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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended March 31, 2008 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to.
 Commission file number 1-08789
 
 American
Shared Hospital Services
 (Exact name of registrant as specified in its charter)
 California
    
    94-2918118(State or other jurisdiction of
    
    (IRS EmployerIncorporation or organization)
    
    Identification No.)
 Four Embarcadero Center, Suite 3700, San Francisco, California
(Address of Principal Executive Offices)
    
    94111
(Zip Code)
 Registrants telephone number, including area code: (415) 788-5300
 þ o
  Large Accelerated Filer o
    
    Accelerated Filer
o
    
    Non-Accelerated Filer o
    
    Smaller reporting company
þ(Do not check if a smaller reporting company)




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETSCONDENSED CONSOLIDATED STATEMENTS OF INCOMECONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTSItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Securities HoldersItem 5. Other InformationItem 6. Exhibits and Reports on Form 8-KSIGNATURESEXHIBIT 10.30AEXHIBIT 10.30BEXHIBIT 10.57EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 
  (unaudited)
    
    
    (audited)March 31, 2008
    
    
    December 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    6,292,000
    
    
    $
    6,340,000Restricted cash
    
    
    50,000
    
    
    
    50,000Securities-current
    
    
    3,170,000
    
    
    
    2,605,000Accounts receivable, net of allowance for
doubtful accounts of $100,000 in 2008
and $170,000 in 2007
    
    
    5,238,000
    
    
    
    4,886,000Other receivables
    
    
    1,833,000
    
    
    
    250,000Prepaid expenses and other assets
    
    
    420,000
    
    
    
    417,000Current deferred tax assets
    
    
    301,000
    
    
    
    301,000Total current assets
    
    
    17,304,000
    
    
    
    14,849,000Property and equipment:Medical equipment and facilities
    
    
    68,232,000
    
    
    
    66,562,000Office equipment
    
    
    699,000
    
    
    
    699,000Deposits and construction in progress
    
    
    6,609,000
    
    
    
    8,947,00075,540,000
    
    
    
    76,208,000Accumulated depreciation and
amortization
    
    
    (32,146,000
    )
    
    
    (31,982,000
    )Net property and equipment
    
    
    43,394,000
    
    
    
    44,226,000Securities-long term
    
    
    0
    
    
    
    1,065,000Investment in preferred stock
    
    
    2,617,000
    
    
    
    2,617,000Other assets
    
    
    278,000
    
    
    
    287,000Total assets
    
    $
    63,593,000
    
    
    $
    63,044,000LIABILITIES AND
SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    844,000
    
    
    $
    795,000Employee
compensation and benefits
    
    
    122,000
    
    
    
    142,000Other accrued liabilities
    
    
    830,000
    
    
    
    793,000Current portion of long-term debt
    
    
    7,685,000
    
    
    
    7,180,000Current portion of obligations under capital leases
    
    
    1,114,000
    
    
    
    1,092,000Line of credit advances
    
    
    4,100,000
    
    
    
    4,100,000Total current liabilities
    
    
    14,695,000
    
    
    
    14,102,000Long-term debt, less current portion
    
    
    21,291,000
    
    
    
    21,285,000Long-term capital leases, less current portion
    
    
    2,433,000
    
    
    
    2,719,000Deferred income taxes
    
    
    2,245,000
    
    
    
    2,245,000Minority interest
    
    
    3,199,000
    
    
    
    3,153,000Shareholders equity:Common stock, without par
value: authorized shares - 10,000,000; issued
and outstanding shares, 5,026,000 in 2008
and 5,026,000 in 2007
    
    
    9,320,000
    
    
    
    9,320,000Additional paid-in capital
    
    
    4,338,000
    
    
    
    4,304,000Retained earnings
    
    
    6,072,000
    
    
    
    5,916,000Total shareholders equity
    
    
    19,730,000
    
    
    
    19,540,000Total liabilities and shareholders equity
    
    $
    63,593,000
    
    
    $
    63,044,000
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AMERICAN SHARED HOSPITAL SERVICES
 
 
 Three Months ended March 31,2008
    
    
    2007Medical services revenue
    
    $
    4,725,000
    
    
    $
    4,749,000Costs of revenue:Maintenance and supplies
    
    
    278,000
    
    
    
    346,000Depreciation and amortization
    
    
    1,558,000
    
    
    
    1,453,000Other direct operating costs
    
    
    820,000
    
    
    
    720,0002,656,000
    
    
    
    2,519,000Gross Margin
    
    
    2,069,000
    
    
    
    2,230,000Selling and administrative expense
    
    
    1,107,000
    
    
    
    1,161,000Interest expense
    
    
    568,000
    
    
    
    467,000Operating income
    
    
    394,000
    
    
    
    602,000Interest and other income
    
    
    147,000
    
    
    
    118,000Minority interest expense
    
    
    (236,000
    )
    
    
    (300,000
    )Income before income taxes
    
    
    305,000
    
    
    
