Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Entity Registrant Name | Fonar Corporation | |
Entity Central Index Key | 355,019 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 | |
Common Shares | ||
Entity Common Stock, Shares Outstanding | 6,287,511 | |
Class B Common Stock | ||
Entity Common Stock, Shares Outstanding | 146 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 382,513 | |
Preferred Stock Class A | ||
Entity Common Stock, Shares Outstanding | 313,438 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 11,339 | $ 10,140 |
Accounts receivable - net | 4,514 | 4,322 |
Accounts receivable - Related party | 90 | |
Medical receivables -net | 11,848 | 11,745 |
Management and other fees receivable -net | 19,572 | 18,594 |
Management and other fees receivable - related medical practices -net | 5,058 | 4,959 |
Inventories | 1,688 | 1,624 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 736 | 736 |
Prepaid expenses and other current assets | 1,229 | 1,294 |
Total Current Assets | 56,074 | 53,414 |
Deferred income tax asset | 17,862 | 17,862 |
Property and equipment - net | 16,478 | 16,462 |
Goodwill | 3,985 | 3,927 |
Other intangible assets - net | 6,365 | 6,645 |
Other assets | 458 | 453 |
Total Assets | 101,222 | 98,763 |
Current Liabilities: | ||
Current portion of long-term debt and capital leases | 138 | 180 |
Accounts payable | 1,606 | 1,423 |
Other current liabilities | 6,646 | 7,203 |
Unearned revenue on service contracts | 4,654 | 4,642 |
Unearned revenue on service contracts - related parties | 83 | |
Customer advances | 737 | 788 |
Total Current Liabilities | 13,864 | 14,236 |
Long-Term Liabilities: | ||
Deferred income tax liability | 332 | 332 |
Due to related medical practices | 227 | 227 |
Long-term debt and capital leases, less current portion | 329 | 337 |
Other liabilities | 696 | 721 |
Total Long-Term Liabilities | 1,584 | 1,617 |
Total Liabilities | 15,448 | 15,853 |
STOCKHOLDERS' EQUITY: | ||
Common Stock | 1 | 1 |
Paid-in capital in excess of par value | 179,131 | 179,131 |
Accumulated deficit | (97,283) | (101,003) |
Notes receivable from employee stockholders | (15) | (17) |
Treasury stock, at cost - 12 shares of common stock at March 31, 2017 and June 30, 2016 | (675) | (675) |
Total Fonar Corporation Stockholders' Equity | 81,159 | 77,437 |
Non controlling interests | 4,615 | 5,473 |
Total Stockholders' Equity | 85,774 | 82,910 |
Total Liabilities and Stockholders' Equity | $ 101,222 | $ 98,763 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Jun. 30, 2017 |
Class A Non-Voting Preferred | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Authorized | 453,000 | 453,000 |
Preferred Stock, Issued | 313,000 | 313,000 |
Preferred Stock, Outstanding | 313,000 | 313,000 |
Preferred Stock | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Authorized | 567,000 | 567,000 |
Preferred Stock, Issued | ||
Preferred Stock, Outstanding | ||
Common Shares | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 8,500,000 | 8,500,000 |
Common Stock, Issued | 6,299,000 | 6,299,000 |
Common Stock, Outstanding | 6,288,000 | 6,288,000 |
Class B Common Stock | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 227,000 | 227,000 |
Common Stock, Issued | 146 | 146 |
Common Stock, Outstanding | 146 | 146 |
Class C Common Stock | ||
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Authorized | 567,000 | 567,000 |
Common Stock, Issued | 383,000 | 383,000 |
Common Stock, Outstanding | 383,000 | 383,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUES | ||
Product sales - net | $ 162 | $ 242 |
Service and repair fees - net | 2,264 | 2,351 |
Service and repair fees - related parties - net | 28 | 28 |
Patient fee revenue, net of contractual allowances and discounts | 8,653 | 8,823 |
Provision for bad debts and bad debt expense for patient fee | (3,750) | (3,878) |
Management and other fees - net | 9,771 | 9,261 |
Management and other fees - related medical practices - net | 2,206 | 1,907 |
Total Revenues - net | 19,334 | 18,734 |
COSTS AND EXPENSES | ||
Costs related to product sales | 143 | 213 |
Costs related to service and repair fees | 780 | 655 |
Costs related to service and repair fees - related parties | 9 | 8 |
Costs related to patient fee revenue | 2,479 | 2,414 |
Costs related to management and other fees | 5,558 | 5,261 |
Costs related to management and other fees - related medical practices | 1,150 | 953 |
Research and development | 349 | 412 |
Selling, general and administrative | 4,081 | 4,065 |
Total Costs and Expenses | 14,549 | 13,981 |
INCOME | ||
Income From Operations | 4,785 | 4,753 |
Interest Expense | (43) | (98) |
Investment Income | 46 | 48 |
Other (Expense) Income | (2) | (3) |
Income Before Provision for Income Taxes and Noncontrolling Interests | 4,786 | 4,700 |
Benefit/(Provision) for Income Taxes | (185) | (200) |
Net Income | 4,601 | 4,500 |
Net Income - Noncontrolling Interests | (882) | (929) |
Net Income - Controlling Interests | $ 3,719 | $ 3,571 |
Basic Net Income Per Common Share | $ .59 | $ 0.58 |
Weighted Average Basic Shares Outstanding | 6,287,000 | 6,105,000 |
Common Shares | ||
INCOME | ||
Net Income - Controlling Interests | $ 3,486 | $ 3,343 |
Basic Net Income Per Common Share | $ .55 | $ 0.55 |
Diluted Net Income Per Common Share | $ .54 | $ 0.54 |
Weighted Average Basic Shares Outstanding | 6,287,000 | 6,105,000 |
Weighted Average Diluted Shares Outstanding | 6,415,000 | 6,233,000 |
Preferred Stock Class A | ||
INCOME | ||
Net Income - Controlling Interests | $ 174 | $ 170 |
Class C Common Stock | ||
INCOME | ||
Net Income - Controlling Interests | $ 59 | $ 58 |
Basic Net Income Per Common Share | $ .16 | $ 0.15 |
