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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549





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 March 31, 2003 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   [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Securities Exchange Act
Rule 12b-2).   Yes  [   ]   No   [X]

As of May 4, 2003, there are outstanding 3,818,203 shares of the Registrants
common stock.





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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | 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                    
|CERTIFICATION                 
|Exhibit 10.42                 



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PART I - FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED BALANCE SHEETS

|                         |                                                                                                      |               |             |               |           |   |            |             |  
|------------------------ | ---------------------------------------------------------------------------------------------------- | ------------- | ----------- | ------------- | --------- | - | ---------- | ----------- | -
|                         |                                                                                                      |               | (unaudited) |               | (audited)
|ASSETS                   |                                                                                                      | Mar. 31, 2003 |             | Dec. 31, 2002
|                         |                                                                                                      |               |             |              
|Current assets:          |                                                                                                      |               |             |               |           |   |            |            
|                         | Cash and cash equivalents                                                                            |               | $           | 11,341,000    |           |   | $          | 9,924,000   |  
|                         | Restricted cash                                                                                      |               |             | 50,000        |           |   |            | 50,000      |  
|                         | Accounts receivable, net of allowance for
doubtful accounts of $120,000 in 2003
and $120,000 in 2002 |               |             | 2,258,000     |           |   |            | 2,571,000   |  
|                         | Prepaid expenses and other assets                                                                    |               |             | 834,000       |           |   |            | 876,000     |  
|                         |                                                                                                      |               |             |               |           |   |            |             |  
|Total current assets     |                                                                                                      |               | 14,483,000  |               |           |   | 13,421,000 |            
|Property and equipment:  |                                                                                                      |               |             |               |           |   |            |            
|                         | Medical equipment and facilities                                                                     |               |             | 40,312,000    |           |   |            | 37,306,000  |  
|                         | Office equipment                                                                                     |               |             | 361,000       |           |   |            | 358,000     |  
|                         | Deposits and construction in progress                                                                |               |             | 3,199,000     |           |   |            | 4,372,000   |  
|                         |                                                                                                      |               |             |               |           |   |            |             |  
|                         |                                                                                                      |               | 43,872,000  |               |           |   | 42,036,000 |            
|                         | Accumulated depreciation and
amortization                                                            |               |             | (11,810,000   | )         |   |            | (10,858,000 | )
|                         |                                                                                                      |               |             |               |           |   |            |             |  
|Net property & equipment |                                                                                                      |               | 32,062,000  |               |           |   | 31,178,000 |            
|Other assets             |                                                                                                      |               | 184,000     |               |           |   | 231,000    |            
|                         |                                                                                                      |               |             |               |           |   |            |             |  
|Total assets             |                                                                                                      | $             | 46,729,000  |               |           | $ | 44,830,000 |            
|                         |                                                                                                      |               |             |               |           |   |            |            

|                                           |                                    |                                                                                                      |            |               |           |   |            |           |           | 
|------------------------------------------ | ---------------------------------- | ---------------------------------------------------------------------------------------------------- | ---------- | ------------- | --------- | - | ---------- | --------- | --------- | 
|LIABILITIES AND                            |                                    | (unaudited)                                                                                          |            | (audited)    
|SHAREHOLDERS EQUITY                       |                                    | Mar. 31, 2003                                                                                        |            | Dec. 31, 2002
|                                           |                                    |                                                                                                      |            |              
|Current liabilities:                       |                                    |                                                                                                      |            |               |           |   |            |          
|                                           | Accounts payable                   |                                                                                                      | $          | 129,000       |           |   | $          | 145,000   |          
|                                           | Accrued interest                   |                                                                                                      |            | 191,000       |           |   |            | 185,000   |          
|                                           | Employee compensation and benefits |                                                                                                      |            | 115,000       |           |   |            | 126,000   |          
|                                           | Other accrued liabilities          |                                                                                                      |            | 793,000       |           |   |            | 280,000   |          
|                                           | Income taxes payable               |                                                                                                      |            | 0             |           |   |            | 20,000    |          
|                                           | Current portion of long-term debt  |                                                                                                      |            | 5,882,000     |           |   |            | 5,490,000 |          
|                                           |                                    |                                                                                                      |            |               |           |   |            |           |          
|Total current liabilities                  |                                    |                                                                                                      | 7,110,000  |               |           |   | 6,246,000  |          
|Long-term debt, less current portion       |                                    |                                                                                                      | 22,965,000 |               |           |   | 22,006,000 |          
|Deferred income taxes                      |                                    |                                                                                                      | 766,000    |               |           |   | 590,000    |          
|Minority interest                          |                                    |                                                                                                      | 1,421,000  |               |           |   | 1,448,000  |          
|Shareholders equity:                      |                                    |                                                                                                      |            |               |           |   |            |          
|                                           | Common stock, without par value:   |                                                                                                      |            |               |           |   |            |           |          
|                                           |                                    | authorized shares - 10,000,000; issued
& outstanding shares, 3,818,000 in 2003
and 3,783,000 in 2002 |            |               | 9,197,000 |   |            |           | 9,173,000 | 
|                                           | Additional paid-in capital         |                                                                                                      |            | 3,333,000     |           |   |            | 3,312,000 |          
|                                           | Retained earnings                  |                                                                                                      |            | 1,937,000     |           |   |            | 2,055,000 |          
|                                           |                                    |                                                                                                      |            |               |           |   |            |           |          
|Total shareholders equity                 |                                    |                                                                                                      | 14,467,000 |               |           |   | 14,540,000 |          
|                                           |                                    |                                                                                                      |            |               |           |   |            |           |          
|Total liabilities and shareholders equity |                                    | $                                                                                                    | 46,729,000 |               |           | $ | 44,830,000 |          
|                                           |                                    |                                                                                                      |            |               |           |   |            |          

