What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 619 added, 672 removed, 518 unchanged (71% of the section changed)

1 unchanged sentence

Evaluation of disclosure controls and procedures.

Our Executive Chairman and our Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures”

(as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act) as of the end of the period covered by this annual report, have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

Management ’

s report on internal control over financial reporting.

Our Executive Chairman of the Board and our Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act) as of the end of the period covered by this annual report, have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

Management ’ s report on internal control over financial reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company’s internal control system was designed to provide reasonable assurance to its management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control –

Integrated Framework (2013).

Based on this assessment management believes that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on those criteria.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013).

Based on this assessment management believes that, as of December 31, 2023, the Company’s internal control over financial reporting is effective based on those criteria.

Changes in internal controls over financial reporting.

Our Executive Chairman and our Chief Financial Officer have evaluated the changes to the Company’s internal control over financial reporting that occurred during our last fiscal quarter ended December 31, 2022, as required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15, and have concluded that there were no such changes that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Our Executive Chairman of the Board and our Chief Financial Officer have evaluated the changes to the Company’s internal control over financial reporting that occurred during our last fiscal quarter ended December 31, 2023, as required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15, and have concluded that there were no such changes that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

2 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding directors is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2023 Annual Meeting of Shareholders (the “2023 Proxy Statement”).

Information regarding executive officers of the Company, included herein under the caption “Executive Officers of the Company”

in “Part I, Item 1.

Business”

above, is incorporated herein by reference.

Information concerning the identification of our standing audit committee required by this Item is incorporated by reference from the 2023  Proxy Statement.

Information concerning our audit committee financial experts required by this Item is incorporated by reference from the 2023  Proxy Statement .

Information concerning compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference from the 2023 Proxy Statement.

Information regarding directors is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2024 Annual Meeting of Shareholders (the “2024 Proxy Statement”).

Information regarding executive officers of the Company, included herein under the caption “Executive Officers of the Company” in “Part I, Item 1.

Business” above, is incorporated herein by reference.

Information concerning the identification of our standing audit committee required by this Item is incorporated by reference from the 2024 Proxy Statement.

Information concerning our audit committee financial experts required by this Item is incorporated by reference from the 2024 Proxy Statement .

Information concerning compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference from the 2024 Proxy Statement.

We have adopted a Code of Ethics that is available on our website at www.ashs.com .

2 unchanged sentences

EXECUTIVE COMPENSATION

Information required by this Item is incorporated herein by reference from the 2023 Proxy Statement.

Information required by this Item is incorporated herein by reference from the 2024 Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item is incorporated herein by reference from the 2023 Proxy Statement.

Information required by this Item is incorporated herein by reference from the 2024 Proxy Statement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item is incorporated herein by reference from the 2023 Proxy Statement.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated by reference to the section entitled “Ratification of the Appointment of Our Independent Registered Public Accounting Firm”

in our Proxy Statement for the 2023 Annual Meeting of Stockholders.

Information required by this Item is incorporated herein by reference from the 2024 Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the section entitled “Ratification of the Appointment of Our Independent Registered Public Accounting Firm” in our Proxy Statement for the 2024 Annual Meeting of Stockholders.

Auditor Firm Id:

9 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Operations

Consolidated Statement of Shareholders' Equity

31 unchanged sentences

Lease Agreement for a Gamma Knife Unit dated as of October 29, 1996 between GK Financing, LLC and Methodist Healthcare Systems of San Antonio, Ltd., dba Southwest Texas Methodist Hospital.

Addendum to Lease Agreement for a Gamma Knife Unit dated as of October 31, 1996 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., dba Southwest Texas Methodist Hospital.  

Addendum Two to Lease Agreement for a Gamma Knife Unit dated as of October 16, 1997 between Methodist Healthcare System of San Antonio, Ltd., d.b.a.

1 unchanged sentence

Amendment to Lease Agreement for a Gamma Knife Unit dated as of December 13, 2003 between Methodist Healthcare Systems of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital and GK Financing, LLC.

Second Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated as of December 23, 2009 between GK Financing, LLC and Methodist Healthcare Systems of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital.  

Third Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated June 1, 2020 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital

Fourth Amendment to Lease Agreement for a Gamma Knife Unit (Esprit Upgrade) dated July 28, 2023 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., L.L.P.

(f/k/a Methodist Healthcare System of San Antonio, Ltd.) d/b/a Southwest Texas Methodist Hospital.

Purchased Services Agreement (for a Gamma Knife Unit) dated as of November 19, 2008 between GK Financing, LLC and Kettering Medical Center.

First Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of June 11, 2009 between GK Financing, LLC and Kettering Medical Center.  

Second Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of February 27, 2014 between GK Financing, LLC and Kettering Medical Center.

Third Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of March 28, 2019 between GK Financing, LLC and Kettering Medical Center

Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated as of July 30, 2013 between Tufts Medical Center, Inc.

(FKA New England Medical Center Hospitals, Inc.) and GK Financing, LLC.

First Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated as of April 23, 2020 between Tufts Medical Center, Inc.

(FKA New England Medical Center Hospitals, Inc.) and GK Financing, LLC.

Amended and Restated Equipment Lease Agreement (for a Gamma Knife Unit) dated as of December 12, 2014, between GK Financing, LLC and the Board of Trustees of the University of Arkansas on behalf of the University of Arkansas for Medical Sciences.

Fourth Amendment to Purchased Services Agreement dated April 20, 2021 between GK Financing, LLC and Kettering Medical Center.

Fifth Amendment to Purchased Services Agreement dated May 1, 2023 between GK Financing, LLC and Kettering Medical Center.

Lease Agreement for a Gamma Knife Unit dated as of November 1, 1999 between GK Financing, LLC and Jackson HMA, Inc.

d/b/a Central Mississippi Medical Center.  

Addendum to Lease Agreement for a Gamma Knife Unit dated as of November 1, 1999 between Jackson HMA, Inc.

9 unchanged sentences

Addendum Four to Lease Agreement for a Gamma Knife Unit dated as of February 6, 2020 between GK Financing, LLC and OSF Healthcare System.

Addendum Five to Lease Agreement for a Gamma Knife Unit dated as of 

April 28, 2021 between GK Financing, LLC and OSF Healthcare System.

Addendum Five to Lease Agreement for a Gamma Knife Unit dated as of April 28, 2021 between GK Financing, LLC and OSF Healthcare System.

Equipment Lease Agreement (for a Gamma Knife Unit) dated as of February 13, 2003 between GK Financing, LLC and AHS Albuquerque Regional Medical Center, LLC.

Amendment to Equipment Lease Agreement (Perfexion Upgrade) dated as of April 8, 2011 between GK Financing, LLC and Lovelace Health System, Inc., d/b/a Lovelace Medical Center.  

Assignment and Assumption of Purchase and License Agreement dated as of February 2, 2011 between Elekta, Inc., GK Financing, LLC and Albuquerque GK Equipment, LLC.

Icon Upgrade and Amendment Two to Equipment Lease Agreement for a Gamma Knife Unit dated as of October 15, 2019 between GK Financing, LLC and Lovelace Health System, Inc., d/b/a Lovelace Medical Center.  

Amendment Three to Equipment Lease Agreement dated as of November 9, 2023 between GK Financing, LLC and Lovelace Health System, LLC d/b/a Lovelace Medical Center.

Equipment Lease Agreement (for a Gamma Knife Unit) dated as of March 21, 2003 between GK Financing, LLC and Northern Westchester Hospital Center.

6 unchanged sentences

Fourth Amendment to Purchased Services Agreement dated as of July 28, 2021 between GK Financing, LLC and University of Southern California.

Equipment Lease Agreement (for a Gamma Knife Unit) dated as of May 1, 2010 between GK Financing, LLC and Fort Sanders Regional Medical Center.  

Amendment to Lease Agreement (for a Gamma Knife Unit) dated as of January 3, 2012 between GK Financing, LLC and Fort Sanders Regional Medical Center.

Second Amendment to Equipment Lease Agreement (for a Gamma Knife Unit) dated as of June 1, 2017 between GK Financing, LLC and Fort Sanders Regional Medical Center.

Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of August 5, 2011 between Jacksonville GK Equipment, LLC and St.

Vincent’s Medical Center, Inc.

First Amendment to the Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of October 10, 2011 between Jacksonville GK Equipment, LLC and St.

Vincent’s Medical Center, Inc.

Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of January 19, 2012 between GK Financing, LLC and Sacred Heart Health System, Inc.

1 unchanged sentence

Amendment One to Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of March 27, 2014 between GKF Financing, LLC and PeaceHealth Sacred Heart Medical Center at Riverbend.

Amendment Two to Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of January 19, 2024 between GKF Financing, LLC and PeaceHealth Sacred Heart Medical Center at RiverBend,

Equipment Lease Agreement (for a Gamma Knife Unit) dated as of February 21, 2017 between Bryan Medical Center, and GK Financing, LLC.

4 unchanged sentences

and GK Financing, LLC

First Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion on site upgrade to Elekta Esprit) dated as of April 18, 2023 between The Methodist Hospitals, Inc.

and GK Financing, LLC.

Second Amendment to Lease Agreement for a Gamma Knife Unit (Cobalt-60 Reload) dated as of June 13, 2023 between The Methodist Hospitals, Inc.

and GK Financing, LLC.

American Shared Hospital Services Incentive Compensation Plan as Amended and Restated effective June 25, 2021

2 unchanged sentences

Form of American Shared Hospital Services Incentive Compensation Plan Performance Share Award Agreement.

Form of American Shared Hospital Services Incentive Compensation Plan Restricted Stock Unit Issuance Agreement.

Form of American Shared Hospital Services Incentive Compensation Plan Notice of Grant of Incentive Stock Option.

Offer Letter between the Company and Mr.

Stachowiak dated April 22, 2020

8-K 001-08789

Offer Letter between the Company and Peter Gaccione dated August 26, 2022.

8-K 001-08789

Credit Agreement dated as of April 9, 2021 among American Shared Hospital Services, PBRT Orlando, LLC and GK Financing, LLC as the initial co-Borrowers, and American Shared Radiosurgery Services as the initial additional Loan Party and Fifth Third Bank, National Association, as Lender.

8-K 001-08789

Subsidiaries of American Shared Hospital Services

Offer Letter between the Company and Robert Hiatt dated April 12, 2023.

Credit Agreement dated as of April 9, 2021 among the Company, PBRT Orlando, LLC and GK Financing, LLC as the initial co-Borrowers, and American Shared Radiosurgery Services as the initial additional Loan Party and Fifth Third Bank, National Association, as Lender.

First Amendment to Credit Agreement dated as of January 25, 2024 among the Company, PBRT Orlando, LLC and GK Financing, LLC as the Borrowers, American Shared Radiosurgery Services as a Loan Party and Fifth Third Bank, National Association, as Lender.

Investment Agreement dated as of November 10, 2023 between GenesisCare USA, Inc., GenesisCare USA Holdings, Inc., and the Company.

First Amendment to Investment Agreement dated as of March 1, 2024 between the Company, GenesisCare USA, Inc., and GenesisCare USA Holdings, Inc.

Subsidiaries of the Company

Consent of Independent Registered Public Accounting Firm

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

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

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C.

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

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

American Shared Hospital Services Compensation Recoupment Policy, effective October 2, 2023.

Inline XBRL Instance Document

7 unchanged sentences

Furnished herewith.

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.

As permitted by Regulation S-K, Item 601(b)(10)(iv) of the Securities Exchange Act of 1934, as amended, certain confidential portions of this exhibit have been redacted from the publicly filed document.

The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.

Omitted information has been replaced with asterisks.

Indicates management compensatory plan, contract, or arrangement.

3 unchanged sentences

AMERICAN SHARED HOSPITAL SERVICES

March 31, 2023

April 1, 2024

/s/ Raymond C.

3 unchanged sentences

Executive Chairman of the Board (principal executive officer)

March 31, 2023

April 1, 2024

/s/ Daniel G.

March 31, 2023

/s/ Ernest A.

