The Southern California Regional Gamma Knife Center

6 Months Ended

Jun. 30, 2013

The Southern California Regional Gamma Knife Center [Abstract]

The Southern California Regional Gamma Knife Center

Note C – The Southern California Regional Gamma Knife Center

During 2007, the Company managed the formation of the Southern California Regional Gamma Knife Center at San Antonio Community Hospital (“SACH”) in Upland, California.  The Company participates in the ownership and operation of the center through its wholly-owned subsidiary USN Corona, Inc. (“USNC”).  Corona Gamma Knife, LLC (“CGK”) is party to a 14-year agreement with SACH to renovate space in the hospital and install and operate a Leksell PERFEXION gamma knife.  CGK leased the gamma knife from Neuro Partners LLC, which holds the gamma knife equipment.  In addition to returns on its ownership interests, USNC expects to receive fees for management services relating to the facility.

USNC is a 20% owner of Neuro Partners LLC. and owns 39% of CGK.

USNC is a 20% guarantor on Neuro Partners, LLC’s seven-year lease with respect to the gamma knife equipment and certain leasehold improvements at SACH.  The outstanding balance on the lease obligations was $2,606,000 at June 30, 2013.  In 2014, Neuro Partners, LLC has the option to purchase the gamma knife for $490,000.

Construction of the SACH gamma knife center was completed in December 2008 and the first patient was treated in January 2009.  The project has been funded principally by outside investors.  While the Company has led the effort in organizing the business and overseeing the development and operation of the SACH center, its investment to date in the SACH center has been minimal.

Neuro Partners, LLC and CGK are considered to be variable interest entities of the Company.  However, as the Company is not deemed to be the primary beneficiary of Neuro Partners, LLC and CGK, since it does not have the power to direct the activities that most significantly affect their economic performance, certain disclosures are required rather than consolidation.

The Company has not recorded its share of the income (loss) of Neuro Parners LLC and CGK due to the fact that the Company’s share of cumulative losses has exceeded its investment in these entities.

The following tables present the aggregation of summarized financial information of Neuro Partners LLC and CGK:

Neuro Partners LLC and CGK Condensed Income Statement Information

	Six Months Ended
	June 30,
	2013			2012
Patient revenue	$	603,000		$	516,000
Rental income		444,000			444,000
Net sales	$	1,047,000		$	960,000
Net income (loss)	$	(3,000	)	$	27,000
USNC's equity in income (loss) of Neuro Partners LLC and CGK	$	(6,000	)	$	10,000

	Three Months Ended
	June 30,
	2013			2012
Patient revenue	$	245,000		$	269,000
Rental income		222,000			222,000
Net sales	$	467,000		$	491,000
Net income (loss)	$	(66,000	)	$	159,000
USNC's equity in income (loss) of Neuro Partners LLC and CGK	$	(28,000	)	$	32,000

Neuro Partners LLC and CGK Condensed Balance Sheet Information

	June 30,			December 31,
	2013			2012
Current assets	$	547,000		$	468,000
Noncurrent assets	$	1,943,000		$	2,261,000
Total assets	$	2,490,000		$	2,729,000
Current liabilities	$	1,112,000		$	442,000
Noncurrent liabilities	$	1,990,000		$	2,896,000
Equity	$	(612,000	)	$	(609,000	)
Total liabilities and equity	$	2,490,000		$	2,729,000