10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT

For the transition period from                     to                     .

Commission file number:  0-15586

U.S. Neurosurgical Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	47-5370333
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2400 Research Blvd, Suite 325, Rockville, Maryland 20850

(Address of principal executive offices)

(301) 208-8998

(Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (do not check if a smaller reporting company)	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No ☒

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of June 30, 2017 was 7,792,185.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1.  Financial Statements	3
Item 2.  Management Discussion and Analysis of Financial Condition and Results of Operations..	17
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.	21
Item 4.  Controls and Procedures	21
PART II - OTHER INFORMATION	24
Item 1.  Legal Proceedings	24
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.  Defaults Upon Senior Securities	24
Item 4.  Submission of Matters to a Vote of Security Holders	24
Item 5.  Other Information	24
Item 6.  Exhibits	24
SIGNATURES	25

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

U.S. NEUROSURGICAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2017		December 31, 2016
	(UNAUDITED)
Current assets:
Cash and cash equivalents	$	3,674,000	$	1,962,000
Accounts receivable		237,000		891,000
Due from related parties		28,000		7,000
Elekta refund due		12,000		12,000
Other current assets		96,000		71,000
Total current assets		4,047,000		2,943,000
Other assets:
Notes receivable		38,000		38,000
Investments in unconsolidated entities		397,000		447,000
Total other assets		435,000		485,000
Property and equipment:
Gamma knife (net of accumulated depreciation of $2,223,000 in 2017 and $1,808,000 in 2016)		3,136,000		3,484,000
Leasehold improvements (net of accumulated amortization of $958,000 in 2017 and $805,000 in 2016)		1,179,000		1,332,000
Total property and equipment		4,315,000		4,816,000
TOTAL ASSETS	$	8,797,000	$	8,244,000
LIABILITIES
Current liabilities:
Obligations under capital lease - current portion	$	956,000	$	936,000
Deferred tax liability- current portion		-		245,000
Accounts payable and accrued expenses		189,000		86,000
Deferred revenue		582,000		257,000
Income taxes payable		413,000		-
Total current liabilities		2,140,000		1,524,000
Obligations under capital lease - net of current portion		2,208,000		2,733,000
Deferred tax liability - net of current portion		661,000		591,000
Guarantee liability		11,000		11,000
Asset retirement obligations		504,000		491,000
Total liabilities		5,524,000		5,350,000
STOCKHOLDERS’ EQUITY
Common stock - par value $.01; 25,000,000 shares authorized; 7,792,185 shares issued and outstanding  at June 30, 2017 and December 31, 2016.		78,000		78,000
Additional paid-in capital		3,100,000		3,100,000
Retained earnings (accumulated deficit)		95,000		(284,000	)
Total stockholders' equity		3,273,000		2,894,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,797,000	$	8,244,000

The accompanying notes to condensed consolidated financial statements are an integral part hereof

3

U.S. NEUROSURGICAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,
	2017			2016
Revenue	$	840,000		$	775,000
Costs and expenses:
Patient expenses		356,000			288,000
Selling, general and administrative		354,000			351,000
Total		710,000			639,000
Operating income		130,000			136,000
Interest expense		(36,000	)		(39,000	)
Other income		-			2,000
Income from investments in unconsolidated entities		129,000			183,000
Income before income taxes		223,000			282,000
Provision for income tax expense		(87,000	)		(105,000	)
Net income	$	136,000		$	177,000
Basic and diluted net income per share	$	0.02		$	0.02
Weighted average common shares outstanding		7,792,185			7,797,185

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

4

U.S. NEUROSURGICAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Six Months Ended June 30,
	2017			2016
Revenue	$	1,824,000		$	1,607,000
Costs and expenses:
Patient expenses		724,000			612,000
Selling, general and administrative		649,000			661,000
Total		1,373,000			1,273,000
Operating income		451,000			334,000
Interest expense		(77,000	)		(80,000	)
Other income		-			6,000
Income from investments in unconsolidated entities		241,000			338,000
Income before income taxes		615,000			598,000
Provision for income tax expense		(236,000	)		(223,000	)
Net income	$	379,000		$	375,000
Basic and diluted net income per share	$	0.05		$	0.05
Weighted average common shares outstanding		7,792,185			7,797,185

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

5

U.S. NEUROSURGICAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	379,000		$	375,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		568,000			471,000
Income from investment in unconsolidated entities, net		(241,000	)		(338,000	)
Distributed earnings from unconsolidated entities		315,000			306,000
Accretion of asset retirement obligations		13,000			12,000
Change in guarantee liability		-			(4,000	)
Deferred income taxes		(175,000	)		131,000
Changes in:
Accounts receivable		654,000			478,000
Other current assets		(25,000	)		18,000
Accounts payable and accrued expenses		64,000			(28,000	)
Deferred revenue		325,000			278,000
Income taxes payable		413,000			92,000
Net cash provided by operating activities		2,290,000			1,791,000
Cash flows from investing activities:
Repayment of amounts advanced to unconsolidated entities		28,000			20,000
Captial contributions to unconsolidated entities		(10,000	)		-
Amounts advanced to unconsolidated entities		(42,000	)		-
Purchase of gamma knife equipment		(28,000	)		(248,000	)
(Increase) decrease in due from related parties		(21,000	)		21,000
Net cash used in investing activities		(73,000	)		(207,000	)
Cash flows from financing activities:
Repayment of capital lease obligations		(505,000	)		(459,000	)
Net cash used in financing activities		(505,000	)		(459,000	)
Net change in cash and cash equivalents		1,712,000			1,125,000
Cash and cash equivalents - beginning of year		1,962,000			1,068,000
Cash and cash equivalents - end of year	$	3,674,000		$	2,193,000
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	77,000		$	80,000
Supplemental disclosure of of noncash investing and financing activities:
Purchase of gamma knife equipment included in accounts payable	$	39,000		$	-

The accompanying notes to condensed consolidated financial statements are an integral part hereof

6

U.S. NEUROSURGICAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A - Basis of Preparation

The accompanying condensed consolidated financial statements of U.S. Neurosurgical Holdings, Inc. and subsidiaries (the “Company”) as of June 30, 2017 and 2016, are unaudited.  However, in the opinion of management, such statements include all adjustments necessary for a fair statement of the information presented therein.  The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date appearing in the Company's Annual Report on Form 10-K.

Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying condensed consolidated financial statements and notes do not include all disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.  Accordingly, these statements should be read in conjunction with the Company's most recent annual financial statements.

Consolidated results of operations for interim periods are not necessarily indicative of those to be achieved for full fiscal years.

In November 2015, the Financial Accounting Standards Board ("FASB") issued accounting standards update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. Previously, entities were required to separately present deferred tax assets and deferred tax liabilities as current and noncurrent in a classified balance sheet. The ASU was effective in the first quarter of 2017. We adopted the guidance related to balance sheet classification on a prospective basis. Prior periods were not retrospectively adjusted.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which in part requires entities to assess whether distributions of cash from unconsolidated entities represent a return on the investment or a return of the investment, to appropriately classify the distributions in the statement of cash flows. We have made an accounting policy election to use the cumulative earnings approach to determine that the distributions were returns on the investment and accordingly classified them as operating cash flows. Under the cumulative earnings approach, distributions received from the unconsolidated entity are presumed to be a return on the investment unless the distributions received by the investor, less distributions received in prior periods that were deemed to be returns of investment, exceed cumulative equity in earnings recognized by the investor. Although the ASU is effective in the first quarter of 2018, we have early adopted the guidance in the first quarter of 2017 due to the ongoing applicability of the new standard to the Company’s financial statements and have retrospectively adjusted our 2016 cash flow statement to conform to the 2017 presentation. This adjustment results in an increase in net cash provided by operating activitites, and a decrease in net cash provided by investing activities, of $306,000, compared with the amounts previously reported for the six months ended June 30, 2016.

7

Note B – Gamma Knife at NYU Medical Center

U.S. NeuroSurgical, Inc. (“USN”), a wholly-owned subsidiary of U.S. Neurosurgical Holdings, Inc., opened its New York gamma knife treatment center in July 1997 on the campus of New York University (“NYU”) Medical Center.  USN 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, USN modified its arrangement with NYU to extend the term for 12 years from March 2009.

In October 2012, USN’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 removal cost was $525,000. USN paid a lease settlement of the outstanding principal balance only and received from insurance coverage $930,000 above the lease principal payments and removal costs.