March 31, 2023

April 1, 2024

/s/ Kathleen Miles

March 31, 2023

April 1, 2024

Kathleen Miles

March 31, 2023

President and Chief Financial Officer

March 31, 2023

April 1, 2024

/s/ Robert L.

Chief Financial Officer

April 1, 2024

(principal financial officer and principal accounting officer)

7 unchanged sentences

Balance sheets

Statements of income

Statement of shareholders’ equity

Statements of operations

Statement of shareholders’ equity

Statements of cash flows

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of American Shared Hospital Services, Inc.

(the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, shareholders’

equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

2 unchanged sentences

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

6 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Retail Revenue Recognition –

Estimates of Reimbursement Rates and Payor Mix

As described in Note 2 in the Company’s consolidated financial statements, the Company has retail customer revenue classified as either turn-key or revenue sharing that are recognized under Accounting Standards Codification 842 Leases .

Rental Revenue from Medical Equipment Leasing – Estimates of Reimbursement Rates

As described in Note 2 in the Company’s consolidated financial statements, the Company has rental revenue from medical equipment leasing on either a fee per use or revenue sharing basis that are recognized under Accounting Standards Codification 842, Leases .

Under revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by the hospital.

Under turn-key arrangements, the Company receives payment from the hospital based on the amount of the hospital’s reimbursement from third party payors.

We identified management’s estimates of reimbursement rates and payor mix to record retail revenue and related accounts receivable, as a critical audit matter. 

Retail revenue and related accounts receivable involves significant judgment and estimation, including measurement uncertainty, by management based on the estimates and assumptions used and are subject to adjustments based on actual reimbursements received by the Company.

In turn, auditing management’s judgments and estimates related to retail revenue and related accounts receivable involved a high degree of subjectivity, as they are based on estimates of reimbursement rates and payor mix.

Under fee per use arrangements, the Company receives payment from the hospital as determined by each hospital’s lease agreement with the Company.

We identified management’s estimates of reimbursement rates to record rental revenue from medical equipment leasing and related accounts receivable, as a critical audit matter.

Rental revenue from medical equipment leasing and related accounts receivable involves significant judgment and estimation, including measurement uncertainty, by management based on the estimates and assumptions used and are subject to adjustments based on actual reimbursements received by the Company.

In turn, auditing management’s judgments and estimates related to rental revenue from medical equipment leasing and related accounts receivable involved a high degree of subjectivity, as they are based on estimates of reimbursement rates.

The primary procedures we performed to address this critical audit matter included:

Obtaining management’s reconciliation of retail revenue and accounts receivable by site and agreeing to supporting documentation related to the estimated reimbursement rates and payor mix used in the calculation.

Obtaining third party confirmations, confirming the number of procedures, payment dates and amounts paid, and reconciling confirmed amounts to management’s reconciliation, to validate the approximate rate per procedure.

Testing subsequent cash receipts and evaluating the reasonableness of the estimates through a look-back analysis over retail revenue as compared to accounts receivable balances previously recognized.

Developing an independent expectation of reimbursement rates per procedure based on historical trends, procedures, and payment amounts received through confirmation directly with the hospital and comparing to management’s estimates.

Property and Equipment - Salvage Value on Equipment

As described in Note 2 to the consolidated financial statements, property and equipment are stated at cost less accumulated depreciation.

Depreciation for Gamma Knife, 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 from 3 to 10 years, and after accounting for salvage value on the equipment where indicated.

Salvage value is based on the estimated fair value of the equipment at the end of its useful life.

As of December 31, 2022, the Company had seven domestic Gamma Knife units with salvage value ranging from $140,000 to $300,000.

We identified management’s estimates of salvage value including qualitative assessments of certain equipment as a critical audit matter. 

Determination of salvage values involves significant judgment and estimation, involving measurement uncertainty, as there is no active resale market for the Gamma Knife units due to limited sellers and buyers and trade-ins for the equipment are not guaranteed.

Trade-ins are highly dependent on future demand, values and the Company’s relationship with the supplier, a related party of the Company. 

In turn, auditing management’s judgments and estimates related to salvage value of certain equipment, involved a high degree of subjectivity.

The primary procedure we performed to address this critical audit matter included evaluating management’s determination of salvage values by comparing determined salvages values with historical trade-in transactions and publicly available transaction information, if available, which may include reviewing relevant purchase agreements, supplier agreements or information, and evaluating publicly available transaction information.

Obtaining management’s reconciliation of rental revenue from medical equipment leasing and accounts receivable by site and agreeing management’s reconciliation to supporting documentation related to the estimated reimbursement rates used in the calculation.

Testing the completeness, accuracy, and relevance of the underlying data of the system-generated reports used by management.

Testing subsequent cash receipts and evaluating the reasonableness of management’s estimates through a look-back analysis over rental revenue from medical equipment leasing as compared to accounts receivable balances previously recognized.

/s/ Moss Adams LLP

San Francisco, California

March 31, 2023

We have served as the Company’s auditor since 2000.

April 1, 2024

We have served as the Company’s auditor since 2000.

AMERICAN SHARED HOSPITAL SERVICES

2 unchanged sentences

Cash and cash equivalents

$ 12,335,000  

$ 13,690,000 $ 12,335,000

Restricted cash

118,000  

Accounts receivable, net of allowance for doubtful accounts of $ 100,000 At December 31, 2022 and December 31, 2021

3,801,000  

118,000 118,000

Accounts receivable, net of allowance for credit losses of $ 100,000 At December 31, 2023 and December 31, 2022

4,343,000 3,801,000

Other receivables

327,000  

504,000 327,000

Prepaid maintenance

1,245,000  

1,275,000 1,245,000

Prepaid expenses and other current assets

897,000  

526,000 897,000

Total current assets

18,723,000  

20,456,000 18,723,000

PROPERTY AND EQUIPMENT, net

23,467,000  

19,000  

1,265,000  

25,844,000 23,467,000

19,000 19,000

1,265,000 1,265,000

INTANGIBLE ASSETS

78,000  

78,000 78,000

RIGHT OF USE ASSETS, net

317,000  

87,000  

$ 43,956,000  

LIABILITIES AND SHAREHOLDERS’

57,000 317,000

443,000 87,000

$ 48,162,000 $ 43,956,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$ 230,000  

$ 315,000 $ 230,000

Employee compensation and benefits

735,000  

757,000 735,000

Other accrued liabilities

1,544,000  

1,226,000 1,544,000

Related party liabilities

497,000  

Asset retirement obligations, related party (includes $ 107,000 non-related party at December 31, 2021)

360,000  

1,961,000 497,000

Asset retirement obligations, related party (includes $ 250,000 and $ 120,000 non-related party at December 31, 2023 and 2022, respectively)

650,000 360,000

Income taxes payable

255,000  

1,229,000 255,000

Current portion of lease liabilities

292,000  

57,000 292,000

Line of credit

Current portion of long-term debt, net

1,262,000  

2,084,000 1,262,000

Total current liabilities

5,175,000  

10,779,000 5,175,000

LONG-TERM LEASE LIABILITIES, less current portion

59,000  

LONG-TERM DEBT, net, less current portion

12,205,000  

11,041,000 12,205,000

DEFERRED REVENUE, less current portion

70,000  

DEFERRED INCOME TAXES

822,000  

63,000 822,000

TOTAL LIABILITIES

18,331,000  

21,883,000 18,331,000

COMMITMENTS AND CONTINGENCIES (See Note 10)

SHAREHOLDERS’

Common stock, no par value ( 10,000,000 authorized;

Issued and outstanding shares –

6,184,000 at December 31, 2022 and 6,049,000 at December 31, 2021

10,763,000  

SHAREHOLDERS’ EQUITY

Common stock, no par value ( 10,000,000 authorized shares;

Issued and outstanding shares – 6,300,000 at December 31, 2023 and 6,184,000 at December 31, 2022

10,763,000 10,763,000

Additional paid-in capital

7,843,000  

8,232,000 7,843,000

Retained earnings

3,019,000  

3,629,000 3,019,000

Total equity- American Shared Hospital Services

21,625,000  

22,624,000 21,625,000

Non-controlling interests in subsidiaries

4,000,000  

Total shareholders’

25,625,000  

3,655,000 4,000,000

Total shareholders’ equity

26,279,000 25,625,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 43,956,000  

$ 48,162,000 $ 43,956,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED December 31,

Rental income from medical services

Patient income

Rental revenue from medical equipment leasing

$ 17,772,000 $ 16,655,000

Direct patient services revenue

3,353,000 3,091,000

Equipment sales, net

21,325,000 19,746,000

Costs of revenue:

Maintenance and supplies

2,032,000 1,878,000

Depreciation and amortization

5,073,000 4,726,000

Other direct operating costs

4,025,000 3,666,000

Other direct operating costs, related party

851,000 1,094,000

11,981,000 11,364,000

9,344,000 8,382,000

Selling and administrative expense

7,022,000 5,145,000

Interest expense

1,112,000 806,000

Loss on write down of impaired assets and associated removal costs

Operating income

(Loss) on early extinguishment of debt

Interest and other (loss) income

270,000 2,431,000

Interest and other income, net

426,000 87,000

Income before income taxes

696,000 2,518,000

Income tax expense

net (income) attributable to non-controlling interests

431,000 963,000

265,000 1,555,000

net loss (income) attributable to non-controlling interests

345,000 ( 227,000 )

Net income attributable to American Shared Hospital Services

$ 610,000 $ 1,328,000

Net income per share attributable to American Shared Hospital Services:

Earnings per common share - basic

$ 0.10 $ 0.21

Earnings per common share - diluted

$ 0.10 $ 0.21

Weighted average common shares for basic earnings per share

6,358,000 6,297,000

Weighted average common shares for diluted earnings per share

6,393,000 6,303,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONSOLIDATED STATEMENT OF SHAREHOLDERS ’

CONSOLIDATED STATEMENT OF SHAREHOLDERS ’ EQUITY

YEARS ENDED December 31, 2023 and 2022

5 unchanged sentences

Balances at December 31, 2021

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

— — 399,000 — 399,000 — 399,000

Options exercised

Issuance of deferred restricted stock awards

3,000 5,000 — — 5,000 — 5,000

Vested restricted stock awards

132,000 — — — — —

Cash distributions to non-controlling interests

— — — — — ( 573,000 ) ( 573,000 )

— — — 1,328,000 1,328,000 227,000 1,555,000

Balances at December 31, 2022

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

Options exercised

— — 389,000 — 389,000 — 389,000

Vested restricted stock awards

Cash distributions to non-controlling interests

116,000 — — — — — —

— — — 610,000 610,000 ( 345,000 ) 265,000

Balances at December 31, 2023

6,300,000 $ 10,763,000 $ 8,232,000 $ 3,629,000 $ 22,624,000 $ 3,655,000 $ 26,279,000

S ee accompanying notes

3 unchanged sentences

OPERATING ACTIVITIES

$ 265,000 $ 1,555,000

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

5,165,000 4,783,000

Non cash lease expense

( 34,000 ) ( 40,000 )

Accretion of deferred issuance costs

Loss on write down impaired assets

Loss on sublease impairment, net

Loss on extinguishment of debt

46,000 84,000

Loss on write down of impaired assets

Deferred income taxes

Stock-based compensation expense

Interest expense associated with lease liabilities

( 759,000 ) 344,000

Stock-based compensation

389,000 399,000

Changes in operating assets and liabilities:

( 719,000 ) 696,000

Prepaid expenses and other assets

21,000 ( 111,000 )

Asset retirement obligations, related party

— ( 397,000 )

Related party liabilities

Lease liability

( 491,000 ) ( 845,000 )

Accounts payable, accrued liabilities and deferred revenue

( 79,000 ) 608,000

Income taxes payable

974,000 159,000

Net cash provided by operating activities

5,718,000 7,235,000

INVESTING ACTIVITIES

Payment for purchases of property and equipment

( 6,273,000 ) ( 388,000 )

Net cash (used in) investing activities

( 6,273,000 ) ( 388,000 )

FINANCING ACTIVITIES

Principal payments on long-term debt

Principal payments on finance leases

Long-term debt financing

Prepayment penalties

( 2,129,000 ) ( 2,032,000 )

Principal payments on line of credit

( 1,400,000 ) —

Long-term debt financing on purchase of property and equipment

Advances on line of credit

Distributions to non-controlling interests

— ( 573,000 )

Debt issuance costs long-term debt

( 9,000 ) ( 9,000 )

Proceeds from options exercised

Principal payments on short-term financing prepaid insurance

Net cash (used in) financing activities

( 202,000 ) ( 48,000 )

Net cash provided by (used in) financing activities

1,910,000 ( 2,657,000 )

Net change in cash and cash equivalents

1,355,000 4,190,000

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year

12,453,000 8,263,000

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of year

$ 13,808,000 $ 12,453,000

S ee accompanying notes

1 unchanged sentence

Cash paid for interest

$ 1,066,000 $ 722,000

Cash paid for income taxes

$ 297,000 $ 169,000

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Right of use assets and lease liabilities

Acquisition of equipment with long-term debt financing

Equipment included in accounts payable and accrued liabilities

$ 1,955,000 $ —

DETAIL OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

Cash and cash equivalents

$ 13,690,000 $ 12,335,000

Restricted cash

118,000 118,000

Cash, cash equivalents, and restricted cash at end of period

$ 13,808,000 $ 12,453,000

S ee accompanying notes

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –

BUSINESS AND BASIS OF PRESENTATION

Business –

These consolidated financial statements include the accounts of American Shared Hospital Services (“ASHS”) and its subsidiaries (the “Company”) as follows:

ASHS wholly-owns the subsidiaries American Shared Radiosurgery Services (“ASRS”), PBRT Orlando, LLC (“Orlando”), 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”).

