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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For
the quarterly period ended September 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 
Incorporation or organization)
    
    (IRS Employer
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(Do not check if a smaller reporting company)
Smaller reporting company þ o o




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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 Proceedings.Item 1A. Risk FactorsItem 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.Item 5. Other Information.Item 6. ExhibitsSIGNATURESEX-31.1EX-31.2EX-32.1    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 (unaudited)
    
    
    (audited)ASSETS
    
    September 30, 2008
    
    
    December 31, 2007Current assets:Cash and cash equivalents
    
    $
    8,788,000
    
    
    $
    6,340,000Securities-current
    
    
    1,065,000
    
    
    
    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
    
    
    4,154,000
    
    
    
    4,886,000Other receivables
    
    
    227,000
    
    
    
    250,000Prepaid expenses and other current
assets
    
    
    291,000
    
    
    
    417,000Current deferred tax assets
    
    
    301,000
    
    
    
    301,000Total current assets
    
    
    14,876,000
    
    
    
    14,849,000Property and equipment:Medical equipment and facilities
    
    
    71,837,000
    
    
    
    66,562,000Office equipment
    
    
    695,000
    
    
    
    699,000Deposits and construction in progress
    
    
    4,892,000
    
    
    
    8,947,00077,424,000
    
    
    
    76,208,000Accumulated depreciation and
amortization
    
    
    (32,161,000
    )
    
    
    (31,982,000
    )Net property & equipment
    
    
    45,263,000
    
    
    
    44,226,000Securities
    
    
    0
    
    
    
    1,065,000Investment in preferred stock
    
    
    2,617,000
    
    
    
    2,617,000Other assets
    
    
    253,000
    
    
    
    287,000Total assets
    
    $
    63,009,000
    
    
    $
    63,044,000
 (unaudited)
    
    
    (audited)LIABILITIES AND
SHAREHOLDERS EQUITY
    
    September 30, 2008
    
    
    December 31, 2007Current liabilities:Accounts payable
    
    $
    402,000
    
    
    $
    795,000Accrued interest and other liabilities
    
    
    858,000
    
    
    
    793,000Employee compensation and benefits
    
    
    405,000
    
    
    
    142,000Advances on line of credit
    
    
    3,500,000
    
    
    
    4,100,000Current portion of long-term debt
    
    
    8,569,000
    
    
    
    7,180,000Current portion of capital leases
    
    
    1,389,000
    
    
    
    1,092,000Total current liabilities
    
    
    15,123,000
    
    
    
    14,102,000Long-term debt, less current portion
    
    
    17,636,000
    
    
    
    21,285,000Long-term capital leases, less current
portion
    
    
    4,948,000
    
    
    
    2,719,000Deferred income taxes
    
    
    2,245,000
    
    
    
    2,245,000Minority interest
    
    
    3,017,000
    
    
    
    3,153,000Shareholders equity:Common
stock, without par value: authorized shares  10,000,000;
issued
& outstanding shares, 5,028,000
in 2008
and 5,026,000 in 2007
    
    
    9,320,000
    
    
    
    9,320,000Additional paid-in capital
    
    
    4,410,000
    
    
    
    4,304,000Retained earnings
    
    
    6,310,000
    
    
    
    5,916,000Total shareholders equity
    
    
    20,040,000
    
    
    
    19,540,000Total liabilities and shareholders equity
    
    $
    63,009,000
    
    
    $
    63,044,000
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AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended September 30,
    
    
    Nine Months ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Medical services
    
    $
    4,532,000
    
    
    $
    4,652,000
    
    
    $
    14,359,000
    
    
    $
    14,311,000Costs and expenses:Costs of revenue:Maintenance and supplies
    
    
    275,000
    
    
    
    380,000
    
    
    
    843,000
    
    
    
    959,000Depreciation and amortization
    
    
    1,647,000
    
    
    
    1,514,000
    
    
    
    4,869,000
    
    
    
    4,406,000Other direct operating costs
    
    
    726,000
    
    
    
    602,000
    
    
    
    2,351,000
    
    
    
    2,114,0002,648,000
    
    
    
    2,496,000
    
    
    
    8,063,000
    
    
    
    7,479,000Gross margin
    
    
    1,884,000
    
    
    
    2,156,000
    
    
    
    6,296,000
    
    
    
    6,832,000Selling and administrative expense
    
    
    1,116,000
    
    
    
    1,038,000
    
    
    
    3,352,000
    
    
    
    3,408,000Interest expense
    
    
    638,000
    
    
    
    434,000
    
    
    
    1,833,000
    
    
    
    1,371,000Operating income
    
    
    130,000
    
    
    
    684,000
    
    
    
