FORM 10-Q/A

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

      For the quarterly period ended    DECEMBER 31, 2004
                                      ----------------------------

      [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to
                                     ------------     -------------
      Commission file number  0-10248
                            ------------

                          FONAR CORPORATION
------------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)

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

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


Registrant's telephone number, including area code:     (631)  694-2929
                                                      ------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.   YES X    NO
                                        ---     ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).   YES X   NO
                                                 ---    ---             

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.


            Class                          Outstanding at January 31, 2005
--------------------------------           -------------------------------
Common Stock, par value $.0001                      102,588,071
Class B Common Stock, par value $.0001                    3,953
Class C Common Stock, par value $.0001                9,562,824
Class A Preferred Stock, par value $.0001             7,836,287
                                                  



FONAR CORPORATION AND SUBSIDIARIES
INDEX



PART I - FINANCIAL INFORMATION                                  PAGE


Item 1.  Financial Statements

   Condensed Consolidated Balance Sheets - December 31, 2004                  
     (Unaudited) and June 30, 2004                                   

   Condensed Consolidated Statements of Operations for
     the Three Months Ended December 31, 2004 and
     December 31, 2003 (Unaudited)                                   

   Condensed Consolidated Statements of Operations for
     the Six Months Ended December 31, 2004 and
     December 31, 2003 (Unaudited)                                   

   Condensed Consolidated Statements of Comprehensive
     Income (Loss) for the Three Months Ended
     December 31, 2004 and December 31, 2003 (Unaudited)             

   Condensed Consolidated Statements of Comprehensive
     Income (Loss) for the Six Months Ended
     December 31, 2004 and December 31, 2003 (Unaudited)             

   Condensed Consolidated Statements of Cash Flows for                  
     the Six Months Ended December 31, 2004 and
     December 31, 2003 (Unaudited)                                   


   Notes to Condensed Consolidated Financial Statements (Unaudited)  

REASON FOR AMENDMENT

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About
        Market Risk

Item 4. Controls and Procedures

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Securities

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Signatures

Exhibit - 31.1

Exhibit - 32.1


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)

ASSETS                                               December 31,   June 30,
                                                         2004         2004
                                                      (UNAUDITED)
Current Assets:                                        ---------    -------
  Cash and cash equivalents                              $ 8,082    $ 9,474

  Marketable securities                                   12,125     11,120

  Restricted cash                                          5,500      5,500

  Accounts receivable - net                                2,631      1,006

  Accounts receivable - related parties - net                414        297

  Management fee receivable - related medical
    practices - net                                       14,464     14,315

  Costs and estimated earnings in excess
    of billings on uncompleted contracts                   2,546      1,711

  Costs and estimated earnings in excess
    of billings on uncompleted contracts - related party   1,500        112

  Inventories                                              9,316      9,585

  Investment in sales-type lease                             163        154

  Current portion of advances and notes to related
    medical practices                                        200        240

  Prepaid expenses and other current assets                2,148      1,572
                                                          ------     ------
        Total Current Assets                              59,089     55,086
                                                          ------     ------

Property and equipment - net                               7,259      8,211

Advances and notes to related medical practices - net        391        481

Investment in sales-type lease                               369        452

Management agreements - net                                8,413      8,730

Other intangible assets - net                              4,206      3,958

Other assets                                                 289        283
                                                        --------   --------
        Total Assets                                    $ 80,016   $ 77,201
                                                        ========   ========




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

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED)

                                                     December 31,   June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                     2004         2004
                                                      (UNAUDITED)
Current Liabilities:                                  ----------   --------
  Current portion of long-term debt and
    capital leases                                       $ 5,897    $ 5,983
  Accounts payable                                         5,603      5,369
  Other current liabilities                               10,984     10,005
  Unearned revenue on service contracts - related parties    471        373
  Customer advances                                        3,003      7,800
  Customer advances - related party                           42          -
  Income taxes payable                                        24         26
  Billings in excess of costs and estimated
    earnings on uncompleted contracts                      2,691      2,937
  Billings in excess of costs and estimated
    earnings on uncompleted contracts - related party        441          -
                                                          ------     ------
      Total Current Liabilities                           29,156     32,493

Due to related medical practices                             154        154
Long-term debt and capital leases,
   less current maturities                                   563        720
Other liabilities                                            289        299
                                                          ------     ------
      Total Long-Term Liabilities                          1,006      1,173
                                                          ------     ------
      Total Liabilities                                   30,162     33,666
                                                          ------     ------
Minority interest                                            446        381
                                                          ------     ------


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


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's OMITTED, except share data)

                                                     December 31,   June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY                    2004          2004
  (continued)                                        (UNAUDITED)
                                                    ------------    --------
STOCKHOLDERS' EQUITY

Class A  non-voting  preferred  stock  $.0001 par value;  
8,000,000  authorized, 7,836,287 issued and outstanding
at December 31, 2004 and June 30, 2004                         1          1

Common Stock $.0001 par value; 110,000,000 shares 
authorized; 102,307,846 issued at December 31, 2004 and 
98,704,937 at June 30, 2004; 102,016,782 outstanding at
December 31, 2004 and 98,413,873 at June 30, 2004             10         10

Class B Common Stock $ .0001 par value; 4,000,000 shares 
authorized, (10 votes per share), 3,953 issued and 
outstanding at December 31, 2004 and 4,153 issued 
and outstanding at June 30, 2004                               -          -

Class C Common Stock $.0001 par value; 10,000,000 shares 
authorized, (25 votes per share), 9,562,824 issued and 
outstanding at December 31, 2004 and June 30, 2004             1          1

Paid-in capital in excess of par value                   156,221    152,090
Accumulated other comprehensive loss                    (     37)  (     46)
Accumulated deficit                                     (105,457)  (107,384)
Notes receivable from employee stockholders              (   656)   (   843)
Treasury stock, at cost - 291,064 shares of common 
  stock at December 31, 2004 and June 30, 2004           (   675)   (   675)
                                                         -------    -------
      Total Stockholders' Equity                          49,408     43,154
                                                         -------    -------
      Total Liabilities and Stockholders' Equity        $ 80,016   $ 77,201
                                                         =======    =======


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


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
                                                  FOR THE THREE MONTHS ENDED
                                                          DECEMBER 31,
                                                     ---------------------
                                                       2004         2003
REVENUES                                             --------     --------
  Product sales - net                               $ 18,938      $ 8,603
  Product sales - related parties - net                2,571        1,941
  Service and repair fees - net                        1,216          671
  Service and repair fees - related parties - net        228          100
  Management and other fees - related medical
    practices - net                                    5,961        5,884
  License fees and royalties                             585          690
                                                     --------     --------
     Total Revenues - Net                             29,499       17,889
                                                     --------     --------
COSTS AND EXPENSES
  Costs related to product sales                      12,119        5,342
  Costs related to product sales - related parties     1,448        1,217
  Costs related to service and repair fees             1,102          891
  Costs related to service and repair                                         
    fees - related parties                               193          105
  Costs related to management and other
    fees - related medical practices                   3,757        3,779
  Research and development                             1,448        1,383
  Selling, general and administrative                  7,077        6,301
  Compensatory element of stock issuances for
    selling, general and administrative expenses         923        1,116
  Provision for bad debts                                 50           60
  Amortization of management agreements                  159          158
                                                     --------     --------
     Total Costs and Expenses                         28,276       20,352
                                                     --------     --------
Income (Loss) From Operations                          1,223      ( 2,463)