USN finalized arrangements with NYU regarding the restored gamma knife center and USN’s long term contract with NYU in early 2014. USN’s new facility, with the Leksell PERFEXION gamma knife, is located in the Tisch Hospital of NYU Langone Medical Center. The facility reopened and began receiving patients at the end of April 2014.

The Company entered into a six year lease in the amount of $4.7 million for the purchase of the replacement equipment and associated leasehold improvements. The first payment of $78,000 was made on September 1, 2014, including $18,000 of interest, 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 was made on November 1, 2014, and the final payment was made in July 2016.

In April 2016 USN entered into an agreement with Elekta for the installation of new ICON imaging technology for the NYU Gamma Knife equipment with a total cost, including sales taxes, of approximately $816,000. This ICON technology was installed during the month of July 2016 and the gamma knife center reopened on August 5, 2016. The Company has obtained lease financing of approximately $900,000 at an interest rate of approximately 4.45% to finance the acquisition of the ICON technology and associated installation costs. The monthly lease payment is approximately $20,500 which commenced October 2016, with the final payment scheduled for September 2020. A monthly maintenance agreement will commence a year after the installation date and is estimated to be about $6,000 per month.

In July 2016, USN entered into an agreement with NYU relating to the newly installed ICON imaging technology, increasing the monthly payment due to the Company by $30,000 for the remaining term of the agreement. A final payment of $17,000 will be made for the partial month of operations at the end of the term in March 2021.

The agreement with NYU continues in effect through the end of March 2021.  The Company is responsible for the maintenance and insurance for the gamma knife equipment at the NYU facility and is reimbursed for use of the gamma knife based on a fee per procedure performed with the equipment.  NYU provides the medical and technical staff to operate the facility.  At the end of the contract term, costs associated with closing and restoring the NYU facility to its original condition are the responsibility of USN.

8

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 Regional Hospital (“SARH”) 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 SARH to renovate space in the hospital and install and operate a Leksell PERFEXION gamma knife.  CGK leases 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 and owns 39% of CGK.

USNC was a 20% guarantor on NeuroPartners LLC’s seven-year lease with respect to the gamma knife equipment and certain leasehold improvements at SARH.  In February 2016, NeuroPartners LLC negotiated a new five- year lease to fund the reloading of cobalt and related construction services.  The new lease of $1,663,000 includes a balance of $668,000 from the prior lease obligations.  This new lease will be paid over 60 months.  The first payment of $31,000 was paid on April 1, 2016 and the final payment will be due on March 1, 2021.  The Company continues to be a 20% guarantor on the new lease and expects any potential obligations from this guarantee would be reduced by the recovery of the related collateral, and  thus expects any exposure from this guarantee to be remote.

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, these entities are not consolidated, but certain disclosures are provided herein.

At June 30, 2017, the Company has $42,000 of remaining advances recorded to NeuroPartners LLC and CGK. For the three months ended June 30, 2017, the Company’s equity in earnings of NeuroPartners LLC and CGK was $31,000, but was not recorded due to prior losses.

9

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

NeuroPartners, LLC and CGK Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Patient Revenue	$	528,000	$	516,000
Net income	$	224,000	$	176,000
USNC's equity in earnings of NeuroPartners, LLC and CGK	$	69,000	$	9,000

	Three Months Ended June 30,
	2017		2016
Patient Revenue	$	252,000	$	211,000
Net income	$	100,000	$	50,000
USNC's equity in earnings (loss) of NeuroPartners, LLC and CGK	$	31,000	$	(9,000	)

NeuroPartners, LLC and CGK Condensed Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	243,000		$	93,000
Noncurrent assets		740,000			876,000
Total assets	$	983,000		$	969,000
Current liabilities	$	420,000		$	449,000
Noncurrent liabilities		931,000			1,121,000
Deficit		(368,000	)		(601,000	)
Total liabilities and equity	$	983,000		$	969,000

10

Note D – 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% was owned by other outside investors. In January of 2015, one of the investors relinquished its ownership interest in both FOP and FOPRE, and that interest was distributed among the remaining members in relationship to their percentages owned. This distribution resulted in an increase of ownership interest for the Company of 4% in each of FOP and FOPRE.  As of January 1, 2015, the Company holds a 24% ownership in both FOP and FOPRE.

The center opened and treated its first patient in May 2011. During 2012 and 2013, FOP made several distributions that reduced the Company’s investment significantly.  The Company’s recorded investment in FOP and FOPRE is $243,000 and $303,000 at June 30, 2017 and December 31, 2016, respectively. Amounts due from FOP and FOPRE included in due from related parties total $22,000 and $4,000 June 30, 2017 and December 31, 2016, respectively.

During 2011, Florida Oncology Partners, LLC entered into a seven year capital lease with Key Bank for approximately $5,800,000.  Under the terms of the capital lease, USN agreed to guarantee a maximum of $1,433,000, approximately 25% of the original lease obligation in the event of default.  USN is a guarantor jointly with most of the other members of FOP (except USNC, which is not a named guarantor).  The outstanding balance on the lease obligation was $1,010,000 at June 30, 2017.  The Company expects any potential liability from this guarantee to be reduced by the recoveries of the respective collateral, but has recorded a liability of $11,000 associated with this guarantee at June 30, 2017.

In June 2012, FOPRE financed the purchase of the building that is occupied by FOP.  The amount of the loan was $1,534,000 and was to be paid at a monthly rate of approximately $8,500 for 120 months with the final payment due on June 15, 2022.  In December 2015, FOPRE sold the building, for a gain on sale of $577,000.  The Company’s share of the gain was $139,000.  The related mortgage was repaid upon closing of the sale.

In December 2015, FOP entered into an agreement with 21^st Century Oncology for the sale of FOP’s Varian Rapid Arc linear accelerator and other medical equipment at the FOP location.  21^st Century Oncology paid FOP $1,000,000 as a down payment for the equipment and from January 2016 until May 2017 made monthly payments of $172,000 for the equipment and all monthly payments due under the capital lease. As of this date, 21^st Century Oncology has not yet satisfied all of the terms of the rental agreement and for the months of May, June, and July of 2016 it paid an additional $30,000 in accelerated payments, and has paid $50,000 in accelerated payments each month from August 2016 until May 2017. These accelerated payments have been recorded as unearned revenue by FOP. In late May 2017, 21^st Century Oncology filed for Chapter 11 bankruptcy protection and FOP is not a secured creditor. As a result, FOP did not receive the agreed additional rental payments beyond the monthly payment for the capital lease in  June 2017. FOP will continue to monitor the impact of 21^st Century’s bankruptcy, but expects to recognize the remaining unearned revenue at May 31, 2017 over the final 12 months of the equipment lease.

11

In June 2017, FOP entered into an agreement with a third party owner of radiation therapy center located in Miami, Florida, whereby FOP will take over the operation of the center effective September 1. 2017 for a ten year initial term, and up to three additional terms of five years each. The Company is currently evaluating the accounting implications of this agreement.

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

FOP and FOPRE Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Rental Income	$	1,804,000	$	2,087,000
Net income	$	1,033,000	$	1,314,000
USNC's equity in earnings of FOP and FOPRE	$	250,000	$	318,000

	Three Months Ended June 30,
	2017		2016
Rental Income	$	791,000	$	1,073,000
Net income	$	414,000	$	680,000
USNC's equity in earnings of FOP and FOPRE	$	100,000	$	163,000

FOP and FOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	647,000	$	630,000
Noncurrent assets		1,436,000		1,798,000
Total assets	$	2,083,000	$	2,428,000
Current liabilities	$	1,274,000	$	1,411,000
Noncurrent liabilities		-		469,000
Equity		809,000		548,000
Total liabilities and equity	$	2,083,000	$	2,428,000

12

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 whichBOP 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%.  The center opened in August 2012.  In February 2014, the Company and other members sold their interests in BOP.

During the year ended December 31, 2016 and the six months ended June 30, 2017, several investors relinquished part of their ownership interest in BOPRE, and those interests were distributed among the remaining investors in relationship to their percentages owned. As a result, the Company now holds a 20.65% ownership interest in BOPRE.

The Company’s recorded investment in BOPRE is $154,000 and $144,000 at June 30, 2017 and December 31, 2016, respectively.

USNC is a 10% guarantor of 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 $2,473,000 at June 30, 2017.  Any liability from this guarantee would be mitigated by the recovery from the underlying real estate, and the Company expects its potential exposure from this guarantee to be remote.

