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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|           | 
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|           | 
|           |  | For the quarterly period ended September 30, 2002 or                                    
|           | 
|[   ]      |  | 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 1-8789



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American Shared Hospital Services
(Exact name of registrant as specified in its charter)

|                                                                          |  |                                             
|------------------------------------------------------------------------- |  | --------------------------------------------
|California
(State or other jurisdiction of
Incorporation or organization) |  | 94-2918118
(IRS Employer
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

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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. Yes [X] No [    ]

As of October 31, 2002 there are outstanding 3,783,203 shares of the
Registrants common stock.



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TABLE OF CONTENTS



|                                                     |                                                                |  |  |  |  |  |  | 
|---------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION                      
|                                                     | ITEM 1. FINANCIAL STATEMENTS                                  
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                     | Item 4. Controls and Procedures                               
|PART II  OTHER INFORMATION                         
|                                                     | Item 1. Legal Proceedings.                                    
|                                                     | Item 2. Changes in Securities.                                
|                                                     | 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.                     
|SIGNATURES                                          
|Quarterly Report for Period Ended 09-30-2002        
|Exhibit 10.40                                       
|Exhibit 10.41                                       



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PART 1  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                           |                                                                                                    |   |                |            |               |   |            |            |  
|-------------------------- | -------------------------------------------------------------------------------------------------- | - | -------------- | ---------- | ------------- | - | ---------- | ---------- | -
|                           |                                                                                                    |   | (unaudited)    |            | (audited)    
|                           |                                                                                                    |   | Sept. 30, 2002 |            | Dec. 31, 2001
|                           |                                                                                                    |   |                |            |              
|ASSETS                     |                                                                                                    |   |                |            |               |   |            |           
|Current assets:            |                                                                                                    |   |                |            |               |   |            |           
|                           | Cash and cash equivalents                                                                          |   | $              | 10,457,000 |               |   | $          | 11,580,000 |  
|                           | Restricted cash                                                                                    |   |                | 50,000     |               |   |            | 50,000     |  
|                           | Accounts receivable, net of allowance
for
doubtful accounts of $84,000 in 2002
and $70,000 in 2001 |   |                | 3,171,000  |               |   |            | 2,369,000  |  
|                           | Prepaid expenses and other assets                                                                  |   |                | 550,000    |               |   |            | 789,000    |  
|                           |                                                                                                    |   |                |            |               |   |            |           
|Total current assets       |                                                                                                    |   | 14,228,000     |            |               |   | 14,788,000 |           
|Property and equipment:    |                                                                                                    |   |                |            |               |   |            |           
|                           | Medical equipment and facilities                                                                   |   |                | 37,239,000 |               |   |            | 31,278,000 |  
|                           | Office equipment                                                                                   |   |                | 391,000    |               |   |            | 234,000    |  
|                           | Deposits and construction in progress                                                              |   |                | 2,064,000  |               |   |            | 3,202,000  |  
|                           |                                                                                                    |   |                |            |               |   |            |           
|                           |                                                                                                    |   | 39,694,000     |            |               |   | 34,714,000 |           
|                           | Accumulated depreciation and
amortization                                                          |   |                | (9,942,000 | )             |   |            | (7,360,000 | )
|                           |                                                                                                    |   |                |            |               |   |            |           
|Net property and equipment |                                                                                                    |   | 29,752,000     |            |               |   | 27,354,000 |           
|Other assets               |                                                                                                    |   | 559,000        |            |               |   | 243,000    |           
|                           |                                                                                                    |   |                |            |               |   |            |           
|Total assets               |                                                                                                    | $ | 44,539,000     |            |               | $ | 42,385,000 |           
|                           |                                                                                                    |   |                |            |               |   |            |           