See accompanying notes

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AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                           |                                               |                               |           |                              |         |      |           |           |         | 
|-------------------------- | --------------------------------------------- | ----------------------------- | --------- | ---------------------------- | ------- | ---- | --------- | --------- | ------- | 
|                           |                                               |                               |           | Three Months ended March 31,
|                           |                                               |                               |           | 2003                         |         | 2002
|                           |                                               |                               |           |                              |         |     
|Revenues:                  |                                               |                               |           |                              |         |      |           |          
|                           | Medical services                              |                               | $         | 3,669,000                    |         |      | $         | 3,245,000 |        
|Costs and expenses:        |                                               |                               |           |                              |         |      |           |          
|                           | Costs of operations:                          |                               |           |                              |         |      |           |           |        
|                           |                                               | Maintenance and supplies      |           |                              | 145,000 |      |           |           | 79,000  | 
|                           |                                               | Depreciation and amortization |           |                              | 940,000 |      |           |           | 802,000 | 
|                           |                                               | Other                         |           |                              | 450,000 |      |           |           | 354,000 | 
|                           |                                               |                               |           |                              |         |      |           |           |        
|                           |                                               |                               | 1,535,000 |                              |         |      | 1,235,000 |          
|                           | Selling and administrative                    |                               |           | 826,000                      |         |      |           | 798,000   |        
|                           | Interest                                      |                               |           | 581,000                      |         |      |           | 624,000   |        
|                           |                                               |                               |           |                              |         |      |           |           |        
|Total costs and expenses   |                                               |                               | 2,942,000 |                              |         |      | 2,657,000 |          
|                           |                                               |                               |           |                              |         |      |           |           |        
|Operating income           |                                               |                               | 727,000   |                              |         |      | 588,000   |          
|Interest and other income  |                                               |                               | 44,000    |                              |         |      | 54,000    |          
|Minority interest          |                                               |                               | (238,000  | )                            |         |      | (217,000  | )        
|                           |                                               |                               |           |                              |         |      |           |           |        
|Income before income taxes |                                               |                               | 533,000   |                              |         |      | 425,000   |          
|Income tax expense         |                                               |                               | 197,000   |                              |         |      | 105,000   |          
|                           |                                               |                               |           |                              |         |      |           |           |        
|Net income                 |                                               | $                             | 336,000   |                              |         | $    | 320,000   |          
|                           |                                               |                               |           |                              |         |      |           |           |        
|Net income per share:      |                                               |                               |           |                              |         |      |           |          
|                           | Earnings per common share - basic             |                               | $         | 0.09                         |         |      | $         | 0.09      |        
|                           |                                               |                               |           |                              |         |      |           |           |        
|                           | Earnings per common share - assuming dilution |                               | $         | 0.07                         |         |      | $         | 0.06      |        
|                           |                                               |                               |           |                              |         |      |           |           |        

