<SEC-DOCUMENT>0000355019-12-000035.txt : 20121114
<SEC-HEADER>0000355019-12-000035.hdr.sgml : 20121114
<ACCEPTANCE-DATETIME>20121114172532
ACCESSION NUMBER:		0000355019-12-000035
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20120930
FILED AS OF DATE:		20121114
DATE AS OF CHANGE:		20121114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FONAR CORP
		CENTRAL INDEX KEY:			0000355019
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				112464137
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-10248
		FILM NUMBER:		121205710

	BUSINESS ADDRESS:	
		STREET 1:		110 MARCUS DR
		CITY:			MELVILLE
		STATE:			NY
		ZIP:			11747
		BUSINESS PHONE:		6316942929

	MAIL ADDRESS:	
		STREET 1:		110 MARCUS DRIVE
		CITY:			MELVILLE
		STATE:			NY
		ZIP:			11747
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>fonar_10-q.htm
<DESCRIPTION>FONAR 10-Q
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: 16pt Courier New, Courier, Monospace; margin: 0; text-align: center"><B>FORM 10-Q</B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SECURITIES AND EXCHANGE COMMISSION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin-top: 6pt; text-align: center; margin-bottom: 0">[X] QUARTERLY REPORT UNDER SECTION
13 OR 15(d)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">OF THE SECURITIES EXCHANGE ACT OF 1934</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">For the quarterly period ended <B><U>SEPTEMBER
30, 2012</U></B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">[ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SECURITIES EXCHANGE ACT OF 1934</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">For the transition period from ________ to
________</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center"><U>Commission file number 0-10248</U></P>

<P STYLE="font: 14pt Courier New, Courier, Monospace; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 16pt Courier New, Courier, Monospace; margin: 0 0 6pt; text-align: center; border-bottom: Black 1.5pt solid"><B>FONAR
CORPORATION</B></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Courier New, Courier, Monospace; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; border-bottom: black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">DELAWARE</TD>
    <TD STYLE="width: 21%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 28%; border-bottom: black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">11-2464137</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">(State or other jurisdiction of</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">(I.R.S. Employer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">incorporation or organization)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">Identification No.)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">110 Marcus Drive&nbsp; Melville, New York</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">11747</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">(Address of principal executive offices)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">(Zip Code)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-size: 8pt; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="padding-right: 5.4pt; padding-left: 5.4pt; font-family: Times New Roman, Times, Serif; text-align: right"><FONT STYLE="font: 10pt/normal Courier New, Courier, Monospace; letter-spacing: normal; word-spacing: normal">Registrant's
    telephone number, including area code:</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; font-family: Times New Roman, Times, Serif"><FONT STYLE="font: 10pt/normal Courier New, Courier, Monospace; letter-spacing: normal; word-spacing: normal">(631)
    694-2929</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 <U>_X_</U> NO ___</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 <U>_X_</U> NO ___</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer
and large accelerated filer in Rule 12b-2 of the Exchange Act.(Check one): Large accelerated filer___ Accelerated filer___ Non-accelerated
filer___ Smaller reporting company <U>_X_</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0">Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). YES ___ NO <U>_X_</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify">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.</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Courier New, Courier, Monospace; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 57%; padding-top: 6pt; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline">Class</TD>
    <TD STYLE="vertical-align: bottom; width: 43%; padding-right: 5.4pt; padding-left: 5.4pt; text-decoration: underline; text-align: right">Outstanding at October 31, 2012</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Common Stock, par value $.0001</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">5,931,262</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Class B Common Stock, par value $.0001</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">158</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Class C Common Stock, par value $.0001</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">382,513</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">Class A Preferred Stock, par value $.0001</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: right">313,438</TD></TR>
</TABLE>
<!-- Field: Page; Sequence: 1 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">INDEX</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 11pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid">PART I - FINANCIAL INFORMATION</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">PAGE</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 1. Financial Statements</TD><TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 18%; text-align: right">3</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Condensed Consolidated Balance Sheets - September 30, 2012 (Unaudited) and June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2012 and September 30, 2011 (Unaudited)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2012 and September 30, 2011 (Unaudited)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2012 and September 30, 2011 (Unaudited)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Notes to Condensed Consolidated Financial Statements (Unaudited)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 3. Quantitative and Qualitative Disclosures About Market Risk</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 4. Controls and Procedures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>PART II - OTHER INFORMATION</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 1. Legal Proceedings</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 1A. Risk Factors</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 3. Defaults Upon Senior Securities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 4. Mine Safety Disclosures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 5. Other Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Item 6. Exhibits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Signatures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 2</P>

<!-- Field: Page; Sequence: 2 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED BALANCE SHEETS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000's OMITTED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">ASSETS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, <BR>2012 <BR>(UNAUDITED)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, <BR>2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Current Assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 56%; text-align: left; padding-left: 11pt; text-indent: -11pt">&nbsp;<BR> Cash and cash equivalents</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">12,905</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">12,032</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Accounts receivable &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,910</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,095</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Accounts receivable - related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Management and other fees receivable - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,282</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,782</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Management and other fees receivable &ndash; <BR>
related medical practices - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,709</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,311</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,159</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,129</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 11pt">&nbsp;<BR>Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,195</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Current portion of notes receivable - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">117</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">116</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 11pt">&nbsp;<BR>Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">202</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">206</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 44pt">&nbsp;<BR>Total Current Assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,891</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,866</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Property and equipment &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,123</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,173</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Notes receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">242</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">276</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Other intangible assets &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,835</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;<BR>Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">490</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">465</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 44pt">&nbsp;<BR>Total Assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">35,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">33,615</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 3</P>

<!-- Field: Page; Sequence: 3 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED BALANCE SHEETS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000's OMITTED, except share data)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, <BR>2012 <BR>(UNAUDITED)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, <BR>2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Current Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 71%; text-align: left; padding-left: 11pt; text-indent: 33pt">&nbsp;<BR>Current portion of long-term debt and capital leases</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,658</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">1,854</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,212</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,077</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Other current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,693</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Unearned revenue on service contracts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,620</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,475</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Unearned revenue on service contracts &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Customer advances</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,898</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,881</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 11pt">&nbsp;<BR>Income tax payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">100</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 55pt">&nbsp;<BR>Total Current Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,496</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,080</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Long-Term Liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Accounts payable, non current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Due to related medical practices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">229</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 11pt">&nbsp;<BR>Long-term debt and capital leases, less current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">706</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">777</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 11pt">&nbsp;<BR>Other liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">390</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">401</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 44pt">&nbsp;<BR>Total Long-Term Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,352</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,454</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 44pt">&nbsp;<BR>Total Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,848</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">22,534</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 4</P>

