AMS 10-Q Quarterly Report Sept. 30, 2023

AMERICAN SHARED HOSPITAL SERVICES

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asha20230930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023 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 001-08789

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.)

601 Montgomery Street	Suite 1112	San Francisco ,	California	94111-2619
(Address of principal executive offices)				(Zip code)

( 415 ) 788-5300

(Registrant ’ s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Shared Hospital Services Common Stock, No Par Value	AMS	NYSE AMER

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐	Non-Accelerated Filer ☒	Smaller reporting company ☒
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 9, 2023, there were outstanding 6,300,000 shares of the registrant’s common stock.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


ASSETS	*September 30, 2023*		*December 31, 2022*
Current assets:
Cash and cash equivalents	$	14,537,000	$	12,335,000
Restricted cash		118,000		118,000
Accounts receivable, net of allowance for doubtful accounts of $ 100,000 at September 30, 2023 and at December 31, 2022		3,986,000		3,801,000
Other receivables		651,000		327,000
Prepaid maintenance		832,000		1,245,000
Prepaid expenses and other current assets		247,000		897,000

Total current assets		20,371,000		18,723,000

Property and equipment, net		25,178,000		23,467,000
Land		19,000		19,000
Goodwill		1,265,000		1,265,000
Intangible asset		78,000		78,000
Right of use assets, net		94,000		317,000
Other assets		353,000		87,000

Total assets	$	47,358,000	$	43,956,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	346,000	$	230,000
Employee compensation and benefits		805,000		735,000
Other accrued liabilities		1,921,000		1,544,000
Related party liabilities		2,788,000		497,000
Asset retirement obligations, related party		938,000		360,000
Income taxes payable		309,000		255,000
Current portion of lease liabilities		83,000		292,000
Line of credit		1,400,000		-
Current portion of long-term debt, net		1,459,000		1,262,000

Total current liabilities		10,049,000		5,175,000

Long-term lease liabilities, less current portion		11,000		59,000
Long-term debt, net, less current portion		10,454,000		12,205,000
Deferred revenue, less current portion		18,000		70,000
Deferred income taxes		822,000		822,000

Total liabilities		21,354,000		18,331,000

Commitments (see Note 9)

Shareholders' equity:
Common stock, no par value ( 10,000,000 authorized; Issued and outstanding shares - 6,270,000 at September 30, 2023 and 6,184,000 at December 31, 2022)		10,763,000		10,763,000
Additional paid-in capital		8,134,000		7,843,000
Retained earnings		3,214,000		3,019,000
Total equity-American Shared Hospital Services		22,111,000		21,625,000
Non-controlling interests in subsidiaries		3,893,000		4,000,000
Total shareholders' equity		26,004,000		25,625,000

Total liabilities and shareholders' equity	$	47,358,000	$	43,956,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	*Three Months Ended September 30,*					*Nine Months Ended September 30,*
	*2023*			*2022*		*2023*			*2022*

Revenues:
Rental income from medical services	$	3,946,000		$	4,101,000	$	12,987,000		$	12,382,000
Patient income		988,000			727,000		2,440,000			2,327,000
Equipment sales, net		200,000			-		200,000			-
		5,134,000			4,828,000		15,627,000			14,709,000
Costs of revenue:
Maintenance and supplies		518,000			472,000		1,509,000			1,374,000
Depreciation and amortization		1,228,000			1,171,000		3,812,000			3,514,000
Other direct operating costs		1,095,000			956,000		2,997,000			2,889,000
Other direct operating costs, related party		191,000			272,000		781,000			820,000
		3,032,000			2,871,000		9,099,000			8,597,000

Gross margin		2,102,000			1,957,000		6,528,000			6,112,000

Selling and administrative expense		1,735,000			1,260,000		5,262,000			3,725,000
Interest expense		277,000			249,000		825,000			546,000
Loss on write down of impaired assets and associated removal costs		-			-		578,000			-

Operating income (loss)		90,000			448,000		( 137,000	)		1,841,000

Interest and other income		135,000			36,000		318,000			31,000
Income before income taxes		225,000			484,000		181,000			1,872,000

Income tax expense		60,000			176,000		93,000			630,000

Net income		165,000			308,000		88,000			1,242,000
Plus (less): Net (income) loss attributable to non-controlling interests		( 47,000	)		8,000		107,000			( 160,000	)

Net income attributable to American Shared Hospital Services	$	118,000		$	316,000	$	195,000		$	1,082,000

Net income per share:
Income per common share - basic	$	0.02		$	0.05	$	0.03		$	0.17
Income per common share - diluted	$	0.02		$	0.05	$	0.03		$	0.17

Weighted average common shares for basic earnings per share		6,366,000			6,234,000		6,336,000			6,223,000
Weighted average common shares for diluted earnings per share		6,432,000			6,273,000		6,406,000			6,261,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

	FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2023 AND 2022
	*Common Shares*		*Common Stock*		*Additional Paid-in Capital*		*Retained Earnings*			*Sub-Total ASHS*			*Non-controlling Interests in Subsidiaries*			*Total*

Balances at January 1, 2022		6,049,000	$	10,758,000	$	7,444,000	$	1,691,000		$	19,893,000		$	4,346,000		$	24,239,000
Stock-based compensation expense		-		-		87,000		-			87,000			-			87,000
Vested restricted stock awards		30,000		-		-		-			-			-			-
Net income		-		-		-		269,000			269,000			125,000			394,000
Balances at March 31, 2022		6,079,000		10,758,000		7,531,000		1,960,000			20,249,000			4,471,000			24,720,000
Stock-based compensation expense		-		-		72,000		-			72,000			-			72,000
Vested restricted stock awards		31,000		-		-		-			-			-			-
Options exercised		2,000		5,000		-		-			5,000			-			5,000
Net income		-		-		-		497,000			497,000			43,000			540,000
Balances at June 30, 2022		6,112,000		10,763,000		7,603,000		2,457,000			20,823,000			4,514,000			25,337,000
Stock-based compensation expense		-		-		76,000		-			76,000			-			76,000
Vested restricted stock awards		41,000		-		-		-			-			-			-
Cash distributions to non-controlling interests		-		-		-		-			-			( 294,000	)		( 294,000	)
Net income (loss)		-		-		-		316,000			316,000			( 8,000	)		308,000
Balances at September 30, 2022		6,153,000	$	10,763,000	$	7,679,000	$	2,773,000		$	21,215,000		$	4,212,000		$	25,427,000

Balances at January 1, 2023		6,184,000	$	10,763,000	$	7,843,000	$	3,019,000		$	21,625,000		$	4,000,000		$	25,625,000
Stock-based compensation expense		-		-		96,000		-			96,000			-			96,000
Net income (loss)		-		-		-		188,000			188,000			( 88,000	)		100,000
Balances at March 31, 2023		6,184,000		10,763,000		7,939,000		3,207,000			21,909,000			3,912,000			25,821,000
Stock-based compensation expense		-		-		97,000		-			97,000			-			97,000
Vested restricted stock awards		30,000		-		-		-			-			-			-
Net loss		-		-		-		( 111,000	)		( 111,000	)		( 66,000	)		( 177,000	)
Balances at June 30, 2023		6,214,000		10,763,000		8,036,000		3,096,000			21,895,000			3,846,000			25,741,000
Stock-based compensation expense		-		-		98,000		-			98,000			-			98,000
Vested restricted stock awards		56,000		-		-		-			-			-			-
Net income		-		-		-		118,000			118,000			47,000			165,000
Balances at September 30, 2023		6,270,000	$	10,763,000	$	8,134,000	$	3,214,000		$	22,111,000		$	3,893,000		$	26,004,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	*Nine Months Ended September 30,*
	*2023*			*2022*
Operating activities:
Net income	$	88,000		$	1,242,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, amortization, and other		3,874,000			3,557,000
Loss on write down of impaired assets and associated removal costs		578,000			-
Accretion of debt issuance costs		44,000			65,000
Non cash lease expense		223,000			252,000
Deferred income taxes		-			443,000
Stock-based compensation expense		291,000			235,000
Interest expense associated with lease liabilities		8,000			23,000
Changes in operating assets and liabilities:
Receivables		( 498,000	)		692,000
Prepaid expenses and other assets		799,000			998,000
Asset retirement obligations, related party		578,000			( 427,000	)
Related party liabilities		2,291,000			( 924,000	)
Accounts payable, accrued liabilities, and deferred revenue		713,000			( 220,000	)
Income taxes payable		54,000			-
Lease liabilities		( 265,000	)		( 303,000	)
Net cash provided by operating activities		8,778,000			5,633,000

