FONAR Corporate Compliance Information

One of the primary role of FONAR's Board of Directors is to oversee how management serves the interests of shareowners and other stakeholders. To do this, FONAR's corporate governance principles are aimed at ensuring that the Board is independent and fully informed on the key strategic and risk issues FONAR faces. Please use the tabs below to view FONAR Corporate Compliance Information.

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Code of Ethics

CODE OF ETHICS for the Principal Executive Officer, Principal Financial Officer, Controllers and Other Personnel Responsible for the Compilation, Maintenance, Recording, Preparation, Reporting and Dissemination of Financial Information

FONAR CORPORATION
HEALTH MANAGEMENT CORPORATION OF AMERICA
HEALTH DIAGNOSTICS MANAGEMENT, LLC

Fonar Corporation (the “Company”)* is committed to conducting its business in compliance with all the applicable laws and regulations of the countries in which it operates and in accordance with high standards of business conduct. The Company strives to maintain the highest standards of accuracy, completeness and disclosure in its financial dealings, records and reports. These standards serve as the basis for managing the Company´s business, for meeting the Company´s duties to its shareholders and for maintaining compliance with financial reporting requirements. All of the Company´s personnel described below must agree to comply with the following principles, and the Chief Executive Officer, in his or her capacity as the Company´s principal executive officer, to whom all senior financial officers and personnel ultimately report, will promote and support this Code of Ethics, and, to the extent consistent with his or her duties and responsibilities, comply with the principles set forth in this Code of Ethics.

Each employee of the Company having responsibility for compiling, recording, maintaining and reporting financial information will adhere to and advocate the following principals and responsibilities governing his or her professional and ethical conduct, each to the best of his or her knowledge and ability and to the extent the following apply to his or her duties on behalf of the Company.

Act with honesty and integrity and in an ethical manner, avoiding actual or apparent conflicts of interest in personal and professional relationships.
Promptly disclose to the Company through the Chief Executive Officer, Chief Financial Officer, General Counsel or Audit Committee, any transaction or relationship that reasonably could be expected to give rise to a conflict of interest between personal and professional relationships.
Provide other Company personnel with information that is accurate, complete, objective, relevant, timely and understandable, for both the internal use of the Company and to promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with or submits to, the Securities and Exchange Commission and in other public communications made by registrant.
Comply with the rules and regulations of federal, state, provincial and local governments and other appropriate and private and public regulatory agencies.
Act in good faith, responsibility, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated.
Use good business and professional judgment in the processing and recording of all financial transactions.
Respect the confidentiality of information acquired in the course of the Company´s business, except when authorized or otherwise legally obligated to disclose such information, and not use confidential information acquired in the course of work for personal advantage.
Share knowledge and maintain skills important and relevant to the Company´s needs.
Promote ethical behavior among co-workers in the work environment.
Achieve responsible use of and control over all assets and resources employed or entrusted to him or her.
Comply with generally accepted accounting standards and practices, rules, regulations and controls, where applicable.
Ensure that accounting entries are promptly and accurately recorded and properly documented and that no accounting entry intentionally distorts or disguises the true nature of any business transaction.
Maintain books and records that fairly and accurately reflect the Company´s business transactions.
Sign only those documents that he or she believes to be accurate and truthful.
Devise, implement and maintain sufficient internal controls in connection with his or her duties or position to assure that financial record keeping objectives are met.
Prohibit the establishment of any undisclosed or unrecorded funds or assets for any purpose and provide for the proper and prompt recording of all disbursements of funds and all receipts.
Not knowingly be a party to any illegal activity or engage in acts that are discreditable to his or her profession or the Company.
Respect and contribute to the legitimate and ethical objects of the Company.
Engage in only those services for which he or she has the necessary knowledge, skill and expertise.
Not make, or tolerate to be made, false or artificial statements or entries for any purpose in the books and records of the Company or in any internal or external correspondence, memoranda, or communication of any type, including telephone or wire communications.
Report to the Company through the Chief Executive Officer, Chief Financial Officer, General Counsel, or Audit Committee, any situation where he or she knows or believes the Code of Ethics, the Company´s standards or the laws are being violated.

Those required to comply with this Code of Ethics understand that they are accountable for adherence to this Code of Ethics, that failure to comply with this Code of Ethics will not be tolerated by the Company and that deviations therefrom or violations thereof will result in serious consequences, which may include, but may not be limited to, serious reprimand, dismissal or other legal actions.

No person required to comply with this Code of Ethics who takes or refuses to take any action on this basis of his or her good faith reliance on this Code of Ethics will be subject to dismissal, disciplinary action, demotion, deprival of benefits or other reprisals by the Company.

The parties subject to this Code of Ethics will acknowledge in writing that they agree to comply with these requirements.

I have read and agree to comply with the within Code of Ethics and agree to comply with the requirements contained herein.

Signatures Omitted

M-15907

Ethics Hotline / Whistleblower Program

FONAR CORPORATION/
HEALTH MANAGEMENT CORPORATION OF AMERICA/
HEALTH DIAGNOSTICS MANAGEMENT, LLC

ETHICS HOTLINE/WHISTLEBLOWER PROGRAM

TO: All Employees of Fonar Corporation, Health Management Corporation of America and Health Diagnostics Management, LLC

FROM: The Audit Committee of Fonar Corporation and Subsidiaries

Introduction: Briefly stated, this is a program established to provide any and all employees a confidential method to report any incidents which they believe may be illegal or improper financial, auditing or accounting conduct, any violation of the Company´s Code of Conduct or other unethical behavior.

Purpose of Program: Under the Sarbanes-Oxley Act, the audit committee of a company covered by the Act is required to established procedures for (1) receiving and retaining information about, and treating alleged incidents involving the company regarding accounting, internal accounting controls or auditing matter and (2) the confidential, anonymous submission of concerns by employees about questionable accounting or auditing matters.