GKF is the majority owner of the subsidiaries Albuquerque GK Equipment, LLC (“AGKE”) and Jacksonville GK Equipment, LLC (“JGKE”).

GKF formed HoldCo GKC S.A.

(“HoldCo”) to acquire Gamma Knife Center Ecuador S.A.

(“GKCE”).

The Company (through ASRS) and Elekta AG (“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.

During 2022 , GKF leased Gamma Knife units to twelve  medical centers in the United States in the states of California, Florida, Illinois, Indiana, Mississippi, Nebraska, New Mexico, New York, Ohio, Oregon, and Texas.

NOTE 1 – BUSINESS AND BASIS OF PRESENTATION

Business – These consolidated financial statements include the accounts of American Shared Hospital Services (“ASHS”) and its subsidiaries (the “Company”) as follows:

ASHS wholly-owns the subsidiaries American Shared Radiosurgery Services (“ASRS”), PBRT Orlando, LLC (“Orlando”), ASHS-Mexico, S.A.

(“ASHS-Mexico”), ASHS-Rhode Island Proton Beam Radiation Therapy, LLC, ASHS-Bristol Radiation Therapy, LLC, 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 wholly owns the subsidiary Gamma Knife Center Ecuador S.A.

GKF is the majority owner of the subsidiaries Albuquerque GK Equipment, LLC (“AGKE”) and Jacksonville GK Equipment, LLC (“JGKE”).

During 2023 , GKF leased Gamma Knife units to twelve medical centers in the United States in the states of California, 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 subsidiary GKPeru and acquired GKCE for the purposes of expanding its business internationally;

5 unchanged sentences

LBE is not expected to generate revenue within the next two years.

April 27, 2022 ,  the Company signed a Joint Venture Agreement (the “Agreement”) with the principal owners of Guadalupe Amor Y Bien (“Guadalupe”) to establish AB Radiocirugia Y Radioterapia de Puebla, S.A.P.I.

of Puebla (“Puebla”) to treat public- and private-paying cancer patients.

The Company and Guadalupe will hold 

85 % and 

15 % ownership interests, respectively, in Puebla.

Under the Agreement, the Company will be responsible for providing a linear accelerator upgrade to an Elekta Versa HD, and Guadalupe will be accountable for all site modification costs. 

The Company formed ASHS-Mexico, S.A.

on October 3, 2022 to establish Puebla in order to provide radiation therapy and radiosurgery services locally in Mexico. 

Puebla was formed on December 15, 2022.

The Company continues to develop its design and business model for The Operating Room for the 21st CenturySM through its 50 % owned OR21, LLC ( “OR21”

On April 27, 2022 , the Company signed a Joint Venture Agreement (the “Agreement”) with the principal owners of Radioterapia Guadalupe Amor y Bien S.A.

(“Guadalupe”) to establish AB Radiocirugia y Radioterapia de Puebla, S.A.P.I.

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 and Guadalupe will be 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 June 2024.

Operating costs incurred during the year ended December 31, 2023 by Puebla, are included in the consolidated statement of operations.

The Company continues to develop its design and business model for The Operating Room for the 21st CenturySM through its 50 % owned OR21, LLC ( “OR21” ).

The remaining 50 % of OR21 is owned by an architectural design company.

2 unchanged sentences

This subsidiary is not operational at this time.

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

NOTE 2 –

ACCOUNTING POLICIES

Use of estimates in the preparation of financial statements –

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Significant accounting estimates reflected in the Company’s consolidated financial statements include the estimated useful lives of fixed assets and its salvage values, revenues and costs of sales for turn-key and revenue sharing arrangements. 

On November 10, 2023, the Company entered into an Investment Purchase Agreement (the “IPA”) with GenesisCare USA, Inc.

(the “GenesisCare”) and GenesisCare USA Holdings, Inc.

(“GC Holdings”), pursuant to which GenesisCare agreed to sell to the Company its entire equity interest in each of Southern New England Regional Cancer Center, LLC and Roger Williams Radiation Therapy, LLC, (collectively, the “RI Target Companies”) together with the assignment of certain payor contacts for a purchase price of $ 2,850,000 (such transaction, the “RI Acquisition”).

The equity interests to be acquired by the Company under the IPA equates to a 60 % interest in each RI Target Company.

The RI Target Companies operate three functional radiation therapy cancer centers in Rhode Island.

The RI Acquisition is contingent upon certain closing conditions, including GenesisCare and the Company entering into a consent agreement with the Rhode Island Department of Health and approval of all equity holders and managers of each RI Target Company.

On March 1, 2024, the Company, GenesisCare and GC Holding entered into a First Amendment to the Investment Agreement pursuant to which the parties agreed to extend the date on which a party could terminate the IPA if the closing conditions had not been met from March 10, 2024 to April 30, 2024.

The Company anticipates that these conditions will be met in April 2024.

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 recorded in the consolidated statement of operations were $ 432,000 for the year ended December 31, 2023 .

All intercompany accounts and transactions have been eliminated in consolidation.

NOTE 2 – ACCOUNTING POLICIES

Use of estimates in the preparation of financial statements – In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

Significant accounting estimates reflected in the Company’s consolidated financial statements include the estimated useful lives of property and equipment and its salvage values, revenues and costs of sales for revenue sharing customers.

Actual results could differ from those estimates.

Advertising and marketing  –

The Company expenses advertising and marketing costs as incurre d (collectively, “

marketing costs”).

Marketing costs were 

$ 233,000 and $ 211,000  during the years ended December 31, 2022 and 2021 , respectively.

Marketing costs include joint marketing with customers and corporate advertising costs. Marketing costs are recorded in other direct operating costs and sales and administrative costs in the consolidated statements of income. 

Sales and Service –

The Company markets its financial and turnkey solutions directly to cancer treatment centers, hospitals, and large cancer networks worldwide through its sales staff. 

Sales expense includes payroll and travel costs for the Company’s sales staff. The Company also typically provides the equipment, as well as planning, installation, reimbursement and marketing support services to its customers.

Cash and cash equivalents –

The Company considers all liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Advertising and marketing – The Company expenses advertising and marketing costs as incurre d (collectively, “ marketing costs”).

Marketing costs were $ 165,000 and $ 233,000 during the years ended December 31, 2023 and 2022 , respectively.

Marketing costs include joint marketing with customers and corporate advertising costs.

Marketing costs are recorded in other direct operating costs and sales and administrative costs in the consolidated statements of income.

Sales and Service – The Company markets its financial and turn-key solutions directly to cancer treatment centers, hospitals, and large cancer networks worldwide through its sales staff.

Sales expense includes payroll and travel costs for the Company’s sales staff.

The Company also typically provides the equipment, as well as planning, installation, reimbursement and marketing support services to its customers.

Cash and cash equivalents – The Company considers all liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Restricted cash is not considered a cash equivalent for purposes of the consolidated statements of cash flows.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted cash –

Restricted cash represents the minimum cash that must be maintained in GKF to fund operations, per the subsidiary’s operating agreement and the minimum cash that must be maintained by GKF per it’s financing agreement with the United States International Development Finance Corporation (“D FC”). 

See further discussion at Note 5  - Long Term Debt.

Business and credit risk –

The Company maintains its cash balances, which exceed federally insured limits, in financial institutions.

The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Restricted cash – Restricted cash represents the minimum cash that must be maintained in GKF to fund operations, per the subsidiary’s operating agreement and the minimum cash that must be maintained by GKF per it’s financing agreement with the United States International Development Finance Corporation (“D FC”).

See further discussion at Note 5 - Long Term Debt.

Business and credit risk – The Company maintains its cash balances, which exceed federally insured limits, in financial institutions.

The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

The Company monitors the financial condition of the financial institutions it uses on a regular basis.

All of the Company’s revenue was provided by fifteen  and seventeen customers in 2022 and 2021 , respectively.

One customer accounted for approximately 45 % and 

34 % of the Company’s total revenue in 2022 and 2021 , respectively. At December 31, 2022 , 

four  customers each individually accounted for 12 %, 14 %, 16 % and 22 % of total accounts receivable, respectively.

At December 31, 2021 , two  customers each individually accounted for 31 % and 10 % of total accounts receivable, respectively.

All of the Company’s revenue was provided by 15 locations or 1 PBRT unit and 14 Gamma Knife units in each of 2023 and 2022 .

One location accounted for approximately 48 % and 45 % of the Company’s total revenue in 2023 and 2022 , respectively.

At December 31, 2023 , two locations each individually accounted for 30 % and 31 % of total accounts receivable, respectively.

At December 31, 2022 , four locations each individually accounted for 12 %, 14 %, 16 % and 22 % of total accounts receivable, respectively.

The Company performs credit evaluations of its customers and generally does not require collateral.

The Company has not experienced significant losses related to receivables from individual customers or groups of customers in any particular geographic area.

All of the Company’s radiosurgery devices have been purchased through Elekta, to date.

However, there are other manufacturers that also make radiosurgery devices.

Accounts receivable and doubtful accounts –

Accounts receivable are recorded at net realizable value.

An allowance for doubtful accounts is estimated based on historical collections plus an allowance for probable losses.

Accounts receivable and allowance for credit losses – Accounts receivable are recorded at net realizable value.

An allowance for doubtful accounts is estimated based on historical collections plus an allowance for expected losses.

Receivables are considered past due based on contractual terms and are charged off in the period that they are deemed uncollectible.

Recoveries of receivables previously charged off are offset against bad debt expense when received.

Non-controlling interests - The Company reports its non-controlling interests as a separate component of shareholders’

The Company also presents the consolidated net income and the portion of the consolidated net income allocable to the non-controlling interests and to the shareholders of the Company separately in its consolidated statements of income.

Property and equipment –

Property and equipment are stated at cost less accumulated depreciation.

Depreciation for Gamma Knife 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 3 –

10 years, and after accounting for salvage value on the equipment where applicable.

Non-controlling interests - The Company reports its non-controlling interests as a separate component of shareholders’ equity.

Non-controlling interest is determined by the income (loss) multiplied by the non-controlling interest in subsidiaries, and the income or losses of the non-controlling interests in various subsidiaries controlled by GKF.

The Company also presents the consolidated net income and the portion of the consolidated net income (loss) allocable to the non-controlling interests and to the shareholders of the Company separately in its consolidated statements of operations.

Property and equipment – Property and equipment are stated at cost less accumulated depreciation.

Depreciation for Gamma Knife 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 3 – 10 years, and after accounting for salvage value on the equipment where applicable.

The Company acquired a building as part of the acquisition of GKCE in June 2020.