Investing activities:
Payment for purchases of property and equipment		( 6,176,000	)		( 332,000	)
Net cash used in investing activities		( 6,176,000	)		( 332,000	)

Financing activities:
Principal payments on long-term debt		( 1,589,000	)		( 1,602,000	)
Advances on line of credit		1,400,000			-
Principal payments on short-term financing		( 202,000	)		-
Distributions to non-controlling interests		-			( 294,000	)
Debt issuance costs long-term debt		( 9,000	)		( 9,000	)
Proceeds from options exercised		-			5,000
Net cash used in financing activities		( 400,000	)		( 1,900,000	)

Net change in cash, cash equivalents, and restricted cash		2,202,000			3,401,000

Cash, cash equivalents, and restricted cash at beginning of period		12,453,000			8,263,000

Cash, cash equivalents, and restricted cash at end of period	$	14,655,000		$	11,664,000

Supplemental cash flow disclosure
Cash paid during the period for:
Interest	$	781,000		$	481,000
Income taxes	$	277,000		$	174,000

Detail of cash, cash equivalents and restricted cash at end of period
Cash and cash equivalents	$	14,537,000		$	11,546,000
Restricted cash		118,000			118,000
Cash, cash equivalents, and restricted cash at end of period	$	14,655,000		$	11,664,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

In the opinion of the management of American Shared Hospital Services (“ASHS”), the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for the fair presentation of ASHS consolidated financial position as of September 30, 2023 , the results of its operations for the three and nine -month periods ended September 30, 2023 and 2022 , and the cash flows for the nine -month periods ended September 30, 2023 and 2022 . The results of operations for the three and nine -month periods ended September 30, 2023 are not necessarily indicative of results on an annualized basis. Consolidated balance sheet amounts as of December 31, 2022 have been derived from the audited consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the ASHS Annual Report on Form 10 -K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

These condensed consolidated financial statements include the accounts of ASHS and its subsidiaries (the “Company”) including as follows: ASHS wholly owns the subsidiaries American Shared Radiosurgery Services (“ASRS”), PBRT Orlando, LLC (“Orlando”), ASHS-Mexico, S.A. de C.V. (“ASHS-Mexico”), OR21, Inc., and MedLeader.com, Inc. (“MedLeader”); ASHS is the majority owner of Long Beach Equipment, LLC (“LBE”); ASRS is the majority-owner of GK Financing, LLC (“GKF”), which wholly owns the subsidiary Instituto de Gamma Knife del Pacifico S.A.C. (“GKPeru”) and HoldCo GKC S.A. (“HoldCo”). HoldCo wholly owns the subsidiary Gamma Knife Center Ecuador S.A. (“GKCE”). GKF is the majority owner of the subsidiaries Albuquerque GK Equipment, LLC (“AGKE”) and Jacksonville GK Equipment, LLC (“JGKE”).

The Company (through ASRS) and Elekta AB (“Elekta”), the manufacturer of the Gamma Knife (through its wholly-owned United States subsidiary, GKV Investments, Inc.), entered into an operating agreement and formed GKF. As of September 30, 2023 , GKF provides Gamma Knife units to eleven medical centers in the United States in the states of Florida, Illinois, Indiana, Mississippi, Nebraska, New Mexico, New York, Ohio, Oregon, and Texas. GKF also owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador. The Company through its wholly-owned subsidiary, Orlando, provided proton beam radiation therapy (“PBRT”) and related equipment to a customer in the United States.

The Company formed the subsidiaries GKPeru and acquired GKCE for the purposes of expanding its business internationally; Orlando and LBE to provide PBRT equipment and services in Orlando, Florida and Long Beach, California, respectively; and AGKE and JGKE to provide Gamma Knife equipment and services in Albuquerque, New Mexico and Jacksonville, Florida, respectively. LBE is not expected to generate revenue within the next two years.

On April 27, 2022 , the Company signed a Joint Venture Agreement with the principal owners of Guadalupe Amor Y Bien S.A. de C.V. (“Guadalupe”) to establish AB Radiocirugia Y Radioterapia de Puebla, S.A.P.I. de C.V. of Puebla (“Puebla”) to treat public- and private-paying cancer patients and provide radiation therapy and radiosurgery services locally in Mexico. The Company and Guadalupe hold 85 % and 15 % ownership interests, respectively, in Puebla. Under the Agreement, the Company is responsible for providing a linear accelerator upgrade to an Elekta Versa HD, and Guadalupe is accountable for all site modification costs. The Company formed ASHS-Mexico on October 3, 2022 to establish Puebla. Puebla was formed on December 15, 2022 and the Company expects Puebla to begin treating patients in January 2024. Operating costs incurred during the three -month period ended September 30, 2023 by Puebla, are included in the condensed consolidated statement of operations.

The Company continues to develop its design and business model for The Operating Room for the 21st Century ^SM through its 50 %-owned subsidiary OR21, LLC ( “OR21 LLC”). The remaining 50 % is owned by an architectural design company. OR21 LLC is not expected to generate significant revenue for at least the next two years.

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

Accounting pronouncements issued and not yet adopted - In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020 - 04, Reference Rate Reform (Topic 848 ): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020 - 04” ), which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020 - 04 apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021 - 01, Reference Rate Reform (Topic 848 ): Scope (“ASU 2021 - 01” ), which clarified that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. In December 2022, the FASB issued ASU 2022 - 06, Reference Rate Reform (Topic 848 ): Deferral of the Sunset Date of Topic 848 (“ASU 2022 - 06”; together with ASU- 2020 - 04 and ASU 2021 - 01, the “Topic 848 ASUs”), which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Topic 848 ASUs are effective any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications through December 31, 2024, provided that the expedients and exceptions provided by the Topic 848 ASUs do not apply to contract modifications or new hedging relationships made after December 31, 2024 or to existing hedging relationships evaluated for effectiveness in periods after December 31, 2024, except for hedging relationships existing as of December 31, 2024 that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2024). The Company is currently evaluating the impact that the Topic 848 ASUs may have on the Company’s consolidated financial statements. See Note 3 - Long-term Debt Financing for additional discussion on transitioning from LIBOR.

Revenue recognition - The Company recognizes revenues under Accounting Standards Codification (“ASC”) 842 Leases (“ASC 842” ) and ASC 606 Revenue from Contracts with Customers (“ASC 606” ).

Rental income from medical equipment services – The Company recognizes revenues under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee per use or revenue sharing basis. The Company’s contracts are typically for a ten -year term and are priced as either fee per use or revenue sharing. Fee per use revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed. Under revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by the hospital after considering certain operating costs of the center. The amount the Company expects to receive is recorded as revenue and estimated based on historical experience and patient mix. Revenue estimates are reviewed periodically and adjusted as necessary. The operating costs are recorded as other direct operating costs in the condensed consolidated statements of operations. For the three and nine -month periods ended September 30, 2023 , the Company recognized revenues of approximately $ 3,946,000 and $ 12,987,000 , respectively, compared to $ 4,101,000 and $ 12,382,000 for the same periods in the prior year, respectively, under ASC 842. Of the ASC 842 revenue, for the three and nine -month periods ended September 30, 2023 approximately $ 2,219,000 and $ 7,078,000 were for PBRT services, respectively, compared to $ 2,358,000 and $ 6,705,000 for the same periods in the prior year, respectively.

Patient income – The Company has stand-alone facilities in Lima, Peru and Guayaquil, Ecuador, where contracts exist between the Company’s facilities and the individual patients treated at the facility. Under ASC 606, the Company acts as the principal in these transactions and provides, at a point in time, a single performance obligation, in the form of a Gamma Knife treatment. Revenue related to a Gamma Knife treatment is recognized on a gross basis at the time when the patient receives treatment. There is no variable consideration present in the Company’s performance obligation and the transaction price is agreed upon per the stated contractual rate. GKPeru’s payment terms are typically prepaid for self-pay patients and insurance provider payments are paid net 30 days. GKCE’s patient population is primarily covered by a government payor and payments are paid between three and six months. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts. Accounts receivable balances under ASC 606 at September 30, 2023 , July 1, 2023 and January 1, 2023 were $ 1,416,000 , $ 980,000 and $ 1,119,000 , respectively. Accounts receivable balances under ASC 606 at September 30, 2022 , July 1, 2022, and January 1, 2022 were $ 1,248,000 , $ 1,145,000 and $ 668,000 , respectively. For the three and nine -month periods ended September 30, 2023 , the Company recognized revenues of approximately $ 988,000 and $ 2,440,000 , respectively, under ASC 606 compared to $ 727,000 and $ 2,327,000 for the same periods in the prior year, respectively.