13

The following tables present the summarized financial information of BOPRE:

BOPRE Condensed Income Statement Information

	Three and Six Months Ended June 30,
	2017		2016
Rental Income	$	-	$	-
Net loss	$	-	$	(1,000	)
USNC's equity in earnings of BOPRE	$	-	$	-

BOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	8,000	$	10,000
Noncurrent assets		920,000		872,000
Total assets	$	928,000	$	882,000
Current liabilities	$	-	$	-
Noncurrent liabilities		-		-
Equity		928,000		882,000
Total liabilities and equity	$	928,000	$	882,000

14

Note F - Medical Oncology Partners

In April 2015 Medical Oncology Partners, LLC (“MOP”), was formed in partnership with local physicians and other investors. MOP was established to acquire a 100% equity interest in United Oncology Medical Associates of FL, LLC (“UOMA”). USNC was not a member of MOP at the time of formation as it was not able to participate due to the fact that USNC was not a physician. Nevertheless, USNC wished to eventually obtain an equity interest in MOP and loaned Dr. Jaime Lozano, the principal investor in MOP and a co-investor in FOP, $173,000.  Dr. Lozano used these funds, along with an equal amount of his own funds (a total of $345,000), to purchase a 76.67% interest in MOP. Other investors paid a further $105,000 for the remaining equity in MOP. MOP used the $450,000 of financing to acquire a 100% equity interest in UOMA.  An application was filed for a waiver to allow USNC to hold an equity interest notwithstanding the physician requirement and on December 22, 2016, USNC was cleared to become a part owner of MOP. Dr. Lozano agreed to exchange half of his membership interest to USNC in settlement of the note to USNC.  USNC and Dr. Lozano also agreed to share equally in providing a 5% equity interest in MOP to an additional investor as a consulting fee for services rendered in the administration of MOP and UOMA. At December 22, 2016 USNC owned 35.83% of MOP with an initial carrying value of $161,000. The Company has recorded its share of losses of $12,000 for the period from December 22, 2016 to December 31, 2016, against its investment which resulted in a reduction of its equity investment to $149,000.

Due to increasing costs, continued net losses since April 2015, and reliance on related party and other debt for operating cash flows, the fair value of UOMA is less than its carrying amount. The Company tested its investment for impairment at December 31, 2016 and determined that the investment was impaired and an impairment loss was recorded against the entire equity balance in MOP, as well as loans from USN and USNC to MOP and UOMA.

15

The following table present the summarized financial information of MOP:

MOP Condensed Consolidated Income Statement Information

	Six Months Ended June 30, 217
Patient revenue	$	539,000
Net loss	$	(126,000	)
USNC's equity in loss in MOP	$	(45,000	)

	Three Months Ended June 30, 217
Patient revenue	$	309,000
Net loss	$	(81,000	)
USNC's equity in loss in MOP	$	(29,000	)

MOP Condensed Consolidated Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	14,000		$	15,000
Noncurrent assets		65,000			52,000
Total assets	$	79,000		$	67,000
Current liabilities	$	478,000		$	305,000
Noncurrent liabilities		-			-
Deficit		(399,000	)		(238,000	)
Total liabilities and equity	$	79,000		$	67,000

Note G – Income Taxes

The Company’s income tax rate, which includes federal and state income taxes, was approximately 38%, for the six months ended June 30, 2017. The Company recorded a tax charge of $236,000 for the six months ended June 30, 2017.

16

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations.

Critical Accounting Policies

The condensed consolidated financial statements of U.S. Neurosurgical Holdings, Inc. and subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America.  As such, some accounting policies have a significant impact on amounts reported in the condensed consolidated financial statements.  A summary of those significant accounting policies can be found in Note B to the Consolidated Financial Statements, in our 2016 Annual Report on Form 10-K.  In particular, judgment is used in areas such as determining and assessing possible asset impairments and determination of the asset retirement obligation.

In November 2015, the Financial Accounting Standards Board ("FASB") issued accounting standards update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. Previously, entities were required to separately present deferred tax assets and deferred tax liabilities as current and noncurrent in a classified balance sheet. The ASU was effective in the first quarter of 2017. We adopted the guidance related to balance sheet classification on a prospective basis. Prior periods were not retrospectively adjusted.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which in part requires entities to assess whether distributions of cash from unconsolidated entities represent a return on the investment or a return of the investment, to appropriately classify the distributions in the statement of cash flows. We have made an accounting policy election to use the cumulative earnings approach to determine that the distributions were returns on the investment and accordingly classified them as operating cash flows. Under the cumulative earnings approach, distributions received from the unconsolidated entity are presumed to be a return on the investment unless the distributions received by the investor, less distributions received in prior periods that were deemed to be returns of investment, exceed cumulative equity in earnings recognized by the investor. Although the ASU is effective in the first quarter of 2018, we have early adopted the guidance in the first quarter of 2017 due to the ongoing applicability of the new standard to the Company’s financial statements and have retrospectively adjusted our 2016 cash flow statement to conform to the 2017 presentation. This adjustment results in an increase in net cash provided by operating activitites, and a decrease in net cash provided by investing activities, of $306,000, compared with the amounts previously reported for the six months ended June 30, 2016.

The following discussion and analysis provides information which the Company’s management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere herein.

17

Results of Operation

Three months ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Patient revenue for the three months ended June 30, 2017 was $840,000, a increase of 8% compared to $775,000 the previous year. This increase in revenue was largely due to an increased number of procedures at NYU. Patient expenses for the three months ended June 30, 2017 were $356,000, an increase of 24% as compared to the $288,000 reported for the comparable period in the previous year. This increase in patient expenses was primarily due to higher depreciation expense following the installation of the ICON equipment in August 2016.

Selling, general and administrative expense of $354,000 for the second quarter of 2017 was similar to the $351,000 incurred during the comparable period in 2016.

The Company incurred $36,000 of interest expense in the second quarter of 2017 related to the capital lease. Interest expense for the same period in 2016 was $39,000.

During the three months ended June 30, 2017, the Company recognized an income tax charge of $87,000 compared to $105,000 for the same period the prior year. The tax expense is due to the Company’s successful operations at NYU during 2017, partly offset by lower income in unconsolidated entities.

For the three months ended June 30, 2017, the Company reported a net income of $136,000 as compared to a net income of $177,000 for the same period a year earlier. The decrease in net income is primarily due to lower income from investments in unconsolidated entities.

Six months ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Patient revenue for the six months ended June 30, 2017 was $1,824,000, an increase of 14% compared to $1,607,000 the previous year. This increase in revenue was largely due to an increased number of procedures at NYU. Patient expenses for the six months ended June 30, 2017 were  $724,000, an increase of 18% as compared to $612,000 reported for the comparable period in the previous year. This increase in patient expenses was largely due to increased depreciation due to the new ICON equipment and expenses related to the gamma knife equipment.

Selling, general and administrative expense of $649,000 for the first six months of 2017 was 2% lower than the $661,000 incurred during the comparable period in 2016.  The decrease in SG&A expenses was mostly due to lower consulting fees, travel fees, and accounting fees.

The Company incurred $77,000 of interest expense in the first half of 2017 related to the capital lease. Interest expense for the same period in 2016 was $80,000.

During the six months ended June 30, 2017, the Company recognized an income tax charge of $236,000 compared to $223,000 for the ame period a year earlier.

18

For the six months ended June 30, 2017, the Company reported a net income of $379,000 as compared to a net income of $375,000 for the same period a year earlier.

Liquidity and Capital Resources

At June 30, 2017, the Company had working capital of $1,907,000 as compared to $1,419,000 at December 31, 2016.  This increase was primarily due to the successful operations at NYU. Cash and cash equivalents at June 30, 2017 were $3,674,000 as compared to $1,962,000 at December 31, 2016.

Net cash provided by operating activities for the six months ended June 30, 2017 was $2,290,000 as compared to $1,791,000 in the same period a year earlier. The increase was primarily due to cash inflows from the operation of the new gamma knife center, net of working capital requirements. Accounts receivable decreased by $654,000 for the six months ended June 30, 2017 as compared to a decrease of $478,000 the previous year.

With respect to financing activities, the Company paid $505,000 towards its capital lease obligations during the first six months of 2017, compared with $459,000 in 2016.

USN entered into a six year lease in the amount of $4.7 million for the purchase of the replacement Leksell PERFEXION gamma knife at the NYU Medical Center. The first payment of $78,000 was made on September 1, 2014, and the final payment is due on May 1, 2020.

