What changed in this filing

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Item 9A. Controls and Procedures

2025-04-04 compared with 2024-04-01 · 475 added, 193 removed, 944 unchanged (41% of the section changed)

1 unchanged sentence

Evaluation of disclosure controls and procedures.

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.

Our Executive Chairman of the Board (who performs the functions of our principal executive officer) 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 not effective as of December 31, 2024 based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, due to the material weakness over financial reporting described below.

Management ’ s report on internal control over financial reporting.

5 unchanged sentences

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.

Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was not effective at the reasonable assurance level as of December 31, 2024.

A material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

We have identified the material weakness in internal control over financial reporting as of December 31, 2024 described below.

The Company did not maintain an effective control environment because it had an insufficient number of personnel and resources with experience to create the proper environment for effective internal control over financial reporting in this period.

The Company’s control environment resulted in the conclusion that we were unable to completely maintain the monitoring component of the COSO framework including ensuring the sufficiency of monitoring activities to ascertain whether the components of internal control are present and functioning in a timely manner.

While there were no material misstatements in 2024, the material weakness could result in misstatements in the consolidated financial statements that would not be prevented or detected on a timely basis.

Accordingly, management has concluded that the control deficiency constitutes a material weakness.

The SEC permits companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year of such acquisition.

In reliance of the SEC’s guidance, management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 does not extend to the internal controls of our current year acquisition of a 60% interest in each of the RI Companies.

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

Management excluded the RI Companies from its report on internal controls over financial reporting as of December 31, 2024.

The RI Companies’ consolidated financial statements contributed 22.5% and 27.4% of the Company’s consolidated total assets and revenues, respectively.

The Company will include the RI Companies in its assessment of the effectiveness of internal controls over financial reporting in the fiscal year 2025 annual management report, the annual management report following the first anniversary of the acquisition.

The Company’s remediation plan related to the material weakness identified are to hire sufficient personnel with accounting and financial reporting experience to augment its current staff and to improve the timeliness of our overall effectiveness of the Company’s closing and financial reporting processes, including as described in this paragraph.

On December 19, 2024, the Company appointed a new Chief Financial Officer who also serves as the Company’s principal financial officer and principal accounting officer.

The new Chief Financial Officer has extensive experience and expertise in billing and collections for radiation therapy facilities.

During 2024, the Company outsourced its billing process for its Rhode Island operations and intends to hire experienced staff to manage this process internally, which is expected to provide more control and efficiency to this process overall.

During the first quarter of 2025, the Company utilized resources from a staffing agency and hired an Accounting Manager on a full-time basis in late March 2025.

The Company will continue to assess the need for additional resources, especially in the finance and accounting areas, as the Company’s business continues to grow and expand.

The primary element of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

As management continues to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address the material weakness.

As we are a non-accelerated filer, our independent registered public accounting firm is not required to issue an attestation report on our internal control over financial reporting

Changes in internal controls 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.

Our Executive Chairman of the Board (who performs the functions of our principal executive officer) 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, 2024, as required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15, and have concluded that, other than the remediation efforts described above, 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

During the quarter ended December 31, 2024, no director or officer adopted or terminated a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement,” as those terms are defined in Item 408 (a) of Regulation S‑K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

10 unchanged sentences

You may also request a copy of this document free of charge by writing our Corporate Secretary.

We have adopted a Policy on Inside Information and Insider Trading (our “Insider Trading Policy”), which governs the purchase, sale, and/or other disposition of our securities by our directors, officers, and employees and other covered persons designated by our Chief Financial Officer.

We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and NYSE American listing standards, as applicable.

A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K

EXECUTIVE COMPENSATION

17 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Income

Consolidated Statement of Shareholders' Equity

67 unchanged sentences

Amendment Two to Equipment Lease Agreement (Reload) dated as of October 7, 2020 between GK Financing, LLC and Northern Westchester Hospital Association.