During the three -month period ended September 30, 2023 , the Company completed a sale of equipment to a new customer. The Company assessed this transaction under ASC 606 and concluded the Company acted as the agent in this transaction and provided, at a point in time, two performance obligations, in the form of an equipment sale of an Icon system (“Icon”) and Cobalt- 60 reload. The performance obligation to sell, assign, transfer and deliver the equipment to the customer was carried out via Elekta. Revenue related to the equipment sale is recognized on a net basis when the sale is complete. The Company recognized net revenue of $ 200,000 on the sale of equipment for the three and nine -month periods ended September 30, 2023 .

Business segment information - Based on the guidance provided in accordance with ASC 280 Segment Reporting (“ASC 280” ), the Company analyzed its subsidiaries which are all in the business of leasing radiosurgery and radiation therapy equipment to healthcare providers, and concluded there are fourteen locations that meet the definition of an operating segment and these fourteen locations are aggregated into two reportable segments, domestic and international. Equipment in the domestic segment is leased by the Company to healthcare providers. The Company owns and operates the facilities in the international segment. The Company provides Gamma Knife and PBRT equipment to twelve hospitals in the United States and owns and operates two single-unit facilities in Lima, Peru and Guayaquil, Ecuador as of September 30, 2023 . The Company also sold an Icon and Cobalt- 60 reload to a new customer during the three -month period ended September 30, 2023 and concluded this transaction met the definition of an operating segment. The revenue from this sale is included in the Company’s domestic segment below. An operating segment is defined by ASC 280 as a component of a reporting entity that has the following three characteristics: ( 1 ) it engages in business activities from which it may recognize revenues and incur expense, ( 2 ) its operating results are regularly reviewed by the Company’s Chief Operating Decision Maker (“CODM”), and ( 3 ) its discrete financial information is available. The Company determined two reportable segments existed due to similarities in economics of business operations and geographic location. The operating results of the two reportable segments are reviewed by the Company’s Executive Chairman of the Board, who is also the CODM.

For the three and nine -month periods ended September 30, 2023 , the Company’s PBRT operations represented a significant majority of the domestic profit, disclosed below. The revenues and profit or loss allocations for the Company’s two reportable segments as of September 30, 2023 and 2022 consists of the following:

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2023*		*2022*		*2023*			*2022*
Revenues
Domestic	$	4,146,000	$	4,101,000	$	13,187,000		$	12,382,000
International		988,000		727,000		2,440,000			2,327,000
Total	$	5,134,000	$	4,828,000	$	15,627,000		$	14,709,000

Net income (loss) attributable to American Shared Hospital Services
Domestic	$	67,000	$	287,000	$	296,000		$	992,000
International		51,000		29,000		( 101,000	)		90,000
Total	$	118,000	$	316,000	$	195,000		$	1,082,000

Reclassification - Certain comparative balances as of and for the three and nine -month periods ended September 30, 2022 have been reclassified to make them consistent with the current year presentation.

Note 2. Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation for Gamma Knife units and other equipment is determined using the straight-line method over the estimated useful lives of the assets, which for medical and office equipment is generally between three and ten years, and after accounting for salvage value on the equipment where indicated. Depreciation expense for the three and nine -month periods ended September 30, 2023 was $ 1,265,000 and $ 3,874,000 compared to $ 1,182,000 and $ 3,557,000 for the same periods in the prior year, respectively. During the three -month period ended June 30, 2023, the Company increased its asset retirement obligation accrual and recorded a write-down of the related assets of $ 578,000 . Accordingly, the Company’s loss on write down of impaired assets and associated removal costs during the three and nine -month periods ended September 30, 2023 was $ 0 and $ 578,000 , respectively. There were no similar write downs in the same periods in the prior year.

The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life. As of January 1, 2023, the Company reduced its estimated useful life and assigned salvage value for one of its international Gamma Knife units. The net effect of the change in estimate made January 1, 2023, for the three and nine -month periods ended September 30, 2023 , was a decrease in net income of approximately $ 50,000 or $ 0.01 per diluted share and $ 151,000 or $ 0.02 per diluted share, respectively. This change in estimate will also impact future periods.

Depreciation for PBRT equipment is determined using the modified units of production method, which is a function of both time and usage of the equipment. This depreciation method allocates costs considering the projected volume of usage through the useful life of the PBRT unit, which has been estimated at 20 years. The estimated useful life of the PBRT unit is consistent with the estimated economic life of 20 years.

The following table summarizes property and equipment as of September 30, 2023 and December 31, 2022 :

	*September 30,*			*December 31,*
	*2023*			*2022*

Medical equipment and facilities	$	73,884,000		$	73,709,000
Office equipment		300,000			422,000
Construction in progress		5,436,000			106,000
		79,620,000			74,237,000
Accumulated depreciation		( 54,442,000	)		( 50,770,000	)
Net property and equipment	$	25,178,000		$	23,467,000

Net property and equipment held outside of the United States	$	4,038,000		$	2,201,000

Note 3. Long-Term Debt Financing

On April 9, 2021 the Company along with certain of its domestic subsidiaries (collectively, the “Loan Parties”) entered into a five year $ 22,000,000 credit agreement with Fifth Third Bank, N.A. (the “Credit Agreement”). The Credit Agreement includes three loan facilities. The first loan facility is a $ 9,500,000 term loan (the “Term Loan”) which was used to refinance the domestic Gamma Knife debt and finance leases, and associated closing costs. The second loan facility of $ 5,500,000 is a delayed draw term loan (the “DDTL”) which was used to refinance the Company’s PBRT finance leases and associated closing costs, as well as to provide additional working capital. The third loan facility provides for a $ 7,000,000 revolving line of credit (the “Revolving Line”) available for future projects and general corporate purposes. The Company borrowed $ 1,400,000 on the Revolving Line as of September 30, 2023 , which was paid off in October 2023. The facilities have a five -year maturity and carry a floating interest of LIBOR plus 3.0 % and are secured by a lien on substantially all of the assets of the Loan Parties and guaranteed by ASHS. The long-term debt on the condensed consolidated balance sheets related to the Term Loan and DDTL was $ 11,200,000 and $ 12,624,000 as of September 30, 2023 and December 31, 2022 , respectively.

As of December 31, 2021, LIBOR will no longer be used to price new loans, but 1 -month, 3 -month, and 6 -month maturities will continue to be published using a synthetic methodology until September 30, 2024. The Company is working with Fifth Third Bank, N.A. to transition its loan pricing to be based on the Secured Overnight Financing Rate (“SOFR”) rather than LIBOR. Any credit extended by Fifth Third Bank, N. A. after July 1, 2023 will be a SOFR based loan. The Revolving Line is charged an unused line fee of 0.25 % per annum. The Term Loan and DDTL have interest and principal payments due quarterly. Principal amortization on an annual basis for the Term Loan and DDTL equates to 48 % of the original principal loan commitments in years one through five and an end of term payment of the remaining principal balance.

The Credit Agreement contains customary covenants and representations, including without limitation, a minimum fixed charge coverage ratio of 1.25 and maximum funded debt to EBITDA ratio of 3.0 to 1.0 (tested on a trailing twelve -month basis at the end of each fiscal quarter), reporting obligations, limitations on dispositions, changes in ownership, mergers and acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and capital expenditures. The Loan Parties are in compliance with the Credit Agreement covenants as of September 30, 2023 .

The loan entered into with United States International Development Finance Corporation (“DFC”) in connection with the acquisition of GKCE in June 2020 ( the “DFC Loan”) was obtained through the Company’s wholly-owned subsidiary, HoldCo and is guaranteed by GKF. The DFC Loan is secured by a lien on GKCE’s assets. The amount outstanding under the DFC Loan is payable in 17 quarterly installments with a fixed interest rate of 3.67 %. The DFC Loan also contains customary covenants and representations, which the Company is in compliance with as of September 30, 2023 . The long-term debt on the condensed consolidated balance sheets related to the DFC Loan was $ 876,000 and $ 1,041,000 as of September 30, 2023 and December 31, 2022 , respectively. The Company capitalized debt issuance costs of $ 9,000 and $ 9,000 as of September 30, 2023 and December 31, 2022, respectively, related to maintenance and administrative fees on the DFC Loan.

The accretion of debt issuance costs for the nine -month periods ended September 30, 2023 and 2022 was $ 44,000 and $ 65,000 , respectively. As of September 30, 2023 and December 31, 2022 , the unamortized deferred issuance costs on the consolidated balance sheets were $ 163,000 and $ 198,000 , respectively.

