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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, 2007
 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
(State or other jurisdiction of 
Incorporation or organization) 

Four Embarcadero Center, Suite 3700, San Francisco, California
(Address of Principal Executive Offices)
    
    94-2918118
(IRS Employer
Identification No.)94111
(Zip Code)
 Registrants telephone number, including area code: (415) 788-5300
 þ o
  o o þ




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ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 (unaudited)
    
    
    (audited)March 31, 2007
    
    
    Dec. 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,221,000
    
    
    $
    3,952,000Restricted cash
    
    
    50,000
    
    
    
    50,000Securities
    
    
    1,900,000
    
    
    
    1,574,000Accounts receivable, net of
allowance for
doubtful accounts of $170,000
in 2007
and $170,000 in 2006
    
    
    4,232,000
    
    
    
    4,248,000Other receivables
    
    
    168,000
    
    
    
    102,000Prepaid expenses and other assets
    
    
    554,000
    
    
    
    598,000Current deferred tax assets
    
    
    601,000
    
    
    
    601,000Total current assets
    
    
    10,726,000
    
    
    
    11,125,000Property and equipment:Medical equipment and facilities
    
    
    62,742,000
    
    
    
    61,828,000Office equipment
    
    
    578,000
    
    
    
    515,000Deposits and construction in progress
    
    
    3,369,000
    
    
    
    3,137,00066,689,000
    
    
    
    65,480,000Accumulated depreciation and
amortization
    
    
    (32,792,000
    )
    
    
    (31,314,000
    )Net property and equipment
    
    
    33,897,000
    
    
    
    34,166,000Securities
    
    
    3,795,000
    
    
    
    3,380,000Investment in preferred stock
    
    
    2,000,000
    
    
    
    2,000,000Other assets
    
    
    233,000
    
    
    
    234,000Total assets
    
    $
    50,651,000
    
    
    $
    50,905,000LIABILITIES AND
SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    357,000
    
    
    $
    340,000Employee compensation and benefits
    
    
    79,000
    
    
    
    116,000Accrued dividends
    
    
    239,000
    
    
    
    239,000Other accrued liabilities
    
    
    1,050,000
    
    
    
    1,095,000Current portion of long-term debt
    
    
    5,879,000
    
    
    
    4,867,000Current portion of obligations under capital
leases
    
    
    1,029,000
    
    
    
    1,009,000Line of credit advances
    
    
    3,200,000
    
    
    
    4,000,000Total current liabilities
    
    
    11,833,000
    
    
    
    11,666,000Long-term debt, less current portion
    
    
    11,282,000
    
    
    
    11,378,000Long term capital leases, less current portion
    
    
    3,546,000
    
    
    
    3,811,000Deferred income taxes
    
    
    1,996,000
    
    
    
    1,996,000Minority interest
    
    
    2,984,000
    
    
    
    3,045,000Shareholders equity:Common stock, without par value:authorized
shares  10,000,000; issued
and outstanding shares, 5,023,000 in 2007
and 5,023,000 in 2006
    
    
    9,317,000
    
    
    
    9,317,000Additional paid-in capital
    
    
    4,264,000
    
    
    
    4,251,000Retained earnings
    
    
    5,429,000
    
    
    
    5,441,000Total shareholders equity
    
    
    19,010,000
    
    
    
    19,009,000Total liabilities and shareholders equity
    
    $
    50,651,000
    
    
    $
    50,905,000
  2




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AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended March 31,2007
    
    
    2006Medical services revenue
    
    $
    4,749,000
    
    
    $
    5,045,000Costs of revenue:Maintenance and supplies
    
    
    346,000
    
    
    
    336,000Depreciation and amortization
    
    
    1,453,000
    
    
    
    1,462,000Other direct operating costs
    
    
    720,000
    
    
    
    824,0002,519,000
    
    
    
    2,622,000Gross Margin
    
    
    2,230,000
    
    
    
    2,423,000Selling and administrative expense
    
    
    1,161,000
    
    
    
    914,000Interest expense
    
    
    467,000
    
    
    
    563,000Operating income
    
    
    602,000
    
    
    
    946,000Interest and other income
    
    
    118,000
    
    
    
    90,000Minority interest expense
    
    
    (300,000
    )
    
    
    (316,000
    )Income before income taxes
    
    
    420,000
    
    
    
