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 Florida, 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 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.

During the three months ended March 31, 2020, USNC contributed $36,000 of capital to MOP, all of which was written off.

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. For the three months ended March 31, 2021 and 2020, the Company’s equity in loss of MOP was $60,000 and $84,000, respectively, but was not recorded due to prior losses.

During the year ended December 31, 2020, the Company wrote off all remaining amounts due from MOP and UOMA and accrued interest thereon, resulting in a $686,000 loss. During the three months ended March 31, 2021, the Company advanced an additional $141,000, of which $140,000 has been fully impaired. These allowances and write offs were recorded as losses from investments in unconsolidated entities.

Due to loans made to MOP and UOMA, MOP and UOMA are considered to be variable interest entities of the Company. However, as the Company is not deemed to be the primary beneficiary of MOP or UOMA, since it does not have the power to direct the operating activities that most significantly affect MOP’s or UOMA’s economic performance, the entities are not consolidated, but certain disclosures are provided herein.

The following table presents the summarized financial information of MOP:

MOP Condensed Consolidated Income Statement Information

	Three Months Ended March 31,
	2021			2020

Patient revenue	$	537,000		$	515,000

Net loss	$	(168,000	)	$	(234,000	)

USNC's equity in loss of MOP	$	(60,000	)	$	(84,000	)

MOP Condensed Consolidated Balance Sheet Information

		March 31, 2021			December 31, 2020


Current assets	$	202,000		$	204,000

Noncurrent assets		624,000			701,000

Total assets	$	826,000		$	905,000

Current liabilities	$	2,961,000		$	2,736,000

Noncurrent liabilities		278,000			410,000

Deficit		(2,413,000	)		(2,241,000	)

Total liabilities and deficit	$	826,000		$	905,000