The Audit Committee: Our Audit Committee consists only of independent directors who, among other things, oversee auditing, accounting and financial matters and the maintenance of honesty, integrity and appropriate controls and procedures in order to assure that the financial statements of the Company are accurate and properly prepared. The Audit Committee has the final authority in selecting our auditors. The Audit Committee presently consists of Charles O´Data and Ronald Lehman.

Person to Contact: Ronald Lehman is designated as the person to contact. You can contact him by phone or e-mail:

Phone: 917-576-5380

Email: ronald.lehman@gmail.com

Your Right to Report: If you know or believe that any person in the Company is doing anything which is illegal or improper with respect to financial, accounting, auditing or following proper procedures, you are encouraged to report the matter to the parties designated below. The misconduct in question could range from stealing, embezzlement, bribing or taking bribes, to improper recording or reporting, or the improper withholding of information. If you are in doubt as to whether or not to report an incident, report it.

In addition to reporting matters of the type indicated above, you have the right to report or communicate concerns, about actual or potential violations of the Company´s Code of Conduct, including unethical behavior and actual or suspected fraud.

You also have the right to write obtain advice before making decisions in the course of your work that appear to have significant legal or ethical implications.

Confidentiality: Your name will be kept confidential by the person you contact. You also have the right to make reports anonymously. No retribution will be taken against an employee making a report under this program.

Follow-Up: If you do not believe appropriate remedial action has been taken, you have the option to report directly to our external auditor, Marcum LLP at 655 Third Avenue, 16th Floor, New York, New York 10017, Attention: Kevin McGann or such other person Marcum LLP may designate.

Non-exclusive: This program is designed to give you a special protected way to discuss matters of concern confidentially or anonymously. You may still discuss concerns you have with supervisors, management, or the personnel department, as you think is most appropriate.

M-15880

The undersigned employee acknowledges that he or she has received the Company´s Ethics Hotline/Whistleblower Program.

________________________________________________
Name

_________________________
Date

Please sign and return to Personnel

Audit Committee Charter

FONAR CORPORATION
AUDIT COMMITTEE CHARTER

This Audit Committee Charter, as most recently revised, adopted by the Board of Directors (the “Board”) of Fonar Corporation (the “Company”).

I. PURPOSE

The Audit Committee (the “Committee”) shall assist the Board of Directors (the “Board”) in fulfilling its responsibility to oversee (i) management´s conduct of: the Company´s financial reporting, including by overviewing the integrity of the financial reports and other financial information provided by the Company to any governmental or regulatory body, the Company´s securityholders and other users thereof; (ii) management´s establishment and conduct of the Company´s systems of internal accounting and financial controls, including the Comp”any´s internal audit function; (iii) the qualifications, engagement, compensation, independence and performance of the Company´s independent auditors, the conduct of the annual audit and any other audit, attest or review services, and the engagement of the independent auditors to provide any non-audit services; (iv) the preparation of the audit committee report required by U.S. Securities and Exchange Commission (“SEC) rules; (v) the Company´s legal and regulatory compliance; and (vi) the Company´s codes of conduct, as established by management and the Board. The Committee´s role shall apply equally with respect to any subsidiary of the Company (including any partnership or joint venture) whose financial results are consolidated with the financial results of the Company and any other subsidiary which is directly or indirectly controlled by the Company and also with respect to any separate financial reports of any such subsidiary.

In discharging its role, the Committee is empowered to investigate any matter that comes to its attention and shall have access to all books, records, facilities and personnel of the Company which are necessary in order for the Committee to perform its duties hereunder. The Committee has the power to retain legal counsel, auditors or other experts as it determines appropriate to carry out its role and responsibilities and shall be provided adequate funding from the Company to engage such advisors and for the administration of the Committeeacute;s affairs. The Company shall compensate the independent auditor for its audit, review and attest services as determined and directed by the Committee.

The Committee shall report regularly to the Board on the Committee´s activities, including all actions taken by the Committee on behalf of the Company and on any material issues that arise with respect to the quality or integrity of the Companyacute;s financial statements, the performance and independence of the independent auditor, the performance of the internal audit function, the Company´s compliance with legal or regulatory requirements and the adequacy of and compliance with the Company´s codes of conduct to the extent such codes of conduct relate to the duties and purposes of the Audit Committee as described herein and any other matters the Committee reasonably deems appropriate in connection with the performance of its duties hereunder or which the Board requests. The Committee shall report to the Board at least annually on its expenses, including the compensation of the independent auditor.

II. COMMITTEE MEMBERSHIP

The Committee shall consist of three or more members of the Board, as shall be determined by the Board, each of whom has been determined by the Board to be "independent" in accordance with the applicable listing standards of the NASD. All members of the Committee shall´ meet the applicable financial literacy requirements of the NASD and at least one member shall be an "audit committee financial expert" as such term is defined under applicable SEC rules. No member of the Committee may serve on the audit committee of more than three public companies, including the Company, unless the Board of Directors has determined that such simultaneous service would not impair the ability of such member to effectively serve on the Committee.

III. COMMITTEE MEETINGS; SUBCOMMITTEES

The Committee shall meet on a regularly-scheduled basis at least four times per year or more frequently as circumstances dictate. The Committees meetings shall include, on at least a quarterly basis, an executive session with the independent auditor to provide the opportunity for full and frank discussion of the Company´s financial reporting without any member of senior management present, except for the Company´s General Counsel if the Committee so desires.