<!-- Field: Page; Sequence: 4 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000&rsquo;s OMITTED, except per share data)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY(Continued)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="text-align: left; vertical-align: top">
    <TD STYLE="border-bottom: Black 1pt solid">STOCKHOLDERS' EQUITY:</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border-bottom: Black 1pt solid">September 30, 2012 <BR>(UNAUDITED)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="border-bottom: Black 1pt solid">June 30, <BR>2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Class A non-voting preferred stock $.0001 par value; 453,000 shares authorized at September 30, 2012 and June 30, 2012, 313,438 issued and outstanding at September 30, 2012 and June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Preferred stock $.001 par value; 567,000 shares authorized at September 30, 2012 and June 30, 2012, issued and outstanding &ndash; none</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 56%; padding-left: 5.4pt">&nbsp;<BR>Common Stock $.0001 par value; 8,500,000 shares authorized at September 30, 2012 and June 30, 2012, 5,912,905 issued at September 30, 2012 and June 30, 2012; 5,901,262 outstanding at September 30, 2012 and June 30, 2012</TD><TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">1</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Class B Common Stock (10 votes per share) $.0001 par value; 227,000 shares authorized at September 30, 2012 and June 30, 2012; 158 issued and outstanding at September 30, 2012 and June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Class C Common Stock (25 votes per share) $.0001 par value; 567,000 shares authorized at September 30, 2012 and June 30, 2012, 382,513 issued and outstanding at September 30, 2012 and June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">&nbsp;<BR>Paid-in capital in excess of par value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174,084</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">174,084</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Accumulated other comprehensive loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Accumulated deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(166,882</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(168,334</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Notes receivable from employee stockholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(69</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(71</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Treasury stock, at cost - 11,643 shares of common stock at September 30, 2012 and June 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(675</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(675</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;<BR>Non controlling interests</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,174</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,096</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 55pt">Total Stockholders' Equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,614</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,081</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 55pt">Total Liabilities and Stockholders' Equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">35,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">33,615</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 5</P>

<!-- Field: Page; Sequence: 5 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000'S OMITTED, except per share data</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="text-align: center; border-bottom: Black 1pt solid">FOR THE THREE MONTHS ENDED <BR>SEPTEMBER 30,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD>
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 5.4pt">REVENUES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt; width: 64%">Product sales &ndash; net</TD><TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,041</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,776</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Service and repair fees &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,709</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,905</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Service and repair fees - related parties - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Management and other fees &ndash; net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,769</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,329</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Management and other fees - related medical practices &ndash; net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,965</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 36.6pt; padding-left: 5.4pt">Total Revenues &ndash; Net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,608</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">COSTS AND EXPENSES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Costs related to product sales</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,056</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,475</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Costs related to service and repair fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">865</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">813</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Costs related to service and repair fees - related parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Costs related to management and other fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,171</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,185</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Costs related to management and other fees &ndash; related medical practices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">817</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">819</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Research and development</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">330</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">329</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Selling, general and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,212</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,043</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Provision for bad debts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">175</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">175</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 36.6pt; padding-left: 5.4pt">Total Costs and Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,635</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,847</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Income From Operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,876</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,761</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Interest Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(76</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(107</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Investment Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">59</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Other (Expense) Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9.6pt; padding-left: 9.6pt">Income Before Provision for Income Taxes and Non Controlling Interests</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,850</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,772</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Provision for Income Taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,778</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,772</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net Income - Non Controlling Interests</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(326</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(259</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Net Income - Controlling Interests</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,452</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,513</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Net Income Available to Common Stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,355</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,409</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Net Income Available to Class A Non-Voting Preferred Stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">72</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">78</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Net Income Available to Class C Common Stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">27</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Basic Net Income Per Common Share Available to Common Stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.23</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Diluted Net Income Per Common Share Available to Common Stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.22</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.24</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Basic and Diluted Income Per Share - Common C</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Weighted Average Basic Shares Outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,901,262</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,668,762</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Weighted Average Diluted Shares Outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,028,766</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,796,266</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 9pt; text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt">Weighted Average Basic Shares Outstanding &ndash; Class C Common</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">382,513</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">382,513</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; padding-bottom: 2.5pt; text-indent: -9.6pt; padding-left: 9.6pt"><FONT STYLE="font-size: 9pt; color: black">Weighted Average Diluted Shares Outstanding &ndash; Class C </FONT><FONT STYLE="font-size: 8pt">Common</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">382,513</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">382,513</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 6</P>

<!-- Field: Page; Sequence: 6 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000'S OMITTED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="9" STYLE="text-align: center; border-bottom: Black 1pt solid">FOR THE THREE MONTHS ENDED <BR>SEPTEMBER 30,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="5" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 56%; text-align: left; padding-left: 11pt">Net income</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,778</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,772</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 22pt; text-indent: -11pt">Other comprehensive income, net of tax:<BR> Unrealized losses on marketable<BR CLEAR="ALL"> securities net of tax</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 11pt">Total comprehensive income</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,777</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,767</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 22pt; text-indent: -11pt">Comprehensive income &ndash; non controlling interests</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">326</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">259</TD></TR>
<TR STYLE="text-align: right; background-color: rgb(204,238,255); vertical-align: bottom">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left; padding-left: 11pt">Comprehensive income &ndash; controlling interests</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD><TD STYLE="border-bottom: Black 2.5pt double">1,451</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,508</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>



<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 7</P>

<!-- Field: Page; Sequence: 7 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000'S OMITTED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="text-align: center">FOR THE THREE MONTHS ENDED</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="7" STYLE="text-align: center; border-bottom: Black 1pt solid">SEPTEMBER 30,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Cash Flows from Operating Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 56%; text-align: left; text-indent: 9.6pt; padding-left: 5.4pt">Net income</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,778</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,772</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 18.6pt">Adjustments to reconcile net income to net cash provided by operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">415</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">525</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Provision for bad debts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">175</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Stock issued for costs and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">104</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">(Increase) decrease in operating assets, net:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Accounts, management fee and medical receivable(s)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(979</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Notes receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(30</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(387</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(322</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,417</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Prepaid expenses and other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(73</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(14</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: black; text-align: left; text-indent: -12pt; padding-left: 0.3in"><FONT STYLE="color: black">Increase (decrease)
    in operating liabilities,net:</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">112</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(67</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Other current liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">536</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">727</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Customer advances</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,208</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Billings in excess of costs and estimated<BR> earnings on uncompleted contracts</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">813</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 27.6pt">Other liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 27.6pt">Due to related medical practices</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 27.6pt; padding-left: 5.4pt">Income tax payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(75</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net cash provided by operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,633</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,028</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Cash Flows from Investing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Purchases of property and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(211</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(116</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Cost of patents</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(39</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(247</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(155</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Cash Flows from Financing Activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Repayment of borrowings and capital lease obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(266</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(326</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Distributions to non controlling interests</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(249</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(288</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 36.6pt">Repayment of notes receivable from employee stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">Net cash used in financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(513</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(612</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">&nbsp;<BR>Net Increase in Cash and Cash Equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">873</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">261</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 5.4pt">&nbsp;<BR>Cash and Cash Equivalents - Beginning of Period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,032</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,251</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Cash and Cash Equivalents - End of Period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,905</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,512</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">See accompanying notes to condensed consolidated financial statements
(unaudited).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 8</P>

