UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB  x
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007 or o
        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
 EXCHANGE ACT
 For the transition period from_____________to_____________.  Commission file number:  0-15586  U.S. Neurosurgical, Inc. (Exact name of small business issuer as specified in its charter)  Delaware
        52-1842411(State of other jurisdiction ofincorporation or organization)
        (I.R.S. EmployerIdentification No.)
  2400 Research Blvd, Suite 325, Rockville, Maryland 20850 (Address of principal executive offices)  (301) 208-8998 (Issuers telephone number)  Not Applicable (Former name, former address and former fiscal year, if changed since last report)  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yesx    No  o  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes  o    Nox  As of April 27, 2007, there were outstanding 7,697,185 shares of the registrants Common Stock. $.01 par value.  Transitional Small Business Disclosure Format (check one) Yes  o
        Nox


PART 1  FINANCIAL
INFORMATIONU.S. NEUROSURGICAL, INC. AND SUBSIDIARYCONSOLIDATED
BALANCE SHEETS March 31,2007
     
     December 31,2006ASSETSCurrent assets:Cash and cash equivalents
     $213,000
        
     $297,000Accounts receivable (net of allowance for doubtfulaccounts of $36,000 in 2007 and 2006)
     223,000
        
     119,000Accounts receivable-stockholder
     66,000
        
     175,000Other current assets
     127,000
        
     119,000Total current assets
     $629,000
        
     $710,000Gamma Knife (net of accumulated depreciation of$4,783,000 in 2007 and $4,599,000 in 2006)
     2,217,000
        
     2,370,000Leasehold improvements (net of accumulated amortizationof $1,763,000 in 2007 and $1,739,000 in 2006)
     279,000
        
     303,000Total property and equipment
     2,496,000
        
     2,673,000Cash held in escrow
     113,000
        
     113,000TOTAL
     $3,238,000
        
     $3,496,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
     $160,000
        
     $122,000Obligations under capital leaseand loans payable-current portion
     407,000
        
     467,000Total current liabilities
     567,000
        
     589,000Obligations under capital lease and loans payable-netof current portion
     1,506,000
        
     1,611,000Asset retirement obligations
     200,000
        
     200,000Total liabilities
     2,273,000
        
     2,400,000Stockholders equity:Common stock
     77,000
        
     77,000Additional paid-in capital
     3,097,000
        
     3,097,000Accumulated deficit
     (2,209,000
        )
     (2,078,000
        )Total stockholders equity
     $965,000
        
     $1,096,000TOTAL
     $3,238,000
        
     $3,496,000  2


NEUROSURGICAL, INC.
AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS Three Months EndedMarch 31,2007
     
     2006Revenue:Patient revenue
     $462,000
        
     $506,000Expenses:Patient expenses
     $232,000
        
     $216,000Selling, general and administrative
     317,000
        
     358,000Total
     $549,000
        
     $574,000Operating income (loss)
     $(87,000
        )
     $(68,000
        )Interest expense
     $(47,000
        )
     $(59,000
        )Interest income
     3,000
        
     5,000Income (loss) before income taxes
     $(131,000
        )
     $(122,000
        )Income tax benefit (provision)
     
        
     36,000Net income (loss)
     $(131,000
        )
     $(86,000
        )Proforma basic and diluted income (loss) per share
     $(0.02
        )
     $(0.01
        )Proforma weighted average shares outstanding
     7,697,185
        
     7,697,185 The accompanying notes
to financial statements are an integral part hereof.  3


U.S. NEUROSURGICAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months EndedMarch 31,2007
     
     2006Cash flows from operating activities:Loss from continuing operations
     $(131,000
        )
     $(86,000
        )Adjustments to reconcile net income to net cash (used in)provided by operating activities:Depreciation and amortization
     177,000
        
     177,000Deferred income taxes
     
        
     (36,000
        )Changes in:Accounts receivable
     5,000
        
     58,000Other current assets
     (8,000
        )
     (9,000
        )Accounts payable and accrued expenses
     38,000
        
     64,000Net cash provided by operating activities
     $81,000
        
     $168,000Cash flows from investing activities:Increase in cash held in escrow
     $
        
     (1,000
        )Net cash (used in) provided by investing activities
     $
        
     $(1,000
        )Cash flows from financing activities:Repayment of capital lease obligations and loans payable
     $(165,000
        )
     (161,000
        )Net cash used in financing activities
     $(165,000
        )
     $(161,000
        )Net (decrease) increase in cash and cash equivalents
     $(84,000
        )
     $6,000Cash and cash equivalents - beginning of period
     $297,000
        
     $422,000CASH AND CASH EQUIVALENTS - END OF PERIOD
     $213,000
        
     $428,000Supplemental disclosures of cash flow information:Cash paid forInterest
     $47,000
        
     $59,000 The accompanying notes
to financial statements are an integral part hereof.  4


U.S. NEUROSURGICAL, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS  Note A - Basis of Preparation  The accompanying financial statements at March 31, 2007, and for the three months ended March 31, 2007 and 2006, are unaudited. However, in the opinion of management, such statements include all adjustments necessary for a fair statement of the information presented therein. The balance sheet at December 31, 2006 has been derived from the audited financial statements at that date appearing in the Companys Annual Report on Form 10-K.  Pursuant to accounting requirements of the Securities and Exchange Commission applicable to quarterly reports on Form 10-QSB, the accompanying financial statements and notes do not include all disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. Accordingly, these statements should be read in conjunction with the Companys most recent annual financial statements.  Results of operations for interim periods are not necessarily indicative of those to be achieved for full fiscal years.  5