IV. RESPONSIBILITIES AND FUNCTIONS

The Committee´s role is one of oversight. The Committee´s primary responsibility relates to the Company´s financial reporting and its other responsibilities and functions as stated herein, while important in their own right, are ancillary to the accurate and complete presentation of the Company´s financial position and prospects. The Company´s management is responsible for preparing the Company´s financial statements, for assuring the Company´s compliance with its legal and regulatory obligations and for the adherence by Company personnel with the Company´s business policies and codes of conduct. The Company´s independent auditor is responsible for auditing the Company´s financial statements and assessing the adequacy of the Company´s internal controls. The Company´s management and independent auditor have more knowledge and detailed information about the Company, greater expertise in financial reporting, internal control matters, the legal and regulatory obligations of the Company and the details of the Company´s codes of conduct and business policies, and greater opportunity to analyze financial reporting issues facing the Company than do Committee members. Consequently, in carrying out its oversight responsibilities, the Committee does not provide any expert or special assurance as to the Company´s financial statements, internal controls, legal compliance or adherence to its codes of conduct and business policies or any professional certification as to the independent auditor´s work.

The following functions of the Committee are specified as a guide, with the understanding that the Committee will exercise its judgment in determining the specific activities the Committee may undertake at any time and in its activities may diverge from this guide as appropriate given the circumstances. The Committee is authorized to carry out these and such other functions and responsibilities as are assigned by the Board from time to time and to take any actions reasonably related to the Committee´s responsibilities as mandated by this Charter.

To fulfill its purpose, the Committee shall:

1. appoint, subject to ratification of the appointment by the shareholders, and, if appropriate, dismiss the accounting firm which shall audit the Company´s annual financial statements and any other accounting firm which shall provide to the Company any other audit, attest or review services (each of which shall be considered an "independent auditor" for purposes for this Charter), and evaluate the performance, determine the compensation and oversee the work of the independent auditors; the independent auditors shall report directly to the Committee and the Committee shall resolve any disagreement between management and the independent auditors regarding financial reporting In connection with the appointment of the Company´s independent auditors, the Committee shall on an annual basis:

(a) receive and review a formal written statement from the accounting firm to be retained as the Company´s independent auditor delineating all relationships between the accounting firm and the Company (consistent with Independence Standards Board Standard No. 1 and any additional or successor standard established by the Public Company Accounting Oversight Board) and also delineating any services the accounting firm has provided to the Company´s chief executive, chief financial and chief accounting officer; the Committee shall actively engage in a dialogue with such accounting firm with respect to any disclosed relationships or services that may impact the objectivity and independence of the accounting firm and take appropriate action in response to the accounting firm´s report to satisfy itself of the auditor´s independence;

(b) consider whether, in the interest of assuring continuing independence of the independent auditor, the Company should regularly rotate the accounting firm that serves as its independent auditor;

(c) set clear policies with respect to the Company´s hiring of employees or former employees of the independent auditors;

(d) receive and review a report from the independent auditors describing: (i) such firm´s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality- control review, peer review, or Public Company Accounting Oversight, Board Review of such firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, regarding one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;

2. review and approve any auditing and non-auditing services to be provided by the Company´s independent auditors, including the adoption by the Committee of any policies and procedures detailing services which the independent auditors are permitted to provide to the Company without specific advance approval by the Committee, if any, except that if services rendered by the auditors were not recognized as non-audit services at the time of the independent auditor´s engagement, such services shall be promptly brought to the attention of the Committee and approved by the Committee prior to the completion of the audit.

3. review and discuss with management and the independent auditor on a regular basis: (i) the adequacy of the Company´s internal and disclosure controls and procedures, including computerized information system disclosure controls and procedures and security; (ii) any significant deficiencies or material weaknesses in the design or operation of the Company´s internal controls which could adversely affect the Company´s ability to record, process, summarize and report financial data that are reported to the Committee; (iii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company´s internal controls that are reported to the Committee; and (iv) any findings and recommendations of the independent auditor with regard to such matters, together with management´s responses;

4. review and discuss with management, including the chief financial officer and chief accounting officer, and the independent auditor (i) any significant audit findings during the year, including the status of previous audit recommendations; (ii) any audit problems or difficulties encountered in the course of the auditor´s work, including any restrictions on the scope of activities or access to required information; (iii) any changes required in the scope of the audit plan; (iv) the audit budget and staffing; and (v) the coordination of audit efforts in order to monitor completeness of coverage, reduction of redundant efforts, and the effective use of audit resources;

5. review and discuss with management and the independent auditor accounting policies that may be viewed as critical; review and discuss significant changes in Company accounting policies and any accounting and financial reporting proposals (including changes in generally accepted accounting principles) that may have a material impact on the Company´s financial reports; inquire as independent auditor´s view of the accounting treatment related to significant new Company transactions or other significant matters or events not in the ordinary course of the Company´s business and inquire as to the independent auditor´s views about whether Company accounting principles as applied are conservative, moderate, or aggressive from the perspective of income, asset, and liability recognition, and whether or not those principles reflect common or minority practices;

6. review and discuss with management and the independent auditor any financial or non-financial arrangements that do not appear in the financial statements of the Company but are material to the Company´s financial position or performance; and review, discuss with management and the independent auditor, and approve, any transactions or courses of dealing with related parties (e.g., including significant shareholders of the Company, directors, corporate officers or other members of senior management or their family members) that are material in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties, as determined by the Committee to warrant review by the Committee;

7. review and discuss with the independent auditor: (i) any accounting adjustments that were noted or proposed by the independent auditor but were "passed" (as immaterial or otherwise), (ii) any communications between the audit team and the audit firm´s national office respecting auditing or accounting issues presented by the engagement and (iii) any "management" or "internal control" letter issued, or proposed to be issued, by the independent auditor to the Company;

8. review and discuss with management, including the chief financial officer and chief accounting officer, and the independent auditor any significant risks or exposures to which the Company is subject and assess the Company´s underlying policies with respect to risk assessment and risk management and the steps management has taken to minimize risks;