<!-- Field: Page; Sequence: 8 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 1 - BASIS OF PRESENTATION &amp; LIQUIDITY &amp; CAPITAL RESOURCES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Basis of Presentation</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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, 2012, are not necessarily indicative
of the results that may be expected for the fiscal year ending June 30, 2013. 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 28, 2012 for
the fiscal year ended June 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Liquidity </U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">At September 30, 2012, the Company
had working capital of $6.4 million as compared to working capital of $4.8 million at June 30, 2012, and stockholders&rsquo; equity
of $12.6 million at September 30, 2012 as compared to stockholders&rsquo; equity of $11.1 million at June 30, 2012. For the three
months ended September 30, 2012, we realized a net income of $1.8 million.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The Company believes that its business
plan has been responsible for the past two consecutive fiscal years of profitability (fiscal 2012 and fiscal 2011) and that its
capital resources will be adequate to support operations at current levels through June 30, 2013. In fiscal 2010 and prior years,
however, the Company also experienced losses and periods of working capital deficits. The future effects on our business of healthcare
reform legislation, the Deficit Reduction Act, the tax on sales of medical equipment 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">In order to promote sales, the Company
is continuing to focus on marketing campaigns to strengthen the demand for our products and services. Management anticipates that
the Company&rsquo;s capital resources will continue to improve if the Company&rsquo;s MRI scanner products gain wider market recognition
and acceptance resulting in both increased product sales and scan volumes. If the Company is not successful with our marketing
efforts to increase sales, the Company will experience a shortfall in cash, and it will be necessary to reduce operating expenses
or obtain funds through equity or debt financing.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">If the Company is unable to meet expenditures
with revenues or financing then it will be necessary to reduce expenses further, or seek other sources of funds through the issuance
of debt or equity financing in order to conduct operations as now conducted subsequent to fiscal 2013.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 9</P>

<!-- Field: Page; Sequence: 9 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Principles of Consolidation</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The unaudited condensed consolidated
financial statements include the accounts of FONAR Corporation, its majority and wholly-owned subsidiaries and partnerships (collectively
the &ldquo;Company&rdquo;). All significant intercompany accounts and transactions have been eliminated in consolidation.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Income Per Share</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Basic income per share (&ldquo;EPS&rdquo;)
is computed based on weighted average shares outstanding and excludes any potential dilution. In accordance with ASC topic 260-10,
&ldquo;Participating Securities and the Two-Class method&rdquo;, 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,
2012 and 2011.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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, 2012 and 2011, the number of common shares potentially
issuable upon the exercise of certain options of 13,000 and 20,000; respectively, have not been included in the computation of
diluted EPS since the effect would be antidilutive.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 9pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="11" STYLE="text-align: center">Three months ended</TD><TD>&nbsp;</TD>
    <TD COLSPAN="11" STYLE="text-align: center">Three months ended</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="11" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="11" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, 2011</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="23" STYLE="text-align: center">(000's omitted, except per share data)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 5.4pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Total</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Common Stock</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Class C Common Stock</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Total</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Common Stock</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Class C Common Stock</TD><TD STYLE="padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: none; text-align: left; padding-left: 5.4pt"><P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0"><U>Basic</U></P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0"></P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">Numerator:</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 40%">Net income available to common
    <BR>
stockholders</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">1,452</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">1,355</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">25</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">1,513</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">1,409</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 2%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 6%; border-bottom: Black 2.5pt double; text-align: right">27</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 5.4pt">Denominator:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Weighted average shares<BR> outstanding</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,901</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,901</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">383</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,669</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,669</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">383</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Basic income per common<BR> share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.23</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.27</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: none; text-align: left; padding-left: 0pt"><P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0"><U>Diluted</U></P> <P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0">Denominator:</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Weighted average shares <BR> outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,901</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,669</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">383</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Stock options</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash; &nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9.65pt">Convertible Class C<BR> Stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">128</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">128</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp; &nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Total Denominator for<BR> diluted earnings per<BR> share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left"></TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,029</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">383</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,797</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">383</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Diluted income per<BR> common share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.22</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.24</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 9pt Courier New, Courier, Monospace; margin: 0; text-align: center"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 10</P>

<!-- Field: Page; Sequence: 11 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>




<P STYLE="font: 10pt Courier New, Courier, Monospace; margin-top: 6pt; margin-bottom: 0; text-align: center">NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Recent Accounting Pronouncements </U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">In December 2011, the Financial Accounting
Standards Board (&ldquo;FASB&rdquo;) issued Accounting Standards Update (&ldquo;ASU&rdquo;) No. 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&rsquo;s condensed consolidated position and results of operations.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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&rsquo;s condensed
consolidated financial position and results of operations.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 consolidated financial statements at the time they become effective.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Reclassifications</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 11</P>

<!-- Field: Page; Sequence: 11 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 3 &ndash; ACCOUNTS RECEIVABLE AND MANAGEMENT AND OTHER FEES
RECEIVABLE</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Accounts Receivable and Management and Other Fees Receivable</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Receivables, net is comprised of the
following at September 30, 2012:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000&rsquo;s Omitted)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Gross <BR>Receivable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Allowance for <BR>doubtful accounts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Net</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 46%">Receivables from equipment sales and service contracts</TD><TD STYLE="width: 5%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 11%; border-bottom: Black 2.5pt double; text-align: right">6,763</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 11%; border-bottom: Black 2.5pt double; text-align: right">1,853</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 11%; border-bottom: Black 2.5pt double; text-align: right">4,910</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Receivables from equipment sales and service contracts - related party</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">90</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">90</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Management and other fees receivables</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,915</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,633</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,282</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Management and other fees receivables from related medical practices ("PC&rsquo;s")</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,112</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">403</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,709</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0">The Company's customers are concentrated in the healthcare
industry.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The Company's receivables from the
related and non-related professional corporations (PC's) substantially consists 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Payment of the management fee receivables
from the PC&rsquo;s may be impaired by the inability of the PC&rsquo;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 38% and 55% of the PCs&rsquo;
net revenues for the three months ended September 30, 2012 and 2011, 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Net revenues from management and other
fees charged to the related PCs accounted for approximately 20.7% and 16.4% of the consolidated net revenues for the three months
ended September 30, 2012 and 2011, respectively.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Tallahassee Magnetic Resonance Imaging,
PA, Stand Up MRI of Boca Raton, PA and Stand Up MRI &amp; 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 12</P>

<!-- Field: Page; Sequence: 12 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 4 - INVENTORIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Inventories included in the accompanying
condensed consolidated balance sheet consist of the following:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000's omitted)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 11pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, <BR>2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, <BR>2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 56%">Purchased parts, components and supplies</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,960</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,673</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Work-in-process</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">557</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">522</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">TOTAL INVENTORIES</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,517</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,195</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 5 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
AND CUSTOMER ADVANCES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 0 27pt; text-align: justify; text-indent: -27pt">1) Information
relating to uncompleted contracts as of September 30, 2012 is as follows:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 0 27pt; text-align: justify; text-indent: -27pt">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000's omitted)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 70%">Costs incurred on uncompleted contracts</TD><TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">2,684</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Estimated earnings</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,062</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Subtotal</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,746</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Less: Billings to date</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,587</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Total Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,159</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 0 27pt; text-align: justify">Included in the accompanying condensed
consolidated balance sheet at September 30, 2012 under the following captions:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 70%">Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">1,159</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Less: Billings in excess of costs and estimated earnings on uncompleted contracts</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Total Costs and estimated earnings in excess of billings on uncompleted contracts</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,159</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">2) Customer advances consist of the following as of September
30, 2012:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left; padding-left: 5.4pt">Total advances</TD><TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">7,485</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.5in; padding-left: 36.6pt">Less: Advances on contracts under construction</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,587</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 5.4pt">Total customer advances</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,898</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 13</P>

