Capital expenditures $ 111 $ —   $ 111

For the three months ended March 31, 2014
Net revenues from external customers $ 3,023 $ 14,017 $ 17,040
Inter-segment net revenues $ 495 $ —   $ 495
Income from operations $ 192 $ 2,127 $ 2,319
Depreciation and amortization $ 104 $ 829 $ 933
Capital expenditures $ 114 $ 98 $ 212

For the nine months ended March 31, 2015
Net revenues from external customers $ 9,177 $ 42,996 $ 52,173
Inter-segment net revenues $ 1,504 $ —   $ 1,504
Income from operations $ 457 $ 9,246 $ 9,703
Depreciation and amortization $ 229 $ 2,436 $ 2,665
Capital expenditures $ 178 $ 55 $ 233

For the nine months ended March 31, 2014
Net revenues from external customers $ 8,922 $ 42,559 $ 51,481
Inter-segment net revenues $ 1,485 $ —   $ 1,485
Income from operations $ 323 $ 9,345 $ 9,668
Depreciation and amortization $ 322 $ 2,565 $ 2,887
Capital expenditures
$ 187 $ 360 $ 547

~~Page 19~~

~~FONAR CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~MARCH 31, 2015 and 2014~~

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

~~(UNAUDITED)~~

	Medical Equipment			Management Of Diagnostic Imaging Centers		Totals
For the three months ended Sept. 30, 2015
Net revenues from external customers	$	2,330		$	15,281	$	17,611
Inter-segment net revenues	$	524		$	—	$	524
(Loss) Income from operations	$	(63	)	$	3,678	$	3,615
Depreciation and amortization	$	78		$	751	$	829
Capital expenditures	$	19		$	45	$	64
For the three months ended Sept. 30, 2014
Net revenues from external customers	$	3,790		$	14,195	$	17,985
Inter-segment net revenues	$	501		$	—	$	501
Income from operations	$	378		$	3,060	$	3,438
Depreciation and amortization	$	76		$	812	$	888
Capital expenditures	$	46		$	26	$	72

NOTE ~~11–~~9 – SUPPLEMENTAL CASH FLOW INFORMATION

During the ~~nine~~three months ended ~~March 31,~~September 30, 2015 and ~~March 31,~~September 30, 2014, the Company paid ~~$406~~$102 and ~~$521~~$159 for interest, respectively.

During the ~~nine~~three months ended ~~March 31,~~September 30, 2015 and ~~March 31,~~September 30, 2014, the Company paid ~~$99~~$50 and ~~$255~~$40 for income taxes, respectively.

Page 14

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

NOTE 1210 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions, will not have a material adverse effect on the consolidated financial position or results of operations of the Company.

There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, ~~2014 and our form 10-Q for the first and second quarters of fiscal~~ 2015.

Other Matters

The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of ~~March 31,~~September 30, 2015, the Company has recorded tax obligations of approximately ~~$2,602~~$2,597 plus interest and penalties of approximately ~~$2,462.~~$2,556. The Company is in the process of determining the regulatory requirements in order to become compliant.

The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $100 per person and for a maximum potential claim liability based on member enrollment. With respect to this program, the Company considers historical and projected medical utilization data when estimating its health insurance program liability and related expense. As of ~~March 31,~~September 30, 2015 and June 30, ~~2014,~~2015, the Company had approximately ~~$415~~$450 and ~~$306,~~$510, 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.

~~Page 20~~

Page 15

FONAR CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 2015 and 2014

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

(UNAUDITED)

NOTE 1311 - INCOME TAXES

ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740.

In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses.

The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2009.

The Company ~~netted~~recorded a deferred tax asset of ~~$5,740~~$8,423 and a deferred tax liability of ~~$584~~$510 as of ~~March 31,~~September 30, 2015, primarily relating to net operating loss carryforwards of approximately ~~$137,252~~$122,926 available to offset future taxable income through 2034. The net operating losses begin to expire in 2019 for federal tax purposes and in ~~2014~~2015 for state income tax purposes.

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

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

NOTE ~~14-~~12 – SUBSEQUENT EVENTS

~~On May 1,~~The Company has evaluated events that occurred subsequent to September 30, 2015 and through the ~~Company repaid a portion of~~date the ~~Class A Stockholders capital contribution in the amount of $1,125. As a result, the Company’s subsidiary, HMCA, owns a 96% interest in Imperial Management Services.~~

~~Page 21~~

condensed consolidated financial statements were issued.

Page 16

FONAR CORPORATION AND SUBSIDIARIES

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

For the ~~nine~~three month period ended ~~March 31,~~September 30, 2015, we reported a net income of ~~$9.2~~$3.5 million on revenues of ~~$52.2~~$17.6 million as compared to net income of ~~$8.8~~$3.3 million on revenues of $51.5 million for the nine month period ended March 31, 2014. Operating income remained constant at $9.7 million for the nine month period ended March 31, 2014 and for the nine month period ended March 31, 2015.

~~For the three month period ended March 31, 2015, we reported net income of $2.5 million on revenues of $17.1 as compared to net income of $2.1 million on revenues of $17.0~~$18.0 million for the three month period ended ~~March 31,~~September 30, 2014. Operating income increased 5.1% from $3.4 million for the three month period ended September 30, 2014 to $3.6 million for the three month period ended September 30, 2015.