As of September 30, 2023 , long-term debt on the condensed consolidated balance sheets was $ 11,913,000 . The following are contractual maturities of long-term debt as of September 30, 2023 , excluding deferred issuance costs of $ 163,000 :

Year ending December 31,	*Principal*
2023 (excluding the nine-months ended September 30, 2023)	$	55,000
2024		2,094,000
2025		2,469,000
2026		7,294,000
2027		164,000
	$	12,076,000

N ote 4. Other Accrued Liabilities

Other accrued liabilities consist of the following as of September 30, 2023 and December 31, 2022 :

	*September 30,*		*December 31,*
	*2023*		*2022*
Insurance	$	-	$	591,000
Professional services		291,000		92,000
Operating costs		782,000		539,000
Other		848,000		322,000
Total other accrued liabilities	$	1,921,000	$	1,544,000

Note 5. Leases

The Company determines if a contract is a lease at inception. Under ASC 842, the Company is a lessor of equipment to various customers. Leases that commenced prior to the ASC 842 adoption date were classified as operating leases under historical guidance. As the Company has elected the package of practical expedients allowing it to not reassess lease classification, these leases are classified as operating leases under ASC 842 as well. All of the Company’s lessor arrangements entered into or modified after ASC 842 adoption are also classified as operating leases. Some of these lease terms have an option to extend the lease after the initial term, but do not contain the option to terminate early or purchase the asset at the end of the term.

The Company’s Gamma Knife and PBRT contracts with hospitals are classified as operating leases under ASC 842. The related equipment is included in medical equipment and facilities on the Company’s condensed consolidated balance sheets. As all income from the Company’s lessor arrangements is solely based on procedure volume, all income is considered variable payments not dependent on an index or a rate. As such, the Company does not measure future operating lease receivables.

On November 3, 2021, the Company entered into an agreement to sublease (the “Sublease”) its corporate office located at Two Embarcadero Center, Suite 410, San Francisco, California, where it leased approximately 3,253 square feet for $ 22,011 per month and the lease expired in August 2023. The Sublease was for $ 16,195 per month through the contract expiration date. The Company also entered into a lease agreement (the “Lease”) for new corporate office space at 601 Montgomery, Suite 1112, San Francisco, CA for approximately 900 square feet for $ 4,500 per month with a lease expiration date in November 2024.

The Company’s lessee operating leases are accounted for as right of use (“ROU”) assets, other current liabilities, and lease liabilities on the condensed consolidated balance sheets. ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s operating lease contracts do not provide an implicit rate for calculating the present value of future lease payments. The Company determined its incremental borrowing rate, to be in the range of approximately 4.0 % and 6.0 %, by using available market rates and expected lease terms. The operating lease ROU assets and liabilities include any lease payments made and there were no lease incentives or initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company’s lessee operating lease agreements are for administrative office space and related equipment, and the agreement to lease clinic space for its stand-alone facility in Lima, Peru. These leases have remaining lease terms of approximately 14 months, some of which include options to renew or extend the lease. As of September 30, 2023 , operating ROU assets and lease liabilities were $ 94,000 .

The following table summarizes the maturities of the Company's lessee operating lease liabilities as of September 30, 2023 :

Year ending December 31,	*Operating Leases*

2023 (excluding the nine-months ended September 30, 2023)	$	38,000
2024		59,000
Total lease payments		97,000
Less imputed interest		( 3,000	)
Total	$	94,000

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2023*			*2022*			*2023*			*2022*
Lease cost
Operating lease cost	$	59,000		$	102,000		$	265,000		$	303,000
Sublease income		( 30,000	)		( 43,000	)		( 129,000	)		( 129,000	)
Total lease cost	$	29,000		$	59,000		$	136,000		$	174,000

Other information
Cash paid for amounts included in the measurement of lease liabilities - Operating leases	$	59,000		$	102,000		$	265,000		$	303,000
Weighted-average remaining lease term - Operating leases in years		0.89			1.30			0.89			1.30
Weighted-average discount rate - Operating leases		4.99	%		5.71	%		4.99	%		5.71	%

Note 6. Per Share Amounts

Per share information has been computed based on the weighted average number of common shares and dilutive common share equivalents outstanding. The computation for the three and nine -month periods ended September 30, 2023 and 2022 excluded approximatel y 118,000 and 91,000 , respectively, of the Company’s stock options b ecause the exercise price of the options was higher than the average market price during the period. The weighted average common shares outstanding for basic earnings per share for the three and nine -month periods ended September 30, 2023 and 2022 included approximately 123,000 and 123,000 , respectively, of the Company's restricted stock awards that are fully vested but are deferred for issuance.

The following table sets forth the computation of basic and diluted earnings per share for the three and nine -month periods ended September 30, 2023 and 2022 :

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
Net income attributable to American Shared Hospital Services	$	118,000	$	316,000	$	195,000	$	1,082,000

Weighted average common shares for basic earnings per share		6,366,000		6,234,000		6,336,000		6,223,000
Dilutive effect of stock options and restricted stock awards		66,000		39,000		70,000		38,000
Weighted average common shares for diluted earnings per share		6,432,000		6,273,000		6,406,000		6,261,000

Basic earnings per share	$	0.02	$	0.05	$	0.03	$	0.17
Diluted earnings per share	$	0.02	$	0.05	$	0.03	$	0.17

Note 7. Stock-based Compensation

In June 2021, the Company’s shareholders approved an amendment and restatement of the Company’s Incentive Compensation Plan (the “Plan”), that among other things, increased the number of shares of the Company’s common stock reserved for issuance under the Plan to 2,580,000 and extended the term of the Plan by five years to February 22, 2027. The Plan provides that the shares reserved under the Plan are available for issuance to officers of the Company, other key employees, non-employee directors, and advisors. No further grants or share issuances will be made under the previous plans.

Stock-based compensation expense associated with the Company’s stock options to employees is calculated using the Black-Scholes valuation model. The Company’s stock awards have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimates. The estimated fair value of the Company’s option grants is estimated using assumptions for expected life, volatility, dividend yield, and risk-free interest rate which are specific to each award. The estimated fair value of the Company’s options is expensed over the period during which an employee is required to provide service in exchange for the award (requisite service period), usually the vesting period. Accordingly, stock-based compensation cost before income tax effect for the Company’s options and restricted stock awards in the amo unt of $ 98,000 and $ 291,000 for the three and nine -month periods ended September 30, 2023 , respectively, and $ 76,000 and $ 235,000 in the same periods of the prior year, respectively, is reflected in selling and administrative expense in the condensed consolidated statements of operations. For the nine -month period ended September 30, 2023 , there was approximately $ 164,000 o f unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. This cost is expected to be recognized over a period of approximately four years. The weighted-average fair value of options granted during the nine -month period ended September 30, 2023 was $ 1.57 .

The following table summarizes stock option activity for the nine -month periods ended September 30, 2023 and 2022 :

	Stock Options			Grant Date Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in Years)		Intrinsic Value
Outstanding at January 1, 2023		95,000		$	2.76		4.83	$	25,000
Granted		70,000		$	2.82		7.00	$	-
Forfeited		( 19,000	)	$	2.69		-	$	-
Outstanding at September 30, 2023		146,000		$	2.80		5.51	$	-
Exercisable at September 30, 2023		38,000		$	2.86		3.35	$	-

Outstanding at January 1, 2022		67,000		$	2.72		3.33	$	-
Granted		50,000		$	2.72		5.00	$	-
Exercised		( 2,000	)	$	2.70		-	$	-
Forfeited		( 7,000	)	$	2.58		-	$	-
Outstanding at September 30, 2022		108,000		$	2.73		4.85	$	9,000
Exercisable at September 30, 2022		50,000		$	2.74		2.74	$	-

Note 8. Income Taxes

The Company generally calculates its effective income tax rate at the end of an interim period using an estimate of the annualized effective income tax rate expected to be applicable for the full fiscal year. However, when a reliable estimate of the annualized effective income tax rate cannot be made, the Company computes its provision for income taxes using the actual effective income tax rate for the results of operations reported within the year-to-date periods. The Company’s effective income tax rate is highly influenced by relative income or losses reported and the amount of the nondeductible stock-based compensation associated with grants of its common stock options and from the results of international operations. A small change in estimated annual pretax income can produce a significant variance in the annualized effective income tax rate given the expected amount of these items. As a result, the Company has computed its provision for income taxes for the three and nine -month periods ended September 30, 2023 and 2022 by applying the actual effective tax rates to income or reported within the condensed consolidated financial statements through those periods.

