NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Mar. 31, 2014

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 on weighted average number of shares 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 per share and applied the if converted method in calculating diluted earnings per share for the three and nine months ended March 31, 2014 and March 31, 2013.

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, 2014 and March 31, 2013, diluted EPS for common shareholders includes 128 shares upon conversion of Class C Common.

	Three months ended March 31, 2014						Three months ended March 31, 2013
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	1,739	$	1,625	$	29	$	1,076	$	1,005	$	18
Denominator:
Weighted average shares  outstanding		6,022		6,022		383		5,937		5,937		383
Basic income per common  share	$	0.29	$	0.27	$	0.08	$	0.18	$	0.17	$	0.05
Diluted
Denominator:
Weighted average shares  outstanding				6,022		383				5,937		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,150		383				6,065		383
Diluted income per common share			$	0.26	$	0.08			$	0.17	$	0.05

	Nine months ended  March 31, 2014						Nine months ended  March 31, 2013
Basic		Total		Common Stock		Class C Common Stock		Total		Common Stock		Class C Common Stock
Numerator:
Net income Available to  common stockholders	$	6,319	$	5,907	$	105	$	3,876	$	3,621	$	65
Denominator:
Weighted average shares  outstanding		6,002		6,002		383		5,921		5,921		383
Basic income per common  share	$	1.05	$	0.98	$	0.27	$	0.65	$	0.61	$	0.17
Diluted
Denominator:
Weighted average shares  outstanding				6,002		383				5,921		383
Stock options				—		—				—		—
Convertible Class C Stock				128		—				128		—
Total Denominator for diluted earnings per share				6,130		383				6,049		383
Diluted income per common share			$	0.96	$	0.27			$	0.60	$	0.17

Recent Accounting Pronouncements

Recent Accounting Pronouncements

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 improves 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 did not have a material impact on the Company’s condensed consolidated financial position and results of operations.

The FASB has issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this standard did not 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 March 31, 2014 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 2014 or 2013, 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 reclassifications did not have any effect on reported consolidated net income for any periods presented.