The revenue ~~increase~~decrease of ~~1.3%~~2.1%, from ~~$51.5~~$18.0 million for the first ~~nine~~three months of fiscal ~~2014~~2015 to ~~$52.2~~$17.6 million for the first ~~nine~~three months of fiscal ~~2015,~~2016, was due to a ~~43.2% increase~~decrease in product sales from $1.3 million for the first ~~nine~~three months of fiscal ~~2014~~2015 to ~~$1.8 million~~$18,000 for the first ~~nine~~three months of fiscal 2015. There was also ~~an increase~~a decrease of ~~7.3%~~8.3% of ~~net patient~~service and repair fees from ~~$10.7~~$2.5 million for the first ~~nine~~three months of fiscal ~~2014~~2015 to ~~$11.5~~$2.3 million for the ~~nine~~three months of fiscal 2016.

Offsetting these decreases, however, net patient fees increased by 26.5% to $4.6 million for the first three months of fiscal 2016 from $3.6 million for the first three months of fiscal 2015 (patient fees less the provision for bad debts for patient fees). Patient fees represent fees for services paid directly by patients to facilities owned by us. All patient fees are derived from Florida facilities.

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

The ~~increase~~decrease in the amount of our revenues was slightly ~~larger~~smaller than the ~~increase~~decrease in the amount of our costs and expenses, and as a result, our operating income of ~~$9.7~~$3.6 million ~~remained constant~~ for the ~~nine~~three months ended ~~March 31,~~September 30, 2015 ~~compared to~~was slightly higher than our operating income of $3.4 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2014. In terms of percentages, ~~however,~~ costs and expenses ~~increased 1.6%~~decreased 3.8% from ~~$41.8~~$14.5 million in the first ~~nine~~three months of fiscal ~~2014~~2015 to ~~$42.5~~$14.0 million in the first ~~nine~~three months of fiscal 2016, while revenues decreased only 2.0%, from $18.0 million in the first three months of fiscal 2015 ~~while revenues increased only 1.3%, from $51.5~~to $17.6 million in the first ~~nine~~three months of fiscal ~~2014 to $52.2 million in the first nine months of fiscal 2015.~~2016.

Fonar’s wholly-owned subsidiary, Health Management Corporation of America (“HMCA”), is the controlling, but not sole owner of two limited liability companies, Imperial Management Services, LLC (“Imperial”) and Health Diagnostics Management, LLC (“HDM”)~~, through which HMCA conducts its business. The outside investors are passive investors, and do not have~~. Effective July 1, 2015, the ~~right to participate in~~Company restructured the corporate organization of the management of ~~either company.~~the diagnostic imaging centers segment of the business. The reorganization was structured to more completely integrate the operations of HMCA and HDM. Imperial Management Services LLC contributed all of its assets (which had been utilized in the business of HMCA) to HDM and received a 24.2% interest in HDM. HMCA 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”. For the sake of simplicity, HMCA, Imperial and HDM are referred to as “HMCA”, unless otherwise indicated.

Page 17

FONAR CORPORATION AND SUBSIDIARIES

Forward Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of Management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving the expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statement included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

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Results of Operations

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

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

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

Manufacturing and Service of MRI Equipment

Revenues from MRI product sales ~~increased 43.2%~~decreased 98.6% to ~~$1.8 million~~$18,000 for the first ~~nine~~three months of fiscal ~~2015~~2016 from $1.3 million for the first ~~nine~~three months of fiscal ~~2014.~~2015. Costs related to product sales also ~~increased,~~decreased, by ~~85.6%~~89.7%, from ~~$902,000~~$1.1 million for the ~~nine~~three month period ended ~~March 31,~~September 30, 2014 to ~~$1.7 million~~$112,000 for the ~~nine~~three month period ended ~~March 31,~~September 30, 2015. These ~~increases, however,~~decreases reflect a volatility resulting from low sales ~~volume, and we do not regard the changes as indicative of a material trend.~~volume. During the first ~~nine~~three months of fiscal ~~2014~~2015 we sold one scanner; during the first ~~nine~~three months of fiscal ~~2015~~2016 we sold ~~two~~no scanners. Continuing tight credit and economic uncertainty, ~~including~~together with lower reimbursement rates for MRI scans, have depressed the market for our MRI scanner products.

Service revenues decreased ~~3.8% from $7.7 million for the nine month period ended March 31, 2014 to $7.4 million for the nine month period ended March 31, 2015. Service revenues also decreased 8.6%~~8.3% from $2.5 million for the three month period ended ~~March 31,~~September 30, 2014 to $2.3 million for the three month period ended ~~March 31,~~September 30, 2015. The changes in service revenues reflect the net result of newer customers entering into service contracts following the expiration of their warranties offset by older scanners being taken out of service. Continuing lower sales volumes ~~are~~have been a factor ultimately contributing to decreasing service revenues.

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Costs relating to providing service for the first ~~nine~~three months of fiscal 2016 increased by 7.2% from $513,000 in the first three months of fiscal 2015 ~~decreased by 8.2% from $1.8 million~~to $550,000 in the first ~~nine~~three months of fiscal 2014 to $1.6 million in the first nine months of fiscal 2015. Costs related to providing service for the three month period ended March 31, 2015 increased slightly by 1.1% from $630,000 for the three month period ended March 31, 2014 to $637,000 for the three month period ended March 31, 2015.2016. We believe that an important factor in controlling our service costs is our ability to monitor the performance of customers’ scanners from our facilities in Melville, New York on a daily basis, and to detect and repair any irregularities before more serious problems result.