Note 9. Commitments

On December 20, 2018, the Company signed Second Amendments to two System Build Agreements for the Company’s second and third Mevion PBRT units. The Company and Mevion Medical Systems Inc. (“Mevion”) have agreed to upgrade the second and third PBRT units for which the Company has purchase commitments. The Company is actively seeking sites for these units but, to date, has not entered into agreements with any party for either placement of a PBRT unit or the related financing. The Company projects that it will be required to commence delivery of the second and third PBRT units no later than December 2023. In the event the Company is unable to enter into customer agreements within the requisite time frame or receive an extension from Mevion, the Company could forfeit its deposits . During the year-ended December 31, 2020, the Company impaired these deposits and wrote-off the deposits and related capitalized interest. As of September 30, 2023 , the Company had commitments, after deposits, to purchase two MEVION S250i PBRT systems for $ 34,000,000 .

As of September 30, 2023 , the Company had commitments to install one Icon, with software, at an existing site, one Gamma Plan workstation, two Esprit Gamma Knife systems, both at existing customer sites, two Linear Accelerator (“LINAC”) systems, one Cobalt- 60 reload, with software upgrade, and one Magnetic Resonance imaging guided LINAC (“MR LINAC”) system at a future customer site. The Company also has two commitments to de-install Gamma Knife units at existing customer sites. One LINAC system will be placed at a future customer site and one LINAC system will be placed at the Company’s new site in Puebla, Mexico. The Puebla installation is in process and the site is expected to begin treating patients in January 2024. The Company has made significant progress payments towards this installation as of September 30, 2023 , and has a commitment to finance the project. The Company is also in the process of upgrading its existing Gamma Knife equipment in Ecuador and expects to begin treating patients on the new system in November 2023. The Company completed financing of this upgrade in October 2023. See Note 11 - Subsequent Events for additional discussion . The remaining Esprit, software upgrades and LINAC purchases are expected to occur in 2024. Total Gamma Knife and LINAC commitments as of September 30, 2023 were $ 15,921,000 . There are no deposits on the condensed consolidated balance sheets related to these commitments as of September 30, 2023 . It is the Company’s intent to finance substantially all of these commitments. There can be no assurance that financing will be available for the Company’s current or future projects, or at terms that are acceptable to the Company. However, the Company currently has cash on hand of $ 14,655,000 and a line of credit of $ 7,000,000 and is actively engaged with financing resources to fund these projects. The Company borrowed $ 1,400,000 on the Revolving Line as of September 30, 2023, which was paid off in October 2023.

On September 4, 2022, the Company entered into a Maintenance and Support Agreement, which provides for maintenance and support of the Company’s PBRT unit at Orlando Health from September 2022 through April 2026. The agreement requires an annual prepayment of $ 1,865,000 for the current contractual period ( one year). This payment portion was recorded as a prepaid contract and is being amortized over the one -year service period.

As of September 30, 2023 , the Company had commitments to service and maintain its Gamma Knife and PBRT equipment. The service commitments are carried out via contracts with Mevion, Elekta and Mobius Imaging, LLC. The Company’s commitments to purchase two LINAC systems also include a 9 -year and 5 -year agreement to service the equipment, respectively. Total service commitments as of September 30, 2023 were $ 12,645,000 . The Gamma Knife and certain other service contracts are paid monthly, as service is performed. The Company believes that cash flow from cash on hand and operations will be sufficient to cover these payments.

Note 10. Related Party Transactions and Balances

The Company’s Gamma Knife business is operated through its 81 % indirect interest in its GKF subsidiary. The remaining 19 % of GKF is owned by a wholly owned U.S. subsidiary of Elekta, which is the manufacturer of the Gamma Knife. Since the Company purchases its Gamma Knife units from Elekta, there are significant related party transactions with Elekta, such as equipment purchases, commitments to purchase and service equipment, and costs to maintain the equipment.

The following table summarizes related party activity for the three and nine -month periods ended September 30, 2023 and 2022 :

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
Equipment purchases and de-install costs	$	2,147,000	$	231,000	$	3,565,000	$	1,594,000
Costs incurred to maintain equipment		191,000		272,000		781,000		820,000
Total related party transactions	$	2,338,000	$	503,000	$	4,346,000	$	2,414,000

The Company also had commitments to purchase or upgrade Gamma Knife units, purchase a LINAC system and service the related equipment of $ 16,311,000 as of September 30, 2023 .

Related party liabilities on the condensed consolidated balance sheets consist of the following as of September 30, 2023 and December 31, 2022

	*September 30,*		*December 31,*
	*2023*		*2022*
Accounts payable, asset retirement obligation and other accrued liabilities	$	3,726,000	$	857,000

Note 11. Subsequent Events

On October 23, 2023, the Company completed the financing for the Icon upgrade at its stand-alone facility in Ecuador. The financing is with DFC and is the second and final disbursement from the DFC Loan. The second disbursement was for $ 1,750,000 payable in 16 quarterly installments with a fixed interest rate of 7.49 %. The covenants and representations are consistent with the initial borrowing under the DFC Loan, see Note 3 - Long-Term Debt Financing.

On November 10, 2023, the Company entered into an Investment Purchase Agreement (the “IPA”) to purchase 60 % of the equity interests in each of Southern New England Regional Cancer Center, LLC and Roger Williams Radiation Therapy, LLC, both Rhode Island limited liability companies (collectively, the “Target Companies”) from GenesisCare USA, Inc., a Florida corporation (the “Seller”), for a purchase price of $ 2.85 million. The Target Companies operate three fully functional, turn-key radiation therapy cancer centers in Rhode Island. The closing of the transaction contemplated by the IPA is subject to certain events and conditions being met, including (i) bankruptcy court approval, (ii) the Seller and the Company entering into a consent agreement with the Rhode Island Department of Health and (iii) other customary closing conditions. The Company anticipates that conditions will be met in the next 60 days. The transaction, if and when finalized, will allow the Company to expand its footprint of owned and operated radiation oncology centers.

The transaction will be accounted for as a business combination under ASC 805 Business Combinations , which requires, among other things, that purchase consideration, assets acquired, and liabilities assumed be measured at their fair values as of the acquisition date. The initial purchase allocation for the business combination is incomplete at this time, subject to finalizing the IPA. After closing, disclosures regarding amounts recognized for major classes of assets acquired and liabilities assumed will be provided once the initial accounting is completed.

Costs related to legal, financial and due diligence services performed in connection with this transaction are not material to date.

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

This quarterly report to the SEC 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, including, statements regarding the expected continued treatment growth of the Company’s MEVION S250 system, the expansion of the Company’s PBRT business, the timing and expansion of treatments by new Gamma Knife systems, the Company’s expansion into new markets and the Company’s acquisitions and potential market segments for its services, which involve risks and uncertainties including, but not limited to, the risks of economic and market conditions, the risks of variability of financial results between quarters, the risks of the Gamma Knife and radiation therapy businesses, the risks of changes to The Centers for Medicare and Medicaid (“CMS”) reimbursement rates or reimbursement methodology, the risks of the timing, financing, and operations of the Company’s PBRT business, the risk of expanding within or into new markets, and the risk that the integration or continued operation of acquired businesses could adversely affect financial results and the risk that current and future acquisitions may negatively affect the Company’s financial position. 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 SEC, including the Annual Report on Form 10-K for the year ended December 31, 2022 and the definitive Proxy Statement for the Annual Meeting of Shareholders held on June 20, 2023.

Overview

American Shared Hospital Services is a leading provider of turnkey technology solutions for stereotactic radiosurgery and advanced radiation therapy equipment and services. The Company’s domestic Gamma Knife business operates by fee-per-use contracts or retail contracts, where the Company shares in the revenue and operating costs of the equipment. The Company, through GKF, also owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador. These units economically function similar to the Company’s turn-key retail arrangements. The Company’s PBRT system at Orlando Health Cancer Institute (“Orlando Health”), is also considered a retail arrangement. The main drivers of the Company’s revenue are numbers of sites, procedure volume and reimbursement.

Based on the guidance provided in accordance with ASC 280, the Company determined it has two reportable segments, domestic and international. See Note 1 - Basis of Presentation to the condensed consolidated financial statements for additional information. The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects activity for both segments and specifically addresses a segment when appropriate to the discussion.

