##### Table of Contents



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, 2007 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For
the transition period fromto.
 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)
    
    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
 þ o
  o o þ
 o þ




---



TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4. Controls and ProceduresPART II  OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Securities HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT 10.19BEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1    Table of Contents  
  
 ITEM 1. FINANCIAL STATEMENTS
 AMERICAN SHARED HOSPITAL SERVICES
 (unaudited)
    
    
    (audited)September 30, 2007
    
    
    December 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,346,000
    
    
    $
    3,952,000Restricted cash
    
    
    50,000
    
    
    
    50,000Securities
    
    
    2,855,000
    
    
    
    1,574,000Accounts receivable, net of
allowance for doubtful accounts of
$170,000 in 2007 and $170,000 in 2006
    
    
    4,721,000
    
    
    
    4,248,000Other receivables
    
    
    202,000
    
    
    
    102,000Prepaid expenses and other assets
    
    
    390,000
    
    
    
    598,000Current deffered tax assets
    
    
    601,000
    
    
    
    601,000Total current assets
    
    
    13,165,000
    
    
    
    11,125,000Property and equipment:Medical equipment and facilities
    
    
    63,748,000
    
    
    
    61,828,000Office equipment
    
    
    691,000
    
    
    
    515,000Deposits and construction in
progress
    
    
    13,796,000
    
    
    
    3,137,00078,235,000
    
    
    
    65,480,000Accumulated
depreciation and amortization
    
    
    (35,790,000
    )
    
    
    (31,314,000
    )Net property & equipment
    
    
    42,445,000
    
    
    
    34,166,000Securities-long term
    
    
    2,140,000
    
    
    
    3,380,000Investment in preferred stock
    
    
    2,617,000
    
    
    
    2,000,000Other assets
    
    
    293,000
    
    
    
    234,000Total assets
    
    $
    60,660,000
    
    
    $
    50,905,000LIABILITIES AND
SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    330,000
    
    
    $
    340,000Other interest and other liabilities
    
    
    866,000
    
    
    
    913,000Customer deposits
    
    
    2,980,000
    
    
    
    100,000Employee compensation and benefits
    
    
    204,000
    
    
    
    116,000Accrued dividends
    
    
    0
    
    
    
    239,000Income taxes payable
    
    
    320,000
    
    
    
    82,000Advances on line of credit
    
    
    4,200,000
    
    
    
    4,000,000Current portion of long-term debt
    
    
    6,358,000
    
    
    
    4,867,000Current portion of long-term capital
leases
    
    
    1,097,000
    
    
    
    1,009,000Total current liabilities
    
    
    16,355,000
    
    
    
    11,666,000Long-term debt, less current portion
    
    
    16,835,000
    
    
    
    11,378,000Long-term capital leases, less current
portion
    
    
    3,000,000
    
    
    
    3,811,000Deferred income taxes
    
    
    1,996,000
    
    
    
    1,996,000Minority interest
    
    
    3,117,000
    
    
    
    3,045,000Shareholders equity:Common
stock, without par value: authorized shares - 10,000,000; issued
& outstanding shares, 5,026,587 in 2007 and 5,023,418 in 2006
    
    
    9,320,000
    
    
    
    9,317,000Additional paid-in capital
    
    
    4,298,000
    
    
    
    4,251,000Retained earnings
    
    
    5,739,000
    
    
    
    5,441,000Total shareholders equity
    
    
    19,357,000
    
    
    
    19,009,000Total liabilities and shareholders
equity
    
    $
    60,660,000
    
    
    $
    50,905,000
  2




---



##### Table of Contents



AMERICAN SHARED HOSPITAL SERVICES
 Three months ended Sep. 30,
    
    
    Nine months ended Sep. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Medical services revenue
    
    $
    4,652,000
    
    
    $
    5,238,000
    
    
    $
    14,311,000
    
    
    $
    15,592,000Costs and expenses:Costs of revenue:Maintenance and supplies
    
    
    380,000
    
    
    
    320,000
    
    
    
    959,000
    
    
    
    964,000Depreciation and amortization
    
    
    1,514,000
    
    
    
    1,466,000
    
    
    
    4,406,000
    
    
    
    4,382,000Other direct operating costs
    
    
    602,000
    
    
    
    803,000
    
    
    
    2,114,000
    
    
    
    2,540,0002,496,000
    
    
    
    2,589,000
    
    
    
    7,479,000
    
    
    
    7,886,000Gross margin
    
    
    2,156,000
    
    
    
    2,649,000
    
    
    
    6,832,000
    
    
    
    7,706,000Selling and administrative expense
    
    
    1,038,000
    
    
    
    1,109,000
    
    
    
    3,408,000
    
    
    
    3,101,000Interest expense
    
    
    434,000
    
    
    
    540,000
    
    
    
    1,371,000
    
    
    
    1,663,000Operating income
    
    
    684,000
    
    
    
    1,000,000
    
    
    
    2,053,000
    
    
    
    2,942,000Interest and other income
    
    
    96,000
    
    
    
    68,000
    
    
    
    314,000
    
    
    
    245,000Minority interest expense
    
    
    (273,000
    )
    
    
    (360,000
    )
    
    
    (908,000
    )
    
    
    (1,025,000
    )Income before income taxes
    
    
    507,000
    
    
    
    708,000
    
    
    
    1,459,000
    
    
    
    2,162,000Income tax expense
    
    
    239,000
    
    
    
