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[Knowledge is King]

re USNU($.2611): sure sounds worrisome, except...


When I compared the relevant language as filed in the last 2 10-Q reports (dated 5/15/14 and 8/14/14), it sounds very much like operations are improving ahead of schedule.

I've bolded what I view are the key parts of the text:


Here's the relevant language from the older March 10-Q(5/15/14):


The Company has obtained a commitment for lease financing in the amount of $4.6 million for the purchase of the replacement equipment and for some construction and other costs associated with the damaged machine removal and new machine installation. However, the Company will incur additional costs relating to the reconstruction of the center at NYU, some of which may be substantial and will not be covered by insurance.

The Company anticipates that these factors will result in significant operating losses for the next several quarters.

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. The Company expects to incur losses for the next several quarters due to the destruction of the NYU Gamma Knife. Should losses continue for an extended period of time, or should the actual construction costs incurred materially exceed forecasts, we will be required to seek additional capital to support continued operations and the development of new centers, but we cannot assure you, however, that we will be able to raise such additional capital as and when required.


Here's the relevant language from the newer June 10-Q(8/14/14):


The Company entered into a commitment for lease financing in the amount of $4.6 million for the purchase of the replacement equipment and for some construction and other costs associated with the damaged machine removal and new machine installation.

The Company anticipates that these factors may result in significant operating losses for the next several quarters.

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. The Company expects to incur net cash outflows from operating activities for the next several quarters due to the destruction of the NYU Gamma Knife. Should net cash outflows continue for an extended period of time, or should the actual construction costs incurred materially exceed forecasts, we will be required to seek additional capital to support continued operations and the development of new centers, but we cannot assure you, however, that we will be able to raise such additional capital as and when required.



So, if you're still with me:
1) all the language about the reconstruction of the center is now gone from the new 10-Q;

2) you can see that "will" in May became "may" in August, and, more importantly IMO, "losses" in May became "net cash outflows" in August.

3) Finally, it's not surprising at all that these two items of language changed because the company did, in fact, report strong operating income in the June quarter, while incurring a net cash outflow...


Bottom line is that I believe USNU's business has resumed/recovered faster that management anticipated and that Q2 results are very representative of what the company can do going forward. And, don't forget, Q2 only represented a little more than 2 months of operations since the company did not resume treating patients until late April.