Interest Expense                                     (    67)     (    63)
Investment Income                                        154          113
Interest Income - Related Parties                          6           10
Other Income (Expense)                                    67      (    10)
Minority Interest in Income of Partnerships          (   220)     (   212)
                                                      ------      -------
Income (Loss) Before Provision for Income Taxes        1,163      ( 2,625)
Provision for Income Taxes                                22            5
                                                      -------      -------
NET INCOME (LOSS)                                   $  1,141     $( 2,630)
                                                      =======      =======
Net Income (Loss) Available to Common Stockholders  $  1,060     $( 2,630)
                                                      -------      -------
Basic Earnings (Loss) Per Common Share              $    .01     $(   .03)    
                                                     ========     ========
Diluted Earnings (Loss) Per Common Share            $    .01     $(   .03)
                                                     ========     ========
Basic and Diluted Earnings Per Share-Common C              -          N/A
                                                     ========     ========

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

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(000's OMITTED, except per share data)
                                                   FOR THE SIX MONTHS ENDED
                                                          DECEMBER 31,
                                                     ---------------------
                                                       2004         2003
REVENUES                                             --------     --------
  Product sales - net                                $36,282      $13,454
  Product sales - related parties - net                2,878        3,169
  Service and repair fees - net                        2,112        1,247
  Service and repair fees - related parties - net        373          208
  Management and other fees - related medical
    practices - net                                   11,752       11,838
  License fees and royalties                           1,170        1,275
                                                     --------     --------
     Total Revenues - Net                             54,567       31,191
                                                     --------     --------
COSTS AND EXPENSES
  Costs related to product sales                      23,039        8,091
  Costs related to product sales - related parties     1,614        1,978
  Costs related to service and repair fees             2,054        1,609
  Costs related to service and repair                                         
    fees - related parties                               355          268
  Costs related to management and other
    fees - related medical practices                   7,254        7,169
  Research and development                             2,822        2,716
  Selling, general and administrative                 13,177       12,827
  Compensatory element of stock issuances for
    selling, general and administrative expenses       1,704        2,333
  Provision for bad debts                                100           85
  Amortization of management agreements                  317          317
                                                     --------     --------
     Total Costs and Expenses                         52,436       37,393
                                                     --------     --------
Income (Loss) From Operations                          2,131      ( 6,202)

Interest Expense                                     (   132)     (   123)
Investment Income                                        260          188
Interest Income - Related Parties                         13           27
Other Income (Expense)                                   143           88
Minority Interest in Income of Partnerships          (   446)     (   433)
                                                      ------      -------
Income (Loss) Before Provision for Income Taxes        1,969      ( 6,455)
Provision for Income Taxes                                42           17
                                                      ------      -------
NET INCOME (LOSS)                                   $  1,927     $( 6,472)
                                                      =======     ========
Net Income (Loss) Available to Common Stockholders     1,789     $( 6,472)
                                                      -------     --------
Basic Earnings (Loss) Per Common Share              $    .02     $(   .07)    
                                                     ========     ========
Diluted Earnings (Loss) Per Common Share            $    .02     $(   .07)
                                                     ========     ========
Basic and Diluted Earnings Per Share-Common C              -          N/A
                                                     ========     ========

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

FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(000'S OMITTED)

                                                    FOR THE THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                         -----------------
                                                          2004       2003
                                                         ------     ------
Net income (loss)                                       $ 1,141    $(2,630)

Other comprehensive loss, net of tax:
    Unrealized losses on securities,
      net of tax                                         (   32)    (   10)
                                                         -------    -------
Total comprehensive income (loss)                       $ 1,109    $(2,640)
                                                         =======    =======


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


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(000'S OMITTED)


                                                     FOR THE SIX MONTHS ENDED
                                                            DECEMBER 31,
                                                         -----------------
                                                          2004       2003
                                                         ------     ------
Net income (loss)                                       $ 1,927    $(6,472)

Other comprehensive income, net of tax:
    Unrealized gains on securities,
      net of tax                                              9         31
                                                         ------     ------
Total comprehensive income (loss)                       $ 1,936    $(6,441)
                                                         ======     ======


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


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(000'S OMITTED)

                                                    FOR THE SIX MONTHS ENDED
                                                            DECEMBER 31,
                                                         -----------------
                                                          2004       2003
                                                         ------     ------
Cash Flows from Operating Activities:
 Net income (loss)                                     $  1,927   $( 6,472)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
    Minority interest in net income of partnerships         446        433
    Depreciation and amortization                         1,972      2,009
    Provision for bad debts                                 100         85
    Compensatory element of stock issuances               1,704      2,333
    Stock issued for costs and expenses                   2,173      9,671
    Reduction in notes receivable from employee
      stockholders adjusted to compensation                 126          -
    Gain on sale of equipment                           (    28)         -
    Amortization of deferred revenue-license fee        ( 1,170)   ( 1,170)
    (Increase) decrease in operating assets, net:
       Accounts and management receivable               ( 2,041)   ( 1,544)
       Costs and estimated earnings in excess of
         billings on uncompleted contracts              (   723)   ( 1,057)
       Inventories                                      (   380)   ( 2,196)
       Principal payments received on sales type
         lease-related party                                  -         14
       Principal payments received on sales type lease       74         66
       Prepaid expenses and other current assets        (   576)   ( 1,517)
       Other assets                                     (     5)   (     8)
       Advances and notes to related medical practices      130         74
    Increase (decrease) in operating liabilities, net:
       Accounts payable                                     235    (    74)
       Other current liabilities                          2,309      1,259
       Customer advances                                ( 4,755)     4,645
       Billings in excess of costs and estimated
         earnings on uncompleted contracts                  195    ( 3,769)
       Other liabilities                                (    10)         3
       Income taxes payable                             (     2)        11
                                                         ------     ------
Net cash provided by operating activities                 1,701      2,796
                                                         ------     ------    


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


FONAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(000'S OMITTED)

                                                      FOR THE SIX MONTHS ENDED
                                                            DECEMBER 31,
                                                         -----------------
                                                          2004       2003
                                                         ------     ------
Cash Flows from Investing Activities:
  Sales (purchases) of marketable securities            (   996)     1,847
  Purchases of property and equipment                   ( 1,165)   (   258)
  Costs of capitalized software development             (   396)   (   265)
  Cost of patents and copyrights                        (   195)   (   153)
  Proceeds from sale of equipment                            31          -
  Repayment of note receivable from buyers
    of A&A Services - Discontinued operations                 -        150
                                                         ------     ------
Net cash (used in) provided by investing activities     ( 2,721)     1,321
                                                         ------     ------

Cash Flows from Financing Activities:
  Distributions to holders of minority interests        (   382)   (   439)
  Repayment of borrowings and capital
    lease obligations                                   (   242)   (   616)
  Net proceeds from exercise of stock options
    and warrants                                            224        450
  Repayment of notes receivable from employee
    stockholders                                             29          -
                                                         ------     ------
Net cash used in financing activities                   (   371)   (   605)
                                                         ------     ------

Increase (Decrease) in Cash and Cash Equivalents        ( 1,391)     3,512

Cash and Cash Equivalents - Beginning of Period           9,474      9,334
                                                         ------     ------
Cash and Cash Equivalents - End of Period               $ 8,083    $12,846
                                                         ======     ======