Diluted Net Income Per Common Share | $ .16 | $ 0.15 |
Weighted Average Basic Shares Outstanding | 383,000 | 383,000 |
Weighted Average Diluted Shares Outstanding | 383,000 | 383,000 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 4,601 | $ 4,500 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 959 | 856 |
Provision for bad debts | (164) | (161) |
Compensatory element of stock issuances | 7 | |
Stock issued for costs and expenses | 2,239 | |
(Increase) decrease in operating assets, net: | ||
Accounts, medical and management fee receivable(s) | (1,297) | (1,675) |
Notes receivable | 12 | |
Inventories | (64) | (140) |
Prepaid expenses and other current assets | 65 | 26 |
Other assets | (5) | (63) |
Increase (decrease) in operating liabilities, net: | ||
Accounts payable | 183 | 50 |
Other current liabilities | (462) | (2,218) |
Customer advances | (51) | (132) |
Billings in excess of costs and estimated earnings on completed contracts | (30) | |
Other liabilities | (25) | 92 |
Due to related medical practices | (9) | |
Net cash provided by operating activities | 3,740 | 3,354 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (665) | (599) |
Cost of patents | (30) | (43) |
Net cash used in investing activities | (695) | (642) |
Cash Flows from Financing Activities: | ||
Repayment of borrowings and capital lease obligations | (50) | (1,410) |
Additional Acquisition Costs | (58) | |
Distributions to noncontrolling interests | (1,740) | (1,837) |
Repayment of notes receivable from employee stockholders | 2 | 1 |
Net cash used in financing activities | (1,846) | (3,246) |
Net (Decrease) Increase in Cash and Cash Equivalents | 1,199 | (534) |
Cash and Cash Equivalents - Beginning of Period | 10,140 | 8,528 |
Cash and Cash Equivalents - End of Period | $ 11,339 | $ 7,994 |
NOTE 1 - DESCRIPTION OF BUSINES
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (USD $) | 3 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of Business Effective July 1, 2015, the Company restructured the corporate organization of the management of diagnostic imaging centers segment of our business. The reorganization was structured to more completely integrate the operations of Health Management Corporation of America and HDM. Imperial contributed all of its assets (which were utilized in the business of Health Management Corporation of America) to HDM and received a 24.2% interest in HDM. Health Management Corporation of America retained a direct ownership interest of 45.8% in HDM, and the original investors in HDM retained a 30.0% ownership interest in the newly expanded HDM. The entire management of diagnostic imaging centers business segment is now being conducted by HDM, operating under the name “Health Management Company of America”. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2017, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018. 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 27, 2017 for the fiscal year ended June 30, 2017. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (USD $) | 3 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2017 and 2016. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2017 and 2016, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Stock Total Common Stock Class C Common Stock Basic Numerator: Net income available to common stockholders $ 3,719 $ 3,486 $ 59 $ 3,571 $ 3,343 $ 58 Denominator: Weighted average shares outstanding 6,287 6,287 383 6,105 6,105 383 Basic income per common share $ 0.59 $ 0.55 $ 0.16 $ 0.58 $ 0.55 $ 0.15 Diluted Denominator: Weighted average shares outstanding 6,287 383 6,105 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,415 383 6,233 383 Diluted income per common share $ 0.54 $ 0.16 $ 0.54 $ 0.15 Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This update includes provisions intended to simplify various aspects of accounting for share-based compensation. ASU No. 2016-09 will take effect for public companies for the annual periods beginning after December 15, 2016. The Company has adopted ASU No. 2016-09. Our adoption of ASU No. 2016-09 did not have an impact on our condensed consolidated financial statements. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Company’s consolidated condensed financial statements. The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2017, as deferred including interim periods within the reporting period and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on it ongoing financial reporting. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. It is effective for annual reporting periods beginning after December 15, 2016. The Company has adopted ASU 2015-11. Our adoption of ASU 2015-11 did not have an impact on our condensed consolidated financial statements. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of June 30, 2017 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 2017 or 2016, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented. |
NOTE 3 - ACCOUNTS RECEIVABLE, M
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) | 3 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