Management Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies  Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. As such, some accounting policies have a significant impact on amounts reported in the financial statements. A summary of those significant accounting policies can be found in our 2006 Annual Report on Form 10-K, filed, in the Notes to the Financial Statements, Note B. In particular, judgment is used in areas such as determining the allowance for doubtful accounts and asset impairments.  The following discussion and analysis provides information which the Companys management believes is relevant to an assessment and understanding of the Companys results of operations and financial condition. This discussion should be read in conjunction with the consolidated financial statements and notes there to appearing elsewhere herein.  First Quarter 2007 Compared to First Quarter 2006  Patient revenue decreased 9% to $462,000 in the quarter ended March 31, 2007 from $506,000 for the quarter ended March 31, 2006. The decrease was due primarily to reduced patient procedures at the Kansas City center. Patient expenses increased 7% to $232,000 for the first quarter of 2007 compared to $216,000 in the same period a year ago. The increase was due primarily to maintenance charges incurred on the Gamma Knife equipment at the Kansas City center during the recent quarter. No such charges were incurred in the same period a year ago since the equipment was still under warranty at the time. Selling, general and administrative expense decreased 11% to $317,000 for the quarter ended March 31, 2007 from $358,000 in the comparable period a year ago. The decrease was due to decreases in professional fees and lower overall payroll expenses for the period in question. Interest expense
decreased 20% to $47,000 from $59,000 in the same period a year earlier. This was due in part to the new lease arrangements for the RMC Gamma Knife. For the quarter ended March 31, 2007, the net loss was $131,000 as compared to a loss of 86,000 for the same period a year earlier. This increased loss was due primarily to decreased revenues.  Liquidity and Capital Resources  At March 31, 2007 the Company had working capital of $62,000 as compared to $121,000 at December 31, 2006. Cash and cash equivalents at March 31, 2007 were $213,000 as compared with $297,000 at December 31, 2006.  Net cash provided by operating activities for the three months ended March 31, 2007 was $81,000 as compared to $168,000 for the same period a year earlier. Depreciation and amortization was $177,000 for the three months ended March 31, 2007, the same as it was in the same period a year earlier.  6


The Company paid $165,000 towards its lease obligations during the three months ended March 31, 2007 as compared to $161,000 in the same period a year ago. With our current cash position, and continued collection on our accounts receivable, the Company believes that the cash position is sufficient for the next twelve months.  Disclosure Regarding Forward Looking Statements  The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a companys future prospects and make informed investment decisions. This document contains such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues and cash flow. Words such as anticipates, estimates, expects, projects, intends, plans, believes, will be, will continue, will likely result, and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify such forward-looking statements. Those forward-looking statements are based on
managements present expectations about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of such changes, new information, future events or otherwise.  The Company operates in a highly competitive and rapidly changing environment and business segments that are dependent on our ability to: achieve profitability; increase revenues; sustain our current level of operation; introduce on a timely basis new products; maintain satisfactory relations with our customers; attract and retain key personnel; maintain and expand our strategic alliances; and protect our know-how. The Companys actual results could differ materially from managements expectations because of changes in such factors. New risk factors can arise and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Companys business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given
these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  Investors should also be aware that while the Company might, from time to time, communicate with securities analysts, it is against the Companys policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, investors should not assume that the company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts or others contain any projections, forecasts or opinions, such reports are not the responsibility of the Company.  In addition, the Companys overall financial strategy, including growth in operations, maintaining financial ratios and strengthening the balance sheet, could be adversely affected by increased interest rates, failure to meet earnings expectations,  7


significant acquisitions or other transactions, economic slowdowns and changes in the Companys plans, strategies and intentions.  Item 3. Quantitative and Qualitative Disclosures About Market Risk.  Market risk represents the risk of loss that may impact the Companys financial position due to adverse changes in financial market prices and rates. Market risk exposure is primarily a result of fluctuations in interest rates. The Company does not hold or issue financial instruments for trading purposes.  The Company has exposure to market rate risk for changes in interest rates related to the interest income on our cash, cash equivalents, and short-term investments, but we believe that the impact of these fluctuations does not have a material effect on our financial position due to the short-term nature of any such investments. The obligations under the Companys capital lease and its loans payable are based on fixed interest rates and thus the amounts due under these instruments do not fluctuate with changes in market prices and rates.  Item 4. Controls and Procedures  Management of the Company, including the Chief Executive Officer, evaluated the effectiveness of the design and operation of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Companys Chief Executive Officer concluded that the Companys disclosure controls and procedures were effective as of the end of the period covered by this report for the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended, to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.  There have not been any changes in the Companys internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.  8


PART II - OTHER INFORMATION  Item 6. Exhibits  31.1
        Rule 13a-14(a)/15d-14(a) Certification
 32.1
        Section 1350 Certifications
  9


SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  U.S. Neurosurgical, Inc. (Registrant)  Date:  May 14, 2007
        By :/s/ Alan Gold
 Alan Gold Director, President and Chief Executive Officer and Principal Financial Officer of the Registrant  10