In April 2016 USN entered into an agreement with Elekta for the installation of new ICON imaging technology for the NYU Gamma Knife equipment with a total cost, including sales taxes, of approximately $816,000. This ICON technology was installed during the month of July 2016 and the gamma knife center reopened on August 5, 2016. The Company has obtained lease financing of approximately $900,000 at an interest rate of approximately 4.45% to finance the acquisition of the ICON technology and associated installation costs. The monthly lease payment is approximately $20,500 which commenced October 2016, with the final payment scheduled for September 2020. A monthly maintenance agreement will commence August 2017, and is estimated to be about $6,000 per month.

In July 2016, USN entered into an agreement with NYU relating to the newly installed ICON imaging technology, increasing the monthly payment due to the Company by $30,000 for the remaining term of the agreement. A final payment of $17,000 will be made for the partial month of operations at the end of the term in March 2021.

The agreement with NYU continues in effect through the end of March 2021.  The Company is responsible for the maintenance and insurance for the gamma knife equipment at the NYU facility and is reimbursed for use of the gamma knife based on a fee per procedure performed with the equipment.  NYU provides the medical and technical staff to operate the facility.  At the end of the contract term, costs associated with closing and restoring the NYU facility to its original condition are the responsibility of USN.

19

Risk Factors

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  The following factors, as well as the factors listed under the caption “Risk Factors” in Annual Report on our Form 10-K for the fiscal year ended December 31, 2016, have affected or could affect our actual results and could cause such results to differ materially from those expressed in any forward-looking statements made by us.  Investors should carefully consider these risks and speculative factors inherent in and affecting our business and an investment in our common stock.

Reliance on Business of the New York University Gamma Knife Center; Recent Destruction of Equipment and Discontinuation of Business at NYU.  While it is the Company’s objective to expand activities to additional cancer centers that rely on a broad range of diagnostic and radiation treatments, the Company has relied on the NYU gamma knife for substantially all of its revenue.  In recent periods, services provided at NYU have represented over 90% of the Company’s revenues.  Unless and until the Company is successful in building its activities at other centers and at new locations, disruptions at NYU could have a materially adverse effect on the Company.

Availability of Working Capital.  To date, we have earned sufficient income from operations to fund periodic operating losses and support efforts to pursue new gamma knife or other types of cancer treatment centers.

Disclosure Regarding Forward Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward looking information so that investors can better understand a company's future prospects and make informed investment decisions.  This document contains such "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues and cash flow.  Words such as "anticipates," "estimates," "expects," "projects," "targets," "intends," "plans," "believes," "will be," "will continue," "will likely result," and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify such forward-looking statements.  Those forward-looking statements are based on management's present expectations about future events.  As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of such changes, new information, future events or otherwise.

The Company operates in a highly competitive and rapidly changing environment and in businesses that are dependent on our ability to: achieve profitability; increase revenues; sustain our current level of operations; maintain satisfactory relations with business partners; attract and retain key personnel; maintain and expand our strategic alliances; and protect our intellectual property.  The Company's actual results could differ materially from management's expectations because of changes in such factors.  New risk factors can arise and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

20

Investors should also be aware that while the Company might, from time to time, communicate with securities analysts, it is against the Company's policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, investors should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others.  Thus, to the extent that reports issued by securities analysts or others contain any projections, forecasts or opinions, such reports are not the responsibility of the Company.

In addition, the Company’s overall financial strategy, including growth in operations, maintaining financial ratios and strengthening the balance sheet, could be adversely affected by increased interest rates, construction delays or other transactions, economic slowdowns and changes in the Company’s plans, strategies and intentions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.  Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  We do realize that we are a very small company and as a small company with only the officers and directors participating in the day to day management, with the ability to override controls, each officer and director has multiple positions and responsibilities that would normally be distributed among several employees in larger organizations with adequate segregation of duties to ensure the appropriate checks and balances.  Because the Company does not currently have a separate chief financial officer, the Chief Executive Officer performs these functions with the support of one of the Company’s outside directors who assists in the reporting and disclosure process (the “Lead Director”).

21

Our management evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report.  Based upon that evaluation the Company’s Chief Executive Officer concluded that the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this report for the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, due to the material weakness in internal control over financial reporting described below.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.  The Company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

22

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2017, A material weakness is a control deficiency, or a combination of control deficiencies in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. In connection with the assessment described above, management identified the following material weakness as of June 30, 2017: the Company did not maintain sufficient qualified personnel with the appropriate level of knowledge, experience and training in the application of accounting principles generally accepted in the United States of America and in internal controls over financial reporting commensurate with its financial reporting requirements. Specifically, effective controls were not designed and in place to ensure that the Company maintained, or had access to, appropriate resources with adequate experience and expertise in the area of financial reporting for transactions such as investments in unconsolidated entities and income taxes. The Company is in the process of developing efficient approaches to remediate this material weakness.  To do this in a cost-effective manner, considering the current extent of the Company’s operations, management is making arrangements with consultants and advisors to assist on an as-needed basis.

Changes in Internal Control over Financial Reporting

While there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2017, management is in the process of developing plans to remediate the material weakness identified above.

23

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

31.1         Certification of President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1         Certification of President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101          Interactive Data Files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 in XBRL (eXtensible Business Reporting Language).  Pursuant to Regulation 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	U.S. NeuroSurgical Holdings, Inc. (Registrant)
Date: August 14, 2017	By:	/s/ Alan Gold
		Alan Gold
		Director, President and Chief Executive Officer and
		Principal Financial Officer of the Registrant

25

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER)

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan Gold, certify that:

1. I have reviewed this Report on Form 10-Q of U.S. NeuroSurgical Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures,and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and;

5. I have disclosed, based on my most recent evaluationof internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 14, 2017	/s/ Alan Gold
	Alan Gold
	President & Chairman of the Board
	(Principal Executive Officer and Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

Certificate pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of U.S. NeuroSurgical Holdings, Inc. on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan Gold, President and Chief Executive Officer of U.S. NeuroSurgical Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of U.S. NeuroSurgical Holdings, Inc.

/s/ Alan Gold

Alan Gold

President and Chief Executive Officer

(Principal Executive Officer and Principal Financial Officer)

Date: August 14, 2017

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2017 shares
Document and Entity Information [Abstract]
Entity Registrant Name	U.S. NeuroSurgical Holdings, Inc.
Entity Central Index Key	0001089815
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	7,792,185
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 3,674,000	$ 1,962,000
Accounts receivable	237,000	891,000
Due from related parties	28,000	7,000
Elekta refund due	12,000	12,000
Other current assets	96,000	71,000
Total current assets	4,047,000	2,943,000
Other assets:
Notes receivable	38,000	38,000
Investments in unconsolidated entities	397,000	447,000
Total other assets	435,000	485,000
Property and equipment:
Gamma knife (net of accumulated depreciation of $2,223,000 in 2017 and $1,808,000 in 2016)	3,136,000	3,484,000
Leasehold improvements (net of accumulated amortization of $958,000 in 2017 and $805,000 in 2016)	1,179,000	1,332,000
Total property and equipment	4,315,000	4,816,000
TOTAL ASSETS	8,797,000	8,244,000
Current liabilities:
Obligations under capital lease - current portion	956,000	936,000
Deferred tax liability - current portion	0	245,000
Accounts payable and accrued expenses	189,000	86,000
Deferred revenue	582,000	257,000
Income taxes payable	413,000	0
Total current liabilities	2,140,000	1,524,000
Obligations under capital lease - net of current portion	2,208,000	2,733,000
Deferred tax liability - net of current portion	661,000	591,000
Guarantee liability	11,000	11,000
Asset retirement obligations	504,000	491,000
Total liabilities	5,524,000	5,350,000
STOCKHOLDERS' EQUITY
Common stock - par value $.01; 25,000,000 shares authorized; 7,792,185 shares issued and outstanding at June 30, 2017 and December 31, 2016.	78,000	78,000
Additional paid-in capital	3,100,000	3,100,000
Retained earnings (accumulated deficit)	95,000	(284,000)
Total stockholders' equity	3,273,000	2,894,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 8,797,000	$ 8,244,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
STOCKHOLDERS' EQUITY
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	7,792,185	7,792,185
Common stock, shares outstanding (in shares)	7,792,185	7,792,185
Gamma Knife [Member]
Property and equipment:
Accumulated depreciation	$ 2,223,000	$ 1,808,000
Leasehold Improvements [Member]
Property and equipment:
Accumulated depreciation	$ 958,000	$ 805,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [Abstract]
Revenue	$ 840,000	$ 775,000	$ 1,824,000	$ 1,607,000
Costs and expenses:
Patient expenses	356,000	288,000	724,000	612,000
Selling, general and administrative	354,000	351,000	649,000	661,000
Total	710,000	639,000	1,373,000	1,273,000
Operating income	130,000	136,000	451,000	334,000
Interest expense	(36,000)	(39,000)	(77,000)	(80,000)
Other income	0	2,000	0	6,000
Income from investments in unconsolidated entities	129,000	183,000	241,000	338,000
Income before income taxes	223,000	282,000	615,000	598,000
Provision for income tax expense	(87,000)	(105,000)	(236,000)	(223,000)
Net income	$ 136,000	$ 177,000	$ 379,000	$ 375,000
Basic and diluted net income per share (in dollars per share)	$ 0.02	$ 0.02	$ 0.05	$ 0.05
Weighted average common shares outstanding (in shares)	7,792,185	7,797,185	7,792,185	7,797,185