NOTE 3 - ACCOUNTS RECEIVABLE. MEDICAL RECEIVABLES AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 3 – ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE Accounts Receivable, Medical Receivable and Management and Other Fees Receivable Receivables, net is comprised of the following September 30, 2017, and June 30, 2017: September 30, 2017 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,704 $ 190 $ 4,514 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 31,980 $ 20,132 $ 11,848 Management and other fees receivable $ 31,888 $ 12,316 $ 19,572 Management and other fees receivable from related medical practices ("PC’s") $ 6,018 $ 960 $ 5,058 June 30, 2017 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,512 $ 190 $ 4,322 Accounts receivable - related party $ — — $ — Medical receivable $ 31,598 $ 19,853 $ 11,745 Management and other fees receivable $ 31,454 $ 12,860 $ 18,594 Management and other fees receivable from related medical practices ("PC’s") $ 5,541 $ 582 $ 4,959 The Company's customers are concentrated in the healthcare industry. Accounts Receivable Credit risk with respect to the Company’s accounts receivable related to product sales and service and repair fees is limited due to the customer advances received prior to the commencement of work performed and the billing of amounts to customers as sub-assemblies are completed. Service and repair fees are billed on a monthly or quarterly basis and the Company does not continue providing these services if accounts receivable become past due. The Company controls credit risk with respect to accounts receivable from service and repair fees through its credit evaluation process, credit limits, monitoring procedures and reasonably short collection terms. The Company performs ongoing credit authorizations before a product sales contract is entered into or service and repair fees are provided. Medical Receivables Medical receivables are due under fee-for-service contracts from third party payors, such as hospitals, government sponsored healthcare programs, patient’s legal counsel and directly from patients. Substantially all the revenue relates to patients residing in Florida. The carrying amount of the medical receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. The Company continuously monitors collections from its clients and maintains an allowance for bad debts based upon the Company’s historical collection experience. The Company determines allowances for contractual adjustments and uncollectible accounts based on specific agings, specific payor collection issues that have been identified and based on payor classifications and historical experience at each site. Management and Other Fees Receivable The Company's receivables from the related and non-related professional corporations (PC's) substantially consist of fees outstanding under management agreements. Payment of the outstanding fees is dependent on collection by the PC's of fees from third party medical reimbursement organizations, principally insurance companies and health management organizations. Payment of the management fee receivables from the PC’s may be impaired by the inability of the PC’s to collect in a timely manner their medical fees from the third party payors, particularly insurance carriers covering automobile no-fault and workers compensation claims due to longer payment cycles and rigorous informational requirements and certain other disallowed claims. Approximately 66% and 64% of the PCs’ net revenues for the three months ended September 30, 2017 and 2016, 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 11.4% and 10.2% of the consolidated net revenues for the three months ended September 30, 2017 and 2016, respectively. Tallahassee Magnetic Resonance Imaging, PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI & Diagnostic Center, PA (all related medical practices) entered into a guaranty agreement, pursuant to which they cross guaranteed all management fees which are payable to the Company, which have arisen under each individual management agreement. Additional Company managed entities have entered into a guaranty agreement, pursuant to which management fees are payable to the Company. The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three months ended September 30, 2017 and 2016 are summarized in the following table. For the Three Months Ended September 30, 2017 2016 Commercial Insurance/ Managed Care $ 1,198 $ 1,264 Medicare/Medicaid 272 300 Workers' Compensation/Personal Injury 5,578 5,680 Other 1,605 1,579 Patient Fee Revenue, net of contractual allowances and discounts 8,653 8,823 Provision for Bad Debts (3,750 ) (3,878 ) Net Patient Fee for Revenue $ 4,903 $ 4,945 |
NOTE 4 - INVENTORIES
NOTE 4 - INVENTORIES | 3 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
NOTE 4 - INVENTORIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 4 - INVENTORIES Inventories included in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Purchased parts, components and supplies $ 1,429 $ 1,431 Work-in-process 259 193 TOTAL INVENTORIES $ 1,688 $ 1,624 |
NOTE 5 - COSTS AND ESTIMATED EA
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 3 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS Information relating to uncompleted contracts is as follows: September 30, 2017 June 30, 2017 Costs incurred on uncompleted contracts $ 1,031 $ 1,031 Estimated earnings 999 999 Subtotal 2,030 2,030 Less: Billings to date 1,294 1,294 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 $ 736 Included in the accompanying condensed consolidated balance sheets under the following captions: September 30, 2017 June 30, 2017 Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 $ 736 Less: Billings in excess of costs and estimated earnings on uncompleted contracts — — Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 736 |
NOTE 6 - OTHER INTANGIBLE ASSET
NOTE 6 - OTHER INTANGIBLE ASSETS | 3 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