Reimbursement

CMS has established a 2023 delivery code reimbursement rate of approximately $7,691 ($7,943 in 2022 ) for a Medicare Gamma Knife treatment. The approximate CMS reimbursement rates for delivery of PBRT for a simple treatment without compensation for 2023 is $572 ($554 in 2022 ) and $1,323 ($1,321 in 2022) for simple with compensation, intermediate and complex treatments, respectively.

On September 29, 2020, CMS published a final rule that would have implemented a new mandatory payment model for radiation oncology services delivered to certain Medicare beneficiaries: the Radiation Oncology Alternative Payment Method (“RO APM”) . As discussed below, the RO APM, which was to be in effect for a five year period, was delayed indefinitely by CMS in August 2022. If the RO APM had not been delayed, it would have significantly altered CMS’ payment methodology from a fee for service paradigm to a set reimbursement by cancer type methodology for radiation services provided within a 90 day episode of care. Under the RO APM, hospital based and free-standing radiation therapy providers would have been required to participate in the model based on whether the radiation therapy provider is located within a randomly selected core-based statistical area. CMS projects that providers treating approximately 30% of radiation oncology patients would have been selected to participate in the RO APM. The remaining providers not included in the RO APM would have continued to receive reimbursement based on a fee-for-service methodology. The RO APM would have included but would not have been limited to PBRT and Gamma Knife services. Three of the Company's Gamma Knife centers were expected to be included in the RO APM. It was not anticipated that inclusion in the RO APM would have a significant impact on the Company's Gamma Knife revenues. The Company's PBRT center was not selected for inclusion in the RO APM. Medicare reimbursement in 2023 for the most commonly used PBRT delivery codes increased by approximately 3.2% and 0.2%, and decreased by approximately 3.2% for Gamma Knife.

On August 29, 2022, CMS published a final rule that delayed the start date of the RO APM to a date to be determined through future rulemaking and amended the definition of “model performance period” to provide that the start and end dates of the five-year model performance period will be established by CMS through future rulemaking. At this time, it is not clear if the RO APM will be implemented and, if it is implemented, the timing for implementation and in what form it will be implemented. If a start date for the RO APM is proposed, CMS will provide at least six months’ notice in advance of the proposed start date, and the proposed start date will be subject to public comment.

Application of Critical Accounting Policies and Estimates

The Company’s condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles and follow general practices within the industry in which it operates. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the condensed consolidated financial statements; accordingly, as this information changes, the condensed consolidated financial statements could reflect different estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.

The most significant accounting policies followed by the Company are presented in Note 2 to the consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2022. These policies along with the disclosures presented in the other condensed consolidated financial statement notes and, in this discussion, and analysis, provide information on how significant assets and liabilities are valued in the condensed consolidated financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts, and the methods, assumptions and estimates underlying those amounts, management has identified revenue recognition and costs of sales for turn-key and revenue sharing arrangements, and the carrying value of property and equipment and useful lives, and as such the aforementioned could be most subject to revision as new information becomes available. The following are our critical accounting policies in which management’s estimates, assumptions and judgments most directly and materially affect the condensed consolidated financial statements:

Revenue Recognition

The Company recognizes revenues under ASC 842 and ASC 606. The Company had eleven domestic Gamma Knife units, two international Gamma Knife units, and one PBRT system in operation in the United States as of September 30, 2023 and twelve domestic Gamma Knife units, two international Gamma Knife units, and one PBRT system in operation in the United States as of September 30, 2022. Five of the Company’s eleven domestic Gamma Knife customers are under fee-per-use contracts, and six customers are under retail arrangements. The Company, through GKF, also owns and operates two single-unit, international Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador. These two units economically function similarly to the Company’s turn-key retail arrangements. The Company’s PBRT system at Orlando Health is also considered a retail arrangement.

Rental income from medical equipment services – The Company recognizes revenues under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee per use or revenue sharing basis. The Company’s contracts are typically for a ten-year term and are priced as either fee per use or revenue sharing. Fee per use revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed. Under revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by the hospital after considering certain operating costs of the center. The amount the Company expects to receive is recorded as revenue and estimated based on historical experience and patient mix. Revenue estimates are reviewed periodically and adjusted as necessary. The operating costs are recorded as other direct operating costs in the condensed consolidated statements of operations. For the three and nine-month periods ended September 30, 2023, the Company recognized revenues of approximately $3,946,000 and $12,987,000, respectively, compared to $4,101,000 and $12,382,000 for the same periods in the prior year, respectively, under ASC 842. Of the ASC 842 revenue, for the three and nine-month periods ended September 30, 2023, approximately $2,219,000 and $7,078,000 were for PBRT services, respectively, compared to $2,358,000 and $6,705,000 for the same periods in the prior year, respectively.

Patient income – The Company has stand-alone facilities in Lima, Peru and Guayaquil, Ecuador, where contracts exist between the Company’s facilities and the individual patients treated at the facility. Under ASC 606, the Company acts as the principal in these transactions and provides, at a point in time, a single performance obligation, in the form of a Gamma Knife treatment. Revenue related to a Gamma Knife treatment is recognized on a gross basis at the time when the patient receives treatment. There is no variable consideration present in the Company’s performance obligation and the transaction price is agreed upon per the stated contractual rate. GKPeru’s payment terms are typically prepaid for self-pay patients and insurance provider payments are paid net 30 days. GKCE’s patient population is primarily covered by a government payor and payments are paid between three and six months. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts. Accounts receivable balances under ASC 606 at September 30, 2023, July 1, 2023 and January 1, 2023 were $1,416,000, $980,000 and $1,119,000, respectively. Accounts receivable balances under ASC 606 at September 30, 2022, July 1, 2022, and January 1, 2022 were $1,248,000, $1,145,000 and $668,000, respectively. For the three and nine-month periods ended September 30, 2023, the Company recognized revenues of approximately $988,000 and $2,440,000, respectively, under ASC 606 compared to $727,000 and $2,327,000 for the same periods in the prior year, respectively.

During the three-month period ended September 30, 2023, the Company completed a sale of equipment to a new customer. The Company assessed this transaction under ASC 606 and concluded the Company acted as the agent in this transaction and provided, at a point in time, two performance obligations, in the form of an equipment sale of an Icon and Cobalt-60 reload. The performance obligation to sell, assign, transfer and deliver the equipment to the customer was carried out via Elekta. Revenue related to the equipment sale is recognized on a net basis when the sale is complete. The Company recognized net revenue of $200,000 on the sale of equipment for the three and nine-month periods ended September 30, 2023.

Salvage Value on Equipment

Salvage value is based on the estimated fair value of the equipment at the end of its useful life. The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life. There is no active resale market of Gamma Knife or PBRT equipment, but the Company believes its salvage value estimates were a reasonable assessment of the economic value of the equipment when the contract ends. As of January 1, 2023, the Company changed its estimate for salvage value for one of its international units. There is no salvage value assigned to the second international Gamma Knife unit. The Company has not assigned salvage value to its PBRT equipment. See Note 3 - Property and Equipment to the condensed consolidated financial statements for further discussion on salvage value.

Third Quarter 2023 Results

Revenues increased by $306,000 and $918,000 to $5,134,000 and $15,627,000 for the three and nine-month periods ended September 30, 2023 compared to $4,828,000 and $14,709,000 for the same periods in the prior year, respectively. Revenues from the Company’s domestic segment increased by $45,000 and $805,000 to $4,146,000 and $13,187,000 for the three and nine-month periods ended September 30, 2023 compared to $4,101,000 and $12,382,000 for the same periods in the prior year, respectively. Revenues from the Company’s international segment increased by $261,000 and $113,000 to $988,000 and $2,440,000 for the three and nine-month periods ended September 30, 2023 compared to $727,000 and $2,327,000 for the same periods in the prior year, respectively.

Revenues generated from the Company’s PBRT system decreased by $139,000 and increased by $373,000 to $2,219,000 and $7,078,000 for the three and nine-month periods ended September 30, 2023 compared to $2,358,000 and $6,705,000 for the same periods in the prior year, respectively. The decrease for the three-month period ended September 30, 2023 was due to lower volumes. The increase for the nine-month period ended September 30, 2023 was due to an increase in average reimbursement.

The number of PBRT fractions decreased by 175 and 221 to 1,188 and to 4,094 for the three and nine-month periods ended September 30, 2023 compared to 1,363 and 4,315 for the same periods in the prior year, respectively. The decrease in PBRT volumes for the three and nine-month periods ended September 30, 2023 was due to normal, cyclical fluctuations.