See accompanying notes

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

|                                                                    |                                                             |                                                                 |           |                              |         |      |         |            |          |  
|------------------------------------------------------------------- | ----------------------------------------------------------- | --------------------------------------------------------------- | --------- | ---------------------------- | ------- | ---- | ------- | ---------- | -------- | -
|                                                                    |                                                             |                                                                 |           | Three Months ended March 31,
|                                                                    |                                                             |                                                                 |           | 2003                         |         | 2002
|                                                                    |                                                             |                                                                 |           |                              |         |     
|Operating activities:                                               |                                                             |                                                                 |           |                              |         |      |         |           
|Net income                                                          |                                                             | $                                                               | 336,000   |                              |         | $    | 320,000 |           
|Adjustments to reconcile net cash provided by operating activities: |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Depreciation and amortization                               |                                                                 |           | 961,000                      |         |      |         | 820,000    |         
|                                                                    | Deferred income taxes                                       |                                                                 |           | 197,000                      |         |      |         | 105,000    |         
|                                                                    | Changes in operating assets and liabilities:                |                                                                 |           |                              |         |      |         |            |         
|                                                                    |                                                             | Decrease (increase) in accounts receivable                      |           |                              | 313,000 |      |         |            | (355,000 | )
|                                                                    |                                                             | Decrease in prepaid expenses and other assets                   |           |                              | 89,000  |      |         |            | 79,000   |  
|                                                                    |                                                             | Increase (decrease) in accounts payable and accrued liabilities |           |                              | 18,000  |      |         |            | (321,000 | )
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|Net cash from operating activities                                  |                                                             |                                                                 | 1,914,000 |                              |         |      | 648,000 |           
|Investing activities:                                               |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Purchase of property and equipment (net of financing)       |                                                                 |           | 811,000                      |         |      |         | (28,000    | )       
|                                                                    | (Decrease) in minority interest                             |                                                                 |           | (27,000                      | )       |      |         | (30,000    | )       
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Net cash from investing activities                          |                                                                 |           | 784,000                      |         |      |         | (58,000    | )       
|Financing activities:                                               |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Payment of dividends                                        |                                                                 |           | 0                            |         |      |         | 0          |         
|                                                                    | Payment received for exercise of options                    |                                                                 |           | 24,000                       |         |      |         | 42,000     |         
|                                                                    | Payment for repurchase of stock                             |                                                                 |           | 0                            |         |      |         | (135,000   | )       
|                                                                    | Principal payments on long-term debt and capitalized leases |                                                                 |           | (1,305,000                   | )       |      |         | (1,036,000 | )       
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Net cash from financing activities                          |                                                                 |           | (1,281,000                   | )       |      |         | (1,129,000 | )       
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Net increase (decrease) in cash and cash equivalents        |                                                                 |           | 1,417,000                    |         |      |         | (539,000   | )       
|                                                                    | Cash and cash equivalents at beginning of period            |                                                                 |           | 9,924,000                    |         |      |         | 11,580,000 |         
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Cash and cash equivalents at end of period                  |                                                                 | $         | 11,341,000                   |         |      | $       | 11,041,000 |         
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|Supplemental cash flow disclosure:                                  |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    | Cash paid during the period for:                            |                                                                 |           |                              |         |      |         |            |         
|                                                                    |                                                             | Interest                                                        |           | $                            | 576,000 |      |         | $          | 619,000  |  
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           
|                                                                    |                                                             | Income taxes                                                    |           | $                            | 19,000  |      |         | $          | 48,000   |  
|                                                                    |                                                             |                                                                 |           |                              |         |      |         |           

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 March 31, 2003 and the results
of its operations for the three month periods ended March 31, 2003 and 2002,
which results are not necessarily indicative of results on an annualized basis.
Consolidated balance sheet amounts as of December 31, 2002 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: OR21,
Inc. (OR21); MedLeader.com, Inc. (MedLeader); American Shared Radiosurgery
Services (ASRS); and ASRS majority-owned subsidiary, GK Financing, LLC (GK
Financing).

The Company through its majority-owned subsidiary, GK Financing, provided
Gamma Knife units to fifteen medical centers as of March 31, 2003 in Arkansas,
California, Connecticut, Florida, Illinois, Maryland, 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 months ended March 31, 2003 basic earnings per share was computed
using 3,787,000 common shares and diluted earnings per share was computed using
5,070,000 common shares and equivalents. For the three months ended March 31,
2002 basic earnings per share was computed using 3,554,000 common shares and
diluted earnings per share was computed using 5,012,000 common shares and
equivalents.