9. review the Company´s financial statements, including: (i) prior to public release, reviewing and discussing with management and the independent auditor the Company´s annual and quarterly financial statements to be filed with the SEC, including (a) the Company´s disclosures under "Management´s Discussion and Analysis of Financial Condition and Results of Operations", (b) the certifications regarding the financial statements or the Company´s internal accounting and financial controls and procedures and disclosure controls or procedures filed with SEC by the Company´s chief executive and financial officers and personnel and any qualifications thereon, (c) the matters required to be discussed with the independent auditor by Statement of Auditing Standards No. 61 or No. 71; (ii) with respect to the independent auditor´s annual audit report and certification, before release of the annual audited financial statements, meet separately with the independent auditor without any management member present and discuss the independent auditor´s assessment of the adequacy of the Company´s system of internal accounting and financial controls and the appropriateness of the accounting principles used in and the judgments made in the preparation of the Company´s audited financial statements and the quality of the Company´s financial reports; (iii) also in connection with the release of the Company´s audited annual financial statements, meet separately with management and the Company´s financial personnel and discuss management´s evaluation of the adequacy of the Company´s system of internal accounting and financial controls and the appropriateness of the accounting principles used in and the judgments made in the preparation of the Company´s audited financial statements and the quality of the Company´s financial reports; (iv) make a recommendation to the Board of Directors regarding the inclusion of the audited annual financial statements in the Company´s Annual Report on Form 10-K to be filed with the SEC; and (v) prior to submission to any governmental authority of any financial statements of the Company with the SEC, review such financial statements and any report, certification or opinion thereon provided by the independent auditor;

10. discuss with management and the independent auditor, as appropriate, earnings press releases and financial information and earnings guidance provided to analysts and to rating agencies;

11. establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

12. review periodically with the General Counsel: (i) legal and regulatory matters that may have a material impact on the Company´s financial statements and (ii) the scope and effectiveness of the Company´s legal compliance policies and programs;

13. receive and act upon any reports of a material violation of law received from any attorney for the Company in accordance with the SEC´s Rule of practice, any reports from legal counsel appointed or retained, with the authorization of the Committee, to investigate any such report and any reports of the General Counsel on any proceeding relating to such reports;

14. review periodically with management the adequacy of the Company´s codes of conduct (including the Company´s policies and procedures concerning trading in Company securities and use in trading of proprietary or confidential information) and the compliance therewith by Company personnel and review and approve any waivers sought under such codes with respect to directors, executive officers and senior financial officers) but any waiver reviewed by the Committee shall be reported by the Committee to the Board and approval of the Board as well shall be required for any such waiver to any officer who is a member of the Board;

15. review and advise the Board with respect to the appointment, reassignment, replacement or dismissal of the chief financial officer and chief accounting officer and other financial or accounting personnel and consult with the Compensation Committee, if any, regarding any reduction in the salary or benefits of, the terms of participation in any incentive compensation program by and any discretionary bonus or incentive award to the chief financial officer and chief accounting officer;

16. prepare a report to be included in the Company´s annual proxy statement stating whether or not the Committee: (i) has reviewed and discussed the Company´s audited financial statements with management; (ii) has discussed with the independent auditor the matters required to be discussed by SAS No. 61 and 90; (iii) has received the written disclosure and letter from the independent auditor (delineating all relationships such firm has with the Company) and has discussed with such firm its independence; and (iv) based on the review and discussions referred to above, the members of the Committee recommended to the Board that the audited financials be included in the Company´s Annual Report on Form 10-K for filing with the U.S. Securities and Exchange Commission;

17. conduct an annual self-evaluation of the performance of the Committee, including its compliance with this Charter, and review and reassess the adequacy of this Charter; and

18. maintain minutes and other records of Committee meetings and activities.

M-11512

Code of Conduct and Company Policies

FONAR CORPORATION/
HEALTH MANAGEMENT CORPORATION OF AMERICA/
HEALTH DIAGNOSTICS MANAGEMENT, LLC

CODE OF CONDUCT AND COMPANY POLICIES


LETTER FROM THE CHIEF EXECUTIVE OFFICER		3
CODE OF CONDUCT
	A. LAWFUL AND ETHICAL BEHAVIOR	4
	B. CORPORATE COMPLIANCE GENERALLY	4
	C. CONFLICTS OF INTEREST	5
	D. BUSINESS PRACTICES	6
	E. DEALINGS WITH GOVERNMENTS	7
	F. GOVERNMENT INVESTIGATIONS	7
	G. TRADE SECRETS AND CONFIDENTIAL INFORMATION	8
	H. FDA REGULATIONS	9
	I. EQUAL EMPLOYMENT OPPORTUNITY POLICY AND INTERNAL COMPLAINT PROCEDURE	9
	J. POLICY ON INSIDER TRADING	11
	K. ANTITRUST AND UNFAIR TRADE PRACTICES	13
ACKNOWLEDGEMENT FORMS		16, 17

LETTER FROM THE CHIEF EXECUTIVE OFFICER

At Fonar Corporation, Health Management Corporation of America and Health Diagnostics Management, LLC (the term "Company" refers to Fonar, HMCA, HDM and all subsidiaries of any of them), our success is defined not just by our excellent products and superior service, but also by our reputation for integrity and fair dealing. In pursuing our business objectives we must adhere to our core values of honesty and fair dealing.

As an employee of the Company, you should become familiar with the provisions of the Code of Conduct and comply with its requirements. Adherence to these standards will not only avoid potential civil and criminal exposures, but ensure that our reputation for fair dealing and ethical business conduct remains intact.