NOTE 6 - OTHER INTANGIBLE ASSETS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 6 – OTHER INTANGIBLE ASSETS Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 4,756 4,727 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,661 19,632 Less: Accumulated amortization 13,296 12,987 Other Intangible Assets $ 6,365 $ 6,645 Amortization of patents and copyrights for the three months ended September 30, 2017and 2016 amounted to $50 and $47, respectively. Amortization of capitalized software development costs for the three months ended September 30, 2017 and 2016 amounted to $65 and $65, respectively. Amortization of non-compete for the three months ended September 30, 2017 and 2016 amounted to $146 and $146, respectively. Amortization of customer relationships for the three months ended September 30, 2017 and 2016 amounted to $48 and $48, respectively. |
NOTE 7 - OTHER CURRENT LIABILIT
NOTE 7 - OTHER CURRENT LIABILITIES | 3 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
NOTE 7 - OTHER CURRENT LIABILITIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 7 – OTHER CURRENT LIABILITIES Other current liabilities in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Accrued salaries, commissions and payroll taxes $ 964 $ 1,139 Accrued interest 45 45 Litigation accruals 145 145 Sales tax payable 2,322 2,282 Legal and other professional fees 297 296 Accounting fees 54 154 Self-funded health insurance reserve - 92 Interest and penalty - sales tax 2,229 2,296 Other 590 754 Other Current Liabilities $ 6,646 $ 7,203 |
NOTE 8 - BUSINESS COMBINATIONS
NOTE 8 - BUSINESS COMBINATIONS | 3 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
NOTE 8 - BUSINESS COMBINATIONS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 8 – BUSINESS COMBINATIONS Acquisitions On June 15, 2017, the Company purchased 100% interest in Turnkey Equipment Management of Great Neck, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 1,313 Security deposit 24 Total Consideration 1,337 Net assets at Fair Value 732 Goodwill $ 605 On March 20, 2017, the Company purchased 100% interest in Radwell Leasing LLC and Radwell LLC. The net assets acquired and consideration is as follows: Diagnostic Equipment $ 544 Leasehold Improvements 126 Total Net Assets Acquired $ 670 Stock issued as consideration $ 791 Less cash received - net (121 ) Total Consideration $ 670 On June 30, 2016, the Company purchased 100% interest in TK2 Equipment Management, LLC and Turnkey Services of New York, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 4,224 Net assets at Fair Value 2,862 Goodwill $ 1,555 Pro forma Results The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the year prior to acquisition, nor of the results that may be reported in the future. The results of operations of Radwell Leasing LLC, Radwell LLC and Turnkey Equipment of Great Neck LLC were diminutive and did not affect the proforma results of operations. |
NOTE 9 - SEGMENT AND RELATED IN
NOTE 9 - SEGMENT AND RELATED INFORMATION | 3 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
NOTE 9 - SEGMENT AND RELATED INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 9 - SEGMENT AND RELATED INFORMATION The Company operates in two industry segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as disclosed in the Company’s 10-K as of June 30, 2017. 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 Sept. 30, 2017 Net revenues from external customers $ 2,454 $ 16,880 $ 19,334 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (197 ) $ 4,982 $ 4,785 Depreciation and amortization $ 82 $ 877 $ 959 Capital expenditures $ 44 $ 650 $ 694 For the three months ended Sept. 30, 2016 Net revenues from external customers $ 2,621 $ 16,113 $ 18,734 Inter-segment net revenues $ 381 $ — $ 381 (Loss) Income from operations $ (147 ) $ 4,900 $ 4,753 Depreciation and amortization $ 80 $ 776 $ 856 Capital expenditures $ 43 $ 599 $ 642 |
NOTE 10 - SUPPLEMENTAL CASH FLO
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Sep. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION During the three months ended September 30, 2017 and September 30, 2016, the Company paid $10 and $67 for interest, respectively. During the three months ended September 30, 2017 and September 30, 2016, the Company paid $185 and $200 for income taxes, respectively. |
NOTE 11 - COMMITMENTS AND CONTI
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 11 - COMMITMENTS AND CONTINGENCIES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 11 – COMMITMENTS AND CONTINGENCIES Litigation The Company is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions, will not have a material adverse effect on the consolidated financial position or results of operations of the Company. There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30, 2017. Other Matters The Company is also delinquent in filing sales tax returns for certain states, for which the Company has transacted business. As of September 30, 2017, the Company has recorded tax obligations of approximately $2,321 plus interest and penalties of approximately $2,229. The Company is in the process of determining the regulatory requirements in order to become compliant. The Company maintains a self-funded health insurance program with a stop-loss umbrella policy with a third party insurer to limit the maximum potential liability for individual claims to $100 per person and for a maximum potential claim liability based on member enrollment. With respect to this program, the Company considers historical and projected medical utilization data when estimating its health insurance program liability and related expense. As of September 30, 2017 and June 30, 2017, the Company had approximately $0 and $92, respectively, in reserve for its self-funded health insurance programs. The reserves are included in “Other current liabilities” in the condensed consolidated balance sheets. The Company regularly analyzes its reserves for incurred but not reported claims, and for reported but not paid claims related to its reinsurance and self-funded insurance programs. The Company believes its reserves are adequate. However, significant judgment is involved in assessing these reserves such as assessing historical paid claims, average lags between the claims’ incurred date, reported dates and paid dates, and the frequency and severity of claims. There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known. There were no significant adjustments recorded in the periods covered by this report. |