Note 3.       Stock-based Compensation

The Company has two stock-based employee compensation plans, the 1995 and
2001 Stock Option Plans. The Company accounts for those plans using the
intrinsic value method prescribed by APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price greater
than or equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition

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provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation. For pro forma purposes, the estimated fair value of the
Companys options is amortized over the options vesting period.

|                        |                                                                                                                                   |   |                        |      |      |   |         |        |  
|----------------------- | --------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------- | ---- | ---- | - | ------- | ------ | -
|                        |                                                                                                                                   |   | Quarter Ended March 31
|                        |                                                                                                                                   |   | 2003                   |      | 2002
|                        |                                                                                                                                   |   |                        |      |     
|Net income, as reported |                                                                                                                                   | $ | 336,000                |      |      | $ | 320,000 |       
|Deduct:                 | Total stock-based employee
compensation expensedetermined
under fair value based method for allawards,
net of related tax effects |   |                        | 0    |      |   |         | (9,000 | )
|Pro forma net income    |                                                                                                                                   | $ | 336,000                |      |      | $ | 311,000 |       
|Earnings per share:     |                                                                                                                                   |   |                        |      |      |   |         |       
|                        | Basic-as reported                                                                                                                 |   | $                      | 0.09 |      |   | $       | 0.09   |  
|                        | Basic-pro forma                                                                                                                   |   | $                      | 0.09 |      |   | $       | 0.09   |  
|                        | Diluted-as reported                                                                                                               |   | $                      | 0.07 |      |   | $       | 0.06   |  
|                        | Diluted-pro forma                                                                                                                 |   | $                      | 0.07 |      |   | $       | 0.06   |  




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

This quarterly report to the Securities and Exchange Commission may be
deemed to contain certain forward-looking statements with respect to the
financial condition, results of operations and future plans of American Shared
Hospital Services, which involve risks and uncertainties including, but not
limited to, the risks of the Gamma Knife business and the risks of developing
its IMRT and The Operating Room for the 21st Century® programs. Further
information on potential factors that could affect the financial condition,
results of operations and future plans of American Shared Hospital Services is
included in the filings of the Company with the Securities and Exchange
Commission, including the Companys Annual Report on Form 10-K for the year
ended December 31, 2002 and the definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on June 12, 2003.

Medical services revenues increased $424,000 to $3,669,000 for the three
month period ended March 31, 2003 from $3,245,000 for the three month period
ended March 31, 2002. The increase reflects the addition of three new Gamma
Knife units and a 3% revenue increase at Gamma Knife centers in operation for
longer than one year. The Company had fifteen Gamma Knife units in operation
at March 31, 2003 compared to twelve at March 31, 2002. Twelve of the
Companys customers are under fee-per-use contracts, and three 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 80 in first quarter 2003
to 490 from 410 in the same quarter in the prior year. This increase was the
result of a 9% increase in procedures performed at Gamma Knife units in
operation more than one year and the addition of three new units.

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Total costs of operations increased $300,000 to $1,535,000 for the three
month period ended March 31, 2003 from $1,235,000 for the three month period
ended March 31, 2002. Maintenance and supplies increased by $66,000 for the
three month period ended March 31, 2003 compared to the same period in the
prior year, primarily due to an increase in the number of Gamma Knife units
covered under maintenance contract, and a maintenance expense credit of $19,000
in the prior year. There were twelve Gamma Knife units covered under
maintenance contract as of March 31, 2003 compared to ten as of March 31, 2002.
Depreciation and amortization increased by $138,000 for the three month period
ended March 31, 2003 compared to the same period in the prior year due to the
addition of three new Gamma Knife units. Other operating costs increased
$96,000 for the three month period ended March 31, 2003 compared to the same
period in the prior year primarily due to an increase in marketing and
promotion costs.

Selling and administrative costs increased by $28,000 to $826,000 for the
three month period ended March 31, 2003 from $798,000 for the three month
period ended March 31, 2002. This increase was primarily due to the write-off
of approximately $58,000 in previously deferred costs relating to the future
placement of a Gamma Knife unit in Brazil. The Gamma Knife unit originally
scheduled for Brazil has been reallocated to another location. This write-off
was partially offset by reductions in legal and accounting fees and business
development costs.