I expect every employee of the Company to make a conscientious effort to act at all times in accordance with both the letter and spirit embodied in the Code of Conduct. Thank you for your cooperation.

Timothy R. Damadian
Chairman, President and Chief Executive Officer
Fonar Corporation, Parent Company

CODE OF CONDUCT

A. LAWFUL AND ETHICAL BEHAVIOR

The purpose of the Code of Business Conduct (the "Code") is to provide a statement of certain key policies and procedures of the Company for conducting our business in a legally and ethically appropriate manner.

It is and has been our policy to be a good "corporate citizen" of the states and countries in which we do business. We have a responsibility to obey applicable laws. This includes the laws and regulations that directly affect the way we do business, such as FDA regulations, product safety regulations, anti-kickback laws and regulations, laws relating to the management of imaging facilities, securities laws, fair labor and equal opportunity laws and antitrust laws.

Each of us has a responsibility to set an example of good behavior by acting in a clearly ethical manner. Each of you is responsible for reviewing and understanding these policies and procedures to the extent they relate to you and your activities. You can obtain advice concerning these policies from your supervisor, the personnel department, the Chief Executive Officer or persons designated by the Chief Executive Officer. On doubtful questions, you should seek and receive advice in advance of taking action.

Supervisors are responsible for promoting open and honest two-way communications, and to be positive and role models who maintain high standards of ethics and show respect and consideration for each of our employees.

The Code is not an employment contract, nor is it able to be an all-inclusive guide to what constitutes lawful and ethical behavior in all situations. It does not supercede any confidentiality, noncompetition or other agreements you may have signed in connection with your employment by the Company. The Code is a statement of Company policy, and the Company reserves the right to provide the final interpretation of the Code and to revise it as in its sole discretion it deems appropriate.

In situations where you believe unlawful or unethical conduct has occurred, even where it is not specifically discussed in this Code, we urge you to report the matter either to your supervisor, the head of personnel, or through the Company´s Ethics Hotline/Whistleblower Program.

B. CORPORATE COMPLIANCE GENERALLY

Failure to comply with the standards contained in the Code can have severe consequences for both the individuals involved and the Company. In addition to potentially damaging the Company´s good name, trade and customer relations and business opportunities, conduct which violates the Code may also violate federal, state and local laws. These violations can subject the individuals involved and the Company to prosecution. Accordingly, violation of these policies could subject an employee to discipline up to and including termination of employment.

If you know of, or reasonably believe there is, a violation of applicable laws, or the Company´s code and policies, you should report that information through the Company´s confidential Ethics Hotline/Whistleblower Program or to your supervisor or the personnel department. A sufficiently detailed description of the factual basis for the allegations should be given in order to allow for an appropriate investigation. Persons who make such reports and persons to whom reports are made should not conduct their own preliminary investigations, unless authorized to do so.

Retaliation against any employee who honestly and in good faith reports a concern to the Company about unethical or illegal conduct will not be tolerated.

C. CONFLICTS OF INTEREST AND SIMILAR MATTERS

Employees are expected to avoid situations that might involve a conflict between their personal interests and the interests of the Company. All employees are required to disclose to their supervisor any situation that may be a conflict of interest. Your participation in any activity which could involve an actual conflict of interest requires the advance approval of the Chief Executive Officer.

The following examples will serve as a guide to activity which should be disclosed to the Company for advance approval or which may be prohibited:

Financial Interests in Other Businesses:
Ownership of a substantial interest in any outside concern that has a present or prospective business relationship with, or is a competitor of, the Company. We generally consider a "substantial interest" to be ownership of more than 1% a public company, or a controlling interest, either alone or in concert with a group, in a private company. Ownership of a "substantial interest", is not necessarily prohibited, but must be disclosed to the Company.
Kickbacks and Bribes: The receipt of any payment, loan, gift or other benefit by an employee from a customer, supplier or other person having business dealings with the Company as an inducement to take actions favorable to such customer, supplier or other person; or the making of any payment, loan, gift or other benefit by an employee to any supplier, customer or other party having business dealings with the Company as an inducement to take actions favorable to the Company are prohibited.
Use of Information: Disclosing, misappropriating, or using Company confidential information for matters unrelated to the proper performance of your assigned duties is prohibited. This particularly includes information concerning the Company´s proprietary technology, inventions, software, any improvements of the foregoing, non-public business plans and strategies, non-public information relating to sales, prospective sales or customers, or financial information. It does not matter whether or not this disclosure or use is motivated by an actual or anticipated personal profit or advantage. Any information about the Company is presumed to be "confidential" until it is made available to the public through the press, periodicals, financial or business publications, or similar sources.
Corporate Opportunities: Using or disclosing to a third party any business opportunity that is discovered through your relationship with the Company without first offering such opportunity to the Company is prohibited.
Acquisition of Property: Acquiring an interest in property or assets whose value may be affected by actions taken by the Company is prohibited.

D. BUSINESS PRACTICES

1. Accounting and Financial Reporting

All funds and other assets and all transactions of the Company must be properly accounted for, documented and promptly recorded in conformity with the Company´s accounting policies to enable the preparation of timely management reports and to meet regulatory reporting requirements. Company business records must always be prepared accurately and reliably and stored properly.

The financial records of the Company must accurately reflect all transactions, including any payment of money, transfer of property or furnishing of services. All transactions must be executed in accordance with the Company´s general or specific authorization.

All employees are expected to give complete cooperation to the Company´s internal accountants and independent outside auditors to enable them to perform their duties.

Any employee having information or knowledge of any hidden fund or asset, any false or artificial entry in the books and records of the Company or any inappropriate payment, or any complaint regarding accounting, internal accounting controls or auditing matters should promptly report the matter through the Company´s confidential Ethics Hotline/Whistleblower Program or to the Company´s Controller or the Chief Executive Officer.