NOTE 12 - INCOME TAXES
NOTE 12 - INCOME TAXES | 3 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
NOTE 12 - INCOME TAXES | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 12 - INCOME TAXES ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as unrecognized benefits. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740. In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses. The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2010. The Company recorded a deferred tax asset of $17,862 and a deferred tax liability of $332 as of September 30, 2017, primarily relating to net operating loss carryforwards of approximately $98,327 available to offset future taxable income through 2030. The net operating losses begin to expire in 2021 for federal tax purposes and in 2016 for state income tax purposes. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company does have a sufficient history of income and anticipates profitability in the coming years and has concluded that it is more-likely-than-not that the Company will be able to realize a portion of its tax benefits in the near future and therefore a valuation allowance was established for the partial value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. Should the Company continue to remain profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly. |
NOTE 13 - SUBSEQUENT EVENTS
NOTE 13 - SUBSEQUENT EVENTS | 3 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
NOTE 13 - SUBSEQUENT EVENTS | FONAR CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2017 and 2016 (Amounts and shares in thousands, except per share amounts) (UNAUDITED) NOTE 13 – SUBSEQUENT EVENTS The Company has evaluated events that occurred subsequent to September 30, 2017 and through the date the condensed consolidated financial statements were issued. |
NOTE 2 - SUMMARY OF SIGNIFICA19
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Sep. 30, 2017 | |
Note 2 - Summary Of Significant Accounting Policies Policies | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) is computed based upon the weighted average number of shares of common stock and stock equivalents outstanding, net of common stock. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic income per share and applied the if converted method in calculating diluted income per share for the three months ended September 30, 2017 and 2016. Diluted EPS reflects the potential dilution from the exercise or conversion of all dilutive securities into common stock based on the average market price of common shares outstanding during the period. For the three months ended September 30, 2017 and 2016, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common. Three months ended Three months ended Total Common Stock Class C Common Stock Total Common Stock Class C Common Stock Basic Numerator: Net income available to common stockholders $ 3,719 $ 3,486 $ 59 $ 3,571 $ 3,343 $ 58 Denominator: Weighted average shares outstanding 6,287 6,287 383 6,105 6,105 383 Basic income per common share $ 0.59 $ 0.55 $ 0.16 $ 0.58 $ 0.55 $ 0.15 Diluted Denominator: Weighted average shares outstanding 6,287 383 6,105 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,415 383 6,233 383 Diluted income per common share $ 0.54 $ 0.16 $ 0.54 $ 0.15 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350). The amendments in this update simplify the test for goodwill impairment by eliminating Step 2 from the impairment test, which required the entity to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining fair value of assets acquired and liabilities assumed in a business combination. The amendments in this update are effective for public companies for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805); Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments in this update are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. We are evaluating the impact of adopting this guidance on our consolidated condensed financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. This update includes provisions intended to simplify various aspects of accounting for share-based compensation. ASU No. 2016-09 will take effect for public companies for the annual periods beginning after December 15, 2016. The Company has adopted ASU No. 2016-09. Our adoption of ASU No. 2016-09 did not have an impact on our condensed consolidated financial statements. During February 2016, FAS issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based upon the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Lease with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Company’s consolidated condensed financial statements. The FASB has issued ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supercedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2017, as deferred including interim periods within the reporting period and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on it ongoing financial reporting. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, “Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. It is effective for annual reporting periods beginning after December 15, 2016. The Company has adopted ASU 2015-11. Our adoption of ASU 2015-11 did not have an impact on our condensed consolidated financial statements. FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of June 30, 2017 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 2017 or 2016, and it does not believe that any of those pronouncements will have a significant impact on our consolidated condensed financial statements at the time they become effective. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications did not have any effect on reported consolidated net income for any periods presented. |