    420,000Income tax expense
    
    
    149,000
    
    
    
    195,000Net income
    
    $
    156,000
    
    
    $
    225,000Net income per share:Earnings per common share  basic
    
    $
    0.03
    
    
    $
    0.04Earnings per common share  assuming dilution
    
    $
    0.03
    
    
    $
    0.04
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AMERICAN SHARED HOSPITAL SERVICES
 
 
 Three Months ended March 31,2008
    
    
    2007Operating activities:Net income
    
    $
    156,000
    
    
    $
    225,000Adjustments to reconcile net income to net cash from
operating activities:Depreciation and amortization
    
    
    1,593,000
    
    
    
    1,484,000Gain on sale of assets
    
    
    (56,000
    )
    
    
    0Minority interest in consolidated subsidiaries
    
    
    236,000
    
    
    
    300,000Stock based compensation expense
    
    
    34,000
    
    
    
    15,000Changes in operating assets and liabilities:Receivables
    
    
    (462,000
    )
    
    
    (50,000
    )Prepaid expenses and other assets
    
    
    (4,000
    )
    
    
    39,000Accounts payable and accrued liabilities
    
    
    66,000
    
    
    
    (65,000
    )Net cash from operating activities
    
    
    1,563,000
    
    
    
    1,948,000Investing activities:Payment for purchase of property and equipment
    
    
    (2,168,000
    )
    
    
    (1,209,000
    )Proceeds from sales and maturities of marketable securities
    
    
    500,000
    
    
    
    753,000Investment in marketable securities
    
    
    0
    
    
    
    (1,494,000
    )Net cash from investing activities
    
    
    (1,668,000
    )
    
    
    (1,950,000
    )Financing activities:Payment of dividends
    
    
    0
    
    
    
    (239,000
    )Distribution to minority owners
    
    
    (190,000
    )
    
    
    (361,000
    )Long term debt financing on purchase of property and equipment
    
    
    1,839,000
    
    
    
    2,110,000Payments on line of credit
    
    
    0
    
    
    
    (800,000
    )Principal payments on capital leases
    
    
    (264,000
    )
    
    
    (245,000
    )Principal payments on long-term debt
    
    
    (1,328,000
    )
    
    
    (1,194,000
    )Net cash from financing activities
    
    
    57,000
    
    
    
    (729,000
    )Net change in cash and cash equivalents
    
    
    (48,000
    )
    
    
    (731,000
    )Cash and cash equivalents at beginning of period
    
    
    6,340,000
    
    
    
    3,952,000Cash and cash equivalents at end of period
    
    $
    6,292,000
    
    
    $
    3,221,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    789,000
    
    
    $
    503,000Income taxes
    
    $
    52,000
    
    
    $
    210,000Schedule of non-cash investing and financing activitiesAccrued dividends
    
    $
    0
    
    
    $
    239,000Other receivables- Gamma Knife sale
    
    $
    1,473,000
    
    
    $
    0
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Note 1. Basis of Presentation
        Note 2. Per Share Amounts
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Note 3. Stock-based Compensation
  Accounting for Stock-Based Compensation
  Note 4. Convertible Preferred Stock Investment
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250
   .
  Note 5. Accounting for Uncertainty in Income Taxes
    7




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 st ®
   8




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Liquidity and Capital Resources
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held-to-maturity
 250
  250
 11




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 ,
 
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings .
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Securities Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits and Reports on Form 8-K.
   Exhibit Number
    
    Description10.30a
    
    Addendum One to Lease Agreement for a Gamma Knife Unit dated January
9, 2008 between GK Financing, LLC and The Community Hospital Group,
Inc. dba JFK Medical Center. (Confidential material appearing in this
document has been omitted and filed separately with the Securities and
Exchange Commission in accordance with Rule 24b-2, promulgated under
the Securities and Exchange Act of 1934, as amended. Omitted
information has been replaced with asterisks).10.30b
    
    Addendum Two to Lease Agreement for a Gamma Knife Unit dated January
9, 2008 between GK Financing, LLC and The Community Hospital Group,
Inc. dba JFK Medical Center. (Confidential material appearing in this
document has been omitted and filed separately with the Securities and
Exchange Commission in accordance with Rule 24b-2, promulgated under
the Securities and Exchange Act of 1934, as amended. Omitted
information has been replaced with asterisks).10.57
    
    Purchased Services Agreement for a Gamma Knife
Perfexion Unit dated as of March 5, 2008 between GK Financing, LLC and
USC University Hospital,
Inc. (Confidential material appearing in this
document has been omitted and filed separately with
the Securities and Exchange Commission in accordance
with Rule 24b-2, promulgated under the Securities and
Exchange Act of 1934, as amended. Omitted
information has been replaced with asterisks).31.1
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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AMERICAN SHARED HOSPITAL SERVICES
                
        RegistrantDate: May 14, 2008
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate: May 14, 2008
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President

Chief Operating and Financial Officer 14