There were approximately ~~$1.9~~$150,000 in foreign revenues for the first three months of fiscal 2016 as compared to approximately $1.5 million in foreign revenues for the first ~~nine~~three months of fiscal 2015, ~~as compared to approximately $1.2 million in foreign revenues for the first nine months of fiscal 2014,~~ representing ~~an increase~~a decrease in foreign revenues of ~~58.3%~~90%. We do not regard this as a material trend, but as part of a normal although sometimes volatile variation resulting from low volumes of foreign sales.

We recognize MRI scanner sales revenues on the “percentage of completion” basis, which means the revenues are recognized as the scanner is manufactured. Revenues recognized in a particular quarter do not necessarily reflect new orders or progress payments made by customers in that quarter. We build the scanner as the customer meets certain benchmarks in its site preparation in order to minimize the time lag between incurring costs of manufacturing and our receipt of the cash progress payments from the customer which are due upon delivery. Consequently, there can be a disparity between the revenues recognized in a fiscal period and the number of product sales. Generally, the revenues from a scanner sale are recognized in a fiscal quarter or quarters following the quarter in which the sale was made.

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Revenues for the medical equipment segment as a whole ~~increased~~decreased by ~~2.9%~~38.5% to ~~$9.2~~$2.3 million for the ~~nine~~three months of fiscal ~~2015~~2016 from ~~$8.9~~$3.8 million for the first ~~nine~~three months of fiscal ~~2014.~~2015. Operating results for our medical equipment segment ~~increased~~decreased to an operating ~~income~~loss of ~~$457,000~~$63,000 for the first ~~nine~~three months of fiscal ~~2015~~2016 as compared to an operating income of ~~$323,000~~$378,000 for the first ~~nine~~three months of fiscal ~~2014.~~2015. For the first ~~nine~~three months of fiscal ~~2015,~~2016, our medical equipment segment recognized a net ~~income~~loss of ~~$377,000,~~$121,000, compared to a net ~~loss~~income of ~~$83,000~~$342,000 in the same period of fiscal ~~2014.~~2015.

Diagnostic Facilities Management Services

HMCA revenues increased ~~slightly~~ in the first ~~nine~~three months of fiscal ~~2015~~2016 by ~~1.0%~~7.7% to ~~$43.0~~$15.3 million from ~~$42.6~~$14.2 million for the first ~~nine~~three months of fiscal ~~2014.~~2015. The percentage of our revenues derived from our diagnostic facilities management segment relative to the percentage of our revenues derived from our medical equipment segment ~~decreased slightly (82.4%~~increased to 86.8% for the first ~~nine~~three months of fiscal ~~2015 compared to 82.7%~~2016 from 78.9% for the first ~~nine~~three months of fiscal ~~2014)~~2015).

The increase in HMCA revenues is principally due to HMCA’s success in marketing the scanning services of the facilities managed or owned by HMCA, notwithstanding the decrease in reimbursement rates paid for MRI scans by insurers, Medicare and other government programs. These developments are not unique to HMCA or HMCA’s clients but are being experienced by the industry in general.

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

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As a result of our vigorous marketing efforts, the number of scans performed at our centers and at our client’s centers increased from ~~97,504~~35,455 in the first ~~nine~~three months of fiscal ~~2014 to106,259~~2015 to 38,238 in the first ~~nine~~three months of fiscal ~~2015.~~2016.

We manage twenty-four sites, twenty-three of which are equipped with Fonar Upright® MRI scanners (our Stand-Up® MRI Scanners are also called Upright® MRI Scanners). HMCA experienced an operating income of ~~$9.2~~$3.7 million for the first ~~nine~~three months of fiscal ~~2015~~2016 compared to operating income of ~~$9.3~~$3.1 million for the first ~~nine~~three months of fiscal ~~2014.~~2015.

HMCA’s cost of revenues for the first ~~nine~~three months of fiscal ~~2015~~2016 as compared to the first ~~nine~~three months of fiscal ~~2014~~2015 increased by ~~0.7%~~2.8% from ~~$25.2~~$8.5 million to ~~$25.4~~$8.7 million.

Consolidated

For the first ~~nine~~three months of fiscal 2016, our consolidated net revenues decreased by 2.1% to $17.6 million from $18.0 million for the first three months of fiscal 2015, ~~our consolidated net revenues increased~~and total costs and expenses decreased by ~~1.3%~~3.8% to ~~$52.2 million from $51.5~~$14.0 million for the first ~~nine~~three months of fiscal ~~2014, while total costs and expenses increased by 1.6% to $42.5~~2016 from $14.5 million for the first ~~nine~~three months of fiscal ~~2015 from $41.8 million for the first nine months of fiscal 2014.~~2015. As a result, our operating income ~~of $9.7~~increased 5.1% to $3.6 million in the first ~~nine~~three months of fiscal ~~2014 remained constant~~2016 from $3.4 million in the first ~~nine~~three months of fiscal ~~2015.~~2015 notwithstanding the 2.1% decrease in net revenues.