    720,000Income tax expense
    
    
    195,000
    
    
    
    284,000Net income
    
    $
    225,000
    
    
    $
    436,000Net income per share:Earnings per common share  basic
    
    $
    0.04
    
    
    $
    0.09Earnings per common share  assuming dilution
    
    $
    0.04
    
    
    $
    0.09
  3




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AMERICAN SHARED HOSPITAL SERVICES
 Three Months ended March 31,2007
    
    
    2006Operating
activities:Net income
    
    $
    225,000
    
    
    $
    436,000Adjustments to reconcile net income to net cash from operating activitiesDepreciation and amortization
    
    
    1,484,000
    
    
    
    1,492,000Deferred income tax
    
    
    (6,000
    )
    
    
    283,000Minority interest in consolidated subsidiaries
    
    
    300,000
    
    
    
    316,000Stock based compensation expense
    
    
    15,000
    
    
    
    8,000Changes in operating assets and liabilities:Receivables
    
    
    (50,000
    )
    
    
    (284,000
    )Prepaid expenses and other assets
    
    
    39,000
    
    
    
    8,000Accounts payable and accrued liabilities
    
    
    (59,000
    )
    
    
    (26,000
    )Net cash from operating activities
    
    
    1,948,000
    
    
    
    2,233,000Investing activities:Payment for purchase of property and equipment
    
    
    (1,209,000
    )
    
    
    (1,830,000
    )Proceeds from sales and maturities of marketable securities
    
    
    753,000
    
    
    
    577,000Investment in marketable securities
    
    
    (1,494,000
    )
    
    
    (507,000
    )Net cash from investing activities
    
    
    (1,950,000
    )
    
    
    (1,760,000
    )Financing activities:Payment of dividends
    
    
    (239,000
    )
    
    
    (238,000
    )Distribution to minority owners
    
    
    (361,000
    )
    
    
    (247,000
    )Long term debt financing on purchase of property and
equipment
    
    
    2,110,000
    
    
    
    Capital lease financing on purchase of property and equipment
    
    
    
    
    
    
    1,540,000Payments on line of credit
    
    
    (800,000
    )
    
    
    Principal payments on capital leases
    
    
    (245,000
    )
    
    
    (211,000
    )Principal payments on long-term debt
    
    
    (1,194,000
    )
    
    
    (1,449,000
    )Net cash from financing activities
    
    
    (729,000
    )
    
    
    (605,000
    )Net change in cash and cash equivalents
    
    
    (731,000
    )
    
    
    (132,000
    )Cash and cash equivalents at beginning of period
    
    
    3,952,000
    
    
    
    1,298,000Cash and cash equivalents at end of period
    
    $
    3,221,000
    
    
    $
    1,166,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    503,000
    
    
    $
    563,000Income taxes
    
    $
    210,000
    
    
    $
    127,000Schedule of non-cash investing and financing activitiesAccrued dividends
    
    $
    239,000
    
    
    $
    238,000
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Note 1. Basis of Presentation
      Note 2. Per Share Amounts
  Note 3. Stock-based Compensation
  5




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Note 4. Accounting for Uncertainty in Income Taxes
    6




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Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 st ®
   7




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8




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Liquidity and Capital Resources
       9




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held-to-maturity
    Item 3. Quantitative and Qualitative Disclosures About Market Risk
 ,
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures
 10




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Changes in internal control over financial reporting
 PART II  OTHER INFORMATION
 Item 1.
    
    Legal Proceedings.None.Item 1A.
    
    Risk FactorsThere are no changes from those listed in the Companys Annual Report on Form 10-K
for the year ended December 31, 2006.Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.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)
    
    ExhibitsThe following exhibits are filed herewith:
 Exhibit Number
    
    Description10.53
    
    Addendum Two to Lease Agreement for a Gamma
Knife Unit effective as of January 17, 2007 between GK Financing, LLC
and Sunrise Hospital Medical Center, LLC, d/b/a as Sunrise Hospital
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.
 11




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Exhibit Number
    
    DescriptionOmitted information has been replaced with
asterisks).31.1
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 (b)
    
    Reports on Form 8-KThe following report on Form 8-K was filed during the three months ended
March 31, 2007:
  The following report on Form 8-K was filed after March 31, 2007:
  12




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Date: May 15, 2007
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate: May 15, 2007
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President

Chief Operating and Financial Officer 13