MELVILLE, NEW YORK, October 20, 2005 - FONAR Corporation has announced the its first group purchasing agreement for the Upright MRI with MAGNET Inc., one of the largest group purchasing organizations (GPO) in the country with significant coverage of the northeast region and upper midwest. The long-term agreement calls for collaborative marketing efforts to MAGNET's member organizations, including 775 acute care hospitals, 5,400 physician practices/clinics, and over 100 free-standing imaging centers.

"We are fortunate to have signed this agreement with FONAR," said Derwood Dunbar, president & CEO of MAGNET Inc. "FONAR's Upright MRI technology is absolutely cutting edge and no other imaging company has it. There is a definite need for upright imaging capabilities by medical care providers. However, many practitioners are unaware that FONAR has commercialized this technology. Together with FONAR, MAGNET's regional groups will co-market the upright MRI to our participating healthcare facilities."

Commenting on the MAGNET agreement, Raymond Damadian, president and founder of FONAR, said, "This development is significant for FONAR as well as many patients in need of quality medical care. The endorsement by MAGNET will, for the first time, provide us with unprecedented exposure to an enormous number of health care facilities and medical practitioners. We look forward to teaming with MAGNET, a most respected regional group purchasing organization covering the northeast, Illinois and Ohio, in bringing the benefits of the upright MRI to patients served by its members."
"Also important for FONAR is the strategic significance of our Company's first group purchasing organization agreement for the Upright MRI," continued Dr. Damadian. "As part of our marketing and sales strategy, we intend to pursue other GPO agreements for comprehensive coverage of the United States, while pursuing relationships with distribution partners to further penetrate domestic as well as international markets. We look forward to continued sales growth for FONAR as we progress with our direct sales efforts, create distribution and reseller partnerships, and add GPOs to aid in our marketing initiatives."

As part of the agreement with MAGNET, the GPO's seven regional groups will work with FONAR to identify potential customers for the upright MRI and co-market with FONAR on these accounts. The regional groups are Connecticut Hospital Association Shared Services Program of Connecticut, Hospital Central Services Cooperative of Pennsylvania, PRIME, Inc. of Maryland, Southwest Ohio Health Care Affiliates, Association Management Resources of Illinois, Joint Purchasing Corporation/Creative Source Concepts of New York, and Monmouth-Ocean Health Care Cooperative of New Jersey.

Additional information may be found at www.magnetgroup.com or www.fonar.com.

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