Selling, general and administrative expenses ~~decreased~~increased by ~~7.6%~~5.5% to ~~$11.1~~$3.8 million in the first ~~nine~~three months of fiscal ~~2015~~2016 from ~~$12.0~~$3.6 million in the first ~~nine~~three months of fiscal ~~2014 as we continued our cost-cutting policies.~~2015. The compensatory element of stock issuances, which is included in selling, general and administrative expenses, ~~also~~ decreased, by ~~38.3%~~100%, to $0 for the first three months of fiscal 2016 from $53,200 for the first ~~nine~~three months of fiscal ~~2015 from $86,290 for the first nine months of fiscal 2014.~~2015.

Research and development expenses ~~remained constant at $1.1 million~~increased by 9.8% to $436,000 for the first ~~nine~~three months of fiscal ~~2015 and~~2016 from $397,000 for the first ~~nine~~three months of fiscal ~~2014.~~to 2015.

Interest expense in the first ~~nine~~three months of fiscal ~~2015~~2016 decreased by ~~20.1%~~26.5% to ~~$545,000~~$150,000 from ~~$682,000~~$204,000 in the first ~~nine~~three months of fiscal ~~2014.~~2015. The decrease was due to the repayment of debt incurred by Fonar in connection with the acquisition of HDM.

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Inventories ~~decreased~~increased to $2.3 million at ~~March 31,~~September 30, 2015 as compared to ~~$2.4~~$2.2 million at June 30, ~~2014.~~2015. This represents our ~~use~~purchase of raw materials and components in our business operations.

Net Management fee and medical receivables increased by ~~12.9%~~3.3% to ~~$27.3~~$27.5 million at ~~March 31, 2014~~September 30, 2015 from ~~$24.2~~$26.6 million at June 30, ~~2014~~2015 due to slower collections.

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The results of operations for the first ~~nine~~three months of fiscal ~~2015~~2016 reflect ~~a slight~~an increase in revenues from management, patient and other fees, as compared to the first ~~nine~~three months of fiscal ~~2014~~2015 ($~~43.0~~15.3 million for the first ~~nine~~three months of fiscal ~~2015~~2016 as compared to ~~$42.6~~$14.2 million for the first ~~nine~~three months of fiscal ~~2014)~~2015), and an ~~increase~~decrease in MRI equipment segment revenues ($~~9.2~~2.3 million as compared to ~~$8.9~~$3.8 million). Revenues were ~~17.6%~~13.2% from the MRI equipment segment as compared to ~~82.4%~~86.2% from HMCA, for the first ~~nine~~three months of fiscal ~~2015,~~2016, as compared to ~~17.3%~~21.1% from the MRI equipment segment and ~~82.7%~~78.9% from HMCA for the first ~~nine~~three months of fiscal ~~2014.~~2015. We do not believe that these variations constitute a trend.

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

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

As mentioned, one of the effects of the PPACA on our business has been the reduction in Medicare reimbursement rates for MRI scans. This also has resulted in a reduction in the reimbursement rates by commercial insurers and government programs which tie their reimbursement rates to those of Medicare. Nevertheless, the increased patient volume of the scanning centers has enabled us to maintain a healthy profitability in spite of these challenges. We believe we are pursuing the correct policies to cope with these problems and to improve the Company’s operating results.

Our Upright® MRI (also referred to as the Stand-Up® MRI), together with our works-in-progress, are intended to significantly improve our competitive position.

The Upright® MRI scanner, which operates at 6000 gauss (.6 Tesla) field strength, allows patients to be scanned while standing, sitting, reclining and in multiple flexion and extension positions. It is common in visualizing the spine that abnormalities are visualized in some positions and not others. This enables surgical corrections that heretofore would be unaddressable for lack of visualizing the symptom causing the pathology and therefore, in general enables the treating physician to achieve a better treatment outcome for his patient. A floor-recessed elevator brings the patient to the height appropriate for the targeted image region. A custom-built multi-position adjustable bed will allow patients to sit or lie on their backs, sides or stomachs at any angle. This allows the MRI technologist to ask the patient to position himself/herself in the exact position that generates his/her pain so that images of the patient in the position that explicitly generates the patient’s pain can be nailed down. Full-range-of-motion studies of the joints in virtually any direction are possible, a particularly promising feature for sports injuries.

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In addition FONAR has announced the publication of a new book “THE CRANIOCERVICAL SYNDROME and MRI” that highlights the unique attributes of FONAR UPRIGHT® MRI Imaging (S. Karger, A.G. based in Basel, Switzerland- www.karger.com/Book/Home/261956) which has been published by S. Karger, a 125 year old company and an academic publisher of scientific and medical journals and books. The seven chapter monograph examines the rapid advances in MRI made possible by the FONAR UPRIGHT® Multi-Position MRI that are transforming the treatment of patients suffering from the craniocervical syndrome (CCS). It is written by leading international experts in the field to practitioners with a better understanding of the subtle anatomy and MRI appearances at the craniocervical junction, along with insight into the clinical significance of cerebrospinal fluid (CSF) flow measurements and its potential role in generating the devastating impairments of the neurodegenerative diseases: Alzheimer’s (5.1 million patients in the United States), childhood and adult Autism (3.0 million), Parkinson’s (1.0 million), Multiple Sclerosis (250,000-350,000) and Amyotrophic Lateral Sclerosis (ALS) (30,000). It calls attention to the revolutionary importance of FONAR’s new UPRIGHT® MRI imaging technology and the prospect of significantly relieving the suffering of the above totaled 9.38 million patients afflicted with these disorders.

