Obligation Under Capital Lease

12 Months Ended

Dec. 31, 2014

Obligation Under Capital Lease [Abstract]

Obligation Under Capital Lease

Note E - Obligation Under Capital Lease

In March 2009, the Company installed a PERFEXION model gamma knife at the NYU center with a seven year lease from Elekta Capital. The amount financed, covering the cost of the new gamma knife equipment and certain space improvements, was approximately $3,742,000 in total. The monthly payment was $63,000 per month, at an implicit interest rate of approximately 11%. This lease became payable as a result of the damage at the NYU facility in October 2012, and the remainder of the balance due was paid in January 2013.  In 2013, the Company entered into a modification of the above capital lease agreement to finance the new gamma knife installation and related construction costs and the removal costs of the old equipment for approximately $4.7 million to be repaid over 72 months with no payments for the first three months. The remaining removal costs of the old equipment of $525,000 were reclassified to the capital lease obligation at December 31, 2013 since they were paid by Elekta Capital (Note F). The Company entered into another capital lease in 2014 to finance a further $250,000 of installation and construction costs. The balance is to be repaid over 24 months with no payments for the first three months.

The obligations under the capital leases are as follows:

	December 31,
	2014			2013
				(As Restated)
Capital leases - Gamma Knife	$	4,659,000			$	3,474,000
Less current portion		(821,000	)			(265,000	)
	$	3,838,000			$	3,209,000

As further described in Note K, we have restated the Consolidated Financial Statements to record an additional $2,880,000 of construction costs related to our new gamma knife, which were paid by our leasing company during 2013, as well as $69,000 of associated capitalized interest. The $2,949,000 asset has been included in the restated consolidated balance sheet as a capital lease asset under construction. The $3,474,000 liability at December 31, 2013 includes the $525,000 of costs to remove the old equipment, plus the $2,949,000 of additional costs incurred in 2013.

The following is an analysis of the leased assets included in property and equipment:

	2014			2013
				(As Restated)
Capitalized costs	$	4,303,000		$	2,949,000
Less - accumulated depreciation		(461,000	)		-
Capitalized lease equipment and improvements- reported as property and equipment - net	$	3,842,000		$	2,949,000

Depreciation expense for assets under capital leases totaled $461,000 and $0 for the years ended December 31, 2014 and 2013.  During the years ended December 31, 2014 and 2013 respectively, $51,000 and $69,000 of interest was capitalized.

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Future payments as of December 31, 2014 on the equipment leases and loans are as follows:

Year Ending December 31,
2015	$	997,000
2016		1,025,000
2017		938,000
2018		938,000
2019		938,000
Thereafter		391,000
		5,227,000
Less interest		(568,000	)
Present value of net minimum obligation	$	4,659,000