NOTE 2 - SUMMARY OF SIGNIFICA20
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Earnings Per Share | Earnings Per Share Three months ended Three months ended Total Common Stock Class C Common Stock Total Common Stock Class C Common Stock Basic Numerator: Net income available to common stockholders $ 3,719 $ 3,486 $ 59 $ 3,571 $ 3,343 $ 58 Denominator: Weighted average shares outstanding 6,287 6,287 383 6,105 6,105 383 Basic income per common share $ 0.59 $ 0.55 $ 0.16 $ 0.58 $ 0.55 $ 0.15 Diluted Denominator: Weighted average shares outstanding 6,287 383 6,105 383 Convertible Class C Stock 128 — 128 — Total Denominator for diluted earnings per share 6,415 383 6,233 383 Diluted income per common share $ 0.54 $ 0.16 $ 0.54 $ 0.15 |
NOTE 3 - ACCOUNTS RECEIVABLE,21
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE (USD $) (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Receivables - net | Receivables, net is comprised of the following September 30, 2017, and June 30, 2017: September 30, 2017 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,704 $ 190 $ 4,514 Accounts receivable - related party $ 90 — $ 90 Medical receivable $ 31,980 $ 20,132 $ 11,848 Management and other fees receivable $ 31,888 $ 12,316 $ 19,572 Management and other fees receivable from related medical practices ("PC’s") $ 6,018 $ 960 $ 5,058 June 30, 2017 Gross Receivable Allowance for doubtful accounts Net Accounts receivable $ 4,512 $ 190 $ 4,322 Accounts receivable - related party $ — — $ — Medical receivable $ 31,598 $ 19,853 $ 11,745 Management and other fees receivable $ 31,454 $ 12,860 $ 18,594 Management and other fees receivable from related medical practices ("PC’s") $ 5,541 $ 582 $ 4,959 |
Patient fee revenue - net | The Company’s patient fee revenue, net of contractual allowances and discounts less the provision for bad debts for the three months ended September 30, 2017 and 2016 are summarized in the following table. For the Three Months Ended September 30, 2017 2016 Commercial Insurance/ Managed Care $ 1,198 $ 1,264 Medicare/Medicaid 272 300 Workers' Compensation/Personal Injury 5,578 5,680 Other 1,605 1,579 Patient Fee Revenue, net of contractual allowances and discounts 8,653 8,823 Provision for Bad Debts (3,750 ) (3,878 ) Net Patient Fee for Revenue $ 4,903 $ 4,945 |
NOTE 4 - INVENTORIES (Tables)
NOTE 4 - INVENTORIES (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories included in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Purchased parts, components and supplies $ 1,429 $ 1,431 Work-in-process 259 193 TOTAL INVENTORIES $ 1,688 $ 1,624 |
NOTE 5 - COSTS AND ESTIMATED 23
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Information relating to uncompleted contracts | Information relating to uncompleted contracts is as follows: September 30, 2017 June 30, 2017 Costs incurred on uncompleted contracts $ 1,031 $ 1,031 Estimated earnings 999 999 Subtotal 2,030 2,030 Less: Billings to date 1,294 1,294 Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 $ 736 |
Included in the accompanying condensed consolidated balance sheets | Included in the accompanying condensed consolidated balance sheets under the following captions: September 30, 2017 June 30, 2017 Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 $ 736 Less: Billings in excess of costs and estimated earnings on uncompleted contracts — — Total Costs and estimated earnings in excess of billings on uncompleted contracts $ 736 736 |
NOTE 6 - OTHER INTANGIBLE ASS24
NOTE 6 - OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other intangible assets - net | Other intangible assets, net of accumulated amortization, in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Capitalized software development costs $ 7,005 $ 7,005 Patents and copyrights 4,756 4,727 Non-compete 4,100 4,100 Customer relationships 3,800 3,800 Gross Other intangible assets 19,661 19,632 Less: Accumulated amortization 13,296 12,987 Other Intangible Assets $ 6,365 $ 6,645 |
NOTE 7 - OTHER CURRENT LIABIL25
NOTE 7 - OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Other current liabilities | Other current liabilities in the accompanying condensed consolidated balance sheets consist of the following: September 30, 2017 June 30, 2017 Accrued salaries, commissions and payroll taxes $ 964 $ 1,139 Accrued interest 45 45 Litigation accruals 145 145 Sales tax payable 2,322 2,282 Legal and other professional fees 297 296 Accounting fees 54 154 Self-funded health insurance reserve - 92 Interest and penalty - sales tax 2,229 2,296 Other 590 754 Other Current Liabilities $ 6,646 $ 7,203 |
NOTE 8 - BUSINESS COMBINATIONS
NOTE 8 - BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Turnkey Equipment Management of Great Neck, LLC | |
Acquisition | On June 15, 2017, the Company purchased 100% interest in Turnkey Equipment Management of Great Neck, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 1,313 Security deposit 24 Total Consideration 1,337 Net assets at Fair Value 732 Goodwill $ 605 |