Gamma Knife revenue increased by $245,000 and $345,000 to $2,715,000 and $8,349,000 for the three and nine-month periods ended September 30, 2023 compared to $2,470,000 and $8,004,000 in the same periods in the prior year, respectively. The increase in Gamma Knife revenues for the three-month period was due to higher procedure volume and average reimbursement. The increase in Gamma Knife revenues for the nine-month period ended September 30, 2023 was due to higher average reimbursement, offset by lower procedure volume. The overall increase in average reimbursement was driven by a shift in payor mix to more commercial payors.

The number of Gamma Knife procedures increased by 23 and decreased by 39 to 316 and 918 for the three and nine-month periods ended September 30, 2023 compared to 293 and 957 for the same periods in the prior year, respectively. The increase in Gamma Knife procedures for the three-month period ended September 30, 2023 was due to normal, cyclical fluctuations. The decrease in Gamma Knife procedures for the nine-month period ended September 30, 2023 was due to the expiration of one existing customer contract, offset by increased volumes at other customer sites.

During the three and nine-month periods ended September 30, 2023 the Company sold equipment to a new customer for net revenue of $200,000. The revenue was recorded net of the Company’s cost to purchase the equipment from Elekta. There were no similar transactions in the same periods in the prior year.

Total costs of revenue increased by $161,000 and $502,000 to $3,032,000 and $9,099,000 for the three and nine-month periods ended September 30, 2023 compared to $2,871,000 and $8,597,000 for the same periods in the prior year, respectively, consistent with the growth in revenues.

Maintenance and supplies and other direct operating costs, related party, decreased by $35,000 and increased $96,000 to $709,000 and $2,290,000 for the three and nine-month periods ended September 30, 2023 , compared to $744,000 and $2,194,000 for the same periods in the prior year, respectively. The increase in maintenance and supplies and other direct operating costs, related party, was primarily due to the annual increase on the Company’s PBRT maintenance agreement.

Depreciation and amortization increased by $57,000 and $298,000 to $1,228,000 and $3,812,000 for the three and nine-month periods ended September 30, 2023 compared to $1,171,000 and $3,514,000 for the same periods in the prior year, respectively. The increase in depreciation and amortization for the three and nine-month periods ended September 30, 2023 was primarily due to the Company’s change in estimate for salvage value and useful life. As of January 1, 2023, the Company reduced its estimated useful life and assigned salvage value for one of its international Gamma Knife units. The net effect of the change in estimate made January 1, 2023, for the three and nine-month periods ended September 30, 2023, was a decrease in net income of approximately $50,000 or $0.01 per diluted share and $151,000 or $0.02 per diluted share, respectively. These changes in estimate will also impact future periods. Salvage value is based on the estimated fair value of the equipment at the end of its useful life.

Other direct operating costs increased by $139,000 and $108,000 to $1,095,000 and $2,997,000 for the three and nine-month periods ended September 30, 2023 compared to $956,000 and $2,889,000 for the same periods in the prior year, respectively. The increase in other direct operating costs for the three and nine-month periods ended September 30, 2023 was primarily due to higher volumes at one of the Company’s international sites.

Selling and administrative expense increased by $475,000 and $1,537,000 to $1,735,000 and $5,262,000 for the three and nine-month periods ended September 30, 2023 compared to $1,260,000 and $3,725,000 for the same periods in the prior year, respectively. The increase in selling and administrative expense for the three and nine-month periods ended September 30, 2023 was due to increased staffing in the sales, finance and customer retention areas and approximately $319,000 and $570,000, respectively, in fees associated with new business opportunities.

Interest expense increased by $28,000 and $279,000 to $277,000 and $825,000 for the three and nine-month periods ended September 30, 2023 compared to $249,000 and $546,000 for the same periods in the prior year, respectively. On April 9, 2021, the Company refinanced predominantly all of its existing debt and finance lease portfolio. The Term Loan and DDTL carry a floating interest rate of LIBOR plus 3%. The increase for the three and nine-month periods ended September 30, 2023 was due to an increase in LIBOR compared to the same periods of the prior year. See the “Liquidity and Capital Resources” section below for a discussion of the Company’s long-term debt and expected changes to the index used to calculate interest.

During the three-month period ended June 30, 2023, the Company increased its asset retirement obligation accrual. The related increase to the underlying leased assets could not be supported by the cash flows of those particular units and as such the Company recorded a loss on the write down of those assets. The loss on write down of impaired assets and associated removal costs was $0 and $578,000 for the three and nine-month periods ended September 30, 2023 . The loss on write down of impaired assets and associated removal costs for the nine-month period ended September 30, 2023 was due to the non-renewal of two Gamma Knife contracts in the second quarter of 2023. There were no similar write downs in the same periods in the prior year.

Interest and other income increased by $99,000 and $287,000 to $135,000 and $318,000 for the three and nine-month periods ended September 30, 2023 compared to income of $36,000 and $31,000 for the same periods in the prior year, respectively. The increases are consistent with the Company’s increases in cash and cash equivalents and rising interest rates.

Income tax expense decreased by $116,000 and $537,000 to expense of $60,000 and $93,000 for the three and nine-month periods ended September 30, 2023 compared to income tax expense of $176,000 and $630,000 for the same periods in the prior year, respectively. The decrease in income tax expense for the three and nine-month periods ended September 30, 2023 was due primarily to lower earnings during the current periods.

Net income attributable to non-controlling interest increased by $55,000 and decreased by $267,000 to income of $47,000 and a loss $107,000 for the three and nine-month periods ended September 30, 2023 compared to a loss of $8,000 and income of $160,000 for the same periods in the prior year, respectively. Net income attributable to non-controlling interests represents net (income) loss earned by the 19% non-controlling interest in GKF, and net income of the non-controlling interests in various subsidiaries controlled by GKF. The decrease or increase in net income attributable to non-controlling interests reflects the relative profitability of GKF.

Net income decreased by $198,000 and $887,000 to a net income of $118,000, or $0.02 per diluted share and net income of $195,000, or $0.03 per diluted share for the three and nine-month periods ended September 30, 2023 compared to net income of $316,000, or $0.05 per diluted share and $1,082,000, or $0.17 per diluted share for the same periods in the prior year, respectively. Net income decreased for the three and nine-month periods ended September 30, 2023 due to higher interest expense and higher selling and administrative expense to support the Company’s pursuit of new business opportunities. The decrease for the nine-month period ended September 30, 2023 was also driven by the write down of impaired assets and associated removal costs.

Liquidity and Capital Resources

The Company’s primary liquidity needs are to fund capital expenditures as well as support working capital requirements. In general, the Company’s principal sources of liquidity are cash and cash equivalents on hand and the $7,000,000 Revolving Line. As of September 30, 2023, the Company borrowed $1,400,000 on its line of credit. The Company had cash, cash equivalents and restricted cash of $14,655,000 at September 30, 2023 compared to $12,453,000 at December 31, 2022. The Company’s cash position increased by $2,202,000 during the first nine months of 2023 due to cash from operating activities of $8,778,000 and advances on the line of credit of $1,400,000. These increases were offset by payment for the purchase of property and equipment of $6,176,000, payments on long-term debt of $1,589,000, debt issuance costs of $9,000 and payments on short-term financing of $202,000. The Company’s expected primary cash needs on both a short and long-term basis are for capital expenditures, business expansion, working capital, and other general corporate purposes. The Company has scheduled interest and principal payments under its debt obligations of approximately $2,488,000 du ring the next 12 months.

Working Capital

The Company had working capital at September 30, 2023 of $10,322,000 compared to $13,548,000 at December 31, 2022. The $3,226,000 decrease in working capital was primarily due to increases in other accrued liabilities, related party liabilities, and the increase in asset retirement obligations. The Company believes that its cash on hand, cash flow from operations, and other cash resources are adequate to meet its scheduled debt obligations and working capital requirements during the next 12 months. See additional discussion in the “Commitments” section below. The Company, in the past, has secured financing for its Gamma Knife and radiation therapy units. The Company has secured financing for its projects from several lenders and anticipates that it will be able to secure financing on future projects from these or other lending sources, but there can be no assurance that financing will continue to be available on acceptable terms.

Long-Term Debt

On April 9, 2021, the Company and certain of its domestic subsidiaries entered into a five year $22,000,000 credit agreement with Fifth Third Bank, N.A., which refinanced its then existing domestic Gamma Knife portfolio. The lease financing previously obtained by Orlando was also refinanced as long-term debt by the Credit Agreement. The Credit Agreement includes the $7,000,000 Revolving Line of which the Company has drawn $1,400,000 on as of September 30, 2023. The Credit Agreement is 48% amortized over a 58-month period with a balloon payment upon maturity and is secured by a lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. The Company’s Gamma Knife unit in Ecuador is financed with DFC. The DFC Loan is secured by a lien on GKCE’s assets. The amount outstanding under the DFC Loan is payable in 17 quarterly installments with a fixed interest rate of 3.67%.