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


                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by accounting  principles  generally  accepted in the United
States 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 six months ended
December  31, 2004 are not  necessarily  indicative  of the results  that may be
expected  for the fiscal  year ending June 30,  2005.  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  16, 2004 for the
fiscal year ended June 30, 2004.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Earnings (Loss) Per Share

Basic earnings  (loss) per share ("EPS") is computed  based on weighted  average
shares outstanding and excludes any potential dilution.  In accordance with EITF
03-6,  "Participating  Securities and the Two-Class  method under FASB Statement
No.  128"  ("EITF  03-6"),   which   nullifies  EITF  Topic  D-95,   "Effect  of
Participating  Convertible  Securities on the  Computation of Basic Earnings Per
Share," the Company's participating convertible securities,  which include Class
B common stock and Class C common stock,  are not included in the computation of
basic EPS for the six months ended  December 31, 2003 because the  participating
securities  do not have a  contractual  obligation to share in the losses of the
Company.  For the six months  ended  December  31,  2004,  the Company  used the
Two-Class  method for  calculating  basic  earnings per share and applied the if
converted  method in calculating  diluted  earnings per share. The provisions of
EITF 03-6 became effective for the Company beginning April 1, 2004. The adoption
of this new pronouncement did not have any impact on the Company's  consolidated
financial statements.

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.  The  number of common  shares
potentially  issuable  upon the  exercise  of certain  options of  approximately
689,000 for the six months ended December 31, 2004 have not been included in the
computation of diluted EPS since the effect would be antidilutive. The number of
common shares potentially  issuable upon the exercise of options and warrants or
conversion of the participating  convertible  securities that were excluded from
the  diluted EPS  calculation  was  approximately  9,066,000,  because  they are
antidilutive  as a result  of a net  loss for the  three  and six  months  ended
December 31, 2003.

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings (Loss) Per Share (Continued)
(000's omitted, except per share data)
                                     Three Months                Three Months
                                  ended December 31,          ended December 31,
                                        2004                        2003
                         -----------------------------------  ------------------
                                                   Class C  
                                       Common      Common               
                            Total      Stock       Stock           Total 
Basic 
      
Numerator:               
                         
  Net income (loss)       
    available to          
    common stockholders     $1,060     $1,034          $26        $(2,630)
                           =======     ======       ======       ========
Denominator:              
                          
  Weighted average        
    shares                            100,822        9,563         88,988
    outstanding                       =======       ======       ========
                          
Basic earnings            
  (loss) per              
   common share             $  .01    $   .01       $   --        $  (.03)
                           =======    =======       ======        =======
Diluted                   
                          
   Weighted average       
     shares outstanding    100,822    100,822        9,563         88,988
   Stock options               311        311                          --
   Warrants                    523        523                          --
   Convertible Class C    
     common stock            3,188      3,188
                           -------    -------       ------        -------
                          
Denominator for diluted    
  earnings per share:     
                          
  Weighted average        
    shares outstanding    
    of common stock and   
    equivalents            104,844    104,844        9,563         88,988
                           =======    =======       ======        =======    
  Diluted earnings (loss) 
    per common share        $  .01    $   .01       $   --        $  (.03)
                           =======    =======       ======        =======



                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings (Loss) Per Share (Continued)
(000's omitted, except per share data)
                                     Six Months                  Six Months
                                  ended December 31,          ended December 31,
                                        2004                        2003
                         -----------------------------------  ------------------
                                                   Class C  
                                       Common      Common               
                            Total      Stock       Stock           Total 
Basic 
      
Numerator:               
                         
  Net income (loss)       
    available to          
    common stockholders    $ 1,789     $1,746       $   43       $ (6,472)
                           =======     ======       ======       ========
Denominator:              
                          
  Weighted average        
    shares                             99,824        9,563         86,730
    outstanding                       =======       ======       ========
                          
Basic earnings            
  (loss) per              
   common share            $ 0 .02    $  0.02       $   --        $  (.07)
                           =======    =======       ======        =======
Diluted                   
                          
   Weighted average       
     shares outstanding     99,824     99,824        9,563         86,730    
   Stock options               195        195                          --    
   Warrants                    487        487                          --    
   Convertible Class C                                        
     common stock            3,188      3,188                 
                           -------    -------       ------        -------
                          
Denominator for diluted    
  earnings per share:     
                          
  Weighted average        
    shares outstanding    
    of common stock and   
    equivalents            103,694    103,694        9,563         86,730
                           =======    =======       ======        =======    
  Diluted earnings (loss) 
    per common share        $  .02    $   .02       $   --        $  (.07)
                           =======    =======       ======        =======



                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Options and Warrants and Similar Equity Instruments

At December 31, 2004, the Company had various stock-based employee  compensation
plans. As permitted under Statement of Financial  Accounting  Standard  ("SFAS")
No. 148, "Accounting for Stock-Based  Compensation--Transition  and Disclosure",
which  amended  SFAS  No.  123  ("SFAS  123"),   "Accounting   for   Stock-Based
Compensation", the Company has elected to continue to follow the intrinsic value
method in accounting for its stock-based employee  compensation  arrangements as
defined by Accounting Principles Board Opinion ("APB") No. 25,

"Accounting  for  Stock  Issued  to  Employees",   and  related  interpretations
including Financial Accounting  Standards Board ("FASB")  Interpretation No. 44,
"Accounting  for  Certain  Transactions   Involving  Stock   Compensation",   an
interpretation  of APB No.  25. No  stock-based  employee  compensation  cost is
reflected  in  operations,  as all  options  granted  under  those  plans had an
exercise price equal to the market value of the  underlying  common stock on the
date of grant.

The following table illustrates the effect on net loss and loss per share if the
Company  had  applied  the  fair  value  recognition  provisions  of SFAS 123 to
stock-based employee compensation:

                         For the Three Months Ended     For the Six Months Ended
                                 December 31,                  December 31,
                               (000's omitted,               (000's omitted,    
                           except per share data)         except per share data)
                         --------------------------     ------------------------
                              2004       2003               2004       2003
                           ---------   --------           ---------   -------- 
Net Income (loss) 
  available to
  common shareholders        $1,060    $(2,630)             $1,789    $(6,472)

Less:
  Undistributed earnings 
    allocated to Class C
    common stock                 26         --                  43        --
                           ---------   --------           ---------   -------- 
                              1,034     (2,630)              1,746     (6,472)

Less:
  Total stock-based 
    employee compensation 
    expense determined
    under fair value 
    based method for all 
    awards                       24         50                  52        248
                           ---------   --------           ---------   -------- 

Pro forma Net Income 
  (Loss)                     $1,010    $(2,680)           $  1,694    $(6,720)
                           =========   ========           =========   ========

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Options and Warrants and Similar Equity Instruments (Continued)

                         For the Three Months Ended     For the Six Months Ended
                                 December 31,                  December 31,
                               (000's omitted,               (000's omitted,    
                           except per share data)         except per share data)
                         --------------------------     ------------------------
                              2004       2003               2004       2003
                           ---------   --------           ---------   -------- 
Basic Net Income (Loss) 
  Per Share As Reported    $   0.01    $ (0.03)           $   0.02    $ (0.07)
                           =========   ========           =========   ========

Basic Pro forma Net 
  Income (Loss) Per Share  $   0.01    $ (0.03)           $   0.02    $ (0.08)
                           =========   ========           =========   ========

Diluted Net Income (Loss) 
  per share as reported    $   0.01    $ (0.03)           $   0.02    $ (0.07) 
                           =========   ========           =========   ======== 
                         
