NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Dec. 31, 2012

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.

Income Per Share

Income Per Share

Basic income per share (“EPS”) is computed based on weighted average shares outstanding and excludes any potential dilution. In accordance with ASC topic 260-10, “Participating Securities and the Two-Class method”, the Company used the Two-Class method for calculating basic earnings per share and applied the if converted method in calculating diluted earnings per share for the three and six months ended December 31, 2012 and December 31, 2011.

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 six months ended December 31, 2012 and December 31, 2011, the number of common shares potentially issuable upon the exercise of certain options of 6,610 and 16,205; respectively, have not been included in the computation of diluted EPS since the effect would be antidilutive.

	Three months ended					Three months ended
	December 31, 2012					December 31, 2011
	(000's omitted, except per share data)
					Class C					Class C
			Common		Common			Common		Common
Basic	Total		Stock		Stock	Total		Stock		Stock
Numerator:
Net income Available to common stockholders	$	1,349	$	1,259	$23	$	1,536	$	1,432	$	26
Denominator:
Weighted average shares outstanding		5,926		5,926	383		5,729		5,729		383
Basic income per common share	$	0.23	$	0.21	$0.06	$	0.27	$	0.25	$	0.07
Diluted
Denominator:
Weighted average shares outstanding				5,926	383				5,729		383
Stock options				—	—				—		—
Convertible Class C Stock				128	—				128		—
Total Denominator for diluted earnings per share				6,054	383				5,857		383
Diluted income per common share			$	0.21	$0.06			$	0.24	$	0.07

	Six months ended					Six months ended
	December 31, 2012					December 31, 2011
	(000's omitted, except per share data)
					Class C					Class C
			Common		Common			Common		Common
Basic	Total		Stock		Stock	Total		Stock		Stock
Numerator:
Net income available to common stockholders	$	2,801	$	2,616	$47	$	3,050	$	2,842	$	53
Denominator:
Weighted average shares outstanding		5,914		5,914	383		5,699		5,699		383
Basic income per common share	$	0.47	$	0.44	$0.12	$	0.54	$	0.50	$	0.14
Diluted
Denominator:
Weighted average shares outstanding				5,914	383				5,699		383
Stock options				—					—		—
Convertible Class C Stock				128	-				128		—
Total Denominator for diluted earnings per share				6,042	383				5,857		383
Diluted income per common share			$	0.43	$0.12			$	0.49	$	0.14

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. ASU 2011-12 defers the requirement that companies present reclassification adjustments for each component of Accumulated Other Comprehensive Income in both net income and Other Comprehensive Income on the face of the financial statements. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. The guidance provided by this update becomes effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this standard has not had a material impact on the Company’s condensed consolidated position and results of operations.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment. This ASU simplifies how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, early adoption is permitted. 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.

FASB, the Emerging Issues Task Force and the SEC have issued certain other accounting standards, updates, and regulations as of June 30, 2012 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 2012 or 2011, 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

Reclassifications

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