Fonar also announced a major diagnostic breakthrough in multiple sclerosis achieved with advanced Upright® MRI. Medical researchers at FONAR published a paper reporting a diagnostic breakthrough in multiple sclerosis (MS), based on observations made possible by the Company’s unique Upright® Multi-Position™ MRI scanner. The findings reveal that the cause of multiple sclerosis may be biomechanical and related to earlier trauma to the neck, which can result in obstruction of the flow of cerebrospinal fluid (CSF), which is produced and stored in the central anatomic structures of the brain known as the ventricles. Since the ventricles produce a large net volume of CSF each day (500 cc), the obstruction can result in a build up of pressure within the ventricles, resulting in leakage of the CSF and the antigenic polypeptides it contains into the surrounding brain tissue. This leakage could be responsible for generating the brain lesions of multiple sclerosis.

The paper, titled “The Possible Role of Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the Genesis of Multiple Sclerosis," appears in ~~the of~~ the journal Physiological Chemistry and Physics and Medical NMR (Sept. 20, 2011).

This capability of the Fonar Upright® technology has demonstrated its key value on patients with the Arnold-Chiari syndrome [Cerebellar Tonsil Extopia (CTE)], which is believed to affect 200,000 to 500,000 Americans. In this syndrome, brain stem compression and subsequent severe neurological symptoms occur in these patients, because the brain stem descends and is compressed at the base of the skull in the foramen magnum, which is the circular bony opening at the base of the skull where the spinal cord exits the skull. Conventional lie-down MRI scanners cannot make an adequate evaluation of this pathology since the patient's pathology is most visible and the symptoms most acute when the patient is scanned in the upright fully weight-bearing position.

A combined study of 1,200 neck pain patients published in “Brain Injury” (July 2010) by eight university medical centers reported that cerebellar tonsil ectopia (CTE) of 1mm or greater was found and visualized 2.5 times (250%) more frequently when patients who had sustained automobile whiplash injuries were scanned upright rather than lying down.

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The Upright® MRI has also demonstrated its value for patients suffering from scoliosis. Scoliosis patients have been typically subjected to routine x-ray exams for years and must be imaged upright for an adequate evaluation of their scoliosis. Because the patient must be standing for a complete evaluation of the extent of the patient’s scoliosis, an x-ray machine has been the only modality that could provide that service. The Upright® MRI is the only MRI scanner which allows the patient to stand during the MRI exam. Fonar has developed an RF receiver and scanning protocol that for the first time allows scoliosis patients to obtain diagnostic pictures of their spines without the risks of x-rays. A study by the National Cancer Institute (2000) of 5,466 women with scoliosis reported a 70% increase in breast cancer resulting from 24.7 chest x-rays these patients received on the average in the course of their scoliosis treatment. The Upright® MRI examination of scoliosis enables the needed imaging evaluation of the degree of spine scoliosis without exposing the patient to the risk of breast cancer from x-radiation. Currently scoliosis affects more than 3,000,000 American women.

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In addition, the University of California, Los Angeles (UCLA) reported their results of their study of 1,302 patients utilizing the Fonar Upright® MRI at the 22nd Annual Meeting of the North American Spine Society on October 23, 2007. The UCLA study showed the superior ability of the Fonar Upright® MRI to detect spine pathology, including spondylolisthesis, disc herniations and disc degeneration, as compared to visualizations of the spine produced by traditional single position static MRIs.

The UCLA study by MRI of 1,302 back pain patients when they were in the Fonar Upright® MRI and examined in a full range of flexion and extension positions made possible by Fonar’s new Upright® technology established that significant “misses” of pathology were occurring with static single position MRI imaging. At L4-5, the vertebral level responsible for 49.8% of lumbar disc herniations, 35.1% of the spondylolistheses (vertebral instabilities) visualized by the Upright® MRI, were being missed by static single position MRI (510 patients). Since this vertebral segment is responsible for the majority of all disc herniations, the finding may reveal a significant cause of failed back surgeries. The UCLA study further showed the “miss-rate” of vertebral instabilities by static only MRI was even higher, 38.7%, at the L3-4 vertebral segment. Additionally, the UCLA study showed that MRI examinations of the cervical spine that did not perform extension images of the neck “missed” disc bulges 23.75% of the time (163 patients).

The UCLA study further reported that they were able to quantitatively measure the dimensions of the central spinal canal with the “highest accuracy” using the FONAR Upright® MRI thereby enabling the extent of spinal canal stenosis that existed in patients to be measured. Spinal canal stenosis gives rise to the symptom complex intermittent neurogenic claudication manifest as debilitating pain in the back and lower extremities, weakness and difficulties in ambulation and leg paresthesias. Spinal canal stenosis is a spinal compression syndrome separate and distinct from the more common nerve compression syndrome of the spinal nerves as they exit the vertebral column through the bony neural foramen.

The Fonar Upright® MRI can also be useful for MRI directed emergency ~~neurosurgical~~neuro-surgical procedures as the surgeon would have unhindered access to the patient’s head when the patient is supine with no restrictions in the vertical direction. This easy-entry, mid-field-strength scanner could prove ideal for trauma centers where a quick MRI-screening within the first critical hour of treatment will greatly improve patients’ chances for survival and optimize the extent of recovery.