Depreciation for buildings is determined using the straight-line method over 20 years.

The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life.

As of  

April 1, 2021, 

the Company reduced its estimate for salvage value for 

nine  of its domestic Gamma Knife Perfexion units.

As of October 1, 2022, the Company further reduced its estimate for salvage value for one of its domestic Gamma Knife Perfexion units.

The net effect of the change in estimate made October 1, 2022, for the year ended 

December 31, 2022 , was a decrease in net income of approximately $ 17,000  or $ 0.00  per diluted share.

This change in estimate will also impact future periods. As of December 31, 2022 , the Company had 

seven domestic Gamma Knife units with salvage value ranging from $ 140,000 to $ 300,000 . 

As of December 31, 2021 , the Company had seven domestic Gamma Knife units with salvage value ranging from $ 175,000 to $ 400,000 .

The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life.

As of October 1, 2022, the Company reduced its estimate for salvage value for one of its domestic Gamma Knife Perfexion units.

As of December 31, 2023 and 2022 , the Company had seven domestic Gamma Knife units with salvage value ranging from $ 140,000 to $ 300,000 .

As of January 1, 2023, the Company reduced its estimated useful life for one of its direct patient services Gamma Knife units.

The net effect of the change in estimate made January 1, 2023, for the year ended December 31, 2023 , was a decrease in net income of approximately $ 207,000 or $ 0.03 per diluted share.

This change in estimate also impacts future periods.

Depreciation for PBRT and related equipment is determined using the modified units of production method, which is a function of both time and usage of the equipment.

3 unchanged sentences

At December 31, 2023 , the Company held equipment under operating lease contracts with customers with an original cost of $ 70,635,000 and accumulated depreciation of $ 52,302,000 .

At December 31, 2021 , the Company held equipment under operating lease contracts with customers with an original cost of $ 68,994,000 and accumulated depreciation of $ 43,400,000 . 

At December 31, 2022 , the Company held equipment under operating lease contracts with customers with an original cost of $ 69,306,000 and accumulated depreciation of $ 47,992,000 .

As of December 31, 2023 and 2022 , the Company recognized a loss on the write down of impaired assets of $ 940,000 and $ 0 , respectively.

The impairment as of 

December 31, 2021  was 

related to the removal costs of one of the Gamma Knife units that was impaired during the year ended December 31, 2020 .

During the year ended December 31, 2023 , the Company recorded an asset removal obligation (“ARO”) for one of the customer contracts that expired during 2023.

An ARO for the second contract that expired during 2023 was recorded and impaired in a prior period.

For the ARO recorded during 2023, the Company concluded the related increase to the underlying assets could not be supported by the cash flows of the equipment and therefore the Company recorded a loss on the write-down of the ARO in June 2023.

The Company’s estimate for the ARO liability was subsequently adjusted during the fourth quarter of 2023 based on new information.

Total ARO impairment for the year ended December 31, 2023 was $ 290,000 .

The Company also reviewed its long-lived assets during the fourth quarter of 2023 and concluded events and circumstances existed that indicated additional impairment existed at a third Gamma Knife site related to the existing equipment.

Total equipment impairment for the year ended December 31, 2023 was $ 650,000 .

See further discussion under Note 2 - Long-lived asset impairment and Note 3 - Property and Equipment.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 –

ACCOUNTING POLICIES (CONTINUED)

Revenue recognition - The Company recognizes revenues under ASC 842 Leases (“ASC 842”

) and ASC 606 Revenue from Contracts with Customers (“ASC 606”

Rental income from medical 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.

NOTE 2 – ACCOUNTING POLICIES (CONTINUED)

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

Rental income from medical equipment leasing ( “ leasing ” ) – The Company recognizes leasing revenue under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee per use or revenue sharing basis.

The terms of the contracts do not contain any guaranteed minimum payments.

The Company’s contracts are typically for a 10 -year term and are classified as either fee per use or retail.

Retail arrangements are further classified as either turn-key or revenue sharing.

Revenues from fee per use contracts is determined by each hospital’s contracted rate.

Revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed.

The Company’s lease contracts are typically for a ten -year term and are classified as either fee per use or revenue sharing.

Revenue from fee per use contracts is determined by each hospital’s lease agreement with the Company.

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.

1 unchanged sentence

Revenue estimates are reviewed periodically and adjusted as necessary.

Under turn-key arrangements, the Company receives payment from the hospital at an agreed upon percentage share of the hospital’s reimbursement from third party payors, and the Company is responsible for paying all the operating costs of the equipment.

Operating costs are determined primarily based on historical treatment protocols and cost schedules with the hospital.

The Company records an estimate of operating costs which are reviewed on a regular basis and adjusted as necessary to more accurately reflect the actual operating costs.

For turn-key sites, the Company also shares a percentage of net operating profit.

The Company records an estimate of net operating profit based on estimated revenues, less estimated operating costs.

Some of the Company’s revenue sharing arrangements also have a cost sharing component and net profit share for the operating costs of the center.

The Company receives payment from the hospital at an agreed upon percentage share of the hospital’s reimbursement from third party payors, and the Company is responsible for paying operating costs of the equipment determined primarily based on historical treatment protocols and cost schedules with the hospital.

The Company records an estimate of operating costs which are reviewed on a regular basis and adjusted as necessary to more accurately reflect the actual operating costs and profit.

The operating costs and estimated net operating profit are recorded as other direct operating costs in the consolidated statement of operations.

As of December 31, 2022 and 2021 , the Company recognized revenues of approximately $ 16,655,000  and $ 14,719,000 under ASC 842, respectively, of which approximately $ 8,952,000  and $ 6,058,000  were for PBRT services, respectively.

Patient income –

The Company has stand-alone facilities in Lima, Peru and Guayaquil, Ecuador, where a contract exists between the Company’s facilities and the individual patient treated at the facility.

For the years ended, December 31, 2023 and 2022 , the Company recognized leasing revenue of approximately $ 17,772,000 and $ 16,655,000 under ASC 842, respectively, of which approximately $ 10,133,000 and $ 8,952,000 were for PBRT services, respectively.

Revenue sharing arrangements amounted to approximately

67 % of total revenue for the years ended

December 31, 2023 and 2022 , respectively.

Because the revenue estimates are reviewed on a quarterly basis, any adjustments required for past revenue estimates would result in an increase or reduction in revenue during the current quarterly period.

Payor mix is a significant variable in the Company’s estimate for revenue sharing revenues.

Direct patient services income ( “ retail ” ) – The Company has stand-alone facilities in Lima, Peru and Guayaquil, Ecuador, where a contract exists between the Company’s facilities and the individual patient treated at the facility.

Under ASC 606, the Company acts as the principal in this transaction 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 3 and 6 months.

Timing of payments from the government payor can fluctuate year to year based on local social or economic changes.

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, following issuance of invoice.

The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts.

Accounts receivable earned by GKPeru were not significant for the years ended December 31, 2022 and 2021 .

GKCE's accounts receivable were $ 862,000  and $ 435,000  for the years ended December 31, 2022 and 2021 .

As of December 31, 2022 and 2021 , the Company recognized revenues of approximately $ 3,091,000 and $ 2,909,000  under ASC 606, respectively.

Stock-based compensation –

The Company measures all stock-based compensation awards at fair value and records such expense in its consolidated financial statements over the requisite service period of the related award.

See Note 8  - Stock-Based Compensation Expense for additional information on the Company’s stock-based compensation programs.

Costs of revenue –

The Company’s costs of revenue consist primarily of maintenance and supplies, depreciation and amortization, and other operating expenses (such as insurance, property taxes, sales taxes, marketing costs and operating costs from the Company’s retail sites).

Costs of revenues are recognized as incurred.

Income taxes –

The Company accounts for income taxes using the asset and liability method.

Accounts receivable under ASC 606 at December 31, 2023 was $ 1,626,000 .

Accounts receivable under ASC 606 at January 1, 2022 and December 31, 2022 was $ 668,000 and $ 1,119,000 .

For the years ended December 31, 2023 and 2022 , the Company recognized retail revenues of approximately $ 3,553,000 and $ 3,091,000 under ASC 606, respectively.

Equipment sales – During the year-ended December 31, 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 year-ended December 31, 2023 .

Stock-based compensation – The Company measures all stock-based compensation awards at fair value and records such expense in its consolidated financial statements over the requisite service period of the related award.

See Note 8 - Stock-Based Compensation Expense for additional information on the Company’s stock-based compensation programs.

Costs of revenue – The Company’s costs of revenue consist primarily of maintenance and supplies, depreciation and amortization, and other operating expenses (such as insurance, property taxes, sales taxes, marketing costs and operating costs from the Company’s revenue sharing and retail sites).

Costs of revenue are recognized as incurred.

Income taxes – The Company accounts for income taxes using the asset and liability method.

Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 –

ACCOUNTING POLICIES (CONTINUED)

The Company accounts for uncertainty in income taxes as required by the provisions of ASC 740 Income taxes (“ASC 740”

), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

NOTE 2 – ACCOUNTING POLICIES (CONTINUED)

The Company accounts for uncertainty in income taxes as required by the provisions of ASC 740 Income taxes (“ASC 740” ), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

1 unchanged sentence

It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible outcomes.

The Company considers many factors when evaluating and estimating the Company’s tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes.

See Note 7  - Income Taxes for further discussion on income taxes.

Functional currency –

Based on guidance provided in accordance with ASC 830, Foreign Currency Matters (“ASC 830”

), the Company analyzes its operations outside the United States to determine the functional currency of each operation.

Management has determined that these operations are initially accounted for in U.S.

See Note 7 - Income Taxes for further discussion on income taxes.

Functional currency – Based on guidance provided in accordance with ASC 830, Foreign Currency Matters (“ASC 830” ), the Company analyzes its operations outside the United States to determine the functional currency of each operation.

Management has determined that these operations are accounted for in U.S.

dollars since the primary transactions incurred are in U.S.

1 unchanged sentence

When Management determines that an operation has become predominantly self-sufficient, the Company will reassess its accounting for the operation to the local currency from the U.S.

The Company analyzed it’s Gamma Knife site in Peru under ASC 830 as of December 31, 2022 and 2021 and concluded the functional currency was the U.S.

As facts and circumstances change, the Company will revisit this conclusion. 

The functional currency of the Company’s Gamma Knife site in Ecuador is the U.S.

dollar because that is the local currency of Ecuador. 

Asset Retirement Obligations –

Based on the guidance provided in ASC 410,  

Asset Retirement Obligations (“ASC 410”

), the Company analyzed its existing lease agreements and determined whether an asset retirement obligation (“ARO”)  exists to remove the respective units at the end of the lease terms.

As of December 31, 2020, four of the Company's Gamma Knife customers notified the Company of their intent to terminate their contracts at the contract lease term.

The Company recorded an ARO liability for these four  sites, using estimates from Elekta.

December 31, 2022 , the Company removed three of these four units and has an ARO recorded for the remaining site.

The Company increased its estimate for one of the AROs as of December 31, 2021 

by approximately $ 105,000 .

The Company paid approximately $ 457,000 for the Gamma Knife unit that was removed in January 2022.

No liability has been recorded as of December 31, 2022 for the remaining Gamma Knife sites, because it is uncertain these units will be removed and the Company historically has not removed the Gamma Knife equipment at the end of the lease term.

The Company analyzed it’s Gamma Knife site in Peru and its startup operations in Mexico for Puebla under ASC 830 as of December 31, 2023 and 2022 and concluded the functional currency was the U.S.

As facts and circumstances change, the Company will revisit this conclusion.

The functional currency of the Company’s Gamma Knife site in Ecuador is the U.S.

dollar because that is the local currency of Ecuador.

Asset Retirement Obligations – Based on the guidance provided in ASC 410, Asset Retirement Obligations (“ASC 410” ), the Company analyzed its existing lease agreements and determined whether an ARO exists to remove the respective units at the end of the lease terms.

As of December 31, 2023 , the Company has two AROs recorded for the two customer sites that expired during the year, totaling $ 650,000 .

One ARO was recorded and impaired in a prior period.