Amendment Three to Equipment Lease Agreement (Esprit Upgrade) dated as of April 24, 2024 between GK Financing, LLC and Northern Westchester Hospital Center.

Purchased Services Agreement (for a Gamma Knife Unit) dated as of March 5, 2008 between GK Financing, LLC and USC University Hospital, Inc.

11 unchanged sentences

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,

Amendment Three to Gamma Knife Perfexion Purchased Services Agreement dated as of March 27, 2014 between GK 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.

16 unchanged sentences

Stachowiak dated April 22, 2020

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

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

Offer of Employment from the Company to Mr.

Gary Delanois dated October 4, 2024.

Offer Letter from the Company to Mr.

Scott Frech dated December 19, 2024.

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.

Second 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.

Second Amendment to Investment Agreement dated as of April 18, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc.

Third Amendment to Investment Agreement dated as of April 24, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc.

Fourth Amendment to Investment Agreement dated as of May 7, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc..

Transition and Severance Agreement between the Company and Robert Hiatt, dated December 19, 2024.

American Shared Hospital Services Policy on Inside Information and Insider Trading.

Subsidiaries of the Company

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April 4, 2025

/s/ Robert L.

/s/ Raymond S.

Chief Financial Officer

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Balance sheets

Statements of operations

Statements of income

Statement of shareholders’ equity

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

(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”).

(the “Company”) as of December 31, 2024 and 2023, 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, 2024 and 2023, 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.

17 unchanged sentences

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 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 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.

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 management’s estimates through a look-back analysis over rental revenue from medical equipment leasing 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.

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.

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

The amount the Company expects to receive is recorded as revenue and estimated based on historical experience.

Under fee per use arrangements, the Company recognizes revenue at the time the procedures are performed, based on each hospital’s contracted rate and number of procedures performed.

During the year ended December 31, 2024, the Company recognized $15.6 million in rental revenue from medical equipment leasing.

We identified the auditing of management’s estimates of reimbursement rates to record rental revenue from medical equipment leasing and related accounts receivable under its revenue sharing arrangements as a critical audit matter.

The estimates of reimbursement rates involve significant judgment and estimation by management and are subject to adjustments based on the actual reimbursements received.

In turn, auditing management’s judgments used in the estimates of reimbursement rates involved a high degree of auditor judgment and subjectivity.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

Our audit procedures related to the matter included the following, among others:

Testing the process used by management, including evaluating the methods used.

Testing the completeness and accuracy of the underlying data used by management.

Testing the reasonableness of significant assumptions used by management by:

Obtaining third party confirmations from a selection of locations to evaluate the inputs to management’s calculation.

Testing cash receipts subsequent to year end.

Evaluating management’s ability to estimate by comparing collections in 2024 to prior year estimated accounts receivable.

Analytically comparing the estimated reimbursement rates to the predicted rates based on a mix of current and historical information.

Valuation of Facilities in a Business Combination Transaction

As described in Note 12 of the Company’s consolidated financial statements, on May 7, 2024, the Company closed the acquisition of Southern New England Regional Cancer Center and Roger Williams Radiation Therapy, LLC.

The acquisition was accounted for as a business combination.

The Company recorded the acquired facilities at their estimated fair value.

The cost approach was used to estimate the fair value the facilities acquired.

We identified the auditing of the estimated fair value of the facilities with existing leases acquired in the business combination, as a critical audit matter.

The estimated fair value of the facilities required significant management judgment.

In turn, auditing management’s judgments required a high degree of auditor judgment including the need to involve our valuation specialists.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

Our audit procedures related to the estimated fair value of the acquired facilities included the following, among others:

Testing the process used by management.

Evaluating the reasonableness of significant assumptions used to estimate the cost of the facilities.

Testing the underlying data for mathematical accuracy used in the estimate.

Utilizing our valuation professionals with specialized skill and knowledge to assist in evaluating the methods and the reasonableness of certain significant assumptions used.

