Note E – Boca Oncology Partners

During the quarter ended June 30, 2011, the Company participated in the formation of Boca Oncology Partners, LLC (“BOP”), for the purpose of owning and operating a cancer center in Boca Raton, Florida. In June 2011, Boca Oncology Partners RE, LLC (“BOPRE”), an affiliated entity, purchased a 20% interest in Boca West IMP, LLC (Boca West IMP), owner of a medical office building in West Boca, Florida in which BOP operates. BOP occupies approximately 6,000 square feet of the 32,000 square foot building. The Company’s wholly-owned subsidiary, USNC invested $225,000 initially and had a 22.5% interest in BOP and BOPRE.

In January 2012, an additional investor purchased 50% of the partnership reducing the Company’s ownership to 11.25%. The Company loaned the proceeds of $56,250 back to BOP as a 5 year note at 7% interest. The remaining 88.75% was owned by other outside investors. In June 2012, BOPRE purchased an additional 3.75% of Boca West IMP from another investor bringing its total interest to 23.75%. BOPRE accounts for this investment under the cost method since it does not exercise significant influence over Boca West IMP. Then the members of BOPRE sold 31.5% of their interests in BOPRE to a new investor. The proceeds of $28,000 were loaned to BOP and USNC’s investment in BOPRE was reduced to 15.4%.

Although the Company reduced its investment to 11.25% of BOP and 15.4% of BOPRE, the Company continues to account for these investments under the equity method due to its participation in the management of the administration and accounting functions of BOP and BOPRE. Due to the outstanding loans made to BOP, BOP was considered to be a variable interest entity of the Company. However, as the Company was not deemed to be the primary beneficiary of BOP, since it does not have the power to direct the operating activities that most significantly affect BOP’s economic performance; certain disclosures are required rather than consolidation. The center opened in August 2012.

In February 2014, the Company and other members sold their interests in BOP. Three members provided short-term loans to the Company of $462,000 from their sales proceeds. The Company has accrued $15,000 in interest expense related to these loans.

The Company’s recorded investment in BOPRE is $134,000 at June 30, 2014 and December 31, 2013.

USNC is a 10% guarantor on 50% of the outstanding balance of Boca West IMP’s ten-year mortgage. This mortgage had an original balance of $3,000,000 and is secured by the medical office building in which BOP operates. The outstanding balance on the mortgage is $2,800,000 at June 30, 2014. The Company expects any potential obligations from this guarantee to be reduced by the recovery of the real estate and expects any amounts arising from this guarantee to be insignificant.

USNC was a 14.06% guarantor on BOP’s five-year lease with respect to the oncology equipment at the Boca Raton, Florida cancer center. Upon the sale of BOP, which occurred in 2014, USNC was indemnified by the buyer from any losses arising from the guarantee.

The following tables present the summarized financial information of BOP and BOPRE:

BOP Condensed Income Statement Information

	Six Months Ended
	June 30,
	2014			2013

Patient revenue	$	115,000		$	1,119,000

Net loss	$	(108,000	)	$	(89,000	)

USNC's equity in loss in BOP	$	(12,000	)	$	(11,000	)

	Three Months Ended June 30,
	2013

Patient revenue	$	600,000

Net loss	$	(102,000	)

USNC's equity in loss in BOP	$	(11,000	)

BOP Condensed Balance Sheet Information

	December 31,
	2013

Current assets	$	640,000

Noncurrent assets		1,831,000

Total assets	$	2,471,000

Current liabilities	$	730,000

Noncurrent liabilities		2,126,000

Equity		(385,000	)

Total liabilities and equity	$	2,471,000

BOPRE Condensed Income Statement Information

	Six Months Ended
	June 30,
	2014		2013

Rental Income	$	-	$	-

Net income (loss)	$	-	$	-

USNC's equity in income in BOPRE	$	-	$	-

	Three Months Ended
	June 30,
	2014		2013

Rental Income	$	-	$	-

Net income (loss)	$	-	$	-

USNC's equity in income in BOPRE	$	-	$	-

BOPRE Condensed Balance Sheet Information

	June 30,		December 31,
	2014		2013

Current assets	$	88,000	$	132,000

Noncurrent assets		751,000		707,000

Total assets	$	839,000	$	839,000

Current liabilities	$	-	$	-

Noncurrent liabilities		-		-

Equity		839,000		839,000

Total liabilities and equity	$	839,000	$	839,000