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Liquidity and Capital Resources

Cash and cash equivalents ~~decreased~~increased by ~~21.3%~~16.1% from ~~$10.0~~$9.4 million at June 30, ~~2014~~2015 to ~~$7.8~~$11.0 million at ~~March 31,~~September 30, 2015, primarily as a result of ~~the Company purchasing 20% of the outside investors’ membership interests~~better collections and a decrease in ~~HDM for $5.0 million. This purchase increased the Company’s interests in HDM from 50.5% to 60.4%. The result~~costs and ~~intent of this acquisition was to increase the share of HDM’s income allocatable to the Company.~~expenses.

Cash provided by operating activities for the first ~~nine~~three months of fiscal ~~2015~~2016 was ~~$8.5~~$3.5 million. Cash provided by operating activities was attributable principally to net income of ~~$9.2~~$3.5 million, a ~~provision for bad debts~~increase in other current liabilities of ~~$10.8~~$1.1 million, , and depreciation and amortization of ~~$2.7 million,~~$829,000, offset by an increase in accounts, management fees and medical receivables of ~~$13.6~~$2.2 million.

Cash used in investing activities for the first ~~nine~~three months of fiscal ~~2015~~2016 was ~~$233,000.~~$64,000. The principal uses of cash used in investing activities during the first ~~nine~~three months of fiscal 2015 consisted of patent costs of ~~$108,000~~$19,000 and the purchase of property and equipment of ~~$125,000.~~$45,000.

Cash used in financing activities for the first ~~nine~~three months of fiscal ~~2015~~2016 was ~~$10.4~~$1.8 million. The principal uses of cash in financing activities during the first ~~nine~~three months of fiscal ~~2015~~2016 were the repayment of principal on long-term debt and capital lease obligations of ~~$2.2 million,~~$623,000 and distributions to non-controlling interests of ~~$3.3 million and a buyout of non controlling interests of $5.0~~$1.3 million.

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Total liabilities ~~decreased~~increased by ~~10.8%~~1.3% to ~~$27.5~~$26.0 million at ~~March 31,~~September 30, 2015 from ~~$30.9~~$25.7 million at June 30, ~~2014. Other~~2015. “Other” current liabilities ~~remained constant~~increased by 6.2% to $8.8 million at ~~$9.0~~September 30, 2015 from $8.3 million at June 30, ~~2014 and March 31,~~ 2015, ~~along with~~offset by a decrease in long-term debt and capital lease obligations from ~~$8.5~~$5.7 million to ~~$6.3~~$5.1 million. The current portion of our unearned revenue on service contracts ~~decreased~~increased from ~~$4.7~~$4.2 million to ~~$4.3~~$4.8 million. Customer deposits ~~decreased to $1.7 million~~remained constant at ~~March 31, 2015 as compared to~~ $1.9 million at September 30, 2015 and June 30, ~~2014.~~2015.

As of ~~March 31,~~September 30, 2015, the total of ~~$9.0~~$8.8 million in ~~other~~“other” current liabilities included accrued salaries and payroll taxes of ~~$1.2 million,~~$807,000, and sales taxes of $2.6 million plus accrued interest and penalties of ~~$2.5~~$2.6 million.

Our working capital increased to ~~$22.8~~$27.2 million at ~~March 31,~~September 30, 2015 from ~~$21.6~~$24.8 million at June 30, ~~2014.~~2015. This resulted from an increase in current assets ($~~42.8~~43.6 million at June 30, ~~2014~~2015 as compared to ~~$43.1~~$46.9 million at ~~March 31,~~September 30, 2015), and a ~~decrease~~smaller increase in current liabilities from ~~$21.2~~$18.8 million at June 30, ~~2014~~2015 to ~~$20.3~~$19.7 million at ~~March 31,~~September 30, 2015.

The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. A valuation will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation. Should the Company continue to remain profitable in the future periods with supportable trends, the valuation allowance will be reversed accordingly.

Fonar has not committed to making any significant capital expenditures for the remainder of the ~~2015~~2016 fiscal year.

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Critical to our business plan are the improvement and expansion of the MRI facilities managed or owned by HMCA, and increasing the number of scans performed at those facilities. In addition, our business plan calls for a continuing commitment to providing our customers with enhanced equipment service and maintenance capabilities and delivering state-of-the-art, innovative and high quality equipment and upgrades at competitive prices.

Management is seeking to promote wider market recognition of Fonar’s scanner products, and to increase demand for Upright® scanning at the facilities HMCA owns or manages. Given the liquidity and credit constraints in the markets, and the uncertainty resulting for the Patient Protection and Affordable Care Act, the sale of medical equipment has and may continue to suffer.

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

The Company believes that its business plan has been responsible for the past ~~three~~four consecutive fiscal years and past ~~three~~ fiscal ~~quarters~~quarter of profitability (fiscal 2012, fiscal 2013, fiscal 2014, fiscal 2015 and the first ~~nine~~three months of fiscal ~~2015)~~2016) and that its capital resources will be adequate to support operations at current levels through at least ~~March 31,~~September 30, 2016. In the past, the Company experienced periods of working capital deficits and prior to fiscal 2011, losses. The future effects on our business of healthcare reform legislation, the Deficit Reduction Act, the 2.3% excise tax on sales of medical equipment, reimbursement rates and the general economic and business climate are not known at the present time. Nevertheless, there is a possibility of adverse consequences to our business operations from these causes.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company maintains its funds in liquid accounts. None of our investments are in fixed rate instruments.