Radwell Leasing, LLC & Radwell LLC | |
Acquisition | On March 20, 2017, the Company purchased 100% interest in Radwell Leasing LLC and Radwell LLC. The net assets acquired and consideration is as follows: Diagnostic Equipment $ 544 Leasehold Improvements 126 Total Net Assets Acquired $ 670 Stock issued as consideration $ 791 Less cash received - net (121 ) Total Consideration $ 670 |
TK2 Equipment Management, LLC & Turnkey Equipment Management, LLC | |
Acquisition | On June 30, 2016, the Company purchased 100% interest in TK2 Equipment Management, LLC and Turnkey Services of New York, LLC. The consideration and net assets acquired is as follows: Cash Paid $ 4,224 Net assets at Fair Value 2,862 Goodwill $ 1,555 |
NOTE 9 - SEGMENT AND RELATED 27
NOTE 9 - SEGMENT AND RELATED INFORMATION (Tables) | 3 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment information | Summarized financial information concerning the Company's reportable segments is shown in the following table: Medical Equipment Management Of Diagnostic Imaging Centers Totals For the three months ended Sept. 30, 2017 Net revenues from external customers $ 2,454 $ 16,880 $ 19,334 Inter-segment net revenues $ 219 $ — $ 219 (Loss) Income from operations $ (197 ) $ 4,982 $ 4,785 Depreciation and amortization $ 82 $ 877 $ 959 Capital expenditures $ 44 $ 650 $ 694 For the three months ended Sept. 30, 2016 Net revenues from external customers $ 2,621 $ 16,113 $ 18,734 Inter-segment net revenues $ 381 $ — $ 381 (Loss) Income from operations $ (147 ) $ 4,900 $ 4,753 Depreciation and amortization $ 80 $ 776 $ 856 Capital expenditures $ 43 $ 599 $ 642 |
NOTE 2 - SUMMARY OF SIGNIFICA28
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Basic Numerator: Net income available to common stockholders | $ 3,719 | $ 3,571 |
Basic Denominator: Weighted average shares outstanding | 6,287,000 | 6,105,000 |
Basic Income Per Common Share | $ .59 | $ 0.58 |
Common Shares | ||
Basic Numerator: Net income available to common stockholders | $ 3,486 | $ 3,343 |
Basic Denominator: Weighted average shares outstanding | 6,287,000 | 6,105,000 |
Basic Income Per Common Share | $ .55 | $ 0.55 |
Shares included upon conversion of Class C Common to calculate a diluted EPS | 128,000 | 128,000 |
Total Denominator for diluted earnings per share | 6,415,000 | 6,233,000 |
Diluted Income Per Share | $ .54 | $ 0.54 |
Class C Common Stock | ||
Basic Numerator: Net income available to common stockholders | $ 59 | $ 58 |
Basic Denominator: Weighted average shares outstanding | 383,000 | 383,000 |
Basic Income Per Common Share | $ .16 | $ 0.15 |
Total Denominator for diluted earnings per share | 383,000 | 383,000 |
Diluted Income Per Share | $ .16 | $ 0.15 |
NOTE 3 - ACCOUNTS RECEIVABLE,29
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Receivables, Net - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Accounts receivable | $ 4,514 | $ 4,322 |
Accounts receivable - Related party | 90 | |
Medical Receivables | 11,848 | 11,745 |
Management and other fees receivable | 19,572 | 18,594 |
Management and other fees receivable from related medical practices ("PC's") | 5,058 | 4,959 |
Gross Receivable | ||
Accounts receivable | 4,704 | 4,512 |
Accounts receivable - Related party | 90 | |
Medical Receivables | 31,980 | 31,598 |
Management and other fees receivable | 31,888 | 31,454 |
Management and other fees receivable from related medical practices ("PC's") | 6,018 | 5,541 |
Allowance for Doubtful Accounts | ||
Accounts receivable | 190 | 190 |
Medical Receivables | 20,132 | 19,853 |
Management and other fees receivable | 12,316 | 12,860 |
Management and other fees receivable from related medical practices ("PC's") | $ 960 | $ 582 |
NOTE 3 - ACCOUNTS RECEIVABLE,30
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - Patient Fees Revenue - (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Patient fee revenue, net of contractual allowances and discounts | $ 8,653 | $ 8,823 |
Provision for bad debts for patient fee and bad debt expense | (3,750) | (3,878) |
Net patient fee revenue | 4,903 | 4,945 |
Commercial Insurance / Managed Care | ||
Patient fee revenue, net of contractual allowances and discounts | 1,198 | 1,264 |
Medicare/Medicaid | ||
Patient fee revenue, net of contractual allowances and discounts | 272 | 300 |
Workers Compensation/Personal Injury | ||
Patient fee revenue, net of contractual allowances and discounts | 5,578 | 5,680 |
Other | ||
Patient fee revenue, net of contractual allowances and discounts | $ 1,605 | $ 1,579 |
NOTE 4 - INVENTORIES (Details)
NOTE 4 - INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Purchased parts, components and supplies | $ 1,429 | $ 1,431 |
Work-in-process | 259 | 193 |
Total inventories | $ 1,688 | $ 1,624 |
NOTE 5 - COSTS AND ESTIMATED 32
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Information relating to uncompleted contracts - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Notes to Financial Statements | ||
Costs incurred on uncompleted contracts | $ 1,031 | $ 1,031 |
Estimated earnings | 999 | 999 |
Subtotal | 2,030 | 2,030 |
Less: Billings to date | 1,294 | 1,294 |
Total Costs and estimated earnings in excess of billings on uncompleted contracts | $ 736 | $ 736 |
NOTE 5 - COSTS AND ESTIMATED 33
NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS - Balance Sheet Items - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Notes to Financial Statements | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 736 | $ 736 |
Total Costs and estimated earnings in excess of billings on uncompleted contracts | $ 736 | $ 736 |
NOTE 6 - OTHER INTANGIBLE ASS34