Diluted Pro Forma Net 
  Income (Loss) per share  $   0.01    $ (0.03)           $   0.02    $ (0.08) 
                           =========   ========           =========   ========
                         
The fair value of options at date of grant was estimated using the Black-Scholes
fair value based method with the following weighted average assumptions:

                                   For the Three and Six Months Ended
                                             December  31,
                                   ----------------------------------
                                         2004               2003    
                                       --------           --------
Expected life (years)                      3                  3
Interest Rate                            2.69%              4.00%
Annual Rate of dividends                    0%                 0%
Volatility                                 55%                92%

Recent Accounting Pronouncements

In December,  2004, the Financial Accounting Standards Board ("FASB") issued its
final standard on accounting for share-based  payments  ("SBP"),  FASB Statement
No. 123R (revised 2004),  Share-Based  Payment. The Statement requires companies
to expense the value of employee  stock  options and similar  awards.  Under FAS
123R,  SBP awards  result in a cost that will be  measured  at fair value on the
awards' grant date, based on the estimated number of awards that are expected to
vest. Compensation cost for awards that vest would not be reversed if the awards
expire  without  being  exercised.  The effective  date for public  companies is
interim and annual  periods  beginning  after June 15, 2005,  and applied to all
outstanding and unvested SBP awards at a company's adoption. Management does not
anticipate  that this Statement will have a significant  impact on the Company's
consolidated financial statements.

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Restricted Cash

At December 31, 2004,  $5,500,000  of cash has been pledged as  collateral on an
outstanding  bank  loan  and  has  been  classified  as  restricted  cash on the
accompanying condensed consolidated balance sheet.


NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable, net is comprised of the following at December 31, 2004:

                                                  (000's omitted)

                                                     Allowance  
                                                     for 
                                     Gross           doubtful    
                                     Receivable      accounts          Net
                                     ----------      ----------        --------
Receivables from  equipment      
sales and service contracts          $  3,099        $      468        $  2,631
                                     ========        ==========        ========
                                 
Receivables from equipment       
sales and service contracts-     
related parties                      $  1,109        $      695        $    414
                                     ========        ==========        ========
                                 
Receivables from related medical 
practices ("PC's")                   $ 16,438        $    1,974        $ 14,464
                                     ========        ==========        ========
                                
The Company's customers are concentrated in the healthcare industry.

The Company's  receivables from the related PC's  substantially  consist of fees
outstanding under management agreements, service contracts and lease agreements.
Payment of the outstanding  fees is based on collection by the PC's of fees from
third party medical reimbursement organizations, principally insurance companies
and health management organizations.

Collection  by the  Company of its  accounts  receivable  may be impaired by the
uncollectibility of the PC's medical fees from third party payors,  particularly
insurance carriers covering automobile no-fault and workers  compensation claims
due  to  longer   payment  cycles  and  rigorous   informational   requirements.
Approximately  65% of the  PC's net  revenues  for  both  the six  months  ended
December  31,  2004 and 2003,  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
and contractual  allowances.  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.


                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 3 - ACCOUNTS RECEIVABLE (Continued)

Net  revenues  from  management  and other  fees  charged  to the  related  PC's
accounted for approximately 21.5% and 38.0% of the consolidated net revenues for
the six months ended December 31, 2004 and 2003, respectively. Product sales and
service and repair fees from related parties amounted to approximately  6.0% and
14.2% of  consolidated  net revenues for the six months ended  December 31, 2004
and 2003, respectively.

Unaudited Financial Information of Unconsolidated Managed Medical Practices
---------------------------------------------------------------------------

Summarized  income  statement  data for the three months ended December 31, 2004
related to the 16 unconsolidated  medical practices managed by the Company is as
follows: (000's omitted) (Income Tax-Cash Basis)

             Patient Revenue - Net                  $ 8,251
                                                    =======
             Income from Operations                 $   158
                                                    =======
             Net Income                             $    46
                                                    =======

Summarized  income  statement  data for the six months  ended  December 31, 2004
related to the 16 unconsolidated  medical practices managed by the Company is as
follows:
                               (000's omitted) (Income Tax-Cash Basis)

             Patient Revenue - Net                  $16,385
                                                    =======                  
             Income from Operations                 $   466
                                                    =======
             Net Income                             $   233
                                                    =======

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 4 - INVENTORIES

Inventories included in the accompanying condensed consolidated balance sheet at
December 31, 2004 consist of:
                                 (000's omitted)
             Purchased parts, components                     
                and supplies                        $ 6,819   
             Work-in-process                          2,497   
                                                    -------   
                                                    $ 9,316   
                                                    =======   

NOTE 5 - COSTS AND  ESTIMATED  EARNINGS ON  UNCOMPLETED  CONTRACTS  AND CUSTOMER
     ADVANCES

1)   Information relating to uncompleted contracts as of December 31, 2004 is as
     follows:
                                 (000's omitted)
             Costs incurred on uncompleted                     
                  Contracts                         $18,741    
             Estimated earnings                      13,623    
                                                    -------    
                                                     32,364    
             Less:     Billings to date              31,450    
                                                    -------    
                                                     $  914    
                                                    =======    
                                            
Included in the accompanying  condensed  consolidated  balance sheet at December
31, 2004 under the following captions:

        Costs and estimated earnings in excess of                     
          billings on uncompleted contracts                $ 2,546
        Cost and estimated earnings in excess of
          billings on uncompleted contracts-related party    1,500
        Less: Billings in excess of costs and estimated
          earnings on uncompleted contracts                 (2,691)
        Less: Billings in excess of costs and estimated
          earnings on uncompleted contracts-related party   (  441)
                                                           --------
                                                           $   914
                                                           ========

2) Customer advances consist of the following as of December 31, 2004:

                                                     Related  
                                          Total      Parties     Other
                                         --------    --------   --------
Total Advances                           $34,495     $ 1,542    $ 32,953
Less: Advances                                                
       on contracts under construction    31,450       1,500      29,950
                                         --------    -------    --------
                                         $ 3,045     $    42    $  3,003
                                         ========    =======    =========  

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 6 -STOCKHOLDERS' EQUITY
                                      
Common Stock

During the three months ended December 31, 2004:

a)   The  Company  issued  512,939  shares  of  common  stock  to  employees  as
     compensation of $623,401 under stock bonus plans.

b)   The Company issued 279,523 shares of common stock to consultants and others
     at a value of $329,961.

c)   The Company issued  1,289,562 shares of common stock for costs and expenses
     of $1,532,557.

d)   The Company issued 21,454 shares of common stock upon the exercise of stock
     options resulting in proceeds of $23,485.

During the six months ended December 31, 2004:

a)   The  Company  issued  1,020,516  shares of  common  stock to  employees  as
     compensation of $1,214,814 under stock bonus plans.

b)   The Company issued 414,257 shares of common stock to consultants and others
     at a value of $481,955.

c)   The Company issued  1,858,822 shares of common stock for costs and expenses
     of $2,173,311.

d)   The Company  issued 6,410 shares of common stock upon the exercise of stock
     options resulting in compensation of $7,500.

e)   The Company issued 21,454 shares of common stock upon the exercise of stock
     options resulting in proceeds of $23,485.

f)   The  Company  issued  28,000  shares of common  stock  valued at $29,960 in
     connection  with  issuance  of notes and  loans  receivable  from  employee
     stockholders.