|                                           |                                    |                                                                                                        |            |                |           |               |            |           |           | 
|------------------------------------------ | ---------------------------------- | ------------------------------------------------------------------------------------------------------ | ---------- | -------------- | --------- | ------------- | ---------- | --------- | --------- | 
|                                           |                                    |                                                                                                        |            | (unaudited)    |           | (audited)    
|                                           |                                    |                                                                                                        |            | Sept. 30, 2002 |           | Dec. 31, 2001
|                                           |                                    |                                                                                                        |            |                |           |              
|LIABILITIES AND
SHAREHOLDERS EQUITY       |                                    |                                                                                                        |            |                |           |               |            |          
|Current liabilities:                       |                                    |                                                                                                        |            |                |           |               |            |          
|                                           | Accounts payable                   |                                                                                                        | $          | 251,000        |           |               | $          | 412,000   |          
|                                           | Accrued interest                   |                                                                                                        |            | 194,000        |           |               |            | 176,000   |          
|                                           | Employee compensation and benefits |                                                                                                        |            | 123,000        |           |               |            | 215,000   |          
|                                           | Other accrued liabilities          |                                                                                                        |            | 305,000        |           |               |            | 329,000   |          
|                                           | Current portion of long-term debt  |                                                                                                        |            | 5,265,000      |           |               |            | 4,305,000 |          
|                                           |                                    |                                                                                                        |            |                |           |               |            |          
|Total current liabilities                  |                                    |                                                                                                        | 6,138,000  |                |           |               | 5,437,000  |          
|Long-term debt, less current portion       |                                    |                                                                                                        | 21,782,000 |                |           |               | 21,615,000 |          
|Deferred income taxes                      |                                    |                                                                                                        | 881,000    |                |           |               | 383,000    |          
|Minority interest                          |                                    |                                                                                                        | 1,386,000  |                |           |               | 1,165,000  |          
|Shareholders equity:                      |                                    |                                                                                                        |            |                |           |               |            |          
|                                           | Common stock, without par value:   |                                                                                                        |            |                |           |               |            |           |          
|                                           |                                    | authorized shares - 10,000,000; issued
and outstanding shares, 3,783,000 in
2002 and 3,525,000 in 2001 |            |                | 9,173,000 |               |            |           | 9,240,000 | 
|                                           | Additional paid-in capital         |                                                                                                        |            | 3,312,000      |           |               |            | 3,154,000 |          
|                                           | Retained earnings                  |                                                                                                        |            | 1,867,000      |           |               |            | 1,391,000 |          
|                                           |                                    |                                                                                                        |            |                |           |               |            |          
|Total shareholders equity                 |                                    |                                                                                                        | 14,352,000 |                |           |               | 13,785,000 |          
|                                           |                                    |                                                                                                        |            |                |           |               |            |          
|Total liabilities and shareholders equity |                                    | $                                                                                                      | 44,539,000 |                |           | $             | 42,385,000 |          
|                                           |                                    |                                                                                                        |            |                |           |               |            |          

See accompanying notes

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AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)


