##### Table of Contents



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 June 30, 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
    
    94111(Address of Principal Executive Offices)
    
    (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)




---



TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. 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. ExhibitsSIGNATURESEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 (unaudited)
    
    
    (audited)June 30, 2008
    
    
    December 31, 2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,587,000
    
    
    $
    6,340,000Securities-current
    
    
    1,765,000
    
    
    
    2,605,000Restricted cash
    
    
    50,000
    
    
    
    50,000Accounts receivable, net of allowance for
for doubtful accounts of $100,000 in
2008 and $170,000 in 2007
    
    
    4,878,000
    
    
    
    4,886,000Other receivables
    
    
    290,000
    
    
    
    250,000Prepaid expenses and other current assets
    
    
    360,000
    
    
    
    417,000Current deferred tax assets
    
    
    301,000
    
    
    
    301,000Total current assets
    
    
    16,231,000
    
    
    
    14,849,000Property and equipment:Medical equipment and facilities
    
    
    68,314,000
    
    
    
    66,562,000Office equipment
    
    
    699,000
    
    
    
    699,000Deposits and construction in progress
    
    
    6,952,000
    
    
    
    8,947,00075,965,000
    
    
    
    76,208,000Accumulated depreciation and
amortization
    
    
    (30,505,000
    )
    
    
    (31,982,000
    )Net property & equipment
    
    
    45,460,000
    
    
    
    44,226,000Securities
    
    
    0
    
    
    
    1,065,000Investment in preferred stock
    
    
    2,617,000
    
    
    
    2,617,000Other assets
    
    
    263,000
    
    
    
    287,000Total assets
    
    $
    64,571,000
    
    
    $
    63,044,000LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    346,000
    
    
    $
    795,000Accrued interest and other liabilities
    
    
    818,000
    
    
    
    793,000Employee compensation and benefits
    
    
    216,000
    
    
    
    142,000Advances on line of credit
    
    
    4,000,000
    
    
    
    4,100,000Current portion of long-term debt
    
    
    7,922,000
    
    
    
    7,180,000Current portion of capital leases
    
    
    1,095,000
    
    
    
    1,092,000Total current liabilities
    
    
    14,397,000
    
    
    
    14,102,000Long-term debt, less current portion
    
    
    19,679,000
    
    
    
    21,285,000Long-term capital leases, less current portion
    
    
    5,101,000
    
    
    
    2,719,000Deferred income taxes
    
    
    2,245,000
    
    
    
    2,245,000Minority interest
    
    
    3,169,000
    
    
    
    3,153,000Shareholders equity:Common stock, without par value:authorized shares - 10,000,000;
issued
& outstanding shares, 5,028,087 in 2008
and 5,026,587 in 2007
    
    
    9,320,000
    
    
    
    9,320,000Additional paid-in capital
    
    
    4,375,000
    
    
    
    4,304,000Retained earnings
    
    
    6,285,000
    
    
    
    5,916,000Total shareholders equity
    
    
    19,980,000
    
    
    
    19,540,000Total liabilities and shareholders equity
    
    $
    64,571,000
    
    
    $
    63,044,000
  2




---



##### Table of Contents



AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended June 30,
    
    
    Six Months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Medical services
    
    $
    5,102,000
    
    
    $
    4,910,000
    
    
    $
    9,827,000
    
    
    $
    9,659,000Costs and expenses:Costs of revenue:Maintenance and supplies
    
    
    290,000
    
    
    
    233,000
    
    
    
    568,000
    
    
    
    579,000Depreciation and amortization
    
    
    1,664,000
    
    
    
    1,439,000
    
    
    
    3,222,000
    
    
    
    2,892,000Other direct operating costs
    
    
    805,000
    
    
    
    792,000
    
    
    
    1,625,000
    
    
    
    1,512,0002,759,000
    
    
    
    2,464,000
    
    
    
    5,415,000
    
    
    
    4,983,000Gross margin
    
    
    2,343,000
    
    
    
    2,446,000
    
    
    
    4,412,000
    
    
    
    4,676,000Selling and administrative expense
    
    
    1,129,000
    
    
    
    1,209,000
    
    
    
    2,236,000
    
    
    
    2,370,000Interest expense
    
    
    627,000
    
    
    
    470,000
    
    
    
    1,195,000
    
    
    
    937,000Operating income
    
    
    587,000
    
    
    
    767,000
    
    
    
    981,000
    
    
    
    1,369,000Interest and other income
    
    
    86,000
    
    
    
    100,000
    
    
    
    233,000
    
    
    
    218,000Minority interest expense
    
    
    (255,000
    )
    
    
    (335,000
    )
    
    
    (491,000
    )
    
    
    (635,000
    )Income before income taxes
    
    
    418,000
    
    
    
    532,000
    
    
    
    723,000
    
    
    
    952,000Income tax expense
    
    
    205,000
    
    
    
    252,000
    
    
    
    354,000
    
    
    
    447,000Net income
    
    $
    213,000
    
    
    $
    280,000
    
    
    $
    369,000
    
    
    $
    505,000Earnings per share:Basic
    
    $
    0.04
    
    
    $
    0.06
    
    
    $
    0.07
    
    
    $
    0.10Diluted
    
    $
    0.04
    
    
    $
    0.06
    
    
    $
    0.07
    
    
    $
    0.10Basic shares
    
    
    5,028,000
    
    
    