Class B Common Stock

During the six months  ended  December  31,  2004,  200 shares of Class B common
stock were converted to common stock leaving 3,953 of such shares outstanding as
of December 31, 2004.

Warrants

On July 1, 2004,  warrants to purchase  151,625  shares of the Company's  common
stock were exercised at an exercise price of $.79 per share.

On November 4, 2004 warrants to purchase  101,625 shares of the Company's common
stock were exercised at an exercise price of $.79 per share.



                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 7 - SEGMENT AND RELATED INFORMATION

The Company operates in two industry  segments - manufacturing and the servicing
of medical equipment and management of physician practices, including diagnostic
imaging services.

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies as disclosed in the Company's 10-K as
of June  30,  2004.  All  inter-segment  sales  are  market-based.  The  Company
evaluates performance based on income or loss from operations.

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

                                 (000's omitted)
                                                          Physician  
                                               Medical    Management
                                               Equipment  Services     Total
                                               ---------  ----------  --------
For the three months ended December 31, 2004: 
                                              
Net revenues from external customers           $ 23,538    $  5,961   $ 29,499
Inter-segment net revenues                     $    107    $     --   $    107
Income from operations                         $    915    $    308   $  1,223
Depreciation and amortization                  $    603    $    387   $    990
Compensatory element of stock issuances        $    496    $    427   $    923
Capital expenditures                           $    489    $    510   $    999

For the three months ended December 31, 2003:

Net revenues from external customers           $ 12,005    $  5,884   $ 17,889
Inter-segment net revenues                     $    113    $     --   $    113
Income (Loss) from operations                  $ (2,533)   $     70   $ (2,463)
Depreciation and amortization                  $    546    $    463   $  1,009
Compensatory element of stock issuances        $    596    $    520   $  1,116
Capital expenditures                           $    202    $     98   $    300

For the six months ended December 31, 2004:

Net revenues from external customers           $ 42,815    $ 11,752   $ 54,567
Inter-segment net revenues                     $    243    $     --   $    243
Income from operations                         $  1,536    $    595   $  2,131
Depreciation and amortization                  $  1,198    $    774   $  1,972
Compensatory element of stock issuances        $    781    $    923   $  1,704
Capital expenditures                           $    989    $    767   $  1,756

Total Identifiable Assets                      $ 50,756    $ 29,260   $ 80,016

For the six months ended December 31, 2003:

Net revenues from external customers           $ 19,353    $ 11,838   $ 31,191
Inter-segment net revenues                     $    234    $     --   $    234
Income (Loss) from operations                  $ (6,230)   $     28   $ (6,202)
Depreciation and amortization                  $  1,083    $    926   $  2,009
Compensatory element of stock issuances        $  1,192    $  1,141   $  2,333
Capital expenditures                           $    554    $    122   $    676

Total Identifiable Assets                      $ 37,625    $ 27,468   $ 65,093

                       FONAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2004
                                   (UNAUDITED)

NOTE 8 - SUBSEQUENT EVENTS

Common Stock

During the period from January 1, 2005 through January 31, 2005:

a)   The  Company  issued  265,135  shares  of  common  stock  to  employees  as
     compensation of $381,047 under stock bonus plans.

b)   The Company issued 224,882 shares of common stock for costs and expenses of
     $327,107.

c)   The Company issued 19,118 shares of common stock to consultants  and others
     at a value of $28,369.

d)   The Company issued 20,348 shares of common stock upon the exercise of stock
     options resulting in proceeds of $22,658.

e)   The  Company  issued  41,806  shares of common  stock  valued at $41,806 in
     connection with issuance of a note receivable from an employee stockholder.



FONAR CORPORATION AND SUBSIDIARIES

REASON FOR AMENDMENT

Fonar Corporation is amending this 10-Q to change the language contained in Part
I, Item 4, in accordance with comments  made  by  the  Securities  and  Exchange
Commission,  to revise  the language  relating  to  our conclusions  as  to  the
effectiveness of our financial controls.

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

     For the six month  period  ended  December  31,  2004 (first half of fiscal
2005),  we reported net income of $1.9  million on revenues of $54.6  million as
compared  to a net loss of $6.5  million on  revenues  of $31.2  million for the
first half of fiscal 2004. Our success in achieving  profitability  in the first
half of fiscal 2005 is primarily  due to the  increase in our product  sales and
the maintenance of healthy gross profit margins on product sales.

     For the fiscal  quarter ended  December 31, 2004 (second  quarter of fiscal
2005), we reported a net income of $1.14 million on revenues of $29.5 million as
compared  to a net loss of $2.6  million on  revenues  of $17.9  million for the
second quarter of fiscal 2004.

     The second quarter of fiscal 2005  represented an even greater  improvement
over our  performance in the first quarter of fiscal 2005 reflecting an increase
in our net income of 45% from $786,000 to $1.14 million and an increase of 17.7%
in our revenues  from $25.1 million in the first quarter to $29.5 million in the
second quarter.

Forward Looking Statements

     Certain  statements  made  in  this  Quarterly  Report  on  Form  10-Q  are
"forward-looking  statements"  (within  the  meaning of the  Private  Securities
Litigation  Reform Act of 1995) regarding the plans and objectives of Management
for  future  operations.  Such  statements  involve  known  and  unknown  risks,
uncertainties  and other factors that may cause actual  results,  performance or
achievements of the Company 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.  The Company's 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 the control of the Company. Although the
Company believes that its 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 the Company or any
other person that the objectives and plans of the Company will be achieved.

Results of Operations

     The  Company  operates  in  two  industry  segments:  the  manufacture  and
servicing of medical (MRI) equipment,  the Company's  traditional business which
is conducted  directly by Fonar,  and in  physician  and  diagnostic  management
services,  which is conducted through Fonar's  wholly-owned  subsidiary,  Health
Management Corporation of America ("HMCA").

     Trends  continuing in the second quarter of fiscal 2005 and contributing to
our  profitability  include  an  increase  in product  sales with an  increasing
emphasis on unrelated party sales revenues compared to related parties (entities
in which Dr.  Damadian or members of his family have an  interest)  revenues and
the maintenance of high gross profit margins on product sales: 37% for the first
six  months of fiscal  2005  compared  to 39% for the first six months of fiscal
2004.  We  attribute  these trends to the  continuing  growth of our MRI product
sales,  particularly our Stand-Up(TM) MRI scanners (also called  Upright(TM) MRI
scanners)  and the  increased  efficiencies  resulting  from  our  higher  sales
volumes.

     For the three month  period ended  December  31,  2004,  as compared to the
three month period ended  December 31, 2003,  overall  revenues from MRI product
sales increased 104% ($21.5 million compared to $10.5 million).  Unrelated party
scanner  sales ($18.9  million  compared to $8.6  million)  increased at an even
greater rate of 120% while related party scanner sales ($2.6 million compared to
$1.9 million) increased 32.5%.  Overall,  for the second quarter of fiscal 2005,
revenues for the medical  equipment  segment  increased by 96% to $23.5  million
from $12.0 million for the second quarter of fiscal 2004. The revenues generated
by HMCA,  also  increased,  by 1.3% to $6.0  million  for the second  quarter of
fiscal 2005 as compared to $5.9 million for the second quarter of fiscal 2004.

