Note C – The Southern California Regional Gamma Knife Center

During 2007, the Company, through a noncontrolling interest in joint ventures, managed the formation of the Southern California Regional Gamma Knife Center at San Antonio Regional Hospital (“SARH”) in Upland, California. 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 included a balance of $668,000 from the prior lease obligations. This new lease is payable 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, through its joint ventures, 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.

For the six months ended June 30, 2019 and 2018, the Company’s equity in earnings of NeuroPartners LLC and CGK was $45,000 and $65,000, respectively. The Company did not record the $65,000 equity in earnings for the six months ended June 30, 2018 due to prior losses incurred by NeuroPartners, LLC and CGK. During the six months ended June 30, 2019, the Company’s share of the combined equity in NeuroPartners LLC and CGK became positive, and the Company recorded $44,000 of equity in earnings. At June 30, 2019, amounts due from related parties include $8,000 in receivables from CGK. The Company’s recorded investment in NeuroPartners LLC and CGK is $45,000 at June 30, 2019 and $0 at December 31, 2018.

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

NeuroPartners LLC and CGK Condensed Combined Income Statement Information


	Six Months Ended June 30,
	2019		2018

Patient Revenue	$	489,000	$	510,000

Net income	$	147,000	$	227,000

USNC's equity in earnings of NeuroPartners, LLC and CGK	$	45,000	$	65,000

	Three Months Ended June 30,
	2019		2018

Patient Revenue	$	189,000	$	299,000

Net income	$	22,000	$	170,000

USNC's equity in earnings of NeuroPartners LLC and CGK	$	1,000	$	52,000

NeuroPartners LLC and CGK Condensed Combined Balance Sheet Information

	June 30, 2019		December 31, 2018


Current assets	$	418,000	$	304,000

Noncurrent assets		936,000		1,064,000

Total assets	$	1,354,000	$	1,368,000

Current liabilities	$	399,000	$	399,000

Noncurrent liabilities		763,000		924,000

Equity		192,000		45,000

Total liabilities and equity	$	1,354,000	$	1,368,000