The Company recorded and impaired an ARO for the second customer site during 2023.

No liability has been recorded as of December 31, 2023 for the remaining Gamma Knife or PBRT locations, because it is uncertain these units will be removed and the Company historically has not removed the equipment at the end of the lease term.

The Company will re-evaluate the need to record additional ARO liabilities on a periodic basis when facts and circumstances change that could affect this conclusion.

Earnings per share –

Earnings per share – The Company calculates diluted shares using the treasury stock method.

Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the year.

The fully vested restricted stock units not issued and outstanding and unvested restricted stock units, are also included therein.

Diluted earnings per share reflect the potential dilution that could occur if common shares were issued pursuant to the exercise of options or warrants. The computation for the years ended 

December 31, 2022 and 2021 excluded approximately 20,000  and 31,000 , respectively, of the Company’s stock options because the exercise price of the options was higher than the average market price during the period. The weighted average common shares outstanding for the years ended 

December 31, 2022 and 2021  included approximately 

123,000  and 

123,000 , respectively, of the Company's restricted stock awards that are fully vested but are deferred for issuance. 

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 –

ACCOUNTING POLICIES (CONTINUED)

Diluted earnings per share reflect the potential dilution that could occur if common shares were issued pursuant to the exercise of options and from unvested restricted stock units.

The computation for the years ended December 31, 2023 and 2022 excluded approximately 144 ,000 and 20,000 , respectively, of the Company’s stock options because the exercise price of the options was higher than the average market price during the period.

The weighted average common shares outstanding for the years ended December 31, 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 illustrates the computations of basic and diluted earnings per share for the years ended December 31, 2023 and 2022 .

Numerator for basic and diluted earnings per share

$ 1,328,000  

Denominator for basic and diluted earnings per share –

weighted-average shares

6,297,000  

$ 610,000 $ 1,328,000

Denominator for basic earnings per share – weighted-average shares

6,358,000 6,297,000

Effect of dilutive securities employee stock options and restricted stock

Denominator for diluted earnings per share –

adjusted weighted-average shares

6,303,000  

Denominator for diluted earnings per share – adjusted weighted-average shares

6,393,000 6,303,000

Earnings per common share- basic

$ 0.21  

$ 0.10 $ 0.21

Earnings per common share- diluted

$ 0.21  

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 fifteen locations that meet the definition of an operating segment and these fifteen locations are aggregated into two reportable segments, domestic and foreign. 

The Company provides Gamma Knife and PBRT equipment to thirteen hospitals in the United States and owns and operates two single-unit facilities in Lima, Peru and Guayaquil, Ecuador as of December 31, 2022 .

An operating segment is defined by ASC 280 as it engages in business activities in which it may recognize revenues and incur expense, its operating results are regularly reviewed by the Company’s Chief Operating Decision Maker (“CODM”), and 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 CEO, who is also the CODM.

For the years ended 

December 31, 2022 and 2021  

, the Company’s PBRT operations represented a significant majority of the domestic profit, disclosed below.

 The revenues, profit or loss, and total asset allocations for the Company’s two reportable segments as of December 31, 2022  and 

2021 consists of the following:

$ 16,655,000  

3,091,000  

$ 19,746,000  

Net income (loss) attributable to American Shared Hospital Services

$ 1,187,000  

141,000  

$ 1,328,000  

$ 37,575,000  

6,381,000  

$ 43,956,000  

$ 0.10 $ 0.21

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 –

ACCOUNTING POLICIES (CONTINUED)

Long lived asset impairment –

The Company assesses the recoverability of its long-lived assets when events or changes in circumstances indicate their carrying value may not be recoverable.

NOTE 2 – ACCOUNTING POLICIES (CONTINUED)

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 providing radiosurgery and radiation therapy services, either through leasing to healthcare providers or directly to patients, and concluded there are two reportable segments, leasing and retail.

During 2023, t he Company provided Gamma Knife and PBRT equipment to thirteen hospitals in the United States and owns and operates two single-unit facilities in Lima, Peru and Guayaquil, Ecuador as of December 31, 2023 .

An operating segment is defined by ASC 280 as it engages in business activities in which it may recognize revenues and incur expenses, its operating results are regularly reviewed by the Company’s Chief Operating Decision Maker (“CODM”), and its discrete financial information is available.

The Company determined two reportable segments existed due to similarities in economics of business operations and how the Company recognizes revenue for the patient treatment.

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 years ended December 31, 2023 and 2022 , the Company’s PBRT operations represented a significant majority of the net income attributable to American Shared Hospital Services from the leasing segment, disclosed below.

The revenues, depreciation, interest expense, interest income, tax expense, and net income attributable to American Shared Hospital Services, and total asset allocations for the Company’s two reportable segments as of December 31, 2023 and 2022 consists of the following:

$ 17,772,000 $ 16,655,000

3,553,000 3,091,000

$ 21,325,000 $ 19,746,000

Depreciation expense

$ 4,429,000 $ 4,268,000

736,000 515,000

$ 5,165,000 $ 4,783,000

Interest expense

$ 1,087,000 $ 806,000

$ 1,112,000 $ 806,000

Interest income

$ 458,000 $ 103,000

Income tax expense

$ 306,000 $ 753,000

125,000 210,000

$ 431,000 $ 963,000

Net income attributable to American Shared Hospital Services

$ 518,000 $ 1,187,000

92,000 141,000

$ 610,000 $ 1,328,000

$ 39,854,000 $ 37,575,000

8,308,000 6,381,000

$ 48,162,000 $ 43,956,000

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – ACCOUNTING POLICIES (CONTINUED)

Long lived asset impairment – The Company assesses the recoverability of its long-lived assets when events or changes in circumstances indicate their carrying value may not be recoverable.

Such events or changes in circumstances may include:

3 unchanged sentences

If the carrying value of the asset group exceeds the forecasted undiscounted cash flows, an impairment loss is recognized, measured as the amount by which the carrying amount exceeds estimated fair value.

An impairment loss is charged to the consolidated statement of income in the period in which management determines such impairment.

As of December 31, 2021, impairment of $ 105,000 related to the removal costs of one of the Gamma Knife units that was impaired in the prior year was recorded. 

No other additional impairment has been noted as of December 31, 2022 .

An impairment loss is charged to the consolidated statement of operations in the period in which management determines such impairment.

As of December 31, 2023 , impairment of $ 650,000 was recorded related to cash flow losses of one of the Company’s Gamma Knife units.

No impairment was recorded as of December 31, 2022.

See Note 3 - Property and Equipment for further discussion.

Goodwill and intangible assets - The Company recorded goodwill of $ 1,265,000 and an intangible asset with a fair value of $ 78,000 as part of the acquisition of GKCE in June 2020.

The intangible asset identified was GKCE’s trade name and the Company assigned an indefinite useful life to the asset.

Based on the guidance provided in accordance with ASC 350 Intangibles-Goodwill and Other (“ASC 350”

), the Company does not amortize the intangible asset because it has an indefinite life.

The intangible asset identified was GKCE’s trade name and the Company assigned an indefinite useful life to the asset.

Based on the guidance provided in accordance with ASC 350 Intangibles-Goodwill and Other (“ASC 350” ), the Company does not amortize the intangible asset because it has an indefinite life.

The Company assesses goodwill at the reporting unit level, which has been determined to be GKCE.

1 unchanged sentence

Per ASC 350, the Company tests goodwill and intangibles for impairment annually or as events or circumstances change that indicate the fair value may be below the carrying amount.

As of December 31, 2022  and 2021 , there has been no change to the Company's assessment of the value of intangible assets or goodwill.

Accounting pronouncements issued and not yet adopted - In January 2021, the FASB issued ASU 2021 - 01  

Reference Rate Reform (Topic 848 ) 

(“ASU 2021 - 01”

) 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 2021 - 01  apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2021 - 01 is 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. The Company is currently evaluating ASU 2021 - 01 to determine the impact it may have on its consolidated financial statements.

See Note 5  - Long-term debt for additional discussion on transition from LIBOR. 

Reclassifications –

Certain comparative balances as of and for the year ended December 31, 2021  have been reclassified to make them consistent with the current year presentation. 

NOTE 3 –

PROPERTY AND EQUIPMENT

As of December 31, 2023 and 2022 , there has been no change to the Company's assessment of the value of intangible assets or goodwill.

Accounting pronouncements issued and not yet adopted - In November 2023, the FASB issued ASU 2023 - 07 Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ) which enhances the disclosure requirements for segment reporting, primarily disclosures around significant segment expenses.

The key provisions of the amendments require disclosure of significant segment expense reviewed by the CODM, require disclosure of an “other” segment category, require disclosure of segment profit or loss and assets for interim periods, clarify and require disclosure of other measurements used by the CODM in assessing segment performance and allocating resources, and require disclosure of the CODM's title and position and explanation of how the CODM assesses segment performance.

ASU 2023 - 07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating ASU 2023 - 07 to determine the impact it may have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09 Income Taxes (Topic 740 ) Improvements to Income Tax Disclosures (“ASU 2023 - 09” ) which requires entities, on an annual basis, to disclose:

specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold, the amount of income taxes paid, net of refunds, disaggregated by jurisdiction, income or loss from continuing operations before income tax, income tax expense from continuing operations disaggregated between foreign and domestic, and income tax expense from continuing operations disaggregated by federal, state and foreign.

ASU 2023 - 09 is effective for annual periods beginning after December 31, 2024.

The Company is currently evaluating ASU 2023 - 09 to determine the impact it may have on its consolidated financial statements.

Reclassifications - Certain comparative balances as of and for the year ended have been reclassified to make them consistent with the current year presentation.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Medical equipment and facilities

$ 73,709,000  

$ 77,150,000 $ 73,709,000

Office equipment

422,000  

306,000 422,000

Construction in progress

106,000  

74,237,000  

3,771,000 106,000

81,227,000 74,237,000

Accumulated depreciation

( 50,770,000 )  

( 55,383,000 ) ( 50,770,000 )

Net property and equipment

$ 23,467,000  

As of December 31, 2022  and 2021 , approximately $ 2,201,000  and $ 2,697,000 , respectively, of the net property and equipment balance is outside of the United States. 

Depreciation expense recorded in costs of revenue and selling and administrative expense in the consolidated statements of income for the years ended 

December 31, 2022 and 2021 , was $ 4,783,000 and $ 4,972,000 , respectively.

As of  

April 1, 2021, 

the Company reduced its estimate for salvage value for 

nine  of its Gamma Knife units.

As of October 1, 2022, the Company further reduced its estimate for salvage value for one of its domestic Gamma Knife Perfexion units.

The net effect of the change in estimate made October 1, 2022, for the year ended 

December 31, 2022 , was a decrease in net income of approximately $ 17,000  or $ 0.00  per diluted share.

This change 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.

$ 25,844,000 $ 23,467,000

As of December 31, 2023 and 2022 , approximately $ 3,966,000 and $ 2,201,000 , respectively, of the net property and equipment balance is outside of the United States.

Depreciation expense recorded in costs of revenue and selling and administrative expense in the consolidated statements of income for the years ended December 31, 2023 and 2022 , was $ 5,165,000 and $ 4,783,000 , respectively.

As of October 1, 2022, the Company reduced its estimate for salvage value for one of its domestic Gamma Knife Perfexion units.

As of January 1, 2023, the Company reduced its estimated useful life for one of its direct patient services Gamma Knife units.

The net effect of the change in estimate made January 1, 2023, for the year ended December 31, 2023 , was a decrease in net income of approximately $ 207,000 or $ 0.03 per diluted share.

This change in estimate also impacts future periods.

As of December 31, 2023 and 2022 , the Company recognized a loss on the write down of impaired assets of $ 940,000 and $ 0 , respectively.

The impairment as of 

December 31, 2021  was 

related to the estimate for removal costs of one of the Gamma Knife units that was impaired during the year ended December 31, 2020 and removed in January 2022 .

The Company reviewed its Gamma Knife equipment, in light of available information as of December 31, 2022 and concluded no additional impairment exists.

The Company reviewed it’s PBRT equipment, in light of available information as of December 31, 2022 and 

2021  and concluded no impairment exists.

