Destruction of Gamma Knife at NYU Medical Center; Replacement and Restoration

6 Months Ended

Jun. 30, 2014

Destruction of Gamma Knife at NYU Medical Center; Replacement and Restoration [Abstract]

Destruction of Gamma Knife at NYU Medical Center; Replacement and Restoration

Note B – Destruction of Gamma Knife at NYU Medical Center; Replacement and Restoration

USN opened its New York gamma knife treatment center in July 1997 on the campus of New York University (“NYU”) Medical Center.  The Company installed a new Leksell gamma knife, the PERFEXION model, at the NYU Medical Center in March 2009 in replacement of the older gamma knife equipment.  In connection with this upgrade, the Company modified its arrangement with NYU to extend the term for 12 years from March 2009.

In October 2012, the Company’s facility at NYU was totally destroyed as a result of flooding from Hurricane Sandy. The gamma knife had to be removed to prevent any cobalt leakage that might occur due to rusting of the equipment. The emergency removal cost was $525,000. The Company paid a lease settlement of the outstanding principal balance only and received from insurance coverage $930,000 above the lease principal payments and emergency removal costs.

The Company has finalized arrangements with NYU regarding the restoration of the gamma knife center and the Company’s long term contract with NYU. The new location, of the Leksell PERFECTION gamma knife in the Tisch Hospital of NYU Langone Medical Center, opened and treated its first patient on April, 29, 2014.

The terms of the agreement with NYU remained the same, terminating at the end of March 2021.  The Company entered into a six year lease in the amount of $4.6 million for the purchase of the replacement equipment and associated leasehold improvements. The first payment of $78,000 is due on September 1, 2014, and the final payment is due on May 1, 2020. The Company entered into a second two year lease in the amount of $250,000 for the cost of the construction required at the relocated site. The first payment of $12,000 is due on November 1, 2014, and the final payment is due on July 1, 2016.