    283,000
    
    
    
    686,000
    
    
    
    853,000Net income
    
    $
    268,000
    
    
    $
    425,000
    
    
    $
    773,000
    
    
    $
    1,309,000Earnings per share:Basic
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.26Diluted
    
    $
    0.05
    
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.26Basic shares
    
    
    5,026,000
    
    
    
    5,023,000
    
    
    
    5,024,000
    
    
    
    5,022,000Diluted shares
    
    
    5,041,000
    
    
    
    5,047,000
    
    
    
    5,047,000
    
    
    
    5,051,000
  3




---



##### Table of Contents



AMERICAN SHARED HOSPITAL SERVICES
 CONDENSED CONSOLIDATED CASH FLOWS STATEMENT(Unaudited)
 Nine months ended Sep. 30,2007
    
    
    2006Operating activities:Net income
    
    $
    773,000
    
    
    $
    1,309,000Adjustments to reconcile net cash provided by operating activities:Depreciation and amortization
    
    
    4,494,000
    
    
    
    4,458,000Deferred income taxes
    
    
    238,000
    
    
    
    853,000Loss on sale of assets
    
    
    0
    
    
    
    3,000Stock based compensation expense
    
    
    51,000
    
    
    
    25,000Minority interest in consolidated subsidiaries
    
    
    908,000
    
    
    
    1,025,000Changes in operating assets and liabilities:Receivables
    
    
    (573,000
    )
    
    
    (683,000
    )Prepaid expenses and other assets
    
    
    131,000
    
    
    
    (13,000
    )Customer deposits
    
    
    2,880,000
    
    
    
    100,000Accounts payable and accrued liabilities
    
    
    31,000
    
    
    
    (225,000
    )Net cash from operating activities
    
    
    8,933,000
    
    
    
    6,852,000Investing activities:Payment for purchase of property and equipment
    
    
    (12,755,000
    )
    
    
    (1,530,000
    )Proceeds from sale and maturity of marketable securities
    
    
    1,698,000
    
    
    
    3,983,000Investment in marketable securities
    
    
    (1,739,000
    )
    
    
    (3,039,000
    )Investment in convertible preferred stock
    
    
    (617,000
    )
    
    
    (2,000,000
    )Proceeds from sale of assets
    
    
    0
    
    
    
    20,000Net cash from investing activities
    
    
    (13,413,000
    )
    
    
    (2,566,000
    )Financing activities:Principal payments on long-term debt
    
    
    (4,028,000
    )
    
    
    (4,302,000
    )Principal payments on capital leases
    
    
    (723,000
    )
    
    
    (678,000
    )Long-term debt financing on purchase of property and equipment
    
    
    10,976,000
    
    
    
    0Advances on line of credit
    
    
    2,425,000
    
    
    
    4,550,000Payments on line of credit
    
    
    (2,225,000
    )
    
    
    (1,100,000
    )Payment of dividends
    
    
    (715,000
    )
    
    
    (715,000
    )Distribution to minority owners
    
    
    (836,000
    )
    
    
    (703,000
    )Proceeds from exercise of stock options
    
    
    0
    
    
    
    5,000Net cash from financing activities
    
    
    4,874,000
    
    
    
    (2,943,000
    )Net change in cash and cash equivalents
    
    
    394,000
    
    
    
    1,343,000Cash and cash equivalents at beginning of period
    
    
    3,952,000
    
    
    
    1,298,000Cash and cash equivalents at end of period
    
    $
    4,346,000
    
    
    $
    2,641,000Supplemental cash flow disclosure:Cash paid during the period for:Interest
    
    $
    1,642,000
    
    
    $
    1,663,000Income taxes
    
    $
    448,000
    
    
    $
    309,000Schedule of noncash investing and financial activities:Accrued dividends
    
    $
    0
    
    
    $
    239,000Acquisition of equipment with capital lease financing
    
    $
    0
    
    
    $
    1,540,000
  4




---



##### Table of Contents



Note 1. Basis of Presentation
        Note 2. Per Share Amounts
  5




---



##### Table of Contents



Note 3. Stock-based Compensation
   Accounting for Stock-Based
Compensation
  6




---



##### Table of Contents



Note 4. Convertible Preferred Stock Investment
    .
  Note 5. Line of Credit
  Note 6. Equipment Deposits
  7




---



##### Table of Contents



Note 7. Accounting for Uncertainty in Income Taxes
      
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 st
 8




---



##### Table of Contents



9




---



##### Table of Contents



10




---



##### Table of Contents



Liquidity and Capital Resources
    11




---



##### Table of Contents



held-to-maturity
    12




---



##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures
 Changes in internal control over financial reporting
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors
  
 Item 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.
  13




---



##### Table of Contents



Item 6. Exhibits
   Exhibit Number
    
    Description10.19b
    
    Ammendment to Lease Agreement for Gamma Knife Unit effective June 30,
2006 between GK Financing, LLC and Yale-New Haven Ambulatory Services
Corporation and Yale-New Haven Hospital, Inc. a/k/a Yale-New Haven
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).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.
 14




---



##### Table of Contents



Date: November 14, 2007
    /s/ Ernest A. Bates, M.D.Ernest A. Bates, M.D.Chairman of the Board and Chief Executive OfficerDate: November 14, 2007
    /s/ Craig K. TagawaCraig K. TagawaSenior Vice President
Chief Operating and Financial Officer 15