    5,024,000
    
    
    
    5,027,000
    
    
    
    5,024,000Diluted shares
    
    
    5,030,000
    
    
    
    5,047,000
    
    
    
    5,029,000
    
    
    
    5,049,000
  3




---



##### Table of Contents



AMERICAN SHARED HOSPITAL SERVICES
 Six Months ended June 30,2008
    
    
    2007Operating activities:Net income
    
    $
    369,000
    
    
    $
    505,000Adjustments to reconcile net cash provided by operating activities:Depreciation and amortization
    
    
    3,291,000
    
    
    
    2,963,000Deferred income taxes
    
    
    0
    
    
    
    112,000(Gain) loss on sale of assets
    
    
    (56,000
    )
    
    
    0Stock based compensation expense
    
    
    71,000
    
    
    
    35,000Minority interest in consolidated subsidiaries
    
    
    491,000
    
    
    
    635,000Changes in operating assets and liabilities:Receivables
    
    
    (32,000
    )
    
    
    42,000Prepaid expenses and other assets
    
    
    56,000
    
    
    
    1,000Accounts payable and accrued liabilities
    
    
    (350,000
    )
    
    
    48,000Customer deposits
    
    
    0
    
    
    
    3,125,000Net cash from operating activities
    
    
    3,840,000
    
    
    
    7,466,000Investing activities:Payment for purchase of property and equipment
    
    
    (2,997,000
    )
    
    
    (4,285,000
    )Proceeds from sale and maturity of marketable securities
    
    
    1,905,000
    
    
    
    1,208,000Investment in marketable securities
    
    
    0
    
    
    
    (1,739,000
    )Proceeds from sale of assets
    
    
    1,473,000
    
    
    
    0Net cash from investing activities
    
    
    381,000
    
    
    
    (4,816,000
    )Financing activities:Principal payments on long-term debt
    
    
    (3,240,000
    )
    
    
    (2,432,000
    )Principal payments on capital leases
    
    
    (535,000
    )
    
    
    (494,000
    )Long-term debt financing on purchase of property and equipment
    
    
    2,376,000
    
    
    
    2,840,000Advances on line of credit
    
    
    0
    
    
    
    1,225,000Payments on line of credit
    
    
    (100,000
    )
    
    
    (1,700,000
    )Payment of dividends
    
    
    0
    
    
    
    (478,000
    )Distribution to minority owners
    
    
    (475,000
    )
    
    
    (551,000
    )Net cash from financing activities
    
    
    (1,974,000
    )
    
    
    (1,590,000
    )Net change in cash and cash equivalents
    
    
    2,247,000
    
    
    
    1,060,000Cash and cash equivalents at beginning of period
    
    
    6,340,000
    
    
    
    3,952,000Cash and cash equivalents at end of period
    
    $
    8,587,000
    
    
    $
    5,012,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    1,561,000
    
    
    $
    937,000Income taxes
    
    $
    116,000
    
    
    $
    335,000Schedule of noncash investing and financial activities:Accrued dividends
    
    $
    0
    
    
    $
    239,000Acquisition of equipment with capital lease financing
    
    $
    2,920,000
    
    
    $
    0
  4




---



##### Table of Contents



Note 1. Basis of Presentation
       Note 2. Per Share Amounts
  5




---



##### Table of Contents



Note 3. Stock-based Compensation
  Accounting for Stock-Based
Compensation
  Note 4. Convertible Preferred Stock Investment
 250
 6




---



##### Table of Contents



.
  Note 5. Line of Credit
  Note 6. Accounting for Uncertainty in Income Taxes
   7




---



##### Table of Contents



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




---



##### Table of Contents



9




---



##### Table of Contents



10




---



##### Table of Contents



Liquidity and Capital Resources
      held-to-maturity
  11




---



##### Table of Contents



250
  250
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 ,
 
 Item 4. Controls and Procedures
  12




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Securities Holders.
  1)
    
    Voted on the Election of Directors as follows:
 Nominee
    
    For
    
    AbstainedErnest A. Bates, M.D.
    
    
    4,177,460
    
    
    
    134,017Olin C. Robison
    
    
    4,206,100
    
    
    
    105,377John F. Ruffle
    
    
    4,174,730
    
    
    
    136,747Stanley S. Trotman, Jr.
    
    
    4,178,230
    
    
    
    133,247
  13




---



##### Table of Contents



2)
    
    Voted on the ratification of Moss Adams LLP as the Companys
Independent Registered Public Accounting Firm. There were 4,234,351 votes for,
61,688 votes against, and 15,438 votes abstained for a 84.24% vote in favor of
total available votes.
 
 Item 5. Other Information.
  
 Item 6. Exhibits
 (a)
    
    ExhibitsThe following exhibits are filed herewith:
 Exhibit Number
    
    Description31.1
    
    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.
 14




---



##### Table of Contents



AMERICAN SHARED HOSPITAL SERVICESRegistrantDate: August 11, 2008
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate: August 11, 2008
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President
Chief Operating and Financial Officer 15