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 379,000	$ 375,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	568,000	471,000
Income from investment in unconsolidated entities, net	(241,000)	(338,000)
Distributed earnings from unconsolidated entities	315,000	306,000
Accretion of asset retirement obligations	13,000	12,000
Change in guarantee liability	0	(4,000)
Deferred income taxes	(175,000)	131,000
Changes in:
Accounts receivable	654,000	478,000
Other current assets	(25,000)	18,000
Accounts payable and accrued expenses	64,000	(28,000)
Deferred revenue	325,000	278,000
Income tax payable	413,000	92,000
Net cash provided by operating activities	2,290,000	1,791,000
Cash flows from investing activities:
Repayment of amounts advanced to unconsolidated entities	28,000	20,000
Capital contributions to unconsolidated entities	(10,000)	0
Amounts advanced to unconsolidated entities	(42,000)	0
Purchase of gamma knife equipment	(28,000)	(248,000)
(Increase) decrease in due from related parties	(21,000)	21,000
Net cash used in investing activities	(73,000)	(207,000)
Cash flows from financing activities:
Repayment of capital lease obligations	(505,000)	(459,000)
Net cash used in financing activities	(505,000)	(459,000)
Net change in cash and cash equivalents	1,712,000	1,125,000
Cash and cash equivalents - beginning of year	1,962,000	1,068,000
Cash and cash equivalents - end of year	3,674,000	2,193,000
Cash paid for:
Interest	77,000	80,000
Supplemental disclosure of noncash investing and financing activities:
Purchase of gamma knife equipment included in accounts payable	$ 39,000	$ 0

XML

Basis of Preparation

6 Months Ended

Jun. 30, 2017

Basis of Preparation [Abstract]

Basis of Preparation

Note A - Basis of Preparation

The accompanying condensed consolidated financial statements of U.S. Neurosurgical Holdings, Inc. and subsidiaries (the “Company”) as of June 30, 2017 and 2016, are unaudited.  However, in the opinion of management, such statements include all adjustments necessary for a fair statement of the information presented therein.  The balance sheet at December 31, 2016 has been derived from the audited financial statements at that date appearing in the Company's Annual Report on Form 10-K.

Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying condensed consolidated financial statements and notes do not include all disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.  Accordingly, these statements should be read in conjunction with the Company's most recent annual financial statements.

Consolidated results of operations for interim periods are not necessarily indicative of those to be achieved for full fiscal years.

In November 2015, the Financial Accounting Standards Board ("FASB") issued accounting standards update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. Previously, entities were required to separately present deferred tax assets and deferred tax liabilities as current and noncurrent in a classified balance sheet. The ASU was effective in the first quarter of 2017. We adopted the guidance related to balance sheet classification on a prospective basis. Prior periods were not retrospectively adjusted.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which in part requires entities to assess whether distributions of cash from unconsolidated entities represent a return on the investment or a return of the investment, to appropriately classify the distributions in the statement of cash flows. We have made an accounting policy election to use the cumulative earnings approach to determine that the distributions were returns on the investment and accordingly classified them as operating cash flows. Under the cumulative earnings approach, distributions received from the unconsolidated entity are presumed to be a return on the investment unless the distributions received by the investor, less distributions received in prior periods that were deemed to be returns of investment, exceed cumulative equity in earnings recognized by the investor. Although the ASU is effective in the first quarter of 2018, we have early adopted the guidance in the first quarter of 2017 due to the ongoing applicability of the new standard to the Company’s financial statements and have retrospectively adjusted our 2016 cash flow statement to conform to the 2017 presentation. This adjustment results in an increase in net cash provided by operating activitites, and a decrease in net cash provided by investing activities, of $306,000, compared with the amounts previously reported for the six months ended June 30, 2016.

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Gamma Knife at NYU Medical Center

6 Months Ended

Jun. 30, 2017

Gamma Knife at NYU Medical Center [Abstract]

Gamma Knife at NYU Medical Center

Note B – Gamma Knife at NYU Medical Center

U.S. NeuroSurgical, Inc. (“USN”), a wholly-owned subsidiary of U.S. Neurosurgical Holdings, Inc., opened its New York gamma knife treatment center in July 1997 on the campus of New York University (“NYU”) Medical Center.  USN 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, USN modified its arrangement with NYU to extend the term for 12 years from March 2009.

In October 2012, USN’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 removal cost was $525,000. USN paid a lease settlement of the outstanding principal balance only and received from insurance coverage $930,000 above the lease principal payments and removal costs.

USN finalized arrangements with NYU regarding the restored gamma knife center and USN’s long term contract with NYU in early 2014. USN’s new facility, with the Leksell PERFEXION gamma knife, is located in the Tisch Hospital of NYU Langone Medical Center. The facility reopened and began receiving patients at the end of April 2014.

The Company entered into a six year lease in the amount of $4.7 million for the purchase of the replacement equipment and associated leasehold improvements. The first payment of $78,000 was made on September 1, 2014, including $18,000 of interest, 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 was made on November 1, 2014, and the final payment was made in July 2016.

In April 2016 USN entered into an agreement with Elekta for the installation of new ICON imaging technology for the NYU Gamma Knife equipment with a total cost, including sales taxes, of approximately $816,000. This ICON technology was installed during the month of July 2016 and the gamma knife center reopened on August 5, 2016. The Company has obtained lease financing of approximately $900,000 at an interest rate of approximately 4.45% to finance the acquisition of the ICON technology and associated installation costs. The monthly lease payment is approximately $20,500 which commenced October 2016, with the final payment scheduled for September 2020. A monthly maintenance agreement will commence a year after the installation date and is estimated to be about $6,000 per month.

In July 2016, USN entered into an agreement with NYU relating to the newly installed ICON imaging technology, increasing the monthly payment due to the Company by $30,000 for the remaining term of the agreement. A final payment of $17,000 will be made for the partial month of operations at the end of the term in March 2021.

The agreement with NYU continues in effect through the end of March 2021.  The Company is responsible for the maintenance and insurance for the gamma knife equipment at the NYU facility and is reimbursed for use of the gamma knife based on a fee per procedure performed with the equipment.  NYU provides the medical and technical staff to operate the facility.  At the end of the contract term, costs associated with closing and restoring the NYU facility to its original condition are the responsibility of USN.

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The Southern California Regional Gamma Knife Center

6 Months Ended

Jun. 30, 2017

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 Regional Hospital (“SARH”) 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 SARH to renovate space in the hospital and install and operate a Leksell PERFEXION gamma knife.  CGK leases 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 and owns 39% of CGK.

USNC was a 20% guarantor on NeuroPartners LLC’s seven-year lease with respect to the gamma knife equipment and certain leasehold improvements at SARH.  In February 2016, NeuroPartners LLC negotiated a new five- year lease to fund the reloading of cobalt and related construction services.  The new lease of $1,663,000 includes a balance of $668,000 from the prior lease obligations.  This new lease will be paid over 60 months.  The first payment of $31,000 was paid on April 1, 2016 and the final payment will be due on March 1, 2021.  The Company continues to be a 20% guarantor on the new lease and expects any potential obligations from this guarantee would be reduced by the recovery of the related collateral, and  thus expects any exposure from this guarantee to be remote.

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, these entities are not consolidated, but certain disclosures are provided herein.

At June 30, 2017, the Company has $42,000 of remaining advances recorded to NeuroPartners LLC and CGK. For the three months ended June 30, 2017, the Company’s equity in earnings of NeuroPartners LLC and CGK was $31,000, but was not recorded due to prior losses.