NOTE 6 - OTHER INTANGIBLE ASSETS - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Gross Other intangible assets | $ 19,661 | $ 19,632 |
Accumulated amortization | 13,296 | 12,987 |
Other Intangible Assets - net | 6,365 | 6,645 |
Capitalized software development costs | ||
Gross Other intangible assets | 7,005 | 7,005 |
Patents and copyrights | ||
Gross Other intangible assets | 4,756 | 4,727 |
Non-compete | ||
Gross Other intangible assets | 4,100 | 4,100 |
Customer relationships | ||
Gross Other intangible assets | $ 3,800 | $ 3,800 |
NOTE 7 - OTHER CURRENT LIABIL35
NOTE 7 - OTHER CURRENT LIABILITIES - (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Payables and Accruals [Abstract] | ||
Accrued salaries, commissions and payroll taxes | $ 964 | $ 1,139 |
Accrued interest | 45 | 45 |
Litigation accruals | 145 | 145 |
Sales tax payable | 2,322 | 2,282 |
Legal and other professional fees | 297 | 296 |
Accounting fees | 54 | 154 |
Self-funded health insurance reserve | 0 | 92 |
Interest and penalty - sales tax | 2,229 | 2,296 |
Other | 590 | 754 |
Total Other current liabilities | $ 6,646 | $ 7,203 |
NOTE 8 - BUSINESS COMBINATION36
NOTE 8 - BUSINESS COMBINATIONS - Acquisition - Turnkey Equipment (Details) - Turnkey Equipment Management of Great Neck, LLC | Jun. 15, 2017USD ($) |
Cash Paid | $ 1,313,000 |
Security deposit | 24,000 |
Total consideration | 1,337,000 |
Net assets at Fair Value | 732,000 |
Business combination goodwill | $ 605,000 |
NOTE 8 - BUSINESS COMBINATION37
NOTE 8 - BUSINESS COMBINATIONS - Acquisition - Radwell Leasing (Details) - Radwell Leasing, LLC & Radwell LLC | Mar. 20, 2017USD ($) |
Diagnostic equipment | $ 544,000 |
Leasehold Improvements | 126,000 |
Total Net Assets Acquired | 670,000 |
Stock issued as consideration | 791,000 |
Less: Cash Received | (121,000) |
Total consideration | $ 670,000 |
NOTE 8 - BUSINESS COMBINATION38
NOTE 8 - BUSINESS COMBINATIONS - Acquisition - TK2 Equipment Management (Details) - TK2 Equipment Management $ in Thousands | Jun. 30, 2016USD ($) |
Cash Paid | $ 4,224 |
Net assets at Fair Value | 2,862 |
Business Combination Goodwill | $ 1,555 |
NOTE 9 - SEGMENT AND RELATED 39
NOTE 9 - SEGMENT AND RELATED INFORMATION - Segment Information - (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Net revenues from external customers | $ 19,334 | $ 18,734 |
Inter-segment net revenues | 219 | 381 |
Income from operations | 4,785 | 4,753 |
Depreciation and amortization | 959 | 856 |
Capital expenditures | 694 | 642 |
Medical Equipment | ||
Net revenues from external customers | 2,454 | 2,621 |
Inter-segment net revenues | 219 | 381 |
Income from operations | (197) | (147) |
Depreciation and amortization | 82 | 80 |
Capital expenditures | 44 | 43 |
Management Of Diagnostic Imaging Centers | ||
Net revenues from external customers | 16,880 | 16,113 |
Income from operations | 4,982 | 4,900 |
Depreciation and amortization | 877 | 776 |
Capital expenditures | $ 650 | $ 599 |
NOTE 1 - DESCRIPTION OF BUSIN40
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION - (Details Narrative) | Jul. 01, 2015 |
Note 1 - Description Of Business And Basis Of Presentation - Details Narrative | |
The ownership interest of Imperial Management Services after reorganization of newly expanded HDM (percent). | 24.20% |
The ownership interest of Health Management Corporation of America after reorganization of newly expanded HDM (percent). | 45.80% |
The ownership interest of the original investors of HDM after reorganization of newly expanded HDM (percent). | 30.00% |
NOTE 2 - SUMMARY OF SIGNIFICA41
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Details Narrative) - shares | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Common Shares | ||
Shares included upon conversion of Class C Common to calculate a diluted EPS | 128,000 | 128,000 |
NOTE 3 - ACCOUNTS RECEIVABLE,42
NOTE 3 - ACCOUNTS RECEIVABLE, MEDICAL RECEIVABLE AND MANAGEMENT AND OTHER FEES RECEIVABLE - (Details Narrative) | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Note 3 - Accounts Receivable Medical Receivable And Management And Other Fees Receivable - Details Narrative | ||
Net revenues derived from no-fault and personal injury protection claims | 66.00% | 64.00% |
Net revenues from management and other fees charged to related PCs | 11.40% | 10.20% |
NOTE 6 - OTHER INTANGIBLE ASS43
NOTE 6 - OTHER INTANGIBLE ASSETS - (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Patents and copyrights | ||
Amortization of intangible assets | $ 50 | $ 47 |
Capitalized software development costs | ||
Amortization of intangible assets | 65 | 65 |
Non-compete | ||
Amortization of intangible assets | 146 | 146 |
Customer relationships | ||
Amortization of intangible assets | $ 48 | $ 48 |
NOTE 10 - SUPPLEMENTAL CASH F44
NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION ($)- (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Note 10 - Supplemental Cash Flow Information - Details Narrative | ||
Interest paid | $ 10 | $ 67 |
Income Taxes Paid | $ 185 | $ 200 |
NOTE 11 - COMMITMENTS AND CON45
NOTE 11 - COMMITMENTS AND CONTINGENCIES - (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Recorded tax obligations | $ 2,321 | |
Tax interest and penalties | 2,229 | |
Maximum limit for individual claims under stop-loss umbrella policy for health insurance | 100 | |
Self-funded health insurance reserve | $ 0 | $ 92 |
NOTE 12 - INCOME TAXES - (Detai
NOTE 12 - INCOME TAXES - (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 |
Income Tax Disclosure [Abstract] | ||
Deferred income tax asset | $ 17,862 | $ 17,862 |
Deferred income tax liability | 332 | $ 332 |
Net deferred operating loss carryforwards | $ 98,327 |