The impairment as of December 31, 2023 was related to cash flow impairment for one of the Company’s Gamma Knife units and estimated removal costs of the two Gamma Knife contracts that expired during the year .

The Company reviewed its Gamma Knife equipment, in light of available information as of December 31, 2022 and concluded no impairment existed.

The Company reviewed it’s PBRT equipment, in light of available information as of December 31, 2023 and 2022 and concluded no impairment exists.

AMERICAN SHARED HOSPITAL SERVICES

2 unchanged sentences

Other accrued liabilities consists of the following:

Equipment maintenance and upgrades, non-related party

591,000  

Insurance financing

$ — $ 591,000

Professional services

92,000  

472,000 92,000

Operating costs

539,000  

322,000  

450,000 539,000

304,000 322,000

Total other accrued liabilities

$ 1,544,000  

NOTE 5  - LONG TERM DEBT

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.

first loan facility is a $ 9,500,000  term loan (the “Term Loan”) of which $ 6,774,000  was used to refinance the domestic Gamma Knife debt and finance leases, and associated closing costs, $ 1,665,000  was used to finance 

two  Gamma Knife reloads and to pay for the unload costs for 

two  customer contracts in the 

first  quarter of 

2021, with the remaining $ 1,061,000  available for future projects.

second  loan facility is a $ 5,500,000 delayed draw term loan (the “DDTL”) of which $ 5,026,000  was used to refinance the Company’s PBRT finance leases and associated closing costs as well as to provide additional working capital.

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 facilities have a 

five -year maturity, 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 Company recorded a loss on extinguishment of debt of $ 401,000  during the year ended December 31, 2021, related to the prepayment penalties charged by the existing lenders.  The Company capitalized debt issuance costs of $ 310,000  related to legal and transaction fees for the Credit Agreement during the year ended 

December 31, 2021. 

The long-term debt on the consolidated balance sheets related to the Term Loan and DDTL was $ 12,624,000  and $ 14,437,000 as of December 31, 2022 and 2021 , respectively.

December 31, 2021, 

LIBOR will no longer be used to price new loans, but 1 -month, 3 -month, 6 -month and 12 -month maturities will continue to be published through 2023.

The Company is working with Fifth Third Bank to determine an alternative base rate. 

$ 1,226,000 $ 1,544,000

NOTE 5 - LONG TERM DEBT

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 is a $ 5,500,000 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 $ 2,500,000 on the Revolving Line as of December 31, 2023 , which was paid off in January 2024.

The facilities have a five -year maturity, 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 consolidated balance sheets related to the Term Loan and DDTL was $ 10,825,000 and $ 12,624,000 as of December 31, 2023 and 2022 , respectively.

The Revolving Line is charged an unused line fee of 0.25 % per annum.

1 unchanged sentence

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 

December 31, 2022 .

The loan entered into with 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 

29  quarterly installments with a fixed interest rate of 

3.67 %. The Company’s loan with DFC also contains customary covenants and representations, which the Company is in compliance with as of  

December 31, 2022 . 

The long-term debt on the consolidated balance sheets related to the DFC loan was $ 1,041,000  and $ 1,261,000  as of 

December 31, 2022 and 2021 , respectively. 

The Company capitalized debt issuance costs of $ 9,000 and $15,000  as of 

December 31, 2022 and 2021 , respectively, related to maintenance and administrative fees on the DFC Loan.  

The accretion of debt issuance costs for the years ended 

December 31, 2022 and 2021 , was $ 84,000 and $ 59,000 , respectively. As of 

December 31, 2022 and 2021 , the unamortized debt issuance costs on the consolidated balances sheets were $ 198,000  and $ 294,000 .  

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 December 31, 2023 .

On January 25, 2024, the Company amended its Credit Agreement to include financing for the equipment in Puebla, see Note 12 - Subsequent Event for further information.

The loan entered into with 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 first tranche of the DFC Loan was funded in June 2020.

During the fourth quarter of 2023, the second tranche of the DFC loan was funded to finance the equipment upgrade in Ecuador.

The amount outstanding under the first tranche of the DFC Loan is payable in 29 quarterly installments with a fixed interest rate of 3.67 %.

The amount outstanding under the second tranche of the DFC Loan is payable in 16 quarterly installments with a fixed interest rate of 7.49 %.

The long-term debt on the consolidated balance sheets related to the DFC loan was $ 2,464,000 and $ 1,041,000 as of December 31, 2023 and 2022 , respectively.

The Company capitalized debt issuance costs of $ 9,000 and $ 9,000 as of December 31, 2023 and 2022 , respectively, related to maintenance and administrative fees on the DFC Loan.

The DFC Loan contains customary covenants among other covenants and obligations, requirements that the Company maintain certain financial ratios related to liquidity and cash flow as well as depository requirements.

On March 28, 2024 the Company received a waiver and amendment from DFC for certain covenants as of December 31, 2023 and through December 31, 2024 and amended other covenants and definitions permanently.

The Company expects to be in compliance with all debt covenants pursuant to the DFC Loan as amended and waived at March 31, 2024.

The accretion of debt issuance costs for the years ended December 31, 2023 and 2022 , was $ 46,000 and $ 84,000 , respectively.

As of December 31, 2023 and 2022 , the unamortized debt issuance costs on the consolidated balances sheets were $ 164,000 and $ 198,000 .

The following are contractual maturities of long-term debt by year at December 31, 2023 , excluding debt issuance costs of $ 164,000 :

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6  - LEASES

NOTE 6 - LEASES

The Company determines if a contract is a lease at inception.

2 unchanged sentences

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 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 has elected not to recognize ROU assets and lease liabilities that arise from short-term ( 12 months or less) leases for any class of underlying asset.

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 consolidated balance sheets (see further discussion at Note 2 ).

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.

All of the Company’s lessor arrangements entered into 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 has elected not to recognize right-of-use (“ROU”) assets and lease liabilities that arise from short-term ( 12 months or less) leases for any class of underlying asset.

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 consolidated balance sheets (see further discussion at Note 2 ).

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 leases approximately 3,253 square feet for $ 22,011 per month with a lease expiration date in August 2023.

The Sublease is for $ 16,195 per month through the existing contract expiration date. The Company also entered into a lease (the “Lease”) agreement 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. 

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.

The lease expired in August 2023.

The Sublease was for $ 16,195 per month through the existing contract expiration date.

The Company also entered into a lease (the “Lease”) agreement 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 assessed the Lease under ASC 842 and concluded the Lease should be classified as an operating lease.

The Company recorded $ 151,000 right-of-use (“ROU”) asset, other current liabilities and lease liabilities on the consolidated balance sheets related to the Lease as of December 1, 2021, the effective date of the Lease. 

The Company assessed the Sublease under ASC 842 and ASC 360 Property and Equipment (“ASC 360”

) and concluded the ROU asset for the corporate offices at Two Embarcadero Center was impaired. 

The Company recorded an impairment loss on the Sublease of $ 77,000 as of December 1, 2021.  

The Company’s lessee operating leases are accounted for as ROU assets, other current liabilities, and lease liabilities on the consolidated balance sheets.

The Company’s lessee operating leases are accounted for as ROU assets, current portion of lease liabilities, and lease liabilities on the consolidated balance sheets.

Operating lease 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, so 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 also include any lease payments made and excludes lease incentives and 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 between 1  and 2  years, some of which include options to renew or extend the lease.

As of December 31, 2022 , operating ROU assets, net of impairment, were $ 317,000  and lease liabilities were $ 351,000 .

The following table summarizes maturities of lessee operating lease liabilities as of December 31, 2022 :

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 1 year, some of which include options to renew or extend the lease.

As of December 31, 2023 , operating ROU assets and lease liabilities were $ 57,000 .

The following table summarizes maturities of lessee operating lease liabilities as of December 31, 2023 :

Year ending December 31,

4 unchanged sentences

Operating lease cost, net of impairment

$ 406,000  

$ 302,000 $ 406,000

Sublease income

( 174,000 )  

( 129,000 ) ( 174,000 )

Total lease cost

$ 232,000  

$ 173,000 $ 232,000

Other information

Cash paid for amounts included in the measurement of lease liabilities - Operating leases

$ 406,000  

$ 302,000 $ 406,000

Weighted-average remaining lease term - Operating leases in years

Weighted-average discount rate - Operating leases

5.65 %  

The Company’s corporate offices are located at

4.65 % 5.65 %

The Company’s corporate offices are located at

601 Montgomery Street, Suite

1112, San Francisco, California, where it leases approximately

1112, San Francisco, California, where it leases approximately

900 square feet for

$ 4,500 per month with a lease expiration date in

November 2024. 

The Company subleased its existing corporate offices located at Two Embarcadero Center, Suite

410, San Francisco, California, where it leases approximately

410, San Francisco, California, where it leased approximately

3,253 square feet for

$ 22,011  per month with a lease expiration date in

The monthly lease expense is offset by sublease income of

The sublease term is consistent with the existing lease term. The Company owns and operates a stand-alone Gamma Knife facility in Lima, Peru where it leases approximately

$ 22,011 per month.

This lease expired in

The monthly lease expense was offset by sublease income of

The sublease term was consistent with the existing lease term.

The Company owns and operates a stand-alone Gamma Knife facility in Lima, Peru where it leases approximately

1,600 square feet for approximately

$ 8,850  per month with a lease expiration date in

$ 8,850 per month with a lease expiration date in

January 2024.

The lease in Peru is currently on a month-to-month basis.

The Company also owns and operates a stand-alone Gamma Knife facility in Guayaquil, Ecuador where it owns

5 unchanged sentences

December 31, 2023 and 2022 , respectively, and includes the above operating leases as well as month-to-month rental and certain executory costs.

The sublease of the Company’s existing office space through the remainder of its lease term at a rate lower than its lease rate resulted in an impairment loss of

$ 77,000 for the year ended

December 31, 2021. 

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7  

The components of income before income taxes for the years ended 

December 31, 2022 and 2021  are as follows:

NOTE 7 – INCOME TAXES

The components of income before income taxes for the years ended December 31, 2023 and 2022 are as follows:

YEARS ENDED December 31,

$ 2,350,000  

168,000  

$ 666,000 $ 2,350,000

30,000 168,000

Income before income taxes

$ 2,518,000  

For the year ended 

December 31, 2022 and 2021 , the Company recorded an income tax expense of $ 963,000  and $ 269,000 , respectively.

The increase in the Company’s provision for income taxes as of December 31, 2022 is due to higher earnings during the current period, return-to-provision adjustments arising from foreign tax returns filed during the current period, as well as permanent domestic tax differences.

The components of the provision for income taxes for the years ended 

December 31, 2022 and 2021 consists of the following:

$ 696,000 $ 2,518,000

For the year ended December 31, 2023 and 2022 , the Company recorded an income tax expense of $ 431,000 and $ 963,000 , respectively.

The components of the provision for income taxes for the years ended December 31, 2023 and 2022 consists of the following:

YEARS ENDED December 31,

$ 355,000  

60,000  

204,000  

$ 940,000 $ 355,000

115,000 60,000

135,000 204,000

Total current

619,000  

290,000  

48,000  

1,190,000 619,000

( 672,000 ) 290,000

( 77,000 ) 48,000

( 10,000 ) 6,000

Total deferred

344,000  

$ 963,000  

Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2022 and 2021 are as follows:

( 759,000 ) 344,000

$ 431,000 $ 963,000

Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2023 and 2022 are as follows:

Deferred tax liabilities:

Property and equipment

$ ( 1,255,000 )  

$ ( 323,000 ) $ ( 708,000 )

Prepaid expenses

( 409,000 ) ( 493,000 )

( 12,000 ) ( 54,000 )

Total deferred tax liabilities

( 1,255,000 )  

( 744,000 ) ( 1,255,000 )

1 unchanged sentence

Net operating loss carryforwards

139,000  

155,000 139,000

Accruals and allowances

167,000  

438,000 167,000

Lease liabilities

61,000  

Other –

114,000  

12,000 61,000

140,000 114,000

Capital loss carryover

646,000  

646,000 646,000

Total deferred tax assets

1,130,000  

1,395,000 1,130,000

Valuation allowance

( 697,000 )  

( 714,000 ) ( 697,000 )

Deferred tax assets net of valuation allowance

433,000  

681,000 433,000

Net deferred tax liabilities

$ ( 822,000 )  

$ ( 63,000 ) $ ( 822,000 )

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7  

INCOME TAXES (CONTINUED)

NOTE 7 – INCOME TAXES (CONTINUED)

The provision for income taxes differs from the amount computed by applying the U.S.

