Note 4 – Investment in Equity Securities

The Company has previously participated in several Mevion rounds of financing and has carried its investment at cost. The Company reviews this investment on a quarterly basis for impairment in light of the length of time and extent to which market value has been below cost, the financial condition and near term prospects of Mevion, current market conditions and events, and our ability and intent to retain our investment for a period sufficient to allow for an anticipated recovery in the market value, or as events or circumstances might indicate that the carrying value of the investment may be below its cost basis on an other-than-temporary impairment basis. The Company evaluated its common stock investment in Mevion of $2,709,000, for impairment at December 31, 2014, and in light of available information, determined that impairment was not other-than temporary.

On July 27, 2015 Mevion cancelled its planned initial public offering (“IPO”) and subsequently announced on August 4, 2015 that it had entered into an investment agreement where up to $200 million will be invested by HOPU Investments, YuanMing Capital and existing U.S. investors. Concurrent with this investment, Mevion and the lead investors intend to form a joint venture to produce, sell, and service proton therapy systems for the Chinese market. The Company’s investment in the common stock of Mevion represents an approximate 0.46% interest following this latest private placement transaction on a fully diluted basis.

In light of the cancellation of Mevion’s IPO, the Company reviewed its investment in Mevion for impairment. The company determined that its investment was other than temporarily impaired and recognized an impairment loss of $2,114,000 at June 30, 2015. In determining the fair value of the Company’s common stock in Mevion, the Company engaged a third party expert to review and corroborate its assessment of the fair value of the investment. The third party utilized the market approach and an option waterfall model calibrated to Mevion’s last round of funding. Each equity class was examined and priced according to its liquidation preferences. Based on the third party analysis, an additional impairment loss of $26,000 was recognized by the Company during the three months ended December 31, 2015. The fair value of the Company’s investment in Mevion, as of December 31, 2015, is approximately $579,000 with an impairment loss for the year then ended of $2,140,000.

The $2,140,000 other than temporary impairment of its investment in Mevion is recorded in other income (loss) on the Company’s Condensed Consolidated Statement of Operations. This transaction is treated as a capital loss for tax purposes which may be deducted only to the extent the Company has capital gains. The Company is not aware of any event or transaction planned where the Company would generate a capital gain. Therefore, a full valuation allowance was recorded against the income tax benefit from the impairment loss, and the net impact to the income tax provision for the year ended December 31, 2015 was $0.

The first MEVION S250, located at Barnes-Jewish Hospital in St. Louis, MO (“Barnes-Jewish Hospital”), treated its first patient on December 19, 2013. The second MEVION S250, located at the Ackerman Cancer Center in Jacksonville, Florida (“Ackerman Cancer Center”), treated its first patient in April 2015. The third MEVION S250, located at Robert Wood Johnson University Hospital in New Brunswick, New Jersey (“Robert Wood Johnson”), started in May 2015. The Company’s first synchrocyclotron was delivered to UF Health Cancer Center at Orlando Health in November 2014 and is expected to begin treating patients in second quarter 2016.