Impairment of Property and Equipment

As described in Note 2 to the consolidated financial statements, the Company assesses the recoverability of its long-lived assets when events or changes in circumstances indicate their carrying value may not be recoverable.

The Company assesses recoverability of a long-lived asset by determining whether the carrying value of the asset group can be recovered through projected undiscounted cash flows over their remaining lives.

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

As of December 31, 2024, the Company’s balance of property and equipment was $31.1 million.

During the year ended December 31, 2024, the Company recognized impairment losses related to property and equipment of $3.1 million.

We identified the auditing of the Company’s impairment assessment for property and equipment as a critical audit matter.

Auditing the Company’s impairment assessment for its property and equipment is especially challenging due to the high degree of auditor judgment in evaluating management’s indicators of potential impairment for certain asset groups and determining the future cash flows and estimated fair values, where applicable, for certain asset groups where indicators of impairment were determined to be present.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

Our audit procedures related to the matter included the following, among others:

Evaluating the significant judgments applied in determining whether indicators of impairment were present, including searching for evidence contrary to such judgments.

Testing management’s process for determining the projected cash flows to be generated by the sites and evaluating the appropriateness of the methods used.

Testing the mathematical accuracy of the models used in the impairment assessment.

Evaluating the reasonableness of underlying assumptions used to forecast future cash flows, including forecasted growth rates by comparing these forecasts to historical operating results of the Company.

/s/ Moss Adams LLP

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250,000 118,000

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

Accounts receivable, net of allowance for credit losses of $ 265,000 and $ 100,000 at December 31, 2024 and December 31, 2023, respectively

11,610,000 4,343,000

Tax receivables

Other receivables

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Income taxes payable

1,229,000 255,000

Current portion of lease liabilities

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17,341,000 11,041,000

DEFERRED REVENUE, less current portion

DEFERRED INCOME TAXES

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AMERICAN SHARED HOSPITAL SERVICES

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED December 31,

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155,000 200,000

28,340,000 21,325,000

Costs of revenue:

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Loss on write down of impaired assets and associated removal costs

Operating income

3,084,000 940,000

Operating (loss) income

( 2,805,000 ) 270,000

Bargain purchase gain RI Acquisition, net of deferred income taxes of $1,220,000

Interest and other income, net

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1,237,000 696,000

Income tax expense

Income tax (benefit) expense

( 295,000 ) 431,000

1,532,000 265,000

net loss (income) attributable to non-controlling interests

net loss attributable to non-controlling interests

654,000 345,000

23 unchanged sentences

— — 389,000 — 389,000 — 389,000

Options exercised

3,000 5,000 — — 5,000 — 5,000

Vested restricted stock awards

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— — — — — — —

Net income (loss)

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

5 unchanged sentences

120,000 — — — — — —

Capital contributions from non-controlling interests

— — — — — 38,000 38,000

Cash distributions to non-controlling interests

— — — — — ( 95,000 ) ( 95,000 )

RI Acquisition non-controlling interests

— — — — — 1,900,000 1,900,000

Net income (loss)

— — — 2,186,000 2,186,000 ( 654,000 ) 1,532,000

Balances at December 31, 2024

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Loss on write down of impaired assets

3,084,000 940,000

Gain on sale of equipment

( 155,000 ) —

Bargain purchase gain RI Acquisition, net of deferred income taxes

( 3,794,000 ) —

Deferred income taxes

( 359,000 ) ( 759,000 )

Accretion of unfavorable lease position

Stock-based compensation

8 unchanged sentences

324,000 ( 491,000 )

Accounts payable, accrued liabilities and deferred revenue

Lease liability

( 228,000 ) —

Accounts payable and accrued liabilities

2,227,000 ( 79,000 )

Income taxes payable

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( 7,938,000 ) ( 6,273,000 )