    1,111,000
    
    
    
    2,053,000Interest and other income
    
    
    90,000
    
    
    
    96,000
    
    
    
    323,000
    
    
    
    314,000Minority interest expense
    
    
    (171,000
    )
    
    
    (273,000
    )
    
    
    (662,000
    )
    
    
    (908,000
    )Income before income taxes
    
    
    49,000
    
    
    
    507,000
    
    
    
    772,000
    
    
    
    1,459,000Income tax expense
    
    
    24,000
    
    
    
    239,000
    
    
    
    378,000
    
    
    
    686,000Net income
    
    $
    25,000
    
    
    $
    268,000
    
    
    $
    394,000
    
    
    $
    773,000Earnings per share:Basic
    
    $
    0.00
    
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.15Diluted
    
    $
    0.00
    
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.15Basic shares
    
    
    5,028,000
    
    
    
    5,026,000
    
    
    
    5,028,000
    
    
    
    5,024,000Diluted shares
    
    
    5,030,000
    
    
    
    5,041,000
    
    
    
    5,029,000
    
    
    
    5,047,000
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AMERICAN SHARED HOSPITAL SERVICES
 Nine Months ended September 30,2008
    
    
    2007Operating activities:Net income
    
    $
    394,000
    
    
    $
    773,000Adjustments to reconcile net cash provided by operating activities:Depreciation and amortization
    
    
    4,967,000
    
    
    
    4,494,000Deferred income taxes
    
    
    145,000
    
    
    
    238,000Gain on sale of assets
    
    
    (56,000
    )
    
    
    0Stock based compensation expense
    
    
    106,000
    
    
    
    51,000Minority interest in consolidated subsidiaries
    
    
    662,000
    
    
    
    908,000Changes in operating assets and liabilities:Receivables
    
    
    755,000
    
    
    
    (573,000
    )Prepaid expenses and other assets
    
    
    121,000
    
    
    
    131,000Accounts payable and accrued liabilities
    
    
    (210,000
    )
    
    
    31,000Customer deposits
    
    
    0
    
    
    
    2,880,000Net cash from operating activities
    
    
    6,884,000
    
    
    
    8,933,000Investing activities:Payment for purchase of property and equipment
    
    
    (3,962,000
    )
    
    
    (12,755,000
    )Proceeds from sale and maturity of marketable securities
    
    
    2,605,000
    
    
    
    1,698,000Investment in marketable securities
    
    
    0
    
    
    
    (1,739,000
    )Investment in convertible preferred stock
    
    
    0
    
    
    
    (617,000
    )Proceeds from sale of assets
    
    
    1,473,000
    
    
    
    0Net cash from investing activities
    
    
    116,000
    
    
    
    (13,413,000
    )Financing activities:Principal payments on long-term debt
    
    
    (4,636,000
    )
    
    
    (4,028,000
    )Principal payments on capital leases
    
    
    (894,000
    )
    
    
    (723,000
    )Long-term debt financing on purchase of property and equipment
    
    
    2,376,000
    
    
    
    10,976,000Advances on line of credit
    
    
    0
    
    
    
    2,425,000Payments on line of credit
    
    
    (600,000
    )
    
    
    (2,225,000
    )Payment of dividends
    
    
    0
    
    
    
    (715,000
    )Distribution to minority owners
    
    
    (798,000
    )
    
    
    (836,000
    )Net cash from financing activities
    
    
    (4,552,000
    )
    
    
    4,874,000Net change in cash and cash equivalents
    
    
    2,448,000
    
    
    
    394,000Cash and cash equivalents at beginning of period
    
    
    6,340,000
    
    
    
    3,952,000Cash and cash equivalents at end of period
    
    $
    8,788,000
    
    
    $
    4,346,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    2,248,000
    
    
    $
    1,642,000Income taxes
    
    $
    233,000
    
    
    $
    448,000Schedule of noncash investing and financial activities:Acquisition of equipment with capital lease financing
    
    $
    3,420,000
    
    
    $
    0
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Note 1. Basis of Presentation
       Note 2. Per Share Amounts
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Note 3. Stock-based Compensation
  Accounting for Stock-Based
Compensation
  Note 4. Convertible Preferred Stock Investment
 250
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.
  Note 5. Line of Credit
  Note 6. Accounting for Uncertainty in Income Taxes
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
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Liquidity and Capital Resources
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held-to-maturity
 250
  250
 Subsequent Event
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 ,
 
 Item 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Securities Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits
 (a)
    
    Exhibits
  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.
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AMERICAN SHARED HOSPITAL SERVICES
                              RegistrantDate: November 13, 2008
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate: November 13, 2008
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President
Chief Operating and Financial Officer 15