2. Quality and Productivity

Quality remains a hallmark of the Company´s products and services and is a source of competitive advantage. A commitment to quality is a commitment to products and services that meet the highest standards of performance, design, manufacturing specifications and safety, as applicable. Our goal is to meet the requirements, and exceed the expectations, of our customers. Equally important is the Company´s commitment to productivity. In order to maintain our competitiveness, we must ensure that our work processes are as efficient as possible and continuously improving. The environment should foster teamwork. All employees are responsible for maintaining high quality and high productivity.

3. Regulatory Compliance

The Company is committed to conducting its business in compliance with all applicable federal and state statutes and regulations governing the manufacturing and servicing of MRI equipment and the management of MRI facilities, including but not limited to FDA regulations.

4. Safety and Health

The Company and it employees are responsible for maintaining a safe workplace by following safety and health rules and practices. Employees should immediately report accidents, injuries and unsafe equipment/practices or conditions to a supervisor or other designated person. The Company is committed to maintaining its workplaces free from hazards and complying with OSHA requirements.

E. DEALINGS WITH GOVERNMENTS

1. Political Contributions

The Company does not make corporate political contributions. Therefore, no contributions of Company funds will be permitted in connection with any federal, state or local election. This prohibition includes performance of services or providing anything of value by an employee as part of his or her duties for the Company. Certain expenditures of Company funds in connection with proper lobbying activity maybe permissible, but only with the approval of the Chief Executive Officer. Political activity and lobbying outside the United States is similarly restricted.

2. Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from making payments to any foreign official, political party official or candidate for political office in order to influence a business decision.

While certain payments to foreign officials are not necessarily prohibited by the FCPA, it is often difficult to distinguish between legal payments and illegal payments under FCPA rules. Therefore, payments, gifts or entertainment, regardless of amount, to foreign governmental officials and personnel to obtain or keep a business relationship with the Company shall not be allowed without the prior authorization of the Chief Executive Officer.

Requests for special billing or payment procedures which suggest possible violations of law, such as evasion of income tax, currency exchange controls or price profit controls, are contrary to the Company´s policies and are prohibited.

F. GOVERNMENT INVESTIGATIONS

It is the Company´s policy to fully cooperate with government investigations. It is critical, however, that the Company be represented by its own legal counsel during any investigation. If you believe that a government investigation or inquiry is imminent, or any inquiries are made, this information should be communicated immediately to the Chief Executive Officer or other members of management before you provide any answers wherever possible, in order to assure that the Company is properly represented by counsel.

Appropriate handling of government investigations is very important. Violations of any of the laws regulating the conduct of the Company´s business, including antitrust, securities, OSHA, environmental, FDA and tax laws, can result in both civil and criminal penalties.

G. TRADE SECRETS AND CONFIDENTIAL INFORMATION

It is very important for all employees to safeguard the Company´s trade secrets and confidential information. We are also responsible for safeguarding confidential information of other companies that we may have in our possession under agreements with them.

Confidential or proprietary information includes any information that is not generally disclosed to the public and which could cause competitive or other damage to the Company if improperly disclosed.

Each Company employee has been upon his or her employment required to execute a written agreement with the Company regarding confidential information and non-disclosure. Confidential and proprietary information such as its technology, know-how, business, finances, personnel, strategies and performance must not be disclosed to third parties. It must be disseminated exclusively through the appropriate authorized channels.

Examples of confidential information include such things as product specifications, research and development, works-in-progress, software, financial data, sales figures, new product development plans, advertising programs, areas where the Company intends to expand, supplier and customer lists, wage and salary data, capital investment plans, projected earnings, anticipated changes in management or policies of the Company, testing data, designs, artwork, concepts, manufacturing processes or procedures, suppliers´ prices to us, or any plans we may have for improving any of our products. A good operating assumption is that if you haven´t seen it in a press release it´s probably confidential.

Our guidelines for safeguarding the Company´s trade secret and confidential information are as follows:

Treat confidential information on a "need to know" basis within the Company.
If you need to disclose our own trade secrets or confidential information to any person outside the Company, it should be done only in conjunction with an appropriate trade secret or confidentiality agreement and upon prior authorization by the Chief Executive Officer.
The Company occasionally exchanges or receives trade secrets or other confidential information from other companies. These exchanges are only conducted through an exchange of confidentiality agreements between the parties involved. Such information received from other companies should also be kept confidential.

H. FDA REGULATIONS.

The manufacturing and marketing of Fonar´s MRI scanners are regulated by the Food and Drug Administration ("FDA"). These requirements include the Quality System regulation, also known as Good Manufacturing Practices and the Medical Device Reporting regulation. The Quality Assurance regulation covers the design, packaging, labeling and manufacturing of a medical device. The Medical Device Reporting regulation is an adverse event reporting program. Under the Medical Device Reporting regulation, Fonar must review and evaluate all complaints to determine whether the complaint represents an event which may be required to be reported to the FDA. A report is required when a manufacturer becomes aware of information that reasonably suggests that one its products has or may have caused or contributed to a death or serious injury, or has malfunctioned and would likely to cause or contribute to a death or serious injury if the malfunction were to recur. Malfunctions are not reportable if they are not likely to result in a death, serious injury or other significant adverse events.

Employees are expected to comply with Fonar´s procedures for implementing these requirements. If an employee believes that these requirements are not being observed, the employee may report the matter to the Chief Executive Officer or his designee, or utilize the Ethics Hotline/Whistleblower Program.

I. EQUAL EMPLOYMENT OPPORTUNITY POLICY AND INTERNAL COMPLAINT PROCEDURE

Employment Discrimination

he Company is committed to maintaining a workplace free of discrimination on the basis of any protected characteristic, including race, color, national origin, sex, age, religion or disability (hereinafter called "Protected Characteristics"), and will take appropriate measures to prevent and/or stop it.