2 unchanged sentences

Computed expected federal income tax

$ 477,000  

$ 218,000 $ 477,000

State income taxes, net of federal benefit

100,000  

12,000 100,000

Foreign rate differential

Stock compensation

Non-deductible expenses

( 25,000 )  

6,000 ( 25,000 )

Return to provision true-up

52,000  

18,000 52,000

Uncertain tax positions

( 17,000 )  

AMT tax payable adjustment

208,000  

9,000 ( 17,000 )

Alternative minimum tax payable adjustment

Change in valuation allowance

Other deferred tax adjustments

168,000  

$ 963,000  

December 31, 2022 , the Company has net operating loss carryforwards for federal and state income tax return purposes of appr oximately $ 0 and 

$ 2,604,000  that begin to expire in 2029.

Utilization of the net operating loss and credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions.

106,000 168,000

$ 431,000 $ 963,000

As of December 31, 2023 , the Company has net operating loss carryforwards for federal and state income tax return purposes of appr oximately $ 0 and $ 2,586,000 that begin to expire in 2029.

Any annual limitation may result in the expiration of net operating losses and credits before utilization.

At December 31, 2022 , the Company has a capital loss carryforward for federal income tax return purposes of approximately $ 2,679,000 ,which starts to expire in 2024.

At December 31, 2023 , the Company has a capital loss carryforward for federal income tax return purposes of approximately $ 2,679,000 ,which start to expire in 2024.

The Company has capital loss carryforwards for state income tax purposes of approximately $ 129,000 , which starts to expire in 2024.

Due to uncertainty surrounding the realization of impairment losses, capital losses and foreign operating losses in future years, the Company has placed a valuation allowance against a portion of its net domestic and foreign deferred tax assets.

The net valuation allowance increased by $ 0  and $ 19,000  for the tax years ended December 31, 2022 and 2021 , respectively.

The tax return years 2018  through 2021  remain open to examination by the major domestic taxing jurisdictions to which the Company is subject.

The net valuation allowance increased by $ 17,000 and $ 0 for the years ended December 31, 2023 and 2022 , respectively.

The tax return years 2019 through 2022 remain open to examination by the major domestic taxing jurisdictions to which the Company is subject.

Net operating losses generated on a tax return basis by the Company for calendar years 1999 through 2004, 2009, 2010, 2012, 2014, 2015, 2016, 2017 and 2018 remain open to examination by the major domestic taxing jurisdictions.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7  

INCOME TAXES (CONTINUED)

s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

NOTE 7 – INCOME TAXES (CONTINUED)

The Company has adopted accounting standards which prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company ’ s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Additionally, these accounting standards specify that tax positions for which the timing of the ultimate resolution is uncertain should be recognized as long-term liabilities.

The Company has made no reclassifications between current taxes payable and long term taxes payable under this guidance.

As of December 31, 2022 , the unrecognized tax benefit was $ 278,000  which, if recognized, will not affect the annual effective tax rate as these unrecognized tax benefits would increase deferred tax assets, which would be subject to a full valuation allowance.

As of December 31, 2023 , the unrecognized tax benefit was $ 287,000 which, if recognized, will not affect the annual effective tax rate as these unrecognized tax benefits would increase deferred tax assets, which would be subject to a full valuation allowance.

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

1 unchanged sentence

Balance at beginning of year

$ 295,000  

$ 278,000 $ 295,000

Additions based on tax positions of prior years

( 17,000 )  

9,000 ( 17,000 )

Balance at end of year

$ 278,000  

The Company’s policy for deducting interest and penalties is to treat interest as interest expense and penalties as income taxes.

As of December 31, 2022 , the Company had $ 43,000  accrued for the payment of penalties and zero interest related to unrecognized tax benefits.

$ 287,000 $ 278,000

The Company’s policy for deducting interest and penalties is to treat interest as interest expense and penalties as income taxes.

As of December 31, 2023 , the Company had $ 58,000 accrued for the payment of penalties and zero interest related to unrecognized tax benefits.

The Company does not expect any material changes to our uncertain tax positions within the next 12 months.

The Company believes that it is reasonably possible that a decrease of up to $ 100,000 in unrecognized tax benefits related to foreign taxes may be necessary within the coming year.

NOTE 8  

STOCK-BASED COMPENSATION EXPENSE

The Company believes that it is reasonably possible that a decrease of up to $ 100,000 in unrecognized tax benefits related to foreign taxes may be necessary within the coming year.

NOTE 8 – STOCK-BASED COMPENSATION EXPENSE

Incentive Compensation Plan

June 2021, 

the Company’s shareholders approved an amendment and restatement of the Company’s Incentive Compensation Plan (the “Plan”), that among other things, increases the number of shares of the Company’s common stock reserved for issuance under the Plan to 

2,580,000  and extends 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.

As of December 31, 2022 , approximately 1,219,000  shares remain available for grant under the Plan.

Under the Plan, a total of 752,000 restricted stock units have been granted, consisting o f 53,000 o f annual automatic grants to non-employee directors, 328,000 of deferred retainer fees to non-employee members of the Board, 31,000 grants issued in lieu of commission or bonus to employees of the Company, and 340,000 restricted stock units issued to the CEO, see further discussion below.

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, increases the number of shares of the Company’s common stock reserved for issuance under the Plan to 2,580,000 and extends 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.

As of December 31, 2023 , approximately 935,000 shares remain available for grant under the Plan.

Under the Plan, a total of 898,000 restricted stock units have been granted, consisting o f 53,000 o f annual automatic grants to non-employee directors, 328,000 of deferred retainer fees to non-employee members of the Board, 57,000 grants issued in lieu of commission or bonus to employees of the Company, and 460,000 restricted stock units issued to the Executive Chairman of the Board, see further discussion below.

Of the total restricted stock units granted under the Plan, 123,000 of them are fully vested but not yet deemed issued and outstanding, 742 ,000 are fully vested and outstanding, and 33,000 are outstanding as of December 31, 2023 .

Changes in restricted stock units, consisting primarily of annual automatic grants, deferred compensation to non-employee directors, and restricted stock units awards to the CEO, under the Incentive Compensation Plans during 2022 and 2021 are as follows:

Restricted Stock

Changes in restricted stock units, consisting primarily of annual automatic grants, deferred compensation to non-employee directors, shares issued to employees as part of the Company’s bonus plan, and restricted stock units awards to the Executive Chairman of the Board, under the Incentive Compensation Plans during 2023 and 2022 are as follows:

Restricted Stock Units

Grant Date Weighted- Average Fair Value

Outstanding at January 1, 2022

13,000  

$ 1.97  

165,000  

$ 2.61  

( 168,000 )  

$ 2.57  

Outstanding at December 31, 2022

10,000  

$ 2.57  

131,000  

$ 2.40  

( 132,000 )  

$ 2.40  

( 3,000 )  

$ 2.92  

Outstanding at December 31, 2023

$ 2.33  

For the year ended December 31, 2022 , total compensation expense recorded in the consolidated statements of income for annual restricted stock units awarded was $ 6,000 , with an offsetting tax benefit of $ 1,500 , as this expense is deductible for income tax purposes.

As of December 31, 2022 , there was $ 11,000 of total unrecognized compensation cost related to annual restricted stock units which is expected to be recognized over a period of three  

For the year ended 

December 31, 2021 , 38,000 of the vested restricted stock units were deferred for issuance.

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8  

STOCK-BASED COMPENSATION EXPENSE (CONTINUED)

NOTE 8 – STOCK-BASED COMPENSATION EXPENSE (CONTINUED)

Certain Executive Equity Awards

Effective May 4, 2020, the Company appointed Raymond C.

Stachowiak as Interim President and Chief Executive Officer.

Stachowiak as Interim President and Chief Executive Officer ( “CEO” ).

Pursuant to his Offer Letter, Mr.

Stachowiak was granted 50,000 restricted stock awards that vested in full on August 3, 2020.

He was granted additional restricted stock awards totaling 10,000 common shares per month, which vest in full at the end of each 30 -day period following issuance.

On October 1, 2020, Mr.

Stachowiak was appointed as the CEO.

For the year ended December 31, 2021 , 120,000 restricted stock awards were issued to the CEO and became fully vested.

Total compensation expense recorded for the year ended December 31, 2021 in the consolidated financial statements of income related to executive equity awards was $ 331,000 . 

He was granted additional restricted stock awards totaling 10,000 common shares per month, which vested in full at the end of each 30 -day period following issuance.

Stachowiak became CEO of the Company on October 1, 2020 and served in such position until he was appointed Executive Chairman of the Board on March 7, 2023.

For the year ended December 31, 2022 , 120,000 restricted stock awards were issued to Mr.

Stachowiak and became fully vested. 

Total compensation expense recorded for the year ended December 31, 2022 in the consolidated financial statements of income related to the executive equity awards was $ 288,000 .

For the year ended 

December 31, 2022 , stock compensation expense recorded in the consolidated financial statements is summarized as follows:

Stachowiak and became fully vested.

Total compensation expense recorded for the year ended December 31, 2022 in the consolidated financial statements of income related to executive equity awards was $ 288,000 .

For the year ended December 31, 2023 , 120,000 restricted stock awards were issued to Mr.

Stachowiak and 90,000 became fully vested.

Total compensation expense recorded for the year ended December 31, 2023 in the consolidated financial statements of income related to the executive equity awards was $ 351,000 .

For the year ended December 31, 2023 , stock compensation expense recorded in the consolidated financial statements is summarized as follows:

Awards Issued

Options Exercised

Management Bonus Program - vested and issued

11,000  

Management Bonus Program

Annual RSU Awards

Board RSU Awards - other

Executive Compensation

120,000  

135,000  

Total stock-based compensation expense before income tax effect for the Company’s options and restricted stock awards in the amount of 

$399,000 and 

$420,000 for the years ended 

December 31, 2022 and 2021 , is reflected in selling and administrative expense in the consolidated statements of income, respectively.

90,000 351,000

116,000 $ 389,000

Total stock-based compensation expense before income tax effect for the Company’s options and restricted stock awards in the amount of $ 389,000 and $ 399,000 for the years ended December 31, 2023 and 2022 , is reflected in selling and administrative expense in the consolidated statements of income, respectively.

Stock Options

5 unchanged sentences

Balance at December 31, 2021

417,000  

$ 2.79  

$ 2.92  

( 22,000 )  

$ 2.65  

( 334,000 )  

$ 2.81  

67,000 $ 2.72 3.33 $ —

50,000 $ 2.72 7.00 $ —

( 4,000 ) $ 2.29 — $ —

( 18,000 ) $ 2.64 — $ —

Balance at December 31, 2022

67,000  

$ 2.72  

50,000  

$ 2.72  

( 4,000 )  

$ 2.29  

( 18,000 )  

$ 2.64  

95,000 $ 2.76 4.83 $ 25,000

70,000 $ 2.89 7.00 $ —

( 19,000 ) $ 2.69 — $ —

Balance at December 31, 2023

95,000  

$ 2.76  

146,000 $ 2.83 5.44 $ —

Exercisable at December 31, 2022

58,000  

$ 2.72  

38,000 $ 2.79 2.38 $ —

Exercisable at December 31, 2023

38,000  

$ 2.79  

31,000 $ 2.84 3.38 $ —

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8  

STOCK-BASED COMPENSATION EXPENSE (CONTINUED)

The weighted average grant-date fair value of the options granted during the years 2022 and 2021 was 

$ 1.49  and $ 1.10 , respectively. There were 4,000 options exercised which resulted in 

3,000 shares issued, due to cashless exercises, during the year ended 

December 31, 2022 . There were 22,000 options exercised which resulted in 

5,000 shares issued, due to cashless exercises, during the year ended 

December 31, 2021 . Total stock-based compensation expense recognized for stock options for the years ended December 

2022  and 

2021  was $ 10,000 and $ 2,000 , respectively.

