Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies [Abstract]

Note I – Commitments and Contingencies

[1]	Operating Leases:

The Company leases office space under an operating lease which was renewed in February 2018 and expires June 2023. The terms of the lease include an escalation clause for a portion of certain operating expenses.

As discussed in Note B, the Company adopted Topic 842 as of January 1, 2019. Upon adoption of Topic 842, the Company’s office lease remained an operating lease and a lease liability in the amount of $176,000 was recognized based on the present value of the remaining minimum lease payments, discounted using the Company’s incremental borrowing rate. The related lease ROU asset was recorded in the amount of $161,000, reflecting the present value of future minimum lease payments, adjusted for deferred rent. As of December 31, 2021 operating lease right-of-use liability and asset amounted to $66,000 and $59,000, respectively. As of December 31, 2020, the operating lease right-of-use liability and asset amounted to $106,000 and $94,000, respectively. Total operating lease expense for the years ended December 31, 2021 and 2020, was $41,000 and $42,000, respectively.

The maturities of the operating lease liability as of December 31, 2021, were as follows:

Year Ending December 31,

2022		46,000
2023		24,000
		70,000
Less interest		(4,000	)
Present value of net minimum obligation	$	66,000

[2]	NYU Gamma Knife:

Capital Lease Obligations (Notes D and F):

In 2009, the Company installed a new gamma knife PERFEXION model at the NYU Medical Center. This new equipment and certain space improvements, costing approximately $3,742,000 in total, were financed through a seven-year lease arrangement. This PERFEXION equipment was recorded as a total loss as a result of flooding from Hurricane Sandy in October 2012.

In early 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 was made in May 2020.

The Company entered into a second capital lease in 2014 to finance an additional $250,000 of installation and construction costs, which was repaid in July 2016.

In April 2016 the Company obtained lease financing of $879,000 to finance the acquisition of the ICON technology for the NYU Gamma Knife and associated installation costs. Monthly lease payments of $20,000 began in October 2016, and the final payment was made in September 2020.

In October 2018, the Company entered into an additional capital lease in the amount of $833,000 to partially finance the reload of the cobalt to be repaid over 30 months. The final payment was made in March 2021.

Maintenance Contract:

The new gamma knife installed in April 2014 included a one-year warranty. The new maintenance agreement began in April of 2015. The monthly payment increased from $20,000 to $26,000 effective August 2017, due to the addition of the ICON maintenance agreement and was in effect for 5 years. The final payment of the maintenance agreement was made in March 2021.

[3]	Guarantees:

USNC was a 20% guarantor on NeuroPartners, LLC’s lease, which terminated in March 2021, with respect to the gamma knife equipment, cobalt reload and associated construction, and certain leasehold improvements located at the Southern California Regional Gamma Knife Center at SARH in Upland, California. The outstanding balance on the lease obligations was $60,000 at December 31, 2020. The final payment of this lease was made in March of 2021, thereby releasing USNC from this guarantee.

Holdings is a guarantor of the full amount of the outstanding CBOP loan with BB&T Bank entered into in 2017, as described In Note C[2]. The outstanding balance on this loan was $2,715,000 and $3,066,000 at December 31, 2021 and 2020, respectively.

USNC was a 10% guarantor on 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 Company was released from this guaranty when the mortgage was refinanced in April of 2020.

The Company expected any potential obligations from these guarantees to be reduced by the recoveries of the respective collateral and had recorded a liability of $11,000 at December 31, 2021 and 2020.

[4]	Product liability:

Although USN does not directly provide medical services, it has obtained professional medical liability insurance, and has general liability insurance as well. USN’s professional medical liability and general liability policies have limits of $3 million each. The Company believes that its insurance is adequate for providing treatment facilities and non-medical services, although there can be no assurance that the coverage limits of such insurance will be adequate or that coverage will not be reduced or become unavailable in the future.