Sexual and Discriminatory Harassment

The Company will not tolerate harassment based on any Protected Characteristic, and will take appropriate measures to prevent and stop any such harassment.

Harassment is broadly defined as any conduct, whether verbal or physical, that denigrates, insults, or offends a person or group on the basis of a Protected Characteristic where:

(1) submission to such conduct is made an explicit or implicit term or condition of employment;
(2) submission to or rejection of such conduct is used as a basis for any employment decision; or
(3) such conduct has the purpose or effect of interfering with an employee´s work performance or creating an intimidating, offensive or hostile working environment.

1. Sexual Harassment. Sexual harassment in violation of this policy includes, but is not limited to:

Sexually suggestive or vulgar comments or jokes; inappropriate comments about another person´s sexual behavior or body; or insulting or ridiculing an employee because of his or her gender.
Improper or intrusive questions or comments about an employee´s romantic or sexual experiences or preferences; or unwelcome or offensive sexual flirtations, propositions, advances, or requests.
Using, displaying or communicating sexually suggestive or offensive words, objects, pictures, calendars, cartoons, articles, letters, e-mail messages, computer programs or Internet sites.
Making or threatening undesired physical conduct (such as touching, embracing, or pinching) or impeding another´s movements in a deliberate manner.
Offering or providing employment benefits in return for sexual favors; or taking or threatening to take adverse action against an employee because the employee rejects requests for sexual favors.

2. Discriminatory Harassment: Discriminatory harassment in violation of this policy includes, but is not limited to:

Comments or jokes that denigrate, insult, offend, or ridicule based on a Protected Characteristic.
Creating a hostile work environment or otherwise singling out an individual for abusive conduct based on the that individual´s Protected Characteristics.
Using, displaying or communicating words, objects, pictures, calendars, cartoons, articles, letters, e-mail messages, computer programs or Internet sites that denigrate, insult, offend or ridicule based on a Protected Characteristic.

3. Retaliation

The Company will not tolerate retaliation against any employee who seeks to enforce his or her right to work in an environment free of unlawful discrimination or harassment or who makes a good faith report under the Ethics Hotline/Whistleblower Program or Internal Complaint Procedure. Any employee who is aware of any conduct that may violate this policy should promptly report the conduct using the Ethics Hotline/Whistleblower Program or the Internal Complaint Procedure.

4. Reasonable Accommodation

The Company is committed to providing reasonable accommodation to enable qualified employees with disabilities to perform their jobs.

Any employee who believes he or she needs accommodation should bring the matter to the attention of the personnel department. The employee may be required to provide medical documentation establishing the existence of a disability, any job-related restrictions, and the estimated length of time for which accommodation is needed. The Company will keep all medical information confidential to the greatest extent practicable.

5. Internal Complaint Procedure

Any employee who believes that a violation of this policy has occurred, if he or she wishes to use the Internal Complaint Procedure, should immediately inform the personnel department. In place of the Internal Complaint Procedure, the employee may instead utilize the Ethics Hotline/Whistleblower Program. The Ethics Hotline/Whistleblower Program and the procedures for reporting under said program are contained in a separate document distributed to employees describing that program.

Under the Internal Complaint Procedure, all complaints will be referred to the personnel department for investigation, review or other appropriate action. The personnel department then will report the alleged violation to the Chief Executive Officer or his designee. The personnel department or other designee of the Chief Executive Officer will conduct a prompt, thorough investigation or review of the complaint. All facts concerning any complaint (including the identities of the complaining party, the person alleged to have violated this policy, and other witnesses) will be kept confidential from anyone who does not have a legitimate reason to know about them, subject to management´s need to investigate and take appropriate remedial measures.

If the Company concludes that its policies have been violated, it will take prompt corrective action reasonably designed to end the violation and to prevent any further violations from occurring. Such corrective action may include disciplinary action against anyone found to have violated this policy, up to and including termination of employment.

After the Company has completed its investigation or review and determined whether this policy has been violated, it will advise the complaining party of the results of the investigation or review and the corrective action, if any, that is being taken as a result.

J. POLICY ON INSIDER TRADING

1. Introduction

In the course of your relationship with the Company, you may learn confidential and sensitive information concerning the Company, its customers, vendors or other companies with which the Company has relationships or may be negotiating transactions. Some of this information has the potential for affecting the market price of securities issued by the Company or the other companies involved. The federal securities laws impose considerable civil and criminal penalties on persons who improperly obtain or use material, non-public information in connection with a purchase or sale of securities. In addition to civil damages of up to three times the profit gained, an individual may be subject to criminal sanctions, including imprisonment and a criminal fine of up to $1,000,000, for any violation. The SEC and governmental prosecutors vigorously enforce these laws against both individuals and institutions.

2. Explanation of the Law and Company Policy

The federal securities laws and regulations (in particular Rule 10b-5 under the Securities Exchange Act of 1934) make it illegal for a person to buy or sell a security when he or she is aware of material, non-public information concerning the issuer of the security, or the market for the security. The federal securities laws and regulations also prohibit sharing the material, non-public information with a third party (commonly called "tipping"). These prohibitions apply not only to stock, but to any security, including debt securities and options.