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

NeuroPartners, LLC and CGK Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Patient Revenue	$	528,000	$	516,000
Net income	$	224,000	$	176,000
USNC's equity in earnings of NeuroPartners, LLC and CGK	$	69,000	$	9,000

	Three Months Ended June 30,
	2017		2016
Patient Revenue	$	252,000	$	211,000
Net income	$	100,000	$	50,000
USNC's equity in earnings (loss) of NeuroPartners, LLC and CGK	$	31,000	$	(9,000	)

NeuroPartners, LLC and CGK Condensed Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	243,000		$	93,000
Noncurrent assets		740,000			876,000
Total assets	$	983,000		$	969,000
Current liabilities	$	420,000		$	449,000
Noncurrent liabilities		931,000			1,121,000
Deficit		(368,000	)		(601,000	)
Total liabilities and equity	$	983,000		$	969,000

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Florida Oncology Partners

6 Months Ended

Jun. 30, 2017

Florida Oncology Partners [Abstract]

Florida Oncology Partners

Note D – 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% was owned by other outside investors. In January of 2015, one of the investors relinquished its ownership interest in both FOP and FOPRE, and that interest was distributed among the remaining members in relationship to their percentages owned. This distribution resulted in an increase of ownership interest for the Company of 4% in each of FOP and FOPRE.  As of January 1, 2015, the Company holds a 24% ownership in both FOP and FOPRE.

The center opened and treated its first patient in May 2011. During 2012 and 2013, FOP made several distributions that reduced the Company’s investment significantly.  The Company’s recorded investment in FOP and FOPRE is $243,000 and $303,000 at June 30, 2017 and December 31, 2016, respectively. Amounts due from FOP and FOPRE included in due from related parties total $22,000 and $4,000 June 30, 2017 and December 31, 2016, respectively.

During 2011, Florida Oncology Partners, LLC entered into a seven year capital lease with Key Bank for approximately $5,800,000.  Under the terms of the capital lease, USN agreed to guarantee a maximum of $1,433,000, approximately 25% of the original lease obligation in the event of default.  USN is a guarantor jointly with most of the other members of FOP (except USNC, which is not a named guarantor).  The outstanding balance on the lease obligation was $1,010,000 at June 30, 2017.  The Company expects any potential liability from this guarantee to be reduced by the recoveries of the respective collateral, but has recorded a liability of $11,000 associated with this guarantee at June 30, 2017.

In June 2012, FOPRE financed the purchase of the building that is occupied by FOP.  The amount of the loan was $1,534,000 and was to be paid at a monthly rate of approximately $8,500 for 120 months with the final payment due on June 15, 2022.  In December 2015, FOPRE sold the building, for a gain on sale of $577,000.  The Company’s share of the gain was $139,000.  The related mortgage was repaid upon closing of the sale.

In December 2015, FOP entered into an agreement with 21^st Century Oncology for the sale of FOP’s Varian Rapid Arc linear accelerator and other medical equipment at the FOP location.  21^st Century Oncology paid FOP $1,000,000 as a down payment for the equipment and from January 2016 until May 2017 made monthly payments of $172,000 for the equipment and all monthly payments due under the capital lease. As of this date, 21^st Century Oncology has not yet satisfied all of the terms of the rental agreement and for the months of May, June, and July of 2016 it paid an additional $30,000 in accelerated payments, and has paid $50,000 in accelerated payments each month from August 2016 until May 2017. These accelerated payments have been recorded as unearned revenue by FOP. In late May 2017, 21^st Century Oncology filed for Chapter 11 bankruptcy protection and FOP is not a secured creditor. As a result, FOP did not receive the agreed additional rental payments beyond the monthly payment for the capital lease in  June 2017. FOP will continue to monitor the impact of 21^st Century’s bankruptcy, but expects to recognize the remaining unearned revenue at May 31, 2017 over the final 12 months of the equipment lease.

In June 2017, FOP entered into an agreement with a third party owner of radiation therapy center located in Miami, Florida, whereby FOP will take over the operation of the center effective September 1. 2017 for a ten year initial term, and up to three additional terms of five years each. The Company is currently evaluating the accounting implications of this agreement.

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

FOP and FOPRE Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Rental Income	$	1,804,000	$	2,087,000
Net income	$	1,033,000	$	1,314,000
USNC's equity in earnings of FOP and FOPRE	$	250,000	$	318,000

	Three Months Ended June 30,
	2017		2016
Rental Income	$	791,000	$	1,073,000
Net income	$	414,000	$	680,000
USNC's equity in earnings of FOP and FOPRE	$	100,000	$	163,000

FOP and FOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	647,000	$	630,000
Noncurrent assets		1,436,000		1,798,000
Total assets	$	2,083,000	$	2,428,000
Current liabilities	$	1,274,000	$	1,411,000
Noncurrent liabilities		-		469,000
Equity		809,000		548,000
Total liabilities and equity	$	2,083,000	$	2,428,000

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Boca Oncology Partners

6 Months Ended

Jun. 30, 2017

Boca Oncology Partners [Abstract]

Boca Oncology Partners

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 whichBOP 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%.  The center opened in August 2012.  In February 2014, the Company and other members sold their interests in BOP.

During the year ended December 31, 2016 and the six months ended June 30, 2017, several investors relinquished part of their ownership interest in BOPRE, and those interests were distributed among the remaining investors in relationship to their percentages owned. As a result, the Company now holds a 20.65% ownership interest in BOPRE.

The Company’s recorded investment in BOPRE is $154,000 and $144,000 at June 30, 2017 and December 31, 2016, respectively.

USNC is a 10% guarantor of 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 $2,473,000 at June 30, 2017.  Any liability from this guarantee would be mitigated by the recovery from the underlying real estate, and the Company expects its potential exposure from this guarantee to be remote.

The following tables present the summarized financial information of BOPRE:

BOPRE Condensed Income Statement Information

	Three and Six Months Ended June 30,
	2017		2016
Rental Income	$	-	$	-
Net loss	$	-	$	(1,000	)
USNC's equity in earnings of BOPRE	$	-	$	-

BOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	8,000	$	10,000
Noncurrent assets		920,000		872,000
Total assets	$	928,000	$	882,000
Current liabilities	$	-	$	-
Noncurrent liabilities		-		-
Equity		928,000		882,000
Total liabilities and equity	$	928,000	$	882,000

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Medical Oncology Partners

6 Months Ended

Jun. 30, 2017

Medical Oncology Partners [Abstract]

Medical Oncology Partners

Note F - Medical Oncology Partners

In April 2015 Medical Oncology Partners, LLC (“MOP”), was formed in partnership with local physicians and other investors. MOP was established to acquire a 100% equity interest in United Oncology Medical Associates of FL, LLC (“UOMA”). USNC was not a member of MOP at the time of formation as it was not able to participate due to the fact that USNC was not a physician. Nevertheless, USNC wished to eventually obtain an equity interest in MOP and loaned Dr. Jaime Lozano, the principal investor in MOP and a co-investor in FOP, $173,000.  Dr. Lozano used these funds, along with an equal amount of his own funds (a total of $345,000), to purchase a 76.67% interest in MOP. Other investors paid a further $105,000 for the remaining equity in MOP. MOP used the $450,000 of financing to acquire a 100% equity interest in UOMA.  An application was filed for a waiver to allow USNC to hold an equity interest notwithstanding the physician requirement and on December 22, 2016, USNC was cleared to become a part owner of MOP. Dr. Lozano agreed to exchange half of his membership interest to USNC in settlement of the note to USNC.  USNC and Dr. Lozano also agreed to share equally in providing a 5% equity interest in MOP to an additional investor as a consulting fee for services rendered in the administration of MOP and UOMA. At December 22, 2016 USNC owned 35.83% of MOP with an initial carrying value of $161,000. The Company has recorded its share of losses of $12,000 for the period from December 22, 2016 to December 31, 2016, against its investment which resulted in a reduction of its equity investment to $149,000.

Due to increasing costs, continued net losses since April 2015, and reliance on related party and other debt for operating cash flows, the fair value of UOMA is less than its carrying amount. The Company tested its investment for impairment at December 31, 2016 and determined that the investment was impaired and an impairment loss was recorded against the entire equity balance in MOP, as well as loans from USN and USNC to MOP and UOMA.