<!-- Field: Page; Sequence: 13 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(UNAUDITED)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 6 &ndash; OTHER CURRENT LIABILITIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0">Other current liabilities in the accompanying condensed
consolidated balance sheet consist of the following:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000&rsquo;s omitted)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">September 30, 2012</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">June 30, 2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt; width: 56%">Accrued salaries, commissions and payroll taxes</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">536</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">570</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Accrued interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">191</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Litigation accruals</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">493</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">493</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Sales tax payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,908</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Legal and other professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">544</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">577</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Accounting fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">345</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Insurance premiums</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">62</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Interest and penalty - sales tax</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,166</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,116</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Penalty&nbsp; - 401k plan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Purchase scanners</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">178</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">Other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">151</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">166</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -9.65pt; padding-left: 9.65pt">TOTAL OTHER CURRENT LIABILITIES</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,001</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,693</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 7 - SEGMENT AND RELATED INFORMATION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The Company operates in two industry
segments - manufacturing and the servicing of medical equipment and management of diagnostic imaging centers.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The accounting policies of the segments
are the same as those described in the summary of significant accounting policies as disclosed in the Company&rsquo;s 10-K as of
June 30, 2012. All inter-segment sales are market-based. The Company evaluates performance based on income or loss from operations.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0">Summarized financial information concerning the Company's
reportable segments is shown in the following table:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">(000's omitted)</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Courier New, Courier, Monospace">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Medical <BR>Equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Management <BR>Of <BR>Diagnostic <BR>Imaging <BR>Centers</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="3" STYLE="text-align: center; border-bottom: Black 1pt solid">Totals</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; padding-left: 5.4pt">For the three months ended Sept. 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-align: left; padding-left: 5.4pt">Net revenues from external customers</TD><TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">3,777</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">5,734</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">9,511</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Inter-segment net revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">202</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">202</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Income from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">227</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,876</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">257</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">415</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Capital expenditures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">71</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">176</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">247</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-decoration: underline; padding-left: 5.4pt">For the three months ended Sept. 30, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Net revenues from external customers</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,708</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">4,900</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">9,608</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Inter-segment net revenues</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">202</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">202</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Income from operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">751</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,010</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,761</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">175</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">525</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 5.4pt">Capital expenditures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">116</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">155</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 14</P>

<!-- Field: Page; Sequence: 14 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 8 &ndash; SUPPLEMENTAL CASH FLOW INFORMATION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">During the three months ended September 30,
2012 and September 30, 2011, the Company paid $33,000 and $64,000 for interest, respectively.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">During the three months ended September 30,
2012 and September 30, 2011, the Company paid $147,000 and $0 for income taxes, respectively.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 9 &ndash; COMMITMENTS AND CONTINGENCIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Litigation</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">There were no material changes in litigation
from that reported in our Form 10-K for the fiscal year ended June 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0"><U>Other Matters</U></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">The Company is also delinquent in filing
sales tax returns for certain states, for which the Company has transacted business. As of September 30, 2012, the Company has
recorded tax obligations of approximately $2,591,000 plus interest and penalties of approximately $2,166,000. The Company is in
the process of determining the regulatory requirements in order to become compliant.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">The Company has determined they may not be
in compliance with the Department of Labor and Internal Revenue Service regulations concerning the requirements to file Form 5500
to report activity of its 401(k) Employee Benefit Plan. The filings do not require the Company to pay tax, however they may be
subject to penalty for non-compliance. The Company has recorded provisions for any potential penalties totaling $250,000. The amount
was the Company&rsquo;s best estimate of potential penalties. Management is unable to determine the outcome of this uncertainty.
The Company has engaged outside counsel to handle such matters to determine the necessary requirements to ensure compliance. On
August 31, 2011, the Company submitted with the Internal Revenue Service a request for a compliance statement and a determination
letter for our 401K plan. On December 9, 2011, the Internal Revenue Service issued a favorable determination letter on our 401K
plan. The Company is still working with outside counsel to complete and file forms with the US Department of Labor.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 15</P>

<!-- Field: Page; Sequence: 15 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Courier New, Courier, Monospace; margin: 0">NOTE 10 - INCOME TAXES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Effective January 1, 2007, the Company
adopted the provisions of ASC topic 740 (formerly FASB Interpretation No. 48/FASB Statement No. 109, &ldquo;Accounting for Uncertainty
in Income Taxes&rdquo;). 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 &ldquo;unrecognized benefits&rdquo;. 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&rsquo;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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 &ldquo;Interest
expense, net&rdquo;. Penalties if incurred would be recognized as a component of &ldquo;Selling, general and administrative&rdquo;
expenses.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 2006.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The adoption of the provisions of ASC
topic 740 did not have a material impact on the Company&rsquo;s consolidated financial position and results of operations. Upon
the adoption and as of September 30, 2012, no liability for unrecognized tax benefits was required to be recorded. The Company
does not expect its unrecognized tax benefit position to change during the next 12 months.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">The Company recognized a net deferred
tax asset of $461,858 and a deferred tax liability of $461,858 as of September 30, 2012, primarily relating to net operating loss
carryforwards of approximately $154,431,000 available to offset future taxable income through 2029. The net operating losses begin
to expire in 2012 for federal tax purposes and in 2012 for state income tax purposes.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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 not have a sufficient history of income or knowledge of future effects on our business of healthcare reform legislation,
the Deficit Reduction Act, the tax on sales of medical equipment and the general economic and business climate to conclude that
it is more-likely-than-not that the Company will be able to realize all of its tax benefits in the near future and therefore a
valuation allowance was established for the full value of the deferred tax asset.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 16</P>

<!-- Field: Page; Sequence: 16 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">SEPTEMBER 30, 2012 and 2011</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Courier New, Courier, Monospace; margin: 0">NOTE 10 - INCOME TAXES (Continued)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">A valuation allowance will be maintained
until sufficient positive evidence exists to support the reversal of any portion or all of the valuation. Should the Company become
profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">NOTE 11 &ndash; SUBSEQUENT EVENTS</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0">During the period from October 1, 2012 through October 31, 2012,
the Company issued 30,000 shares of common stock to consultants as compensation valued at $146,700 under the 2010 Stock Bonus Plan.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Item 2. MANAGEMENT&rsquo;S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 6pt; text-align: justify; text-indent: 0.5in">For the three month
period ended September 30, 2012, we reported a net income of $1.8 million on revenues of $9.5 million as compared to net income
of $1.8 million on revenues of $9.6 million for the three month period ended September 30, 2011. We recognized an operating income
of $1.9 million for the three month period ended September 30, 2012 compared to an operating income of $1.8 million for the three
month period ended September 30, 2011.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 6pt; text-align: justify; text-indent: 0.5in">Overall, our
revenues decreased 1.0% from $9.6 million for the first three months of fiscal 2012 to $9.5 million for the first three
months of fiscal 2013. Although management fees increased by 17.0% from $4.9 million for the first three months of fiscal
2012 to $5.7 million for the first three months of fiscal 2013, service and repair fees decreased 6.7% from $2.9 million the
first three months of fiscal 2012 to $2.7 million the first three months of fiscal 2013, and revenues from product sales
decreased 41.4%, from $1.8 million for the first three months of 2012 to $1.0 million for the first three months of fiscal
2013.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 0.5in">The decrease in our revenues
was offset by a larger decrease in our costs and expenses, and consequently we recognized an increased operating income for the
three months ended September 30, 2012 of $1.9 million as compared to an operating income of $1.8 million for the three months ended
September 30, 2011. The decrease in costs and expenses of 2.7% from $7.8 million in the first three months of fiscal 2012 to $7.6
million in the first three months of fiscal 2013, exceeded the decrease in revenues of 1.0%, from $9.6 million in the first three
months of fiscal 2012 to $9.5 million in the first three months of fiscal 2013.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Our continuing efforts
to control costs, combined with our intensive efforts to increase our management fees, the adoption of a new billing and collection
contract in fiscal 2011 and the addition of an additional site to the sites we manage, are responsible for our profitability during
the three months ended September 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 17</P>