|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |           |           | 
|-------------------------- | --------------------------------------------- | ----------------------------- | --------- | ---------------------------- | ------- | --------------------------- | --------- | --------- | ------- | ---- | --------- | ---------- | --------- | - | --------- | --------- | --------- | 
|                           |                                               |                               |           | Three Months ended Sept. 30, |         | Nine Months ended Sept. 30,
|                           |                                               |                               |           |                              |         |                            
|                           |                                               |                               |           | 2002                         |         | 2001                        |           | 2002      |         | 2001
|                           |                                               |                               |           |                              |         |                             |           |           |         |     
|Revenues:                  |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           | Medical services                              |                               | $         | 3,563,000                    |         |                             | $         | 3,050,000 |         |      | $         | 10,024,000 |           |   | $         | 8,729,000 |          
|Costs and expenses:        |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           | Costs of operations:                          |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |           |          
|                           |                                               | Maintenance and supplies      |           |                              | 141,000 |                             |           |           | 90,000  |      |           |            | 324,000   |   |           |           | 257,000   | 
|                           |                                               | Depreciation and amortization |           |                              | 911,000 |                             |           |           | 788,000 |      |           |            | 2,539,000 |   |           |           | 2,160,000 | 
|                           |                                               | Other                         |           |                              | 290,000 |                             |           |           | 188,000 |      |           |            | 1,011,000 |   |           |           | 727,000   | 
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           |                                               |                               | 1,342,000 |                              |         |                             | 1,066,000 |           |         |      | 3,874,000 |            |           |   | 3,144,000 |          
|                           | Selling and administrative                    |                               |           | 899,000                      |         |                             |           | 798,000   |         |      |           | 2,560,000  |           |   |           | 2,379,000 |          
|                           | Interest                                      |                               |           | 626,000                      |         |                             |           | 652,000   |         |      |           | 1,825,000  |           |   |           | 1,875,000 |          
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|Total costs and expenses   |                                               |                               | 2,867,000 |                              |         |                             | 2,516,000 |           |         |      | 8,259,000 |            |           |   | 7,398,000 |          
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           |                                               |                               | 696,000   |                              |         |                             | 534,000   |           |         |      | 1,765,000 |            |           |   | 1,331,000 |          
|Interest and other income  |                                               |                               | 41,000    |                              |         |                             | 100,000   |           |         |      | 138,000   |            |           |   | 388,000   |          
|Minority interest          |                                               |                               | (264,000  | )                            |         |                             | (208,000  | )         |         |      | (659,000  | )          |           |   | (566,000  | )        
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|Income before income taxes |                                               |                               | 473,000   |                              |         |                             | 426,000   |           |         |      | 1,244,000 |            |           |   | 1,153,000 |          
|Income tax (expense)       |                                               |                               | (190,000  | )                            |         |                             | (170,000  | )         |         |      | (330,000  | )          |           |   | (294,000  | )        
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|Net income                 |                                               | $                             | 283,000   |                              |         | $                           | 256,000   |           |         | $    | 914,000   |            |           | $ | 859,000   |          
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|Net income per share:      |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           | Earnings per common share  basic             |                               | $         | 0.08                         |         |                             | $         | 0.07      |         |      | $         | 0.25       |           |   | $         | 0.24      |          
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          
|                           | Earnings per common share  assuming
dilution |                               | $         | 0.06                         |         |                             | $         | 0.05      |         |      | $         | 0.18       |           |   | $         | 0.17      |          
|                           |                                               |                               |           |                              |         |                             |           |           |         |      |           |            |           |   |           |          

See accompanying notes

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AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |            |           |          |  
|------------------------------------------------------------------- | ----------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------------- | ---------- | --------------------------- | -------- | --------- | ---------- | --------- | -------- | -
|                                                                    |                                                             |                                              |                                                          |            | Nine Months ended Sept. 30,
|                                                                    |                                                             |                                              |                                                          |            |                            
|                                                                    |                                                             |                                              |                                                          |            | 2002                        |          | 2001     
|                                                                    |                                                             |                                              |                                                          |            |                             |          |          
|Operating activities:                                               |                                                             |                                              |                                                          |            |                             |          |           |           
|Net income                                                          |                                                             | $                                            | 914,000                                                  |            |                             | $        | 859,000   |           
|Adjustments to reconcile net cash provided by operating activities: |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    |                                                             | Depreciation and amortization                |                                                          |            | 2,611,000                   |          |           |            | 2,212,000 |         
|                                                                    |                                                             | Deferred income taxes                        |                                                          |            | 330,000                     |          |           |            | 294,000   |         
|                                                                    |                                                             | Changes in operating assets and liabilities: |                                                          |            |                             |          |           |            |           |         
|                                                                    |                                                             |                                              | (Increase) in accounts receivable                        |            |                             | (802,000 | )         |            |           | (239,000 | )
|                                                                    |                                                             |                                              | Decrease (increase) in prepaid expenses and other assets |            |                             | 222,000  |           |            |           | (5,000   | )
|                                                                    |                                                             |                                              | (Decrease) in accounts payable and accrued liabilities   |            |                             | (259,000 | )         |            |           | (10,000  | )
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|Net cash from operating activities                                  |                                                             |                                              | 3,016,000                                                |            |                             |          | 3,111,000 |           
|Investing activities:                                               |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Purchase of property and equipment (net of financing)       |                                              |                                                          | (627,000   | )                           |          |           | (694,000   | )        
|                                                                    | Increase in minority interest                               |                                              |                                                          | 221,000    |                             |          |           | 14,000     |          
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Net cash from investing activities                          |                                              |                                                          | (406,000   | )                           |          |           | (680,000   | )        
|Financing activities:                                               |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Payment of dividends                                        |                                              |                                                          | (438,000   | )                           |          |           | (361,000   | )        
|                                                                    | Payment received for exercise of stock options              |                                              |                                                          | 68,000     |                             |          |           | 15,000     |          
|                                                                    | Repurchase of options/warrants                              |                                              |                                                          | 0          |                             |          |           | (74,000    | )        
|                                                                    | Repurchase of common stock                                  |                                              |                                                          | (135,000   | )                           |          |           | (521,000   | )        
|                                                                    | Principal payments on long-term debt and capitalized leases |                                              |                                                          | (3,228,000 | )                           |          |           | (2,362,000 | )        
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Net cash from financing activities                          |                                              |                                                          | (3,733,000 | )                           |          |           | (3,303,000 | )        
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Net (decrease) in cash and cash equivalents                 |                                              |                                                          | (1,123,000 | )                           |          |           | (872,000   | )        
|                                                                    | Cash and cash equivalents at beginning of period            |                                              |                                                          | 11,580,000 |                             |          |           | 12,421,000 |          
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Cash and cash equivalents at end of period                  |                                              | $                                                        | 10,457,000 |                             |          | $         | 11,549,000 |          
|                                                                    |                                                             |                                              |                                                          |            |                             |          |           |           
|Supplemental cash flow disclosure:                                  |                                                             |                                              |                                                          |            |                             |          |           |           
|                                                                    | Cash paid during the period for:                            |                                              |                                                          |            |                             |          |           |            |          
|                                                                    |                                                             | Interest paid                                |                                                          | $          | 1,808,000                   |          |           | $          | 1,815,000 |         
|                                                                    |                                                             | Income taxes paid                            |                                                          | $          | 85,000                      |          |           | $          | 23,000    |         