The following table present the summarized financial information of MOP:

MOP Condensed Consolidated Income Statement Information

	Six Months Ended June 30, 217
Patient revenue	$	539,000
Net loss	$	(126,000	)
USNC's equity in loss in MOP	$	(45,000	)

	Three Months Ended June 30, 217
Patient revenue	$	309,000
Net loss	$	(81,000	)
USNC's equity in loss in MOP	$	(29,000	)

MOP Condensed Consolidated Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	14,000		$	15,000
Noncurrent assets		65,000			52,000
Total assets	$	79,000		$	67,000
Current liabilities	$	478,000		$	305,000
Noncurrent liabilities		-			-
Deficit		(399,000	)		(238,000	)
Total liabilities and equity	$	79,000		$	67,000

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Taxes [Abstract]

Income Taxes

Note G – Income Taxes

The Company’s income tax rate, which includes federal and state income taxes, was approximately 38%, for the six months ended June 30, 2017. The Company recorded a tax charge of $236,000 for the six months ended June 30, 2017.

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The Southern California Regional Gamma Knife Center (Tables)

6 Months Ended

Jun. 30, 2017

Neuro Partners LLC and CGK [Member]

Schedule of Cost-method Investments [Line Items]

Schedule of Equity Method Investment Summarized Financial Information

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

NeuroPartners, LLC and CGK Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Patient Revenue	$	528,000	$	516,000
Net income	$	224,000	$	176,000
USNC's equity in earnings of NeuroPartners, LLC and CGK	$	69,000	$	9,000

	Three Months Ended June 30,
	2017		2016
Patient Revenue	$	252,000	$	211,000
Net income	$	100,000	$	50,000
USNC's equity in earnings (loss) of NeuroPartners, LLC and CGK	$	31,000	$	(9,000	)

NeuroPartners, LLC and CGK Condensed Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	243,000		$	93,000
Noncurrent assets		740,000			876,000
Total assets	$	983,000		$	969,000
Current liabilities	$	420,000		$	449,000
Noncurrent liabilities		931,000			1,121,000
Deficit		(368,000	)		(601,000	)
Total liabilities and equity	$	983,000		$	969,000

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Florida Oncology Partners (Tables)

6 Months Ended

Jun. 30, 2017

FOP and FOPRE [Member]

Schedule of Cost-method Investments [Line Items]

Schedule of Equity Method Investment Summarized Financial Information

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

FOP and FOPRE Condensed Income Statement Information

	Six Months Ended June 30,
	2017		2016
Rental Income	$	1,804,000	$	2,087,000
Net income	$	1,033,000	$	1,314,000
USNC's equity in earnings of FOP and FOPRE	$	250,000	$	318,000

	Three Months Ended June 30,
	2017		2016
Rental Income	$	791,000	$	1,073,000
Net income	$	414,000	$	680,000
USNC's equity in earnings of FOP and FOPRE	$	100,000	$	163,000

FOP and FOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	647,000	$	630,000
Noncurrent assets		1,436,000		1,798,000
Total assets	$	2,083,000	$	2,428,000
Current liabilities	$	1,274,000	$	1,411,000
Noncurrent liabilities		-		469,000
Equity		809,000		548,000
Total liabilities and equity	$	2,083,000	$	2,428,000

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Boca Oncology Partners (Tables)

6 Months Ended

Jun. 30, 2017

Boca Oncology Partners RE, LLC ("BOPRE") [Member]

Schedule of Cost-method Investments [Line Items]

Schedule of Equity Method Investment Summarized Financial Information

The following tables present the summarized financial information of BOPRE:

BOPRE Condensed Income Statement Information

	Three and Six Months Ended June 30,
	2017		2016
Rental Income	$	-	$	-
Net loss	$	-	$	(1,000	)
USNC's equity in earnings of BOPRE	$	-	$	-

BOPRE Condensed Balance Sheet Information

	June 30, 2017		December 31, 2016
Current assets	$	8,000	$	10,000
Noncurrent assets		920,000		872,000
Total assets	$	928,000	$	882,000
Current liabilities	$	-	$	-
Noncurrent liabilities		-		-
Equity		928,000		882,000
Total liabilities and equity	$	928,000	$	882,000

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Medical Oncology Partners (Tables)

6 Months Ended

Jun. 30, 2017

Medical Oncology Partners LLC [Member]

Schedule of Cost-method Investments [Line Items]

Schedule of Equity Method Investment Summarized Financial Information

The following table present the summarized financial information of MOP:

MOP Condensed Consolidated Income Statement Information

	Six Months Ended June 30, 217
Patient revenue	$	539,000
Net loss	$	(126,000	)
USNC's equity in loss in MOP	$	(45,000	)

	Three Months Ended June 30, 217
Patient revenue	$	309,000
Net loss	$	(81,000	)
USNC's equity in loss in MOP	$	(29,000	)

MOP Condensed Consolidated Balance Sheet Information

	June 30, 2017			December 31, 2016
Current assets	$	14,000		$	15,000
Noncurrent assets		65,000			52,000
Total assets	$	79,000		$	67,000
Current liabilities	$	478,000		$	305,000
Noncurrent liabilities		-			-
Deficit		(399,000	)		(238,000	)
Total liabilities and equity	$	79,000		$	67,000

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Basis of Preparation (Details) - ASU 2016-15 [Member]	6 Months Ended
	Jun. 30, 2017 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase in net cash provided by operating activities	$ 306,000
Decrease in net cash provided by investing activities	$ (306,000)

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Gamma Knife at NYU Medical Center (Details) - USD ($)				1 Months Ended		6 Months Ended
	Nov. 01, 2014	Sep. 01, 2014	Oct. 31, 2012	Jul. 31, 2016	Apr. 30, 2016	Jun. 30, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Terms of agreement with NYU						12 years
Removal cost			$ 525,000
Insurance coverage			$ 930,000
Capital lease obligation					$ 900,000
Installation cost of new ICON imaging technology for gamma knife equipment					$ 816,000
Interest rate on capital lease					4.45%
Monthly lease payment					$ 20,500
Estimated cost of monthly maintenance agreement					$ 6,000
Increase in capital lease minimum monthly payment				$ 30,000
Final lease payment amount, partial month				$ 17,000
Lease One [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Capital lease term						6 years
Capital lease obligation		$ 4,700,000
Capital lease payment		78,000
Interest on lease		$ 18,000
Lease Two [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Capital lease term						2 years
Capital lease obligation	$ 250,000
Capital lease payment	$ 12,000

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The Southern California Regional Gamma Knife Center (Details) - USD ($)				1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 01, 2016	Nov. 01, 2014	Sep. 01, 2014	Feb. 29, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Apr. 30, 2016
Schedule of Cost-method Investments [Line Items]
Renovation installation and operation agreement period							14 years
Capital lease obligation										$ 900,000
Condensed Income Statement Information [Abstract]
Patient Revenue					$ 840,000	$ 775,000	$ 1,824,000	$ 1,607,000
USNC's equity in earnings (loss) of NeuroPartners, LLC and CGK					129,000	183,000	$ 241,000	338,000
Lease One [Member]
Schedule of Cost-method Investments [Line Items]
Lease term							6 years
Capital lease obligation			$ 4,700,000
Capital lease payment			$ 78,000
Lease Two [Member]
Schedule of Cost-method Investments [Line Items]
Lease term							2 years
Capital lease obligation		$ 250,000
Capital lease payment		$ 12,000
Neuro Partners LLC and CGK [Member]
Schedule of Cost-method Investments [Line Items]
Remaining amount of advances to unconsolidated entities							$ 42,000
Condensed Income Statement Information [Abstract]
Patient Revenue					252,000	211,000	528,000	516,000
Net income					100,000	50,000	224,000	176,000
USNC's equity in earnings (loss) of NeuroPartners, LLC and CGK					31,000	$ (9,000)	69,000	$ 9,000
Condensed Consolidated Balance Sheet Information [Abstract]
Current assets					243,000		243,000		$ 93,000
Noncurrent assets					740,000		740,000		876,000
Total assets					983,000		983,000		969,000
Current liabilities					420,000		420,000		449,000
Noncurrent liabilities					931,000		931,000		1,121,000
Deficit					(368,000)		(368,000)		(601,000)
Total liabilities and equity					$ 983,000		$ 983,000		$ 969,000
Neuro Partners LLC [Member] | Lease One [Member]
Schedule of Cost-method Investments [Line Items]
Ownership percentage					20.00%		20.00%
Share of guarantee in lease obligations							20.00%
Lease term							7 years
Neuro Partners LLC [Member] | Lease Two [Member]
Schedule of Cost-method Investments [Line Items]
Lease term							5 years
Capital lease obligation				$ 1,663,000
Prior year lease obligations				$ 668,000
Capital lease payment	$ 31,000
CGK [Member]
Schedule of Cost-method Investments [Line Items]
Ownership percentage					39.00%		39.00%