All of our revenue, expense and capital purchasing activities are transacted in United States dollars.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officer and Acting Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of ~~March 31,~~September 30, 2015. Based on this evaluation, the Company’s Principal Executive Officer and Acting Principal Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of ~~March 31,~~September 30, 2015 because of the material weakness in our internal control over financial reporting described in our Annual Report on Form 10-K. The Company intends to begin its remediation process of implementing changes in information technology general controls in order to improve controls over segregation of duties, restricted access to programs and data, and to change management activities in order to address the previously reported internal control deficiencies in our Form 10-K.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting, during the fiscal quarter ended ~~March 31,~~September 30, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings: There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, ~~2014~~2015 and our Form 10-Q for the fiscal quarter ended ~~December 31, 2014.~~September 30, 2015.

Item 1A – Risk Factors: An investment in the securities of the Company is subject to various risks, the most significant of which are summarized below.

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FONAR CORPORATION AND SUBSIDIARIES

1. Reduced Reimbursement Rates. Most of our revenues are derived from our scanning center business conducted by ~~HCMA (including HMCA’s subsidiary HDM).~~HMCA. We are experiencing lower reimbursement rates from Medicare, other government programs and private insurance companies. To date, we have been able to counter the impact of these reductions by increasing our volume of scans, thereby maintaining profitability in this business segment. There is, however, no assurance that we will be able to continue to do so.

2. Demand for MRI Scanners. The reduced reimbursement rates also affects our sales of MRI scanners negatively. With lower revenue projections, fewer prospective customers will be able to operate ~~a profitable scanning center business, resulting in a lower~~and demand ~~and~~ lower prices for scanners. Although the reduced reimbursements may not affect foreign demand, a lower number of sales in the aggregate could reduce economies of scale and consequently, profit margins.

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~~FONAR CORPORATION AND SUBSIDIARIES~~

3. Manufacturing Competition. Many if not most of our competing scanner manufacturers have significantly greater financial resources, production capacity, and other resources than we do. Such competitors would include General Electric, Siemens, Hitachi and Phillips. Although Fonar is the only company which can manufacture and sell the unique Stand-Up® (Upright®) MRI scanner, potential customers must be convinced that the purchase of a Fonar scanner is their best choice. We believe that with time, that objective will be reached, particularly with customers scanning patients having neck, back, knee and various orthopedic issues who would benefit from being scanned in weight-bearing positions.

4. Dependence on Referrals. HMCA derives substantially all of its revenue, directly or indirectly, from fees charged for the diagnostic imaging services performed at the facilities. We depend on referrals of patients from unaffiliated physicians and other third parties to the facilities we manage or own for the services we perform. If these physicians and other third parties were to reduce the number of patients they refer or discontinue referring patients, scan volumes could decrease, which would reduce our net revenue and operating margins.

5. Pressure to Control Healthcare Costs. One of the principal objectives of health maintenance organizations and preferred provider organizations is to control the cost of healthcare services. Healthcare providers participating in managed care plans may be required to refer diagnostic imaging tests to certain providers depending on the plan in which a covered patient is enrolled. In addition, managed care contracting has become very competitive. The expansion of health maintenance organizations, preferred provider organizations and other managed care organizations within New York or Florida could have a negative impact on the utilization and pricing of services performed at the facilities HMCA manages or owns to the extent these organizations exert control over patients’ access to diagnostic imaging services, selections of the provider of such services and reimbursement rates for those services.

6. Scanning Facility Competition. The market for diagnostic imaging services is highly competitive. The facilities we manage or own compete for patients on the basis of reputation, location and the quality of diagnostic imaging services. Groups of radiologists, established hospitals, clinics and other independent organizations that own and operate imaging equipment are the principal competitors.

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FONAR CORPORATION AND SUBSIDIARIES

7. Eligibility Changes to Insurance Programs. Due to potential decreased availability of healthcare through private employers, the number of patients who are uninsured or participate in governmental programs may increase. Healthcare reform legislation will increase the participation of individuals in the Medicaid program in states that elect to participate in the expanded Medicaid coverage. A shift in payor mix from managed care and other private payors to government payors or an increase in the number of uninsured patients may result in a reduction in the rates of reimbursement or an increase in uncollectible receivables or uncompensated care, with a corresponding decrease in net revenue. Changes in the eligibility requirements for governmental programs such as the Medicaid program and state decisions on whether to participate in the expansion of such programs also could increase the number of patients who participate in such programs and the number of uninsured patients. Even for those patients who remain in private insurance plans, changes to those plans could increase patient financial responsibility, resulting in a greater risk of uncollectible receivables. These factors and events could have a material adverse effect on our business, financial condition, and results of operations.