"Material, non-public information" is defined broadly and includes any information that is not available to the general public which could be expected to affect a reasonable investor in deciding whether to buy, sell or retain the security. Consequently, any information that could be expected to affect the market price of Company securities, whether positive or negative, should be considered material. Although the following is not a complete list, examples of information that will frequently be regarded as material are: (1) matters involving significant new products or services; (2) matters relating to new financing; (3) gain or loss of a significant customer or vendor; (4) earnings-related information, including preliminary financial results; (5) new internally developed financial projections; (6) a pending or proposed merger, acquisition, joint venture, tender offer or exchange offer; (7) a pending or proposed sale or disposition of a subsidiary, division or significant assets; (8) changes in dividend policies, the declaration of a stock split or the offering of additional securities; (9) impending bankruptcy or financial liquidity problems; (10) changes in senior management; (11) changes in auditors or notification that an audit report can no longer be relied upon; (12) changes in credit ratings; (13) significant litigation; or (14) notifications of alleged violations or investigations by government agencies (for example, the SEC, the Federal Trade Commission or the FDA) or by an exchange or market on which Company securities are listed (e.g. NASDAQ).

Information is considered to be available to the public only when it has been publicly disseminated through appropriate channels (for example, by means of a press release or a filing with the SEC) and enough time has elapsed to permit the investment market to absorb and evaluate the information.

You should note that there will likely be instances where public disclosure does not occur for an extended amount of time, and therefore you may be forced to abstain from trading Company securities for a lengthy period. It is irrelevant whether the transaction may be necessary or justifiable for independent reasons (such as your need to raise money for an emergency) or whether you actually will use the inside information.

During certain periods the Company may establish "black-out" periods during which certain individuals, or even all employees, will be assumed to be in possession of material, non-public information regarding the Company and will be prohibited from trading the Company´s securities. This may include persons working on the preparation a Form 10-Q or a Form 10-K during for a period preceding the filing.

Whether or not the Company prescribes a "black-out" period, the prohibition against insider trading will apply against you when you are in possession of material non-public information.

Even if you leave the Company you will be subject to this Policy and the laws against insider trading until any blackout period applicable to you ends or until any material, non-public, information in your possession has become public or is no longer material.

K. ANTITRUST AND UNFAIR TRADE PRACTICES

Antitrust laws are intended to promote vigorous competition. Most antitrust violations are the result of an "agreement" with a competitor, customer, supplier or other person. The form of the agreement is immaterial and need not be in writing. Oral statements, handshakes, "side letters", "gentlemen´s agreements", and other kinds of conduct from which agreements may be implied may be considered violations. The following guidelines are intended to help us minimize the risk of antitrust violations.

Agreements with Competitors

Certain agreements with competitors are per se violations of U.S. federal antitrust law. That means they are unlawful, regardless of the surrounding facts or circumstances. Per se violations are often prosecuted criminally by the U.S. Department of Justice. In furtherance of this policy no employee should discuss or enter into:

Any agreement with a competitor on prices, bids, discounts, profit margins or promotional terms — whether to fix prices or to fix terms and conditions of sale or otherwise to affect prices or terms and conditions of sale; the only exception to this policy is when the Company sells to or purchases from a competitor. In such situations, it is permissible to discuss or agree upon prices charged to or by the Company relating to transactions with that competitor.
Any agreement with a competitor to limit or restrict production of goods for the purpose of limiting supply and keeping prices high;
Any agreement with a competitor limiting competition on the basis of quality;
Any agreement with a competitor, customer or supplier to "blacklist" or otherwise refuse to deal with a supplier, customer or other third party;
Any agreement not to bid on a given contract opportunity or provide a quote to a particular customer or potential customer; or
Any agreement with a competitor to divide markets through allocation of sales territories, product lines, or classes of customers or suppliers.

Customer Relations

Agreements with distributors or other customers may also create antitrust exposure. Agreements with distributors or customers concerning the prices at which they resell the Company´s product or services or which make the purchase of one of the Company´s products or services contingent on the purchase of another of the Company´s products or services raise antitrust issues and should be discussed with management or counsel.

Mergers and Acquisitions

Mergers and acquisitions may give rise to antitrust concerns, when they involve competitors. Like joint venture discussions, the exchange of information with competitors about a possible merger can be competitively sensitive. Accordingly, no Company employee is authorized to discuss a potential merger or acquisition without the prior review and approval of the Chief Executive Officer.

Information Exchanges

The exchange of price or other non-public, competitively sensitive information may contribute to a finding of unlawful price fixing or market allocation. For this reason, Company policy forbids discussion or communication by the Company´s employees with a competitor concerning past, present or future sales prices, pricing policies, bids, discounts, promotions, terms or conditions of sale, sales volume, customers, territorial markets, costs, inventories, product plans, market surveys or production without the approval of the Chief Executive Officer. Company policy also prohibits the provision to or receipt from a competitor of price lists or strategic plans, without the approval of the Chief Executive Officer. The only exception to the above rule arises where a competitor is also a customer or supplier, in which case price information related to the transaction between the Company and the customer or supplier may be communicated.

Unfair Trade Practices

State and federal law prohibit certain deceptive trade practices. The following guidelines will minimize the risk of violations:

Misrepresentation and Unsubstantiated Claims: No employee shall make material misrepresentations in connection with the sales of Company products. All claims must be capable of substantiation at the time they are made public.
False and Misleading Merchandising Program — Disparagement: No employee shall falsely disparage a competitor´s product. Such statements could involve the Company in expensive lawsuits.
Procurement of Confidential Information: Certain methods of obtaining a competitor´s confidential information are unlawful. Any attempt or fortuitous opportunity to obtain such information should be reported to your supervisor or the Chief Executive Officer.

ACKNOWLEDGMENT FORM

I have received and will read the booklet entitled, "Fonar Corporation, Health Management Corporation of America and Health Diagnostics Management, LLC Code of Conduct and Company Policies".

I realize that failure to observe and comply with all the Code´s provisions will subject me to disciplinary action, up to and including discharge and where a violation of the law is involved, prosecution by governmental authorities.

I understand that this Code is not a contract of employment and that my compliance with this Code does not confer any right to continue in the service of the Company, or in any way affect my right to terminate employment with the Company.

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Employee

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