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Florida Oncology Partners (Details)					3 Months Ended		6 Months Ended		10 Months Ended	12 Months Ended
	Jul. 01, 2016 USD ($)	Jun. 01, 2016 USD ($)	May 01, 2016 USD ($)	Jun. 30, 2012 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) Term	Jun. 30, 2016 USD ($)	May 31, 2017 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2016 USD ($)	Apr. 30, 2016 USD ($)	Dec. 31, 2014	Sep. 30, 2010 USD ($)
Schedule of Cost-method Investments [Line Items]
Due from related parties					$ 28,000		$ 28,000					$ 7,000
Capital leases, amount													$ 900,000
Liability associated with guarantee					11,000		11,000					11,000
Gain on sale of building										$ 139,000
Monthly payments of capital leases													$ 20,500
Condensed Income Statement Information [Abstract]
USNC's equity in earnings (loss)					129,000	$ 183,000	241,000	$ 338,000
FOP and FOPRE [Member]
Schedule of Cost-method Investments [Line Items]
Recorded investments					243,000		243,000					303,000			$ 200,000
Ownership percentage														24.00%	20.00%
Ownership percentage by outside investors															80.00%
Increase in ownership percentage															4.00%
Due from related parties					22,000		22,000					4,000
Condensed Income Statement Information [Abstract]
Rental income					791,000	1,073,000	1,804,000	2,087,000
Net income					414,000	680,000	1,033,000	1,314,000
USNC's equity in earnings (loss)					100,000	$ 163,000	250,000	$ 318,000
Condensed Consolidated Balance Sheet Information [Abstract]
Current assets					647,000		647,000					630,000
Noncurrent assets					1,436,000		1,436,000					1,798,000
Total assets					2,083,000		2,083,000					2,428,000
Current liabilities					1,274,000		1,274,000					1,411,000
Noncurrent liabilities					0		0					469,000
Equity					809,000		809,000					548,000
Total liabilities and equity					2,083,000		$ 2,083,000					$ 2,428,000
FOP [Member]
Schedule of Cost-method Investments [Line Items]
Lease term							7 years
Capital leases, amount											$ 5,800,000
Percentage of guarantee obligations											25.00%
Outstanding lease obligation					1,010,000		$ 1,010,000
Liability associated with guarantee					$ 11,000		$ 11,000
Down payment of capital leases										1,000,000
Monthly payments of capital leases									$ 172,000
Payment of penalties on capital leases	$ 30,000	$ 30,000	$ 30,000						$ 50,000
FOP [Member] | Maximum [Member]
Schedule of Cost-method Investments [Line Items]
Amount of guarantee obligations											$ 1,433,000
FOP [Member] | Radiation Therapy Center [Member]
Schedule of Cost-method Investments [Line Items]
Lease term							10 years
Term of extension period of agreement | Term							3
Extension of agreement							5 years
FOPRE [Member]
Schedule of Cost-method Investments [Line Items]
Outstanding Loan				$ 1,534,000
Monthly loan payment				$ 8,500
Debt maturity period							120 months
Maturity date							Jun. 15, 2022
Gain on sale of building										$ 577,000

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Boca Oncology Partners (Details)			3 Months Ended		6 Months Ended
	Jun. 30, 2012 USD ($)	Jan. 31, 2012 USD ($)	Jun. 30, 2017 USD ($) ft²	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) ft²	Jun. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Jun. 30, 2011 USD ($)
Condensed Income Statement Information [Abstract]
USNC's equity in earnings (loss)			$ 129,000	$ 183,000	$ 241,000	$ 338,000
USNC [Member] | Boca West IMP [Member]
Schedule of Cost-method Investments [Line Items]
Share of guarantee in mortgage			10.00%		10.00%
Share of guarantee in outstanding mortgage			50.00%		50.00%
Mortgage term of guarantee					10 years
Original balance of mortgage			$ 3,000,000		$ 3,000,000
Outstanding balance on mortgage			$ 2,473,000		$ 2,473,000
Boca Oncology Partners, LLC [Member]
Schedule of Cost-method Investments [Line Items]
Area of building | ft²			6,000		6,000
Ownership percentage, cost method		11.25%
Amount loaned to related parties	$ 28,000	$ 56,250
Debt maturity period					5 years
Company loan interest rate		7.00%
Boca Oncology Partners RE, LLC ("BOPRE") [Member]
Schedule of Cost-method Investments [Line Items]
Investments in unconsolidated entities			$ 154,000		$ 154,000		$ 144,000
Ownership percentage, equity method								20.00%
Ownership percentage, cost method			20.65%		20.65%
Ownership percentage by outside investors	31.50%
Condensed Income Statement Information [Abstract]
Rental income			$ 0	0	$ 0	0
Net loss			0	(1,000)	0	(1,000)
USNC's equity in earnings (loss)			0	$ 0	0	$ 0
Condensed Consolidated Balance Sheet Information [Abstract]
Current assets			8,000		8,000		10,000
Noncurrent assets			920,000		920,000		872,000
Total assets			928,000		928,000		882,000
Current liabilities			0		0		0
Noncurrent liabilities			0		0		0
Equity			928,000		928,000		882,000
Total liabilities and equity			$ 928,000		$ 928,000		$ 882,000
Boca Oncology Partners RE, LLC ("BOPRE") [Member] | Boca West IMP [Member]
Schedule of Cost-method Investments [Line Items]
Ownership percentage, cost method	23.75%
Additional investor purchased ownership percentage	3.75%
Boca Oncology Partners RE, LLC ("BOPRE") [Member] | USNC [Member]
Schedule of Cost-method Investments [Line Items]
Ownership percentage, cost method	15.40%
BOP and BOPRE [Member]
Schedule of Cost-method Investments [Line Items]
Area of building | ft²			32,000		32,000
Additional investor purchased ownership percentage		50.00%
Ownership percentage by outside investors		88.75%
BOP and BOPRE [Member] | USNC [Member]
Schedule of Cost-method Investments [Line Items]
Investments in unconsolidated entities								$ 225,000
Ownership percentage, equity method								22.50%

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Medical Oncology Partners (Details) - USD ($)		3 Months Ended		6 Months Ended
	Dec. 31, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 23, 2016
Condensed Income Statement Information [Abstract]
Patient revenue		$ 840,000	$ 775,000	$ 1,824,000	$ 1,607,000
USNC's equity in earnings (loss)		129,000	$ 183,000	$ 241,000	$ 338,000
Medical Oncology Partners LLC [Member]
Schedule of Cost-method Investments [Line Items]
Equity interest percentage to be acquired by subsidiary				100.00%
Investments in unconsolidated entities		450,000		$ 450,000
Condensed Income Statement Information [Abstract]
Patient revenue		309,000		539,000
Net loss		(81,000)		(126,000)
USNC's equity in earnings (loss)	$ (12,000)	(29,000)		(45,000)
Condensed Consolidated Balance Sheet Information [Abstract]
Current assets	15,000	14,000		14,000
Noncurrent assets	52,000	65,000		65,000
Total assets	67,000	79,000		79,000
Current liabilities	305,000	478,000		478,000
Noncurrent liabilities	0	0		0
Deficit	(238,000)	(399,000)		(399,000)
Total liabilities and equity	$ 67,000	79,000		79,000
Medical Oncology Partners LLC [Member] | Other Investor [Member]
Schedule of Cost-method Investments [Line Items]
Investments in unconsolidated entities		105,000		105,000
Medical Oncology Partners LLC [Member] | USNC [Member]
Schedule of Cost-method Investments [Line Items]
Investments in unconsolidated entities		173,000		173,000
Ownership percentage, cost method						35.83%
Carrying value of investment		149,000		149,000		$ 161,000
Medical Oncology Partners LLC [Member] | USNC [Member] | Dr. Jaime Lozano [Member]
Schedule of Cost-method Investments [Line Items]
Investments in unconsolidated entities		$ 345,000		$ 345,000
Ownership percentage, cost method		76.67%		76.67%
Percentage of equity interest to an additional investor as a consulting fee for services				5.00%

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Taxes [Abstract]
Federal and state income taxes, rate			38.00%
Tax charge	$ 87,000	$ 105,000	$ 236,000	$ 223,000