8. Proposed Reduction of New York Workers’ Compensation Benefits. A proposal has been published by the New York State Workers’ Compensation Board (“NYSWCB”) to change the fee schedule for Workers’ Compensation payments. In brief, the fees would be set at 130% of the Medicare fees. This would reduce fees for the most commonly billed radiology procedures by 60%. Further, since the Workers’ Compensation fees are coupled with the New York State No Fault Program, radiology providers will suffer similar reductions for No-Fault fees. Although we and the HMCA clients have written to the NYSWCB to argue against this proposal, and other affected parties are commenting as well, there can be no assurance that the NYSWCB will modify this proposal, or if they elect to do so, the extent to which the NYSWCB would modify their proposal. A significant reduction in Workers’ Compensation and No-Fault fees could have a material adverse impact on our business.

9. Federal and state privacy and information security laws. We must comply with numerous federal and state laws and regulations governing the collection, dissemination, access, use, security and privacy of PHI, including HIPAA and its implementing privacy and security regulations, as amended by the federal HITECH Act and collectively referred to as HIPAA. If we fail to comply with applicable privacy and security laws, regulations and standards, properly maintain the integrity of our data, protect our proprietary rights to our systems, or defend against cybersecurity attacks, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.

Information security risks have significantly increased in recent years in part because of the proliferation of new technologies, the use of the internet and telecommunications technologies to conduct our operations, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state agents. Our operations rely on the secure processing, transmission and storage of confidential, proprietary and other information in our computer systems and networks.

10. Changes in Domestic and Worldwide Economic Conditions. We are subject to risk arising from adverse changes in general domestic and global economic conditions, including recession or economic slowdown and disruption of credit markets.

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FONAR CORPORATION AND SUBSIDIARIES

Turbulence and uncertainty in the United States and international markets and economies may adversely affect our liquidity, financial condition, revenues, profitability and business operations generally.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds: The Company has not issued any unregistered shares of its Common Stock during the first ~~three quarters~~quarter of fiscal ~~2015.~~2016.

Item 3 - Defaults Upon Senior Securities: None

Item 4 - Mine Safety Disclosure: Not Applicable

Item 5 - Other Information: None

Item 6 - Exhibits and Reports on Form 8-K:

a.a)

Exhibit 31.1 Certification. See Exhibits

b.b)

Exhibit 32.1 Certification. See Exhibits

c.c)

Report on Form 8-K filed on ~~February 10,~~September 14, 2015, Item 2.02: Results of Operations and Financial Condition for the fiscal ~~quarter~~year ended ~~December 31, 2014.~~June 30, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FONAR CORPORATION

(Registrant)

By: /s/ Raymond V. Damadian

Raymond V. Damadian

President & Chairman

Dated: November 6, 2015

Page 29

~~Dated: May 11, 2015~~

~~Page 30~~

DELAWARE		11-2464137
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

110 Marcus Drive Melville, New York		11747
(Address of principal executive offices)		(Zip Code)

Class	Outstanding at ~~April 30,~~November 2, 2015
Common Stock, par value $.0001		6,050,840
Class B Common Stock, par value $.0001		146
Class C Common Stock, par value $.0001		382,513
Class A Preferred Stock, par value $.0001		313,438

PART I - FINANCIAL INFORMATION		~~Page No.~~	PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - ~~March 31,~~September 30, 2015 (Unaudited) and June 30, ~~2014~~2015	3
Condensed Consolidated Statements of Income for the Three Months Ended ~~March 31,~~September 30, 2015 and ~~March 31,~~September 30, 2014 (Unaudited)	6
Condensed Consolidated Statements of ~~Income~~Cash Flows for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2015 and ~~March 31,~~September 30, 2014 (Unaudited)	7
~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)~~	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	98
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	2217
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2925
Item 4. Controls and Procedures	2926
PART II - OTHER INFORMATION	2926
Item 1. Legal Proceedings	2926
Item 1A. Risk Factors	2926
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3029
Item 3. Defaults Upon Senior Securities	3029
Item 4. Mine Safety Disclosures	3029
Item 5. Other Information	3029
Item 6. Exhibits	3029
Signatures	3029

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

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

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

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

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

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

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

		Medical Equipment			Management of Diagnostic Imaging Centers		Totals
For the three months ended March 31, 2015
Net revenues from external customers	$	2,486		$	14,610	$	17,096
Inter-segment net revenues	$	502		$	—	$	502
(Loss) income from operations	$	(367	)	$	3,033	$	2,666
Depreciation and amortization	$	78		$	811	$	889
Capital expenditures	$	111		$	—	$	111

For the three months ended March 31, 2014
Net revenues from external customers	$	3,023		$	14,017	$	17,040
Inter-segment net revenues	$	495		$	—	$	495
Income from operations	$	192		$	2,127	$	2,319
Depreciation and amortization	$	104		$	829	$	933
Capital expenditures	$	114		$	98	$	212

For the nine months ended March 31, 2015
Net revenues from external customers	$	9,177		$	42,996	$	52,173
Inter-segment net revenues	$	1,504		$	—	$	1,504
Income from operations	$	457		$	9,246	$	9,703
Depreciation and amortization	$	229		$	2,436	$	2,665
Capital expenditures	$	178		$	55	$	233

For the nine months ended March 31, 2014
Net revenues from external customers	$	8,922		$	42,559	$	51,481
Inter-segment net revenues	$	1,485		$	—	$	1,485
Income from operations	$	323		$	9,345	$	9,668
Depreciation and amortization	$	322		$	2,565	$	2,887
Capital expenditures	$	187		$	360	$	547