Note C - Investment in Unconsolidated Entities

[1]	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 Regional Hospital (“SARH”) in Upland, California. The Company participates in the ownership and operation of the center through USNC. Corona Gamma Knife, LLC (“CGK”) is party to a 14-year agreement with SARH to renovate space in the hospital and install and operate a Leksell PERFEXION gamma knife. CGK leased the gamma knife from NeuroPartners 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 NeuroPartners LLC. USNC also owned initially 27% of CGK, but increased its ownership to 44% during 2011 to accommodate a member who desired to transfer his interest. Subsequently, in the first quarter of 2012, USNC sold a portion of its ownership to a new member, resulting in a decrease in its ownership in CGK to 39%.

Construction of the SARH 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 SARH center, its investment to date in the SARH center has been minimal.

The Company’s share of cumulative losses associated with its investment in NeuroPartners LLC and CGK has exceeded its investment. Due to the outstanding loans made to NeuroPartners LLC and CGK, NeuroPartners 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 NeuroPartners LLC and CGK, since it does not have the power to direct the operating activities that most significantly affect NeuroPartners LLC’s and CGK’s economic performance; certain disclosures are required rather than consolidation.

During 2014 and 2013, the Company absorbed losses against the total outstanding receivables of $45,000 and $27,000, respectively, from NeuroPartners LLC and CGK due to these losses.

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

Neuro Partners LLC and CGK Combined Condensed Income Statement Information

	Year Ended December 31,
	2014			2013

Patient revenue	$	1,223,000		$	1,040,000

Net income (loss)	$	74,000		$	(180,000	)

USNC's equity in income (loss) of Neuro Partners LLC and CGK	$	14,000		$	(75,000	)

Neuro Partners LLC and CGK Combined Condensed Balance Sheet Information

	December 31,
	2014			2013

Current assets	$	92,000		$	521,000

Noncurrent assets		991,000			1,626,000

Total assets	$	1,083,000		$	2,147,000

Current liabilities	$	829,000		$	1,272,000

Noncurrent liabilities		969,000			1,664,000

Equity		(715,000	)		(789,000	)

Total liabilities and equity	$	1,083,000		$	2,147,000

[2]	Florida Oncology Partners

During the quarter ended September 30, 2010, the Company participated in the formation of Florida Oncology Partners, LLC (“FOP”) and Florida Oncology Partners RE, LLC (“FOPRE”), which operates a cancer center located in West Kendall (Miami), Florida. The center diagnoses and treats patients utilizing a Varian Rapid Arc linear accelerator and a GE CT scanner. USNC originally invested $200,000 for 20% ownership interest in FOP and FOPRE. The remaining 80% is owned by other outside investors. The center opened and treated its first patient in May 2011. During 2013, FOP made several distributions that reduced the Company’s investment significantly. The Company’s investment in FOP and FOPRE is $190,000 and $151,000 at December 31, 2014 and 2013. Amounts due from FOP and FOPRE included in due from related parties total $8,000 and $40,000 at December 31, 2014 and 2013, respectively.

The following tables present the aggregation of summarized financial information of FOP and FOPRE:

FOP and FOPRE Combined Condensed Income Statement Information
	Year Ended December 31,
	2014		2013

Patient revenue	$	2,631,000	$	2,836,000

Net income	$	197,000	$	281,000

USNC's equity in income of FOP and FOPRE	$	39,000	$	56,000

FOP and FOPRE Combined Condensed Balance Sheet Information

	December 31,
	2014		2013

Current assets	$	606,000	$	653,000

Noncurrent assets		5,070,000		5,795,000

Total assets	$	5,676,000	$	6,448,000

Current liabilities	$	858,000	$	893,000

Noncurrent liabilities		3,947,000		4,881,000

Equity		871,000		674,000

Total liabilities and equity	$	5,676,000	$	6,448,000

[3]	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 did 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.

Since June 2012, the Company’s share of cumulative losses associated with its investment in BOP has exceeded its investment. During 2013, the Company absorbed losses against $57,000 of outstanding receivables from BOP. Amounts due from BOP and BOPRE included in due from related parties total $0 and $200,000 at December 31, 2014 and 2013 respectively. Amounts due to BOPRE included in due to related parties total $12,000 and $0 at December 31, 2014 and 2013 respectively.

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

In February 2014, the Company and other members sold their interests in BOP, resulting in a gain of $204,000. Three members provided short-term loans to the Company of $462,000 from their sales proceeds. The Company had accrued $26,000 in interest expense related to these loans. During the year ended December 31, 2014, the Company repaid all of the loan balance and related interest.

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

BOP Condensed Income Statement Information

	Years Ended December 31,
	2014			2013

Patient revenue	$	115,000		$	2,386,000

Net loss	$	(108,000	)	$	(206,000	)

USNC's equity in loss in BOP	$	(12,000	)	$	(23,000	)

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

	Years Ended December 31,
	2014			2013

Rental Income	$	-		$	-

Net loss	$	(4,000	)	$	(1,000	)

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

BOPRE Condensed Balance Sheet Information

	December 31,
	2014			2013

Current assets	$	61,000		$	132,000

Noncurrent assets		786,000			707,000

Total assets	$	847,000		$	839,000

Current liabilities	$	-		$	-

Noncurrent liabilities		-			-

Equity		847,000			839,000

Total liabilities and equity	$	847,000		$	839,000

[4]	Broward Oncology Partners

In early 2013, the Company formed Broward Oncology Partners, LLC (“BROP”) with other outside investors. The Company invested $50,000 for a 12.5% ownership interest in BROP. BROP operates a radiation oncology center in Fort Lauderdale, Florida under a lease from Tenet Health Services. BROP began operations in February 2013. In May 2014, the Company and other members sold their interests in BROP, resulting in a gain of $33,000.

The following table represents the summarized financial information for BROP:

Broward Oncology Partners, LLC Condensed Income Statement Information

	Year Ended December 31,
	2014		2013

Patient revenue	$	505,000	$	522,000


Net income (loss)	$	255,000	$	(120,000	)

USNC's equity in income (loss) of Broward Oncology Partners	$	32,000	$	(15,000	)


Broward Oncology Partners, LLC Condensed Balance Sheet Information

			December 31, 2013

Current assets			$	360,000

Noncurrent assets				239,000

Total assets			$	599,000

Current liabilities			$	319,000

Equity				280,000

Total liabilities and equity			$	599,000