The Company received approximately $ 5,000 from the exercise of 2,000 options under the share-based arrangements in each of the years ended December 31, 2022 and 2021 .

The remaining options exercised during 2022  and 

2021  were cashless exercises. 

NOTE 8 – STOCK-BASED COMPENSATION EXPENSE (CONTINUED)

The weighted average grant-date fair value of the options granted during the years 2023 and 2022 was $ 2.89 and $ 1.49 , respectively.

There were no options exercised during the year ended December 31, 2023 .

There were 4,000 options exercised which resulted in 3,000 shares issued, due to cashless exercises, during the year ended December 31, 2022 .

Total stock-based compensation expense recognized for stock options for the years ended December 2023 and 2022 was $ 34,000 and $10,000, respectively.

The Company received approximately $ 5,000 from the exercise of 2,000 options under the share-based arrangements during the year ended December 31, 2022 .

The remaining options exercised during 2022 were cashless exercises.

At December 31, 2023 , there was approximately $ 156,000 of 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 Company’s stock-based awards to employees are calculated using the Black-Scholes options valuation model.

This cost is expected to be recognized over a period of approximately four years.

The Company’s stock option awards to employees are calculated using the Black-Scholes options valuation model.

The Black-Scholes model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable.

In addition, the Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility.

The Company’s stock-based awards have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the present value estimates.

For these reasons, management believes that the existing models do not necessarily provide a reliable single measure of the fair value of its stock-based awards to employees.

The fair value of the Company’s option grants issued during 2022 and 2021 were estimated using assumptions for expected life, volatility, dividend yield, forfeiture rate, and risk-free interest rate which are specific to each award as summarized in the following table.

The estimated fair value of the Company’s options is amortized over the period during which the optionee is required to provide service in exchange for the award, usually the vesting period.

The fair value of the Compan y’s option grants under the Plan in 2022 and 2021 was estimated using the following assumptions:

The fair value of the Company’s option grants issued during 2023 and 2022 were estimated using assumptions for expected life, volatility, dividend yield, forfeiture rate, and risk-free interest rate which are specific to each award as summarized in the following table.

The estimated fair value of the Company’s options is amortized over the period during which the optionee is required to provide service in exchange for the award, usually the vesting period.

The fair value of the Compan y’s option grants under the Plan in 2023 and 2022 was estimated using the following assumptions:

Expected life (years)

3 unchanged sentences

Risk-free interest rate

The following summarizes the assumption inputs used for the Company’s Black-Scholes calculation:

Expected life (years):

The expected term represents the weighted average period that the Company’s stock options are expected to be outstanding.  

Expected forfeiture rate:

Forfeitures are recognized as they occur. 

Forfeitures are recognized as they occur.

Expected volatility:

The expected volatility was derived from the Company’s historical stock volatility. 

The expected volatility was derived from the Company’s historical stock volatility.

Dividend yield:

The expected dividend yield was assumed to be zero, as the Company has not previously paid dividends on common stock and has no current plans to do so.  

Risk-free interest rate: 

The expected dividend yield was assumed to be zero, as the Company has not previously paid dividends on common stock and has no current plans to do so.

Risk-free interest rate:

The risk-free interest rate is based on the interest yield in effect at the date of grant for zero coupon U.S.

Treasury notes with maturities approximately equal to the option’s expected term.

Repurchase of Common Stock, Common Stock Warrants and Stock Options

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9  

RETIREMENT PLAN

The Company has a defined-contribution retirement plan (the “Retirement Plan”) that allows for a matching safe harbor contribution.

For 2022 , the Board of Directors elected to match participant deferred salary contributions up to a maximum of 4 % of the participant’s annual compensation.

NOTE 9 – RETIREMENT PLAN

The Company has a defined-contribution retirement plan (the “Retirement Plan”) that allows for a matching safe harbor contribution.

For 2023 , the Board of Directors elected to match participant deferred salary contributions up to a maximum of 4 % of the participant’s annual compensation.

Discretionary profit sharing contributions are allowed under the Retirement Plan in years that the Board does not elect a safe harbor match.

The Company has accrued approximately $ 36,000 for the estimated safe harbor matching contribution for the year ended December 31, 2022 .

The Company contributed $ 41,000 to the Retirement Plan for the safe harbor match for the year ended December 31, 2021 .

NOTE 10  

COMMITMENTS AND CONTINGENCIES

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 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 December 31, 2022 , the Company had commitments, after deposits, to purchase two MEVION S250i PBRT systems for $ 34,000,000 .

As of December 31, 2022 , the Company had commitments to install four Leksell Gamma Knife Icon Systems (“Icon”) at existing customer sites, and purchase three  Linear Accelerator (“LINAC”) systems.

Two LINACS will be placed at future customer sites and 

one LINAC system will be placed at the Company’s new site in Puebla, Mexico, which is expected to begin operations in the second  half of 

2023, pending regulatory approval. The Company also has a commitment to upgrade the Gamma Knife unit at its stand-alone facility in Ecuador to an Icon.

The remaining Icon upgrades and LINAC purchases are scheduled to occur between 2023  and 2024.

The Company expects to upgrade the equipment in Ecuador in mid- 2023, pending regulatory approval. The Company has a commitment from DFC to finance this upgrade. 

During 2023, the Company contributed $ 43,000 to the Retirement Plan for the safe harbor match for the year ended December 31, 2023 .

The Company has accrued approximately $ 17,000 for additional safe harbor matching contribution for the year ended December 31, 2023 .

Also during 2023, the Company contributed $ 47,000 to the Retirement Plan for the safe harbor match for the year ended December 31, 2022 .

NOTE 10 – COMMITMENTS AND CONTINGENCIES

On December 20, 2018, the Company signed Second Amendments to two System Build Agreements for the Company’s second and third Mevion PBRT units.

These commitments expired in January 2024 and the Company was not able to utilize this equipment.

During the year-ended December 31, 2020, the Company impaired these deposits and wrote-off the deposits and related capitalized interest.

As of December 31, 2023 , the Company had commitments to install three Leksell Gamma Knife Esprit Systems (“Esprit”), install one Cobalt- 60 reload with software, purchase one Gamma Plan workstation, purchase one Linear Accelerator (“LINAC”) system, and purchase one Magnetic Resonance imaging guided LINAC (“MR LINAC”).

The LINAC, MR LINAC and one Esprit will be placed at future customer sites.

The remaining Esprit upgrades and Cobalt- 60 reload are scheduled to occur during 2024 at existing customer sites.

The Company also has one commitment to de-install a Gamma Knife unit at an existing customer site.

The Company’s LINAC installation in Puebla was in process at December 31, 2023 and the Company made substantial payments towards the project during 2023.

In January 2024, the Company amended the Credit Agreement to include financing for this project.

At December 31, 2023 , the Company had commitments remaining for some of the ancillary equipment in Puebla.

Total Gamma Knife and LINAC commitments as of December 31, 2023 , were $ 15,925,000 .

There may be cash requirements, pending financing, for the Company ’

s new site in Mexico and the upgrade in Ecuador in the next 12 months. 

However, the Company currently has cash on hand of $ 12,453,000  and a line of credit of $ 7,000,000  to fund these projects, if necessary. The Company has not placed the remaining commitments at this time. There can be no assurance that financing will be available for the Company’s future projects, or at terms that are acceptable to the Company. 

On September 4, 2022, the Company entered into a Maintenance and Support Agreement with Mevion (the “Mevion Service Agreement”), which provides for maintenance and support of the Company’s PBRT unit at Orlando Health from September 2022 through April 2026. 

There are no deposits on the consolidated balance sheets related to these commitments as of December 31, 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 $ 13,808,000 and a line of credit of $ 7,000,000 to fund these projects, if necessary.

The Company borrowed $ 2,500,000 on the Revolving Line as of December 31, 2023 , which was paid off in January 2024.

The agreement requires an annual prepayment of $ 1,865,000 for the current contractual period ( one year).

2 unchanged sentences

The service commitments are carried out via contracts with Mevion, Elekta and Mobius Imaging, LLC.

In addition, in April 2019, the Company signed agreements to service the Icon upgrades which will be installed at various dates between 2023  and 2024.

The Company’s commitments to purchase t wo LINAC systems also include a 9 -year and 5 -year agreement to service the equipment, respectively.

Total service commitments as of December 31, 2023 were $ 14,805,000 .

1 unchanged sentence

The Company believes that cash flow from cash on hand and operations will be sufficient to cover these payments.

The Company’s customer contracts generally contain mutual indemnification provisions.

The Company maintains general and professional liability insurance in the United States.

The Company is not involved in the practice of medicine and therefore believes its present insurance coverage and indemnification agreements are adequate for its business.

The Company’s Peruvian and Ecuadorian Gamma Knife centers are free-standing facilities operated by GKPeru and GKCE, respectively.

The treating physicians and clinical staff at these facilities are independent contractors.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11  

RELATED PARTY TRANSACTIONS

The Company’s Gamma Knife business is operated through its 81 % indirect interest in its GKF subsidiary.

NOTE 11 – 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 summarizes related party activity for the years ended 

December 31, 2022  and 

subsidiary of Elekta, which is the manufacturer of the Gamma Knife and other radiation therapy equipment.

Since the Company purchases the majority of its equipment 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 summarizes related party activity for the years ended December 31, 2023 and 2022 :

Equipment purchases and de-install costs

$ 1,844,000  

$ 6,918,000 $ 1,844,000

Costs incurred to maintain equipment

1,094,000  

851,000 1,094,000

Total related party transactions

$ 2,938,000  

The Company also had related party commitments to purchase 

one  Icon, install 

four  Icon upgrades, purchase 

two  Gamma Plan workstations, purchase two LINACs, and service the related equipment of $ 17,407,000  as of 

December 31, 2022 .

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

$ 7,769,000 $ 2,938,000

The Company had related party commitments to install three Esprit upgrades, one Cobalt- 60 reload, purchase one MR LINAC, purchase one Gamma Plan workstation, and service the related equipment.

The Company also has two commitments to de-install Gamma Knife units at existing customer sites.

Total related party commitments were $ 18,968,000 as of December 31, 2023 .

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

Accounts payable and other accrued liabilities

$ 497,000  

NOTE 12  

SUBSEQUENT EVENT

On February 15, 2023, the Company executed an equipment sales agreement with a new customer for the sale of a Gamma Knife upgrade and Cobalt- 60 reload. The Company expects to complete the sale during the second or third  quarter of 2023.

The Company will fulfill this order by exercising its purchase commitments. See Note 10 –

Commitments and Contingencies for additional information. 

$ 1,961,000 $ 497,000

NOTE 12 – SUBSEQUENT EVENT

On January 25, 2024 ( the “First Amendment Effective Date”), the Company entered into a First Amendment to Credit Agreement (the “First Amendment”) with Fifth Third which amended the Credit Agreement to add a new term loan in the aggregate principal amount of $ 2,700,000 (the “Supplemental Term Loan”).

The proceeds of the Supplemental Term Loan were advanced in a single borrowing on January 25, 2024, and will be used for capital expenditures related to the Company’s operations in Puebla, Mexico and other related transaction costs.

The Supplemental Term Loan will mature on January 25, 2030 ( the “Maturity Date’).

Interest on the Supplemental Term Loan is payable monthly during the initial twelve month period following the First Amendment Effective Date.

Following such twelve month period, the Company is required to make equal monthly payments of principal and interest to fully amortize the amount outstanding under the Supplemental Term Loan by the Maturity Date.

The Supplemental Term Loan is secured by a lien on substantially all of the assets of the Company and certain of its domestic subsidiaries.

The First Amendment also replaces the LIBOR-based rates in the Credit Agreement with SOFR-based rates.

Pursuant to the First Amendment, advances under the Credit Agreement bear interest at a floating rate per annum equal to SOFR plus 3.00 %, subject to a SOFR floor of 0.00 %.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures