##### 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 March 31, 2009
 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
 o 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 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-KSIGNATURESEX-31.1EX-31.2EX-32.1    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 (unaudited)
    
    
    (audited)March 31, 2009
    
    
    December 31, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,546,000
    
    
    $
    10,286,000Restricted cash
    
    
    50,000
    
    
    
    50,000Accounts receivable, net of allowance for
doubtful accounts of $100,000 in 2009
and $100,000 in 2008
    
    
    4,210,000
    
    
    
    4,229,000Other receivables
    
    
    293,000
    
    
    
    221,000Prepaid expenses and other assets
    
    
    535,000
    
    
    
    430,000Current deferred tax assets
    
    
    246,000
    
    
    
    246,000Total current assets
    
    
    14,880,000
    
    
    
    15,462,000Property and equipment:Medical equipment and facilities
    
    
    71,854,000
    
    
    
    71,854,000Office equipment
    
    
    703,000
    
    
    
    703,000Deposits and construction in progress
    
    
    5,742,000
    
    
    
    5,203,00078,299,000
    
    
    
    77,760,000Accumulated depreciation and
amortization
    
    
    (35,535,000
    )
    
    
    (33,897,000
    )Net property and equipment
    
    
    42,764,000
    
    
    
    43,863,000Investment in preferred stock
    
    
    2,617,000
    
    
    
    2,617,000Other assets
    
    
    294,000
    
    
    
    254,000Total assets
    
    $
    60,555,000
    
    
    $
    62,196,000LIABILITIES AND
SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    485,000
    
    
    $
    262,000Employee compensation and benefits
    
    
    239,000
    
    
    
    322,000Other accrued liabilities
    
    
    748,000
    
    
    
    950,000Current portion of long-term debt
    
    
    6,085,000
    
    
    
    6,341,000Current portion of obligations under capital leases
    
    
    1,192,000
    
    
    
    1,292,000Line of credit advances
    
    
    6,900,000
    
    
    
    6,500,000Total current liabilities
    
    
    15,649,000
    
    
    
    15,667,000Long-term debt, less current portion
    
    
    15,134,000
    
    
    
    16,386,000Long-term capital leases, less current portion
    
    
    4,372,000
    
    
    
    4,667,000Deferred income taxes
    
    
    2,538,000
    
    
    
    2,538,000Shareholders equity:Common stock (4,691,000 shares at March 31, 2009
and 4,712,000 shares at December 31, 2008)
    
    
    8,831,000
    
    
    
    8,877,000Additional paid-in capital
    
    
    4,491,000
    
    
    
    4,458,000Retained earnings
    
    
    6,299,000
    
    
    
    6,393,000Total equity- American Shared Hospital Services
    
    
    19,621,000
    
    
    
    19,728,000Non-controlling interest in subsidiary
    
    
    3,241,000
    
    
    
    3,210,000Total shareholders equity
    
    
    22,862,000
    
    
    
    22,938,000Total liabilities and shareholders equity
    
    $
    60,555,000
    
    
    $
    62,196,000
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AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended March 31,2009
    
    
    2008Medical services revenue
    
    $
    4,167,000
    
    
    $
    4,725,000Costs of revenue:Maintenance and supplies
    
    
    395,000
    
    
    
    278,000Depreciation and amortization
    
    
    1,624,000
    
    
    
    1,558,000Other direct operating costs
    
    
    551,000
    
    
    
    820,0002,570,000
    
    
    
    2,656,000Gross Margin
    
    
    1,597,000
    
    
    
    2,069,000Selling and administrative expense
    
    
    993,000
    
    
    
    1,107,000Transaction costs
    
    
    197,000
    
    
    
    Interest expense
    
    
    483,000
    
    
    
    568,000Operating income (loss)
    
    
    (76,000
    )
    
    
    394,000Interest and other income
    
    
    34,000
    
    
    
    147,000Income (loss) before income taxes
    
    
    (42,000
    )
    
    
    541,000Income tax expense (benefit)
    
    
    (93,000
    )
    
    
    149,000Net income
    
    
    51,000
    
    
    
    392,000Less: Net income attributable to non-controlling interest
    
    
    (145,000
    )
    
    
    (236,000
    )Net income (loss) attributable to American Shared Hospital Services
    
    $
    (94,000
    )
    
    $
    156,000Net income (loss) per share:Earnings per common share  basic
    
    $
    (0.02
    )
    
    $
    0.03Earnings per common share  assuming dilution
    
    $
    (0.02
    )
    
    $
    0.03
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AMERICAN SHARED HOSPITAL SERVICES
 PERIODS ENDED DECEMBER 31, 2007 AND 2008 AND MARCH 31, 2009AdditionalCommon
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Sub-Total
    
    
    Non-controllingShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    ASHS
    
    
    Interest in Sub.
    
    
    TotalBalances at January 1, 2007 (audited)
    
    
    5,023,000
    
    
    $
    9,317,000
    
    
    $
    4,251,000
    
    
    $
    5,441,000
    
    
    $
    19,009,000
    
    
    $
    3,045,000
    
    
    $
    22,054,000Options exercised
    
    
    2,000
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    3,000Common stock withheld on option exercises
    
    
    (1,000
    )
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    (3,000
    )Stock based compensation expense
    
    
    2,000
    
    
    
    
    
    
    
    69,000
    
    
    
    
    
    
    
    69,000
    
    
    
    
    
    
    
    69,000Excess tax benefit from share-based payment
arrangements
    
    
    
    
    
    
    
    
    
    
    (13,000
    )
    
    
    
    
    
    
    (13,000
    )
    
    
    
    
    
    
    (13,000
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (476,000
    )
    
    
    (476,000
    )
    
    
    
    
    
    
    (476,000
    )Cash distributions to non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,026,000
    )
    
    
    (1,026,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    951,000
    
    
    
    951,000
    
    
    
    1,134,000
    
    
    
    2,085,000Balances at December 31, 2007 (audited)
    
    
    5,026,000
    
    
    
    9,320,000
    
    
    
    4,304,000
    
    
    
    5,916,000
    
    
    
    19,540,000
    
    
    
    3,153,000
    
    
    
    22,693,000Repurchase of common stock
    
    
    (316,000
    )
    
    
    (443,000
    )
    
    
    
    
    
    
    
    
    
    
    (443,000
    )
    
    
    
    
    
    
    (443,000
    )Stock based compensation expense
    
    
    2,000
    
    
    
    
    
    
    
    137,000
    
    
    
    
    
    
    
    137,000
    
    
    
    
    
    
    
    137,000True-up tax benefit from share-based payment
arrangements
    
    
    
    
    
    
    
    
    
    
    17,000
    
    
    
    
    
    
    
    17,000
    
    
    
    
    
    
    
    17,000Cash distributions to non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (798,000
    )
    
    
    (798,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    477,000
    
    
    
    477,000
    
    
    
    855,000
    
    
    
    1,332,000Balances at December 31, 2008 (audited)
    
    
    4,712,000
    
    
    
    8,877,000
    
    
    
    4,458,000
    
    
    
    6,393,000
    
    
    
    19,728,000
    
    
    
    3,210,000
    
    
    
    22,938,000Repurchase of common stock
    
    
    (21,000
    )
    
    
    (46,000
    )
    
    
    
    
    
    
    
    
    
    
    (46,000
    )
    
    
    
    
    
    
    (46,000
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    33,000Cash distributions to non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,000
    )
    
    
    (114,000
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94,000
    )
    
    
    (94,000
    )
    
    
    145,000
    
    
    
    51,000Balances at March 31, 2009 (unaudited)
    
    
    4,691,000
    
    
    $
    8,831,000
    
    
    $
    4,491,000
    
    
    $
    6,299,000
    
    
    $
    19,621,000
    
    
    $
    3,241,000
    
    
    $
    22,862,000
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AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended March 31,2009
    
    
    2008Operating activities:Net income (loss)
    
    $
    (94,000
    )
    
    $
    156,000Adjustments to reconcile net income to net cash from
operating activities:Depreciation and amortization
    
    
    1,647,000
    
    
    
    1,593,000Gain on sale of assets
    
    
    
    
    
    
    (56,000
    )Net income attributable to non-controlling interest
    
    
    145,000
    
    
    
    236,000Stock based compensation expense
    
    
    33,000
    
    
    
    34,000Changes in operating assets and liabilities:Receivables
    
    
    (53,000
    )
    
    
    (462,000
    )Prepaid expenses and other assets
    
    
    (154,000
    )
    
    
    (4,000
    )Accounts payable and accrued liabilities
    
    
    (62,000
    )
    
    
    66,000Net cash from operating activities
    
    
    1,462,000
    
    
    
    1,563,000Investing activities:Payment for purchase of property and equipment
    
    
    (539,000
    )
    
    
    (2,168,000
    )Proceeds from sales and maturities of marketable securities
    
    
    
    
    
    
    500,000Net cash from investing activities
    
    
    (539,000
    )
    
    
    (1,668,000
    )Financing activities:Cash distribution to non-controlling interest
    
    
    (114,000
    )
    
    
    (190,000
    )Long term debt financing on purchase of property and equipment
    
    
    
    
    
    
    1,839,000Advances on line of credit
    
    
    400,000
    
    
    
    Stock/option repurchase
    
    
    (46,000
    )
    
    
    Principal payments on capital leases
    
    
    (395,000
    )
    
    
    (264,000
    )Principal payments on long-term debt
    
    
    (1,508,000
    )
    
    
    (1,328,000
    )Net cash from financing activities
    
    
    (1,663,000
    )
    
    
    57,000Net change in cash and cash equivalents
    
    
    (740,000
    )
    
    
    (48,000
    )Cash and cash equivalents at beginning of period
    
    
    10,286,000
    
    
    
    6,340,000Cash and cash equivalents at end of period
    
    $
    9,546,000
    
    
    $
    6,292,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    579,000
    
    
    $
    789,000Income taxes
    
    $
    38,000
    
    
    $
    52,000Schedule of non-cash investing and financing activitiesOther receivables- Gamma Knife sale
    
    $
    
    
    
    $
    1,473,000
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Note 1. Basis of Presentation
        Note 2. Per Share Amounts
  6




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Note 3. Stock-based Compensation
   Note 4. Convertible Preferred Stock Investment
  .
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
    
    Still River recently completed and passed the cold mass test on the prototype unit, a
major milestone in the development of the PBRT.
    
    A review of the Still River project by a third party expert hired by the Company
revealed no known impediments to completion of the prototype unit.
    
    Still River was able to raise the money it needed in spite of an uncertain economic
climate.
  Note 5. Repurchase of Common Stock
  Note 6. Accounting and Reporting for Noncontrolling Interests
  8




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Note 7. Recent Accounting Pronouncements
     9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 st ®
   10




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11




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Liquidity and Capital Resources
   12




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held-to-maturity
   250
 13




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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.
 14




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Total Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    of Shares thatNumber of
    
    
    Average
    
    
    as Part of Publicly
    
    
    May Yet beShares
    
    
    Price Paid
    
    
    Announced
    
    
    Purchased UnderPeriod
    
    Purchased
    
    
    Per Share
    
    
    Programs
    
    
    the ProgramsJanuary 1 - January 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    February 1 - February 28, 2009
    
    
    21,245
    
    
    
    2.13
    
    
    
    21,245
    
    
    
    178,501March 1 - March 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total First Quarter
    
    
    21,245
    
    
    $
    2.13
    
    
    
    21,245
    
    
    
    178,501
 
 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.
 (a)
    
    ExhibitsThe following exhibits are filed herewith:
 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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Date:      May 15, 2009
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate:      May 15, 2009
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President
Chief Operating and Financial Officer 16