<!-- Field: Page; Sequence: 1 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Forward Looking Statements</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Certain statements
made in this Quarterly Report on Form 10-Q are &quot;forward-looking statements&quot; (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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Results of Operations</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">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 Fonar&rsquo;s wholly-owned subsidiary, Health
Management Corporation of America, which we also refer to as HMCA.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Effective May 2,
2011, HMCA contributed all of its assets, liabilities and business to Imperial Management Services, LLC, which is controlled but
not wholly-owned by HMCA. Imperial is continuing the business of HMCA utilizing the same facilities, equipment and personnel as
HMCA. This transaction did not result in a change of control or policy, but was solely a means to raise capital. To avoid confusion
in making comparisons and to show the continuity of the business, our physician management and diagnostic services segment is sometimes
referred to as &ldquo;HMCA-IMPERIAL&rdquo; for both periods before and after May 2, 2011.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Trends in the first
three months of fiscal 2013 include an increase in management and other fee revenues, and a decline in product sales revenues,
and service and repair fees. Also costs related to product sales decreased 28.4% from $1.5 million for the first three months of
fiscal 2012 to $1.1 million for the first three months of fiscal 2013, which corresponds to the decrease in product sales. We will
continue to focus on our marketing efforts to improve sales performance and increase patient volume at the MRI facilities managed
by HMCA-IMPERIAL in fiscal 2013. In addition, we will monitor our cost control program and will continue to reduce costs as necessary.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 18</P>

<!-- Field: Page; Sequence: 2 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 12pt; text-align: justify; text-indent: 0.5in">For the three
month period ended September 30, 2012, as compared to the three month period ended September 30, 2011 overall revenues from MRI
product sales decreased 41.4% ($1.0 million compared to $1.8 million). Continuing tight credit and world-wide economic uncertainty
have depressed the market for our MRI products, which in the overwhelming majority of cases are purchased on credit.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Service revenues
for the three month period ended September 30, 2012 as compared to the three month period ended September 30, 2011 decreased 6.7%
($2.7 million compared to $2.9 million). Unrelated party service and repair fees decreased 6.7% ($2.7 million compared to $2.9
million) and related party service and repair fees remained constant at $27,000 for the three month period ended September 30,
2011 and the three month period ended September 30, 2012. We anticipate that there will be increases in service revenues as warranties
on installed scanners expire over time.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">There were approximately
$265,000 in foreign revenues for the first three months of fiscal 2013 as compared to approximately $279,000 in foreign revenues
for the first three months of fiscal 2012, representing a decrease in foreign revenues of 5%. We do not regard this as a material
trend, but as part of a normal variation resulting from low volumes of foreign sales.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Overall, for the
first three months of fiscal 2013, revenues for the medical equipment segment decreased by 19.8% to $3.8 million from $4.7 million
for the first three months of fiscal 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">The revenues generated
by HMCA-IMPERIAL increased by 17.0%, to $5.7 million for the first three months of fiscal 2013 as compared to $4.9 million for
the first three months of fiscal 2012. This trend reflects an increase in the percentage of our revenues derived from our diagnostic
facilities management segment relative to our revenues derived from our medical equipment segment (60.3% for the first three months
of fiscal 2013 compared to 51.0% for the first three months of fiscal 2012). The increase in HMCA-IMPERIAL revenues was the result
of increased marketing efforts for the scanning centers and the opening of a new center.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">We recognize MRI
scanner sales revenues on the &ldquo;percentage of completion&rdquo; 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 recognized revenue results from revenues from a scanner sale are recognized in a fiscal quarter or
quarters following the quarter in which the sale was made.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Costs related to
product sales decreased by 28.4% from $1.5 million in the first quarter of fiscal 2012 to $1.1 million in the first quarter of
2013, resulting from a decrease in the manufacturing activity.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 19</P>

<!-- Field: Page; Sequence: 3 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">Costs related to
providing service for the first quarter increased by 6.5% from $821,000 in the first quarter of fiscal 2012 to $874,000 in fiscal
2013, notwithstanding a decrease in service revenues of only 6.7%, from $2.9 million in the first quarter of fiscal 2012 to $2.7
million in the first quarter of fiscal 2013. Certain of the costs of providing service (employee salaries and overhead, for example)
are not directly tied to revenue. Notwithstanding the foregoing, we believe that an important factor in controlling our service
costs is our ability to monitor the performance of customers&rsquo; scanners from our facilities in Melville, New York on a daily
basis, and to detect and repair any irregularities before more serious problems result.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">Overall, the operating
results for our medical equipment segment decreased to an operating income of $227,000 for the first quarter of fiscal 2013 as
compared to an operating income of $751,000 for the first quarter of 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">HMCA-IMPERIAL revenues
increased in the first quarter of fiscal 2013 by 17.0% to $5.7 million from $4.9 million for the first quarter of fiscal 2012,
primarily due to increased revenues from our New York locations. Contributing to the increase in revenue was the increase in management
and other fees resulting from renegotiating our annual management contracts with the professional corporations we manage, the opening
of a new facility along with the acquisition of a new billing and collection contract with Health Diagnostics LLC.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">We now manage eleven
sites, all of which are equipped with FONAR UPRIGHT&reg; MRI scanners. HMCA-IMPERIAL experienced an operating income of $1.6 million
for the first three months of fiscal 2013 compared to operating income of $1.0 million for the first three months of fiscal 2012.
The greater operating income was due primarily to an increase in management and other fees and the acquisition of a new billing
and collection contract.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">HMCA-IMPERIAL cost
of revenues for the first three months of fiscal 2013 as compared to the first three months of fiscal 2012 remained constant at
$3.0 million. HMCA&rsquo;s cost of revenues include expenditures we have been making to improve HMCA revenues through our marketing
efforts, which focus on the unique capability of our Upright&reg; MRI Scanners to scan patients in different positions.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">The decrease in
our consolidated net revenues of 1.0% from $9.6 million in the first quarter of fiscal 2012 to $9.5 million in the first quarter
of fiscal 2013 was coupled with a decrease of 2.7% in total costs and expenses from $7.8 million in the first quarter of fiscal
2012 compared to $7.6 million in the first quarter of fiscal 2013. As a result, our income from operations of $1.8 million in the
first quarter of fiscal 2012 increased to $1.9 million in the first quarter of fiscal 2013.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">Selling, general
and administrative expenses increased by 8.3% to $2.2 million in the first three months of fiscal 2013 from $2.0 million in the
first three months of fiscal 2012. The compensatory element of stock issuances, which is included in selling, general and administrative
expenses, was $0 for the first three months of fiscal 2013 and for the first three months of fiscal 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: justify; text-indent: 0.5in">Research and development
expenses increased by 0.3% to $330,000 for the first three months of fiscal 2013 as compared to $329,000 for the first three months
of fiscal 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 20</P>