See accompanying notes

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AMERICAN SHARED HOSPITAL SERVICES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


Note 1. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly American Shared Hospital
Services consolidated financial position as of September 30, 2002 and the
results of its operations for the three and nine month periods ended September
30, 2002 and 2001, which results are not necessarily indicative of results on
an annualized basis. Consolidated balance sheet amounts as of December 31,
2001 have been derived from audited financial statements.

These financial statements include the accounts of American Shared
Hospital Services (the Company) and its wholly-owned subsidiaries: American
Shared Radiosurgery Services; OR21, Inc. (OR21); MMRI, Inc.; MedLeader.com,
Inc. (MedLeader); and the Companys majority-owned subsidiary, GK Financing,
LLC (GK Financing).

The Company through its majority-owned subsidiary, GK Financing, provided
Gamma Knife units to fourteen medical centers as of September 30, 2002 in
Arkansas, California, Connecticut, Florida, Illinois, Massachusetts,
Mississippi, Nevada, New Jersey, New York, Ohio, Texas and Wisconsin.

All significant intercompany accounts and transactions have been
eliminated in consolidation.

Note 2. Per Share Amounts

Per share information has been computed based on the weighted average
number of common shares and dilutive common share equivalents outstanding. For
the three and nine months ended September 30, 2002 basic earnings per share was
computed using 3,769,000 and 3,681,000 common shares, and diluted earnings per
share was computed using 5,082,000 and 5,059,000 common shares and equivalents,
respectively. For the three and nine months ended September 30, 2001 basic
earnings per share was computed using 3,549,000 and 3,581,000 common shares,
and diluted earnings per share was computed using 5,126,000 and 5,148,000
common shares and equivalents, respectively.

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

Medical services revenues increased $513,000 and $1,295,000 for the three
and nine month periods ended September 30, 2002 from $3,050,000 and $8,729,000
for the three and nine month periods ended September 30, 2001. The revenue
increase in third quarter 2002 compared to third quarter 2001 reflects
increased revenue at Gamma Knife centers in operation for longer

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than one year and the increase in revenue from two additional Gamma Knife
units. For the nine months ended September 30, 2002, the increase is due to two
new Gamma Knife units that started during 2002, the full nine month inclusion
of two Gamma Knife units that started in 2001, and a three percent (3%)
increase in revenue at Gamma Knife centers in operation more than one year. The
Company had 14 Gamma Knife units in operation at September 30, 2002 compared to
12 at September 30, 2001. Twelve (12) of the Companys customers are under
fee-per-use contracts, and two customers are under revenue sharing agreements
(retail). For retail units, the Company receives all or a percentage of the
reimbursement (exclusive of physician fees) received by the customer, and is
responsible for all or a percentage of the operating expenses of the Gamma
Knife.

The number of Gamma Knife procedures increased by 21% and 17% to 470 and
1,274 for the three and nine month periods ended September 30, 2002 from 390
and 1,093 for the three and nine month periods ended September 30, 2001,
respectively. These increases were due to the addition of two new Gamma Knife
units during 2002 (one each in the second and third quarter), two new Gamma
Knife units during second quarter 2001, and an increase in procedures performed
at units in operation for more than one year of 10% and 6% for the three and
nine month periods, respectively.

Total costs of operations increased $276,000 and $730,000 for the three
and nine month periods ended September 30, 2002 from $1,066,000 and $3,144,000
for the three and nine month periods ended September 30, 2001. Maintenance and
supplies increased $51,000 and $67,000 for the three and nine month periods
ended September 30, 2002 compared to the same periods in the prior year due to
additional Gamma Knife units that started contract maintenance after the
expiration of each units warranty period. There were eleven Gamma Knife units
covered under contract maintenance as of September 30, 2002 compared to nine as
of September 30, 2001. Depreciation and amortization increased $123,000 and
$379,000 for the three and nine month periods ended September 30, 2002 compared
to the same periods in the prior year due to the addition of one new Gamma
Knife unit in each of the second and third quarters of 2002, the upgrade of one
unit to a Model C in first quarter 2002, and the full nine month inclusion of
two new Gamma Knife units that started in second quarter 2001. Other operating
costs increased $102,000 and $284,000 for the three and nine month periods
ended September 30, 2002 compared to the same periods in the prior year,
respectively. These increases were primarily due to higher marketing and
insurance costs, and were partially offset by a $70,000 use tax credit recorded
during third quarter 2002.

Selling and administrative costs increased $101,000 and $181,000 for the
three and nine month periods ended September 30, 2002 from $798,000 and
$2,379,000 for the three and nine month periods ended September 30, 2001. For
both the three and nine month periods this increase is primarily due to
increased payroll related costs, rent expense and legal fees. For the nine
month period, selling and administrative cost increases were partially offset
by reduced costs ($102,000) in 2002 associated with the Companys subsidiaries,
OR21 and Medleader.

Interest expense decreased $26,000 and $50,000 for the three and nine
month periods ended September 30, 2002 from $652,000 and $1,875,000 for the
three and nine month periods ended September 30, 2001. This is primarily due
to lower interest expense on the debt relating

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to the more mature Gamma Knife units. The mature units have lower
interest expense because interest expense decreases as the outstanding balance
of each loan in reduced. This reduction offset the additional interest expense
on the financing of the two new Gamma Knife units during 2002.

Interest and other income decreased $59,000 and $250,000 for the three and
nine month periods ended September 30, 2002 from $100,000 and $388,000 for the
three and nine month periods ended September 30, 2001 primarily due to lower
interest rates on invested cash balances.

Minority interest increased $56,000 and $93,000 for the three and nine
month periods ended September 30, 2002 from $208,000 and $566,000 for the three
and nine month periods ended September 30, 2001 due to increased profitability
of GK Financing. Minority interest represents the 19% interest of GK Financing
owned by a third party.

The Company recorded a 40% income tax provision in both third quarter 2002
($190,000) and third quarter 2001 ($170,000). For the nine months ended
September 2002, the Company recorded a 40% income tax provision that was
partially offset by an income tax benefit of $168,000 which resulted from the
exercise of options to purchase 260,000 common shares during the first and
second quarter. The income tax benefits are the result of compensation expense
that was recognized when these options for common shares were granted in 1995.
For the nine months ended September 2001, the Company did not begin recording a
40% income tax provision until second quarter 2001 due to net operating loss
carryforwards available for tax purposes.

The Company had net income of $283,000 ($0.08 per basic share) and
$914,000 ($0.25 per basic share) for the three and nine month periods ended
September 30, 2002 compared to net income of $256,000 ($0.07 per basic share)
and $859,000 ($0.24 per basic share) in the same periods in the prior year.
The increase for both the three and nine month periods ended September 30, 2002
is primarily the result of a 17% and 15% increase in revenue over the same
periods in the prior year respectively. The increases in net income due to
revenue growth were partially offset by a reduction in interest and other
income of $59,000 and $250,000 for the three and nine month periods. For the
nine month period there was also a decrease in costs associated with MedLeader
and OR21, primarily because the Company has delayed further activity in
MedLeader at this time.

Liquidity and Capital Resources

The Company had cash and cash equivalents of $10,457,000 at September 30,
2002 compared to $11,580,000 at December 31, 2001. The Companys cash position
decreased by $1,123,000, primarily due to purchases of property and equipment
of $627,000 (including deposits of $475,000 on future Gamma Knife purchases),
payment of annual dividends of $0.12 per share ($438,000) to shareholders of
record on March 15, 2002, a reduction in accounts payable and other accrued
liabilities of $259,000, and increased principal payments on long term debt
relating to the Gamma Knife units.

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The Company as of September 30, 2002 had shareholders equity of
$14,352,000, working capital of $8,090,000 and total assets of approximately
$44,539,000.

The Company has scheduled interest and principal payments under its debt
obligations of approximately $7,787,000 during the next 12 months. The Company
believes that its cash flow from operations and cash resources is adequate to
meet its scheduled debt obligations during the next 12 months.

The Company is investing its cash in an institutionally priced money
market fund pending use in the Companys operations. The investment objective
of the money market fund is to maintain a stable net asset value, in order to
maximize yield while preserving principal value.




Item 4. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures. Our chief executive
officer and our chief financial officer, after evaluating the effectiveness of
the Companys disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) as of a date (the Evaluation Date) within 90
days of the filing date of this quarterly report, have concluded that as of the
Evaluation Date, our disclosure controls and procedures were adequate and
designed to ensure that material information relating to us and our
consolidated subsidiaries would be made known to them by others within those
entities.

(b)  Changes in internal controls. There were no significant changes in
our internal controls or in other factors that could significantly affect our
internal controls subsequent to the Evaluation Date.

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PART II  OTHER INFORMATION




Item 1. Legal Proceedings.

None.




Item 2. Changes in Securities.

None.




Item 3. Defaults upon Senior Securities.

None.




Item 4. Submission of Matters to a Vote of Securities Holders.

None.




Item 5. Other Information.

None.




Item 6. Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits
The following exhibit is filed herewith:
| | --- |  | -------------------------------------------------

|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.40          |  | Lease Agreement for a Gamma Knife
Unit dated as of September 13, 2001 between GK
Financing, LLC and Mercy 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.)                      
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.41          |  | Addendum Number One to Contract with
GKF and Mercy Medical Center, dated September 13, 2001
between GK Financing, LLC and Mercy 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.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AMERICAN SHARED HOSPITAL SERVICES
Registrant

|      |  |                   |  |                                                                            
|----- |  | ----------------- |  | ---------------------------------------------------------------------------
|Date: |  | November 14, 2002 |  | /s/ Ernest A. Bates                                                        
|     
|      |  |                   |  |                                                                            
|      |  |                   |  | Ernest A. Bates, M.D.
Chairman of the Board and
Chief Executive Officer    
|     
|      |  |                   |  |                                                                            
|     
|      |  |                   |  |                                                                            
|     
|Date: |  | November 14, 2002 |  | /s/ Craig K. Tagawa                                                        
|     
|      |  |                   |  |                                                                            
|      |  |                   |  | Craig K. Tagawa
Senior Vice President
Chief Operating and Financial Officer

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CERTIFICATION

I, Craig K. Tagawa, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of American Shared
Hospital Services;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

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6. The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

October 31, 2002



| | /s/   Craig K. Tagawa
| | ---------------------

| | Craig K. Tagawa
| | ---------------

| | Chief Financial Officer
| | -----------------------

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CERTIFICATION

I, Ernest A. Bates, M.D., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of American Shared
Hospital Services;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

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6. The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

October 31, 2002



| | /s/   Ernest A.
Bates, M.D.
| | ---------------------------

| | Ernest A. Bates, M.D.
| | ---------------------

| | Chief Executive Officer
| | -----------------------

14