     For the six month  period ended  December 31, 2004,  as compared to the six
month period ended  December 31, 2003,  overall  revenues from MRI product sales
increased  135.6% ($39.2 million  compared to $16.6  million).  Unrelated  party
scanner sales ($36.3 million  compared to $13.5 million)  increased at a rate of
170% while related  party scanner sales ($2.9 million  compared to $3.2 million)
decreased by 9.4%. Overall,  for the second quarter of fiscal 2005, revenues for
the medical  equipment  segment  increased by 121.3% to $42.8 million from $19.3
million for the second quarter of fiscal 2004.

     The increase in product sales reflected continuing market acceptance of the
Company's Stand-Up(TM) MRI scanners. During the first six months of fiscal 2005,
revenues  of   approximately   $38.4  million  were  recognized  from  sales  of
Stand-Up(TM)  MRI  scanners.  During  the first six months of fiscal  2004,  the
Company  recognized  revenues of  approximately  $16.5  million from the sale of
Stand-Up(TM) MRI scanners.

     There were  approximately  $3.6 million in foreign  sales  revenues for the
first six months of fiscal 2005 as compared to approximately $502,000 million in
foreign sales revenues for the first six months of fiscal 2004.

     We recognize MRI scanner sales  revenues on the  "percentage of completion"
basis,  which means the revenues are recognized as the scanner is  manufactured.
Revenues  recognized  in a  particular  quarter do not  necessarily  reflect new
orders or progress  payments  made by  customers in that  quarter.  We build the
scanner as the customer  meets  certain  benchmarks in its site  preparation  in
order to minimize the time lag between  incurring costs of manufacturing and our
receipt  of the cash  progress  payments  from the  customer  which are due upon
delivery. Consequently, there can be a disparity between the revenues recognized
in a fiscal period and the number of product sales. Generally, this results from
the  revenues  from a scanner  sale  being  recognized  in a fiscal  quarter  or
quarters  following  the quarter in which the sale was made.  Illustrating  this
point,  the revenue  recognition  for product  sales for the first six months of
fiscal  2005  increased  135.6%  from the first six months of fiscal 2004 ($39.1
million compared to $16.6 million),  although there was a decrease in the number
of orders of 14%: we received  orders for 12 Stand-Up  MRI  scanners and for one
Fonar 360(TM)  scanner during the first six months of fiscal 2005 as compared to
orders for 14 Stand-Up MRI scanners during the first six months of fiscal 2004.

     Service and repair  revenues  increased  by 87.3%,  from  $771,000  for the
second  quarter of fiscal 2004 to $1.4  million for the first  quarter of fiscal
2005.  License fees and royalties  decreased by 15% from $690,000 for the second
quarter of fiscal 2004 to$585,000 for the first quarter of fiscal 2005.

     Service and repair revenues  increased by 70.8%,  from $1.5 million for the
first six  months of fiscal  2004 to $2.5  million  for the first six  months of
fiscal 2005. License fees and royalties  decreased by 8.2% from $1.3 million for
the first six months of fiscal 2004  to$1.2  million for the first six months of
fiscal 2005.

     Costs related to product sales increased by 106.8% from $6.6 million in the
second  quarter of fiscal  2004 to $13.6  million in the first  quarter of 2005,
reflecting the corresponding  increase in product sales revenues.  Costs related
to providing  service  increased  30.1% from  $996,000 in the second  quarter of
fiscal 2004 to $1.3  million in the first  quarter of 2005.  In both cases,  the
percentage  increase in revenues  was greater  than the  percentage  increase in
costs.

     Costs  related to product  sales  increased by 144.9% from $10.1 million in
the first six months of fiscal 2004 to $24.7  million in the first six months of
fiscal  2005.  Costs  related to  providing  service  increased  28.4% from $1.9
million in the first six months of fiscal 2004 to $2.4  million in the first six
months of fiscal 2005.

     As a result, combined with the containment of other expenses, our operating
income for our medical  equipment segment was $916,000 for the second quarter of
fiscal  2005 as  compared to an  operating  loss of $2.5  million for the second
quarter of fiscal 2004.

     Our operating income for our medical equipment segment was $1.5 million for
the first six months of fiscal  2005 as compared  to an  operating  loss of $6.2
million of fiscal 2004.

     Our gross  profit  margin  for the entire  medical  equipment  segment  (as
opposed to just product  sales) was 36.9% for the second quarter of fiscal 2005,
as compared  to 37.8% for the first  quarter of fiscal  2004,  and 37.1% for the
first six months of fiscal 2005 as compared to 39.4% for the first six months of
fiscal 2004.

     HMCA  revenues  increased in the second  quarter of fiscal 2005, by 1.3% to
$6.0 million from $5.9  million for the second  quarter of fiscal 2004.  For the
first six  months of fiscal  2005 and 2004 HMCA  revenues  were  $11.8.  HMCA is
seeking to increase  revenues from the MRI  facilities by continuing its program
of  replacing  older  scanners  at the sites we  manage  with  Stand-Up(TM)  MRI
scanners. We now manage four sites equipped with Stand-Up(TM) MRI scanners,  and
we are planning to open four new sites with Stand-Up(TM) MRI scanners within the
next  twelve  months,  which  would bring the total  number of  facilities  with
Stand-Up(TM)  MRI scanners we manage to eight.  During fiscal 2004,  HMCA closed
one MRI site.  HMCA  experienced  operating  income of  $308,000  for the second
quarter of fiscal 2005  compared to  operating  income of $70,000 for the second
quarter  of  fiscal  2004.  For the  first  six  months  of  fiscal  2005,  HMCA
experienced  operating  income of $595,000 as  compared to  operating  income of
$28,000 for the first six months of fiscal 2004.

     HMCA cost of  revenues  for the second  quarter of fiscal 2005 and 2004 was
$3.8  million.  HMCA costs of  revenues  remained  essentially  constant at $7.2
million in the first six months of fiscal 2004 and fiscal 2005.

     As our  consolidated  revenues  increased by 64.8% to $29.5 million for the
second  quarter of fiscal  2005 from  $17.9  million  for the second  quarter of
fiscal 2004,  the total costs and expenses  increased by 38.9% to $28.3  million
for the second  quarter of fiscal 2005 from $20.3 million for the second quarter
of fiscal 2004. Selling,  general and administrative expenses increased by 12.7%
from $6.3  million in the second  quarter of fiscal 2004 to $7.1  million in the
second quarter of fiscal 2005.  This increase was related to our medical segment
participating  in 3  trade  shows.  For  the  six  months  of  fiscal  2005  the
consolidated  revenues  increased  by 74.9% to $54.6  million from $31.2 for the
first six months of fiscal 2004.  Our total costs and expenses  increased  40.2%
from $37.4  million for the first six months of fiscal 2004 to $52.4 million for
the  first six  months  of fiscal  2005.  Selling,  general  and  administrative
expenses  increased by 2.7% from $12.8 million in the first six months of fiscal
2004 to $13.2 million in the first six months of fiscal 2005.

     The  compensatory  element of stock issuances  decreased by 27.0% from $2.3
million in the first six months of fiscal 2004 to $1.7  million in the first six
months of fiscal 2005.  This  reflected a lesser use of Fonar's stock in lieu of
cash to pay employees, consultants and professionals for services.

     Research and development expenses increased by 3.9% to $2.8 million for the
first six months of fiscal 2005 as  compared  to $2.7  million for the first six
months of fiscal 2004.

     Interest  expense in the first six months of fiscal 2005  increased by 7.3%
to  $132,000  from  $123,000  for the first six months of fiscal 2004 due to new
borrowings.

     Inventories  decreased  by 2.8% to $9.3  million at  December  31,  2004 as
compared  to $9.6  million at June 30,  2004 as the  Company  filled  orders and
product sales revenues increased.

     Management  fee receivable  and accounts  receivable  increased by 12.1% to
$17.5  million  at  December  31,  2004 from  $15.6  million  at June 30,  2004,
primarily  due to increased  receivables  from the Company's  medical  equipment
segment which includes service contracts on MRI scanners.

     As a result the  Company's  operating  and net income were $2.1 million and
$1.9 million,  respectively, for the first six months of fiscal 2005 as compared
to operating and net losses of $6.2 million and $6.5 million,  respectively, for
the first six months of fiscal 2004.

     The overall trends reflected in the results of operations for the first six
months of fiscal  2005 are an  increase  in  revenues  from  product  sales,  as
compared to the first six months of fiscal 2004 ($54.6 million for the first six
months of fiscal 2005 as  compared to $31.2  million for the first six months of
fiscal 2004), and an increase in MRI equipment segment revenues relative to HMCA
revenues  ($42.8  million or 78% from the MRI  equipment  segment as compared to
$11.8  million or 22% from HMCA,  for the first six  months of fiscal  2005,  as
compared  to $19.4  million  or 62% from the MRI  equipment  segment  and  $11.8
million  or 38%,  from  HMCA,  for the first six  months  of  fiscal  2004).  In
addition,  we  experienced  an increase  in  unrelated  party sales  relative to
related party sales in our medical equipment product sales ($36.3 million or 93%
to unrelated parties and $2.9 million or 7% to related parties for the first six
months of fiscal 2005 as compared to $13.5 million,  or 81% to unrelated parties
and $3.2  million or 19% to related  parties  for the first six months of fiscal
2004).  The relative  decline in related  party sales  reflects  the  increasing
penetration of the marketplace by our  Stand-Up(TM)  MRI scanners which has more
than compensated for the decline in the related party sales revenues. During the
first six months of fiscal 2005, related party sales decreased,  by 9.2% to $2.9
million as compared to $3.2 million for fiscal 2004.

     We believe that the  continuing  trends in our medical  equipment  division
have  resulted in improved  operating  results  and a  profitable  six months in
fiscal 2005.  Factors beyond our control,  such as the timing and rate of market
growth  which  depend on economic  conditions,  make it  impossible  to forecast
future  operating  results.  Nevertheless,  we believe we have been pursuing the
correct  policies  which now have brought us to the point of  profitability  and
should prove  successful  in keeping the Company  profitable  and  improving its
operating results and net income.

     The Company's Stand-Up(TM),  and Fonar-360(TM) MRI scanners,  together with
the  Company's  works-in-progress,  are  intended to  significantly  improve the
Company's competitive position.

     The Company's Stand-Up(TM) scanner, which operates at 6000 gauss (.6 Tesla)
field strength,  allows patients to be scanned while standing or reclining. As a
result,  for the first time,  MRI is able to be used to show  abnormalities  and
injuries  under  full  weight-bearing  conditions,  particularly  the  spine and
joints. 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  will be
possible, an especially promising feature for sports injuries.

     The  Stand-Up(TM)  will  also be  useful  for MRI  directed  neuro-surgical
procedures as the surgeon  would have  unhindered  access to the patient's  head
when the patient is supine with no restrictions in the vertical direction.  This
easy-entry,  mid-field-strength scanner should be ideal for trauma centers where
a quick  MRI-screening  within the first critical hour of treatment will greatly
improve patients' chances for survival and optimize the extent of recovery.

     The Fonar  360(TM) 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's  patented  Iron-Frame(TM)   technology  which  allows  the
Company's engineers to control, contour and direct the magnet'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 360 degree  access to the
patient  and  physicians  and family  members  are able to enter the scanner and
approach the patient.

     The Fonar  360(TM) is  presently  marketed as a  diagnostic  scanner and is
sometimes referred to as the Open Sky(TM) MRI. In its Open Sky(TM) version,  the
Fonar 360(TM) serves as an open patient friendly scanner which allows 360 degree
access to the patient on the  scanner  bed.  To  optimize  the  patient-friendly
character of the Open Sky(TM)  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 FONAR's  Stand-Up(TM)  and QUAD(TM) MRI
scanner, is 0.6 Tesla.

     In the  future,  we may also  develop  the Fonar  360(TM) to function as an
operating  room. We sometimes  refer to this  contemplated  version of the Fonar
360(TM) as the OR-360(TM).  In its OR-360(TM) version,  which is in the planning
stages, the enlarged room sized magnet and 360 access to the patient afforded by
the Fonar  360(TM)  would permit  full-fledged  surgical  teams to walk into the
magnet and perform  surgery on the patient inside the magnet.  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 surgery to guide the
surgeon  in  the  surgery.  Thus  surgical  instruments,   needles,   catheters,
endoscopes  and the like could be  introduced  directly  into the human body and
guided  to the  malignant  lesion  by  means of the MRI  image.  The  number  of
inoperable  lesions should be greatly  reduced by the  availability  of this new
capability.  Most  importantly  treatment can be carried  directly to the target
tissue. The  interventional  OR-360(TM) version of the Fonar 360(TM) is still in
the planning  stages.  There is not a prototype.  A full range of MRI compatible
surgical instruments using ceramic cutting tools and beryllium-copper  materials
are commercial available.

     The  Company's  works in  progress  include  an  in-office  weight  bearing
extremities  scanner  which will be able to be used to examine  the knee,  foot,
elbow,  hand, wrist and shoulder.  This scanner will allow scans to be performed
under both weight- bearing and non-weight-bearing conditions.

     The Company expects marked demand for its most commanding MRI products, the
Stand- Up(TM) and the Fonar  360(TM),  first for 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.

Liquidity and Capital Resources

     Cash, cash equivalents and marketable  securities  decreased  slightly from
$20.6 million at June 30, 2004 to $20.2 million at December 31, 2004.  Principal
uses of cash  during  the first  six  months of  fiscal  2005  included  capital
expenditures for property and equipment of $1.2 million, repayment of borrowings
and capital lease  obligations in the amount of $242,000,  capitalized  software
development  costs of $396,000 and  capitalized  patent and  copyright  costs of
$195,000.

     Marketable  securities  approximated $12.1 million as at December 31, 2004,
as  compared  to $11.1  million at June 30,  2004.  At December  31,  2004,  our
investments in U.S. Government obligations were $5.4 million, our investments in
corporate and government  agency bonds were $3.6 million and our  investments in
certificates  of deposit and deposit  notes were $3.1 million.  The  investments
made have had the intended effect of maintaining a stable investment portfolio.

     Cash  provided by operating  activities  for the first six months of fiscal
2005  approximated  $1.7  million.  Cash  provided by operating  activities  was
attributable  primarily  to  net  income  of  $1.9  million,  stock  issued  for
compensation,  costs  and  expenses  of $3.9  million,  offset  primarily  by an
increase in accounts receivable of $2.0 million.

     Cash used in investing  activities  for the first six months of fiscal 2005
approximated $2.7 million.  The principal uses of cash from investing activities
during  the first six  months of fiscal  2005  consisted  of,  expenditures  for
property and equipment of  approximately  $1.2 million and capitalized  software
and  patent  costs of  approximately  $591,000,  and  marketable  securities  of
$996,000.