<!-- Field: Page; Sequence: 4 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">Interest expense
in the first three months of fiscal 2013 decreased by 29.0% to $76,000 from $107,000 in the first three months of fiscal 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">Inventories increased
by 14.7% to $2.5 million at September 30, 2012 as compared to $2.2 million at June 30, 2012 representing the purchase of raw materials
and components in our inventory to fill orders.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">Management fee
and medical receivables increased by 17.8% to $6.0 million at September 30, 2012 from $5.1 million at June 30, 2012, primarily
due to renegotiated management fee contracts with an unrelated party coupled with decreased collections of outstanding receivables.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">The overall trends
reflected in the results of operations for the first three months of fiscal 2013 are an increase in revenues from management and
other fees, as compared to the first three months of fiscal 2012 ($5.7 million for the first three months of fiscal 2013 as compared
to $4.9 million for the first three months of fiscal 2012), and a decrease in MRI equipment segment revenues both absolutely ($3.8
million as compared to $4.7 million) and as compared to HMCA-IMPERIAL revenues. Revenues were $3.8 million or 39.7% from the MRI
equipment segment as compared to $5.7 million or 60.3% from HMCA-IMPERIAL, for the first three months of fiscal 2013, as compared
to $4.7 million or 49% from the MRI equipment segment and $4.9 million or 51%, from HMCA-IMPERIAL, for the first three months of
fiscal 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">On March 23, 2010,
President Obama signed into law healthcare reform legislation in the form of the Patient Protection and Affordable Care Act (PPACA).
The implementation of this law could have a profound impact on the healthcare industry. Many of the most substantive provisions
of PPACA will be phased in commencing in January, 2013. Certain of PPACA&rsquo;s provisions are already in effect. Many provisions
will require the federal government and individual state governments to interpret and implement the new requirements and adopt
appropriate regulations. Although PPACA remains the subject of significant debate, the Act has been held constitutional by the
United States Supreme Court, and there is no indication that the Act will be repealed or substantially modified in the foreseeable
future. We are unable to predict how many of the legislative mandates contained in PPACA will be implemented or how they will affect
our MRI equipment segment or HMCA-IMPERIAL in practice.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">We are committed
to improving the operating results we experienced in the first three months in fiscal 2013. 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. We believe we are pursuing the correct policies which should prove successful in improving the Company&rsquo;s operating
results.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: justify; text-indent: 0.5in">Our FONAR UPRIGHT&reg;
MRI, and Fonar-360&trade; MRI scanners, together with our works-in-progress, are intended to significantly improve our competitive
position.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 21</P>

<!-- Field: Page; Sequence: 5 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 24pt 0 0; text-align: justify; text-indent: 0.5in">Our FONAR UPRIGHT&reg;
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. A floor-recessed elevator brings the patient to the height appropriate for the targeted image region.
A custom-built adjustable bed will allow patients to sit or lie on their backs, sides or stomachs at any angle. Full-range-of-motion
studies of the joints in virtually any direction are possible and another promising feature for sports injuries.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 24pt 0 0; text-align: justify; text-indent: 0.5in">Fonar recently
announced a major diagnostic breakthrough in multiple sclerosis achieved with advanced UPRIGHT&reg; MRI. In a newly published paper,
medical researchers at FONAR report a diagnostic breakthrough in multiple sclerosis (MS), based on observations made possible by
the Company&rsquo;s unique FONAR UPRIGHT&reg; Multi-Position&trade; 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 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 into the surrounding brain tissue. This leakage could be responsible for generating the brain lesions of
multiple sclerosis.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 24pt 0 0; text-align: justify; text-indent: 0.5in">The paper, titled
&ldquo;The Possible Role of Cranio-Cervical Trauma and Abnormal CSF Hydrodynamics in the Genesis of Multiple Sclerosis,&quot; has
just been published and appears in the latest issue of the journal Physiological Chemistry and Physics and Medical NMR (Sept. 20,
2011, 41: 1-17).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 24pt 0 0; text-align: justify; text-indent: 0.5in">Recently, this
capability of the FONAR UPRIGHT&reg; technology has demonstrated its key value on patients with the Arnold-Chiari syndrome, 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, when because of weakness in the support tissues within the skull, 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 the pathology since the
patient's pathology is most visible and the symptoms most acute when the patient is scanned in the upright weight-bearing position.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">Page 22</P>

<!-- Field: Page; Sequence: 6 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The UPRIGHT&reg;
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 the exam, an x-ray machine has been the only modality that could provide that service. The UPRIGHT&reg; MRI is
the only MRI scanner which allows the patient to stand during the MRI exam. Fonar has developed a new 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 recent 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&reg; 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">In addition, the
University of California, Los Angeles (UCLA) reported their results of their study of 1,302 patients utilizing the FONAR UPRIGHT&reg;
Multi-Position&trade; 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 Dynamic&trade; FONAR UPRIGHT&reg; MRI to detect spine pathology, including spondylolisthesis, disc
herniations and disc degneration, as compared to visualizations of the spine produced by traditional single position static MRIs.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">The UCLA study by
MRI of 1,302 back pain patients when they were UPRIGHT&reg; and examined in a full range of flexion and extension positions made
possible by FONAR&rsquo;s new UPRIGHT&reg; technology established that significant &ldquo;misses&rdquo; 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 Dynamic&trade; Multi-Position&trade; 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 &ldquo;miss-rate&rdquo; 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 &ldquo;missed&rdquo; disc bulges 23.75%
of the time (163 patients).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">The UCLA study further
reported that they were able to quantitatively measure the dimensions of the central spinal canal with the &ldquo;highest accuracy&rdquo;
using the FONAR UPRIGHT&reg; Multi-Position&trade; 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 12pt 0 0; text-align: center">Page 23</P>

<!-- Field: Page; Sequence: 7 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Most recently a
combined study of 1,200 neck pain patients published in &ldquo;Brain Injury&rdquo; (July 2010: 24(7-8): 988-944) by 8 university
medical centers reported that cerebellar tonsil ectopia (CTE) 1mm or greater was found and visualized 2.5 times (250%) more frequently
when patients who had sustained MVA whiplash injuries were scanned upright rather than lying down (recumbent).</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The FONAR UPRIGHT&reg;
MRI can also be useful for MRI directed emergency neuro-surgical procedures as the surgeon would have unhindered access to the
patient&rsquo;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&rsquo; chances for survival and optimize the extent of recovery.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Fonar 360&trade;
is an enlarged room sized magnet in which the floor, ceiling and walls of the scan room are part of the magnet frame. This is made
possible by Fonar&rsquo;s patented Iron-Frame&trade; technology which allows the Company&rsquo;s engineers to control, contour
and direct the magnet&rsquo;s lines of flux in the patient gap where wanted and almost none outside of the steel of the magnet
where not wanted. Consequently, this scanner allows surgeons and other interventional physicians to walk inside the magnet and
achieve 360 degree access to the patient to perform interventional procedures.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Fonar 360&trade;
is presently marketed as a diagnostic scanner and is sometimes referred to as the Open Sky&trade; MRI. In its Open Sky&trade; version,
the Fonar 360&trade; serves as an open patient friendly scanner which allows 360 degree surgical access to the patient on the scanner
bed. To optimize the patient-friendly character of the Open Sky&trade; MRI, the walls, floor, ceiling and magnet poles are decorated
with landscape murals. The patient gap is twenty inches and the magnetic field strength, like that of the FONAR UPRIGHT&reg;, is
0.6 Tesla.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">In the future,
we expect the Fonar 360&trade; to function as an interventional MRI. The enlarged room sized magnet and 360&ordm; access to the
patient afforded by the Fonar 360&trade; permits surgeons to walk into the magnet and perform surgical interventions on the patient
under direct MR image guidance. Most importantly the exceptional quality of the MRI image and its capacity to exhibit tissue detail
on the image, can then be obtained real time during the procedure to guide the interventionalist. Thus surgical instruments, needles,
catheters, endoscopes and the like could be introduced directly into the human body and guided directly to a malignant lesion using
the MRI image. The number of inoperable lesions could be significantly reduced by the availability of this new FONAR technology.
Most importantly treatment can be carried directly to the target tissue.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The first Fonar
360&trade; MRI scanner, installed at the Oxford-Nuffield Orthopedic Center in Oxford, United Kingdom, is now carrying a full diagnostic
imaging caseload. In addition, development of the work in progress Fonar 360&trade; MRI image guided interventional technology
is actively progressing. Fonar software engineers have completed and installed their 2nd generation tracking software at Oxford-Nuffield
which is designed to enable the surgeons to insert needles into the patient and accurately advance them, under direct visual image
guidance, to the target tissue, such as a tumor, so that therapeutic agents can be injected.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 5pt 0 0; text-align: center">Page 24</P>

<!-- Field: Page; Sequence: 8 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Company expects
marked demand for its most commanding MRI products, the FONAR UPRIGHT&reg; MRI and the Fonar 360&trade; because of their exceptional
features in patient diagnosis and treatment. These scanners additionally provide improved image quality and higher imaging speed
because of their higher field strength of .6 Tesla. The geometry of the FONAR UPRIGHT&reg; MRI magnet and its transverse magnetic
field enables the use of two detector rf coils operating in quadrature which increases the FONAR UPRIGHT&reg; MRI signal to noise
ratio by 40%, providing a signal to noise ratio equal to a .84T recumbent only MRI scanner.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Liquidity and Capital Resources</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Cash, cash equivalents
and marketable securities increased by 7.3% from $12.0 million at June 30, 2012 to $12.9 million at September 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Cash provided by
operating activities for the first three months of fiscal 2013 was $1.6 million. Cash provided by operating activities was attributable
to net income of $1.8 million, a decrease of other current liabilities of $536,000, offset by an increase in inventories of $322,000,
an increase in costs and estimated earnings on uncompleted contracts of $30,000 and with an increase in accounts, management fee
and medical receivables of $979,000.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Cash used in investing
activities for the first three months of fiscal 2013 was $247,000. The principal uses of cash used in investing activities during
the first three months of fiscal 2013 consisted of capitalized software and patent costs of $36,000, and the purchase of property
and equipment of $211,000.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Cash used in financing
activities for the first three months of fiscal 2013 was $513,000. The uses of cash in financing activities during the first three
months of fiscal 2013 were the repayment of principal on long-term debt and capital lease obligations of $266,000, along with distributions
to noncontrolling interests of $249,000.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Total liabilities
increased by 1.4% to $22.8 million at September 30, 2012 from $22.5 million at June 30, 2012. Other current liabilities increased
from $7.7 million at June 30, 2012 to $8.0 million at September 30, 2012 coupled with a decrease in long-term debt and capital
leases from $777,000 at June 30, 2012 to $706,000 at September 30, 2012, an increase in accounts payable from $2.1 million at June
30, 2012 to $2.2 million at September 30, 2012. Unearned revenue on service contracts increased to $5.7 million at September 30,
2012 as compared to $5.5 million at June 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">As of September
30, 2012, the total of $8.0 million in other current liabilities included accrued salaries and payroll taxes of $536,000, accrued
interest and penalties of $2.2 million and sales taxes of $2.9 million.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Our working capital
increased to $6.4 million at September 30, 2012 from $4.8 million at June 30, 2012. This resulted from an increase in current assets
($25.9 million at June 30, 2012 as compared to $27.9 million at September 30, 2012), in particular an increase in inventories of
$300,000 ($2.2 million at June 30, 2012 as compared to $2.5 million at September 30, 2012), and an increase of accounts, management
and other fees receivable of $803,000 ($10.2 million at June 30, 2012 as compared to $11.0 million at September 30, 2012), slightly
offset by an increase in current liabilities from $21.1 million at June 30, 2012 to $21.5 million at September 30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">Page 25</P>

<!-- Field: Page; Sequence: 9 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Fonar has not committed
to making any significant capital expenditures in the remainder of the 2013 fiscal year.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Our business plan
calls for a continuing emphasis on 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. Also critical to our business plan
are improvement and expansion of the MRI facilities managed by our subsidiary HMCA-IMPERIAL.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">Critical to our
business plan are improvement and expansion of the MRI facilities managed by our subsidiary HMCA-IMPERIAL, and increasing the number
of scans performed at those facilities. In addition, our business plan calls for a continuing emphasis on 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Company continues
to focus its efforts on increased marketing campaigns to strengthen the demand for its products and services. Management is seeking
to promote wider market recognition of Fonar&rsquo;s scanner products, and increase demand for Upright&reg; scanning at the facilities
HMCA-IMPERIAL manages. Given the liquidity and credit constraints in the markets, the sale of medical equipment has and may continue
to suffer. There can be no assurance that the Company would be able to secure additional funds in the event such funds were needed
on terms and conditions acceptable to the Company. In such case, reduction in operating expenses might need to be implemented in
order for the Company to generate positive cash flow to sustain the operations of the Company.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Management anticipates
that Fonar&rsquo;s capital resources will improve if (1) Fonar&rsquo;s MRI scanner products gain wider market recognition and acceptance
resulting in increased product sales, (2) service and maintenance revenues increase as the warranties on scanners expire and (3)
HMCA-IMPERIAL revenues can be increased through the Company&rsquo;s vigorous marketing efforts and the installation of more HMCA-IMPERIAL
managed Upright&reg; MRI scanners. If our marketing efforts to increase revenues fail, and we are unable to raise debt or equity
capital, we will experience a shortfall in cash, and it will 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Company believes
that its business plan has been responsible for the past two consecutive fiscal years of profitability (fiscal 2012 and fiscal
2011) and that its capital resources will be adequate to support operations at current levels through September 30, 2013. The Company
also has experienced, however, 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 tax on sales of medical equipment, 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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 26</P>

<!-- Field: Page; Sequence: 10 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Item 3. Quantitative and Qualitative Disclosures
About Market Risk</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">The Company maintains
its funds in liquid accounts. None of our investments are in fixed rate instruments.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">All of our revenue,
expense and capital purchasing activities are transacted in United States dollars.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Item 4. Controls and Procedures</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Disclosure Controls and Procedures</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 0.5in">Disclosure controls and
procedures (as defined in Rule 13(a)-15(e)) are designed to ensure that information required to be disclosed by a public company
in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time
periods specified in the SEC&rsquo;s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed by a public company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the company&rsquo;s management, including its principal executive
and principal financial officers, or persons performing similar functions, as appropriate to allow for timely decisions regarding
required disclosure. Disclosure controls and procedures include many aspects of internal control over financial reporting.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">In connection with
the preparation of this Quarterly Report on Form 10-Q for the three months ended September 30, 2012, management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
pursuant to Rule 13a-15 under the Exchange Act and have determined that such controls and procedures were effective as of September
30, 2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Changes in Internal Control Over Financial
Reporting</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">There were no changes
in our internal controls or in other factors that could significantly affect these controls, during the quarter ended September
30, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.&#9;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">PART II &ndash; OTHER INFORMATION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0; text-align: justify; text-indent: 0.5in">Item 1 &ndash; Legal
Proceedings: There were no material changes in litigation from that reported in our Form 10-K for the fiscal year ended June 30,
2012. In the Golden Triangle Company v. Fonar Corporation et al case (U.S. District Court for the Eastern District of New York
CV10-2932), the Company made a motion to dismiss the plaintiff&rsquo;s amended complaint, which was granted, leaving only the cause
of action for breach of contract. The claims against the individual officers and employees were also dismissed. Fonar filed its
answer to the complaint, together with a counterclaim alleging the plaintiff, by attempting to overcharge the end customer has
damaged Fonar&rsquo;s reputation and ability to sell in Kuwait. The plaintiff, in turn, has answered our counterclaim. The case
is now in discovery, with a deadline of December 31, 2012 to complete discovery.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 27</P>

<!-- Field: Page; Sequence: 11 -->
    <DIV STYLE="margin-bottom: 6pt">&nbsp;</DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt">&nbsp;</DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center">FONAR CORPORATION AND SUBSIDIARIES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">In the Matt Malek
Madison v. Fonar case (U.S. District Court, Northern District of California), Fonar appealed the judgment against it, but the U.S.
Court of Appeals for 9th Circuit affirmed the judgment of the District Court on January 31, 2012, awarding the plaintiff the $300,000
deposit with prejudgment interest from July 1, 2006. The $300,000 plus interest of $72,000 has been accrued as of September 30,
2012. Although we asked the Court of Appeals to reconsider its decision in an en banc (larger panel of judges) proceeding, our
request was not granted. Notwithstanding the outstanding judgment, the plaintiff has not to our knowledge taken any steps to enforce
the judgment against us.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">In the Bonutti
Research v. Fonar et al case (U.S. District Court, Eastern District of New York), Bonutti Research filed an action on December
2, 2011 alleging that Fonar&rsquo;s Upright&reg; MRI scanners infringe plaintiff&rsquo;s patent, which relates to the moving of
a patient into the scanner. Fonar believes plaintiff&rsquo;s claims are without merit and further, that the patent is invalid.
The plaintiff served the complaint on the last possible day permitted after filing. The defendants obtained an extension of time
to answer to May 18, 2012. Subsequently, on or about July 3, 2012, Bonutti hired new substitute counsel and requested a 60 day
extension to answer Fonar&rsquo;s counterclaims and to postpone the initial conference. Bonutti has answered our counterclaims
and discovery commenced. We have now made a motion to dismiss the case. At this point we are unable to assess the amount in controversy
as no damages were specified. The patent has expired.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 1A &ndash; Risk Factors: Not required.
We are a smaller reporting company.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 2 &ndash; Unregistered Sales of
Equity Securities and Use of Proceeds: None</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 3 - Defaults Upon Senior Securities:
None</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 4 - Mine Safety Disclosure: None</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 5 - Other Information: &#9;None</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">Item 6 - Exhibits and Reports on Form
8-K:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0 31.5pt; text-align: justify; text-indent: 4.5pt">a) Exhibit
31.1 Certification. See Exhibits</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 0.5in">b) Exhibit 32.1
Certification. See Exhibits</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0 0.75in; text-align: justify; text-indent: -0.25in">c) Report
on Form 8-K filed on October 2, 2012, Item 2.02: Results of Operations and Financial Condition for the fiscal year ended June 30,
2012.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">SIGNATURES</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify">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.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 3.5in">FONAR CORPORATION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 3.5in">(Registrant)</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 3.5in">By: /s/ Raymond
V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 283.5pt">Raymond V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify; text-indent: 283.5pt">President &amp; Chairman</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: justify; text-indent: 3.5in">Dated: November
14, 2012</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: center">Page 28</P>



<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 6pt 0 0; text-align: center"></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>fonar_exhibit-31.htm
<DESCRIPTION>FONAR EXHIBIT 31
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Exhibit 31.1</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">CERTIFICATION</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">I, Raymond V. Damadian, certify that:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">1. I have reviewed this quarterly report
on Form 10-Q of Fonar Corporation;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">2. Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this quarterly report;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">3. Based on my knowledge, the financial statements,
and other financial information included in this quarterly report, fairly present in all material respects the financial</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this quarterly report;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">4. I am responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13(a) &ndash; 15(f) and 15d-15(f) for the registrant and have:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">a)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">designed such disclosure controls and
procedures or caused such disclosure controls over procedures to be designed under my supervision to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">b)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">designed such internal control over
financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">c)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">evaluated the effectiveness of the registrant&rsquo;s
disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report; and </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 0 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">d)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">disclosed in this report any change
in the registrant&rsquo;s internal control over financial reporting that occurred during the registrant&rsquo;s most recent fiscal
quarter (the registrant&rsquo;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant&rsquo;s internal control over financial reporting; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">5. I have disclosed, based on my most recent
evaluation of internal control over financial reporting, to the registrant&rsquo;s auditors and the audit committee of the registrant&rsquo;s
board of directors (or persons performing the equivalent functions):</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">a)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">all significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant&rsquo;s ability to record, process, summarize and report financial information; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0 0 0 0.75in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Courier New, Courier, Monospace">b)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Courier New, Courier, Monospace">Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant&rsquo;s internal control over financial
reporting.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Date: November 14, 2012</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">/s/ Raymond V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Raymond V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">President, Principal Executive Officer and
Acting Principal</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Financial Officer</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>



<P STYLE="margin: 0"></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>fonar_exhibit-32.htm
<DESCRIPTION>FONAR EXHIBIT 32
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Exhibit 32.1</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">CERTIFICATION PURSUANT TO</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">18 U.S.C. SECTION 1350,</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">AS ADOPTED PURSUANT TO</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">In connection with the Quarterly Report of
FONAR Corporation and Subsidiaries (the &ldquo;Company&rdquo;) on Form 10Q for the fiscal quarter ended September 30, 2012, as
filed with the Securities and Exchange Commission on the date hereof (the &ldquo;Report&rdquo;), I, Dr. Raymond V. Damadian, President,
Chief Executive Officer, and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant
to ss. 906 of the Sarbanes-Oxley Act of 2002, that:</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">The Report fully complies with the requirements
of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">The information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">/s/Dr. Raymond V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">----------------------------------</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">Dr. Raymond V. Damadian</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">President, Chief Executive Officer</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">and Chief Financial Officer</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">November 14, 2012</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">A signed original of this written statement
required by Section 906 has been provided to Fonar Corporation and will be retained by Fonar Corporation and furnished to the Securities
and Exchange Commission or its staff upon request.</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Courier New, Courier, Monospace; margin: 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>fonar_exhibit-992.htm
<DESCRIPTION>FONAR EXHIBIT 99
<TEXT>
<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P>Exhibit 99.2</P>

<P>XBRL</P>

<P>To be provided upon completion.</P>


<P STYLE="margin: 0"></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