The Company’s Gamma Knife unit in Ecuador is financed with DFC. The DFC Loan is secured by a lien on GKCE’s assets. The amount outstanding under the DFC Loan is payable in 17 quarterly installments with a fixed interest rate of 3.67%. On October 23, 2023, the Company completed the financing for the Icon upgrade at its stand-alone facility in Ecuador. The financing is with DFC and is the second and final disbursement from the DFC Loan. The second disbursement was for $1,750,000 payable in 16 quarterly installments with a fixed interest rate of 7.49%. The covenants and representations are consistent with the initial borrowing under the DFC Loan, see Note 3 - Long-Term Debt Financing.

As of December 31, 2021, LIBOR will no longer be used to price new loans, but 1-month, 3-month, and 6-month maturities will continue to be published using a synthetic methodology until September 30, 2024. The Company is working with Fifth Third Bank, N.A. to transition its loan pricing to be based on the Secured Overnight Financing Rate (“SOFR”) rather than LIBOR. Any credit extended by Fifth Third Bank, N. A. after July 1, 2023 will be a SOFR based loan. The Revolving Line is charged an unused line fee of 0.25% per annum. The Term Loan and DDTL have interest and principal payments due quarterly. Principal amortization on an annual basis for the Term Loan and DDTL equates to 48% of the original principal loan commitments in years one through five and an end of term payment of the remaining principal balance.

See Note 3 - Long Term Debt Financing to the condensed consolidated financial statements for additional information regarding the Company’s long-term debt.

Commitments

On December 20, 2018, the Company signed Second Amendments to two System Build Agreements for the Company’s second and third Mevion PBRT units. The Company and Mevion Medical Systems Inc. (“Mevion”) have agreed to upgrade the second and third PBRT units for which the Company has purchase commitments. The Company is actively seeking sites for these units but, to date, has not entered into agreements with any party for either placement of a PBRT unit or the related financing. The Company projects that it will be required to commence delivery of the second and third PBRT units no later than December 2023. In the event the Company is unable to enter into customer agreements within the requisite time frame or receive an extension from Mevion, the Company could forfeit its deposits . During the year-ended December 31, 2020, the Company impaired these deposits and wrote-off the deposits and related capitalized interest. As of September 30, 2023, the Company had commitments, after deposits, to purchase two MEVION S250i PBRT systems for $34,000,000.

As of September 30, 2023, the Company had commitments to install one Icon, with software, at an existing site, one Gamma Plan workstation, two Esprit Gamma Knife systems, both at existing customer sites, two Linear Accelerator (“LINAC”) systems, one Cobalt-60 reload, with software upgrade, and one Magnetic Resonance imaging guided LINAC (“MR LINAC”) system at a future customer site. The Company also has two commitments to de-install Gamma Knife units at existing customer sites. One LINAC system will be placed at a future customer site and one LINAC system will be placed at the Company’s new site in Puebla, Mexico. The Puebla installation is in process and the site is expected to begin treating patients in January 2024. The Company has made significant progress payments towards this installation as of September 30, 2023 and has a commitment to finance the project. The Company is also in the process of upgrading its existing Gamma Knife equipment in Ecuador and expects to begin treating patients on the new system in November 2023. The Company completed financing of this upgrade in October 2023. See Note 11 - Subsequent Events for additional discussion . The remaining Esprit, software upgrades and LINAC purchases are expected to occur in 2024. Total Gamma Knife and LINAC commitments as of September 30, 2023 were $15,921,000. There are no deposits on the condensed consolidated balance sheets related to these commitments as of September 30, 2023 . It is the Company’s intent to finance substantially all of these commitments. There can be no assurance that financing will be available for the Company’s current or future projects, or at terms that are acceptable to the Company. However, the Company currently has cash on hand of $14,655,000 and a line of credit of $7,000,000 and is actively engaged with financing resources to fund these projects. The Company borrowed $1,400,000 on the Revolving Line as of September 30, 2023, which was paid off in October 2023.

On September 4, 2022, the Company entered into a Maintenance and Support Agreement, which provides for maintenance and support of the Company’s PBRT unit at Orlando Health from September 2022 through April 2026. The agreement requires an annual prepayment of $1,865,000 for the current contractual period (one year). This payment portion was recorded as a prepaid contract and is being amortized over the one-year service period.

As of September 30, 2023, the Company had commitments to service and maintain its Gamma Knife and PBRT equipment. The service commitments are carried out via contracts with Mevion, Elekta and Mobius Imaging, LLC. The Company’s commitments to purchase two LINAC systems also include a 9-year and 5-year agreement to service the equipment, respectively. Total service commitments as of September 30, 2023 were $12,645,000. The Gamma Knife and certain other service contracts are paid monthly, as service is performed. The Company believes that cash flow from cash on hand and operations will be sufficient to cover these payments.

Related Party Transactions

The Company’s Gamma Knife business is operated through its 81% indirect interest in its GKF subsidiary. The remaining 19% of GKF is owned by a wholly owned U.S. subsidiary of Elekta, which is the manufacturer of the Gamma Knife. Since the Company purchases its Gamma Knife units from Elekta, there are significant related party transactions with Elekta, such as equipment purchases, commitments to purchase and service equipment, and costs to maintain the equipment.

The following table summarizes related party activity for the three and nine-month periods ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Equipment purchases and de-install costs	$	2,147,000	$	231,000	$	3,565,000	$	1,594,000
Costs incurred to maintain equipment		191,000		272,000		781,000		820,000
Total related party transactions	$	2,338,000	$	503,000	$	4,346,000	$	2,414,000

The Company also had commitments to purchase or upgrade Gamma Knife units, purchase a LINAC system and service the related equipment of $16,311,000 as of September 30, 2023.

Related party liabilities on the condensed consolidated balance sheets consist of the following as of September 30, 2023 and December 31, 2022

	September 30,		December 31,
	2023		2022
Accounts payable, asset retirement obligation and other accrued liabilities	$	3,726,000	$	857,000

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company does not hold or issue derivative instruments for trading purposes and is not a party to any instruments with leverage or prepayment features. The Company does not have affiliation with partnerships, trusts or other entities whose purpose is to facilitate off-balance sheet financial transactions or similar arrangements , and therefore has no exposure to the financing, liquidity, market or credit risks associated with such entities. At September 30, 2023 , the Company had no significant long-term, market-sensitive investments.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934. These controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is communicated to the principal executive officer and our principal financial officer. Based on that evaluation, our principal executive officer and our principal financial officer concluded that, as of September 30, 2023 , our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to the principal executive officer and our principal financial officer, and recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the nine-month period ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

There were no material changes during the period covered in this report to the risk factors previously disclosed in Part 1, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibit Index

			Incorporated by reference herein
Exhibit Number		Description	Form	Exhibit	Date
31.1	*	Certification of Principal Executive Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification of Principal Financial Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	ǂ	Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	*	Inline XBRL Instance Document
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Definition Linkbase Document
101.LAB	*	Inline XBRL Taxonomy Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline Instance XBRL contained in Exhibit 101

	*	Filed herewith.
	ǂ	Furnished herewith.
	#	Portions of this exhibit (indicated therein by asterisks) have been omitted for confidential treatment.
	•	Indicates management compensatory plan, contract, or arrangement.

SIGNATURES

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

AMERICAN SHARED HOSPITAL SERVICES

Registrant

Date:	November 14, 2023	/s/ Raymond C. Stachowiak
		Raymond C. Stachowiak
		Executive Chairman of the Board (principal executive officer)

Date:	November 14, 2023	/s/ Robert L. Hiatt
		Robert L. Hiatt
		Chief Financial Officer (principal financial and principal accounting officer)

TABLE OF CONTENTS

Part I Item 1. Financial Statements Note 1. Basis Of Presentation Note 2. Property and Equipment Note 3. Long-term Debt Financing Note 4. Other Accrued Liabilities Note 5. Leases Note 6. Per Share Amounts Note 7. Stock-based Compensation Note 8. Income Taxes Note 9. Commitments Note 10. Related Party Transactions and Balances Note 11. Subsequent Events Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations 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 Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibit Index

Exhibits

31.1 * Certification of Principal Executive Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 * Certification of Principal Financial Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certifications of PrincipalExecutive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

AMS 10-Q Quarter ended Sept. 30, 2023

Exhibits