     Cash used by financing  activities  for the first six months of fiscal 2005
approximated $371,000. The principal uses of cash in financing activities during
the first six months of fiscal 2005  consisted  of  repayment  of  principal  on
long-term  debt and capital  lease  obligations  of  approximately  $242,000 and
distributions to holders of minority  interests of $382,000.  The source of cash
from  financing  activities was net proceeds from exercises of stock options and
warrants of $224,000.

     The  Company's  obligations  and the periods in which they are scheduled to
become due are set forth in the following table:

                                 (000's OMITTED)

                                 Due in
                                  Less         Due          Due          Due
                                  than 1      in 1-3       in 4-5       after 5
Obligation          Total         year         years        years        years
--------------   -----------   ----------   ----------   ----------   ----------

Long-term debt   $   6,116     $5,723       $    393      $   --       $  --

Capital lease
Obligation             345        175            112            58        --

Operating
  Leases            10,929      2,426          4,543         2,792       1,168
                 -----------   ----------   ----------   ----------   ----------
Total cash
Obligations      $  17,390     $8,324       $  5,048       $ 2,850     $ 1,168
                 ===========   ==========   ==========   ==========   ==========

     Total liabilities  decreased by 10.4% to $30.2 million at December 31, 2004
from $33.7 million at June 30, 2004.

     We  experienced a decrease in long-term debt from $720,000 at June 30, 2004
to $563,000 at December 31, 2004, an increase in billings in excess of costs and
estimated  earnings on uncompleted  contracts from $2.9 million at June 30, 2004
to $3.1 million at December 31, 2004, an increase in accounts  payable from $5.4
million at June 30, 2004 to $5.6  million at December  31,  2004,  a decrease in
customer advances from $7.8 million at June 30, 2004 to $3.0 million at December
31, 2004 and an increase in other current liabilities from $10.0 million at June
30, 2004 to $11.0 million at December 31, 2004.

     As of December 31, 2004, the obligations of approximately  $11.0 million in
other current  liabilities  included  deferred revenue from license fees of $1.2
million, unearned revenue on service contracts of $4.3 million, accrued salaries
and payroll taxes of $1.0 million and excise and sales taxes of $2.5 million.

     Our working capital  approximated $29.9 million as of December 31, 2004, as
compared to working capital of $22.6 million as of June 30, 2004,  increasing by
32.3%. This results  principally from an increase in accounts receivable of $1.9
million ($15.6 million at June 30, 2004 as compared to $17.5 million at December
31,  2004),  along with a decrease of customer  advances of $3.8  million  ($7.8
million at June 30,  2004 as compared to $3.0  million at  December  31,  2004).
Accounts  receivable  increased  from $15.6 million as at June 30, 2004 to $17.5
million as at December 31, 2004 due to increased  receivables from the Company's
medical equipment segment and in particular,  an increase of approximately  $1.6
million in accounts receivable from service contracts on MRI scanners.

     With respect to current liabilities,  the current portion of long-term debt
decreased  from $6.0  million at June 30, 2004 to $5.9  million at December  31,
2004,  and  billings in excess of costs and  estimated  earnings on  uncompleted
contracts  increased  from $2.9  million  at June 30,  2004 to $3.1  million  at
December 31, 2004.  Customer  advances  decreased  from $7.8 million at June 30,
2004 to $3.0 million at December 31, 2004 and accounts  payable  increased  from
$5.4 million at June 30, 2004 to $5.6 million at December 31, 2004.

     The aggregate decrease in customer advances and billings in excess of costs
and estimated earnings on uncompleted  contracts reflects the Company's progress
in filling  its  backlog of orders,  which also  translates  into an increase in
recognized revenues. The increase in accounts payable resulted from the purchase
of parts to manufacture the scanners.

     In order to conserve  our capital  resources,  we have issued  common stock
under  our stock  bonus  and stock  option  plans to  compensate  employees  and
non-employees for services rendered. In the first six months of fiscal 2005, the
compensatory  element of stock  issuances  was $1.7  million as compared to $2.3
million for the first six months of fiscal 2004.  Utilization  of equity in lieu
of cash  compensation  has  improved  our  liquidity  since  it  increases  cash
available for other expenditures.

     The foregoing  trends in Fonar's capital  resources are expected to improve
as Fonar's  MRI  scanner  products  gain wider  market  acceptance  and  produce
increased product sales.

     Fonar has not committed to making  additional  capital  expenditures in the
2005 fiscal year other than its intention to continue  research and  development
expenditures at current levels. HMCA also expects to incur capital  expenditures
of  approximately  $1.0 million to acquire premises and to construct and furnish
four new  Stand-Up(TM)  MRI  facilities,  which would bring the total  number of
Stand-Up(TM) MRI facilities managed by HMCA to eight.

     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 upgrades at
competitive prices.

     We believe that the above mentioned financial  resources,  anticipated cash
flows from  operations and potential  financing  sources,  will provide the cash
flows needed to achieve the sales,  service and production  levels  necessary to
support our operations.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Our  investments  are  in  fixed  rate  instruments.  Below  is  a  tabular
presentation of the maturity profile of the fixed rate instruments held by us at
December 31, 2004.

                            INTEREST RATE SENSITIVITY
                      PRINCIPAL AMOUNT BY EXPECTED MATURITY
                         WEIGHTED AVERAGE INTEREST RATE

                                           Investments
                         Year of           in Fixed Rate    Weighted Average
                         Maturity          Instruments      Interest Rate
                         --------          -------------    ----------------
                         12/31/05          $  6,569,333           1.36%
                         12/31/06             1,498,982           3.33%
                         12/31/07             1,100,000           3.21%
                         12/31/08             1,050,000           3.08%
                         12/31/09             1,648,500           3.13%
                         12/31/10               100,000           3.50%
                         12/31/13               100,000           4.12%
                                           -------------

                         Total:            $ 12,066,815
                                           ============
                          Fair Value
                           at 12/31/04     $ 12,022,407
                                           ============

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

     See Note 12 to the consolidated Financial Statements in our Form 10-K as of
and for the year ended June 30, 2004 for information on long-term debt.


Item 4. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

     The  Company  maintains  controls  and  procedures  designed to ensure that
information  required to be  disclosed  in the reports  that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported  within  the time  periods  specified  in the  rules  and  forms of the
Securities  and  Exchange  Commission.  Based  upon  their  evaluation  of those
controls  and  procedures  performed  within 90 days of the filing  date of this
report,  the principal  executive and acting principal  financial officer of the
Company concluded that disclosure controls and procedures were adequate.

(b)  Change in internal controls.

     The Company  made no  significant  changes in its  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the evaluation of those  controls by the principal  executive and acting
principal financial officer.


PART II - OTHER INFORMATION

Item 1 - Legal Proceedings: There were no material changes in litigation for the
     first six months of fiscal 2005.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds: None

Item 3 - Defaults Upon Senior Securities: None

Item 4 - Submission of Matters to a Vote of Security Holders: None

Item 5 - Other Information: None

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

         (earnings press release) filed on September 16, 2004  
         8-K (earnings press release) filed on November 9, 2004
         Exhibit 31.1 Certification See Exhibits
         Exhibit 32.1 Certification See Exhibits



SIGNATURES

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

                                                  FONAR CORPORATION
                                                  (Registrant)

                                                  By:  /s/ Raymond V. Damadian
                                                         Raymond V. Damadian
                                                         President & Chairman

Dated:   June 24, 2005