Interest expense decreased by $43,000 to $581,000 for the three month
period ended March 31, 2003 from $624,000 for the three month period ended
March 31, 2002 primarily due to lower interest expense on the debt relating to
the more mature Gamma Knife units. The mature units have lower interest
expense because interest expense decreases as the outstanding principal balance
of each loan is reduced. Interest expense reduction on existing loans offset
additional interest expense from financings of three new Gamma Knife units. In
addition, the debt relating to newer Gamma Knife units is at a lower interest
rate than the more mature units.

Interest and other income decreased by $10,000 to $44,000 for the three
month period ended March 31, 2003 from $54,000 for the three month period ended
March 31, 2002 primarily due to lower average invested cash balances and lower
interest rates available on those balances.

Minority interest increased by $21,000 to $238,000 for the three month
period ended March 31, 2003 from $217,000 for the three month period ended
March 31, 2002 due to increased profitability of GK Financing. Minority
interest represents the 19% interest of GK Financing owned by a third party.

Income tax expense increased by $92,000 to $197,000 in the first quarter
2003 compared to $105,000 in the first quarter 2002. The increase was due to
increased profitability and an increase in the effective income tax rate in
first quarter 2003 compared to first quarter 2002. The Company recorded a 40%
income tax provision in both first quarter 2003 and first quarter 2002. The
effective income tax rate in 2003 was reduced to approximately 37% due to an
income tax benefit of $16,000 that was recorded for the exercise of 25,000 previously
expensed options. In first quarter 2002, the effective income tax rate was
reduced to 25% due to an income tax benefit of $65,000 that was recorded for
the exercise of 100,000 previously expensed options. These income tax benefits
are the result of compensation expense that was recognized when the options
were granted in 1995.

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The Company had net income of $336,000 ($0.07 per diluted share) for the
three month period ended March 31, 2003 compared to net income of $320,000
($0.06 per diluted share) in the same period in the prior year. The increase
was primarily due to increased utilization of Gamma Knife units in operation
more than one year, which resulted in higher operating income. This was
partially offset by higher income tax expense, primarily due to the higher
effective income tax rate of 37% in first quarter 2003 compared to 25% in first
quarter 2002.

Liquidity and Capital Resources

The Company had cash and cash equivalents of $11,341,000 at March 31, 2003
compared to $9,924,000 at December 31, 2002. The Companys cash position
increased by $1,417,000 primarily due to the net reimbursement of progress
payments of $966,000 on Gamma Knife projects financed in first quarter 2003 and
a decrease in accounts receivable of $313,000.

During first quarter 2003, the Company declared an annual dividend of
$0.12 per share to shareholders of record on March 14, 2003, which resulted in
a reduction in retained earnings of $454,000. The dividends are payable to
shareholders on April 4, 2003.

The Company as of March 31, 2003 had shareholders equity of $14,467,000,
working capital of $7,373,000 and total assets of approximately $46,729,000.

The Company has scheduled interest and principal payments under its debt
obligations of approximately $8,196,000 during the next 12 months. The Company
believes that its cash flow from operations and cash resources are 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.




PART II - OTHER INFORMATION

8



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##### Table of Contents






|        |  |                         
|------- |  | ------------------------
|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.
|        |  |                                  
|        |  | 10.42                             |  | Lease Agreement for a Gamma Knife Unit dated as
of May 22, 2002 between GK Financing, LLC and The Johns
Hopkins Hospital. (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.)

9



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##### Table of Contents






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: | May 15, 2003 | /s/ Ernest A. Bates

Ernest A. Bates, M.D.
Chairman of the Board and
Chief Executive Officer    
|      |              |                                                                                                 
|Date: | May 15, 2003 | /s/ Craig K. Tagawa

Craig K. Tagawa
Senior Vice President
Chief Operating and Financial Officer

10



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##### Table of Contents






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

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.

|             |  |                        
|------------ |  | -----------------------
|May 15, 2003 |  |                        
|             |  |                        
|             |  | /s/ Craig K. Tagawa    
|             |  |                        
|             |  | Craig K. Tagawa        
|             |  |                        
|             |  | Chief Financial Officer

11



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##### Table of Contents



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

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.

|             |  |                          
|------------ |  | -------------------------
|May 15, 2003 |  |                          
|             |  |                          
|             |  | /s/ Ernest A. Bates, M.D.
|             |  |                          
|             |  | Ernest A. Bates, M.D.    
|             |  |                          
|             |  | Chief Executive Officer  

12