Cash received in excess of cash paid for RI Acquisition

Proceeds from sale of equipment

Net cash (used in) investing activities

5 unchanged sentences

( 13,400,000 ) ( 1,400,000 )

Long-term debt financing on purchase of property and equipment

Advances on line of credit

Distributions to non-controlling interests

10,900,000 3,900,000

Long-term debt financing on purchase of property and equipment

9,860,000 1,750,000

Debt issuance costs long-term debt

( 164,000 ) ( 9,000 )

Proceeds from options exercised

Distributions to non-controlling interests

Capital contributions from non-controlling interests

Principal payments on short-term financing prepaid insurance

— ( 202,000 )

Net cash provided by (used in) financing activities

Net cash provided by financing activities

4,405,000 1,910,000

14 unchanged sentences

$ 990,000 $ 1,955,000

Increase in ARO obligation

$ 1,138,000 $ 290,000

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

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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.

(“ASHS-Mexico”), ASHS-Rhode Island Proton Beam Radiation Therapy, LLC (“RI-PBRT”), ASHS-Bristol Radiation Therapy, LLC (“Bristol”), 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.

ASHS is the majority owner of Southern New England Regional Cancer Center, LLC (“SNERCC”), Roger Williams Radiation Therapy, LLC (“RWRT”) and Long Beach Equipment, LLC (“LBE”);

ASRS is the majority-owner of GK Financing, LLC (“GKF”), which wholly owns the subsidiaries 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.

ASHS-Mexico is the majority owner of AB Radiocirugia y Radioterapia de Puebla, S.A.P.I.

of Puebla (“Puebla”).

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

The Company (through ASRS) and Elekta 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 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.

During 2024 , GKF leased Gamma Knife units to ten medical centers in the United States in the states of Florida, Illinois, Indiana, Mississippi, Nebraska, New Mexico, New York, Ohio, Oregon, and Texas.

GKF also owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador.

The Company through its wholly-owned subsidiary, Orlando, provided proton beam radiation therapy (“PBRT”) and related equipment to a customer in the United States.

The Company formed the subsidiary GKPeru and acquired GKCE for the purposes of expanding its business internationally;

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 SNERCC and RWRT, (collectively, the “RI Companies”) and to assign certain payor contacts to the Company for a purchase price of $ 2,850,000 (such transaction, the “RI Acquisition”).

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

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

The parties closed the RI Acquisition on May 7, 2024.

Accordingly, activity from May 7, 2024 forward is included in the consolidated financial statements.

See Note 12 - Rhode Island Acquisition to the consolidated financial statements for further information.

On June 28, 2024, ASHS-Mexico, S.A.P.I.

signed a Joint Venture Agreement with Hospital San Javier, S.A.

(“HSJ”) to establish Newco to treat public- and private-paying cancer patients and provide radiosurgery services in Guadalajara, Mexico.

The Company and HSJ will hold 70 % and 30 % ownership interests, respectively, in Newco.

Under the agreement, the Company is responsible for upgrading HSJ’s existing Gamma Knife Perfexion system to a Gamma Knife Esprit and paying 50% of all site modification costs required to install the Esprit.

The Company does not expect that Newco will begin treating patients until mid to late 2025.

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

(“Guadalupe”) to establish Puebla to treat public- and private-paying cancer patients and provide radiation therapy and radiosurgery services in Guadalupe, Mexico.

The Company and Guadalupe hold 85 % and 15 % ownership interests, respectively, in Puebla.

Under the agreement, the Company is responsible for providing a linear accelerator upgrade to an Elekta Versa HD, and Guadalupe 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 began treating patients in July 2024.

Operating costs incurred during the twelve months ended December 31, 2024 by Puebla, are included in the consolidated statement of operations.

The Company formed the subsidiaries GKPeru, Puebla, and acquired GKCE for the purposes of expanding its business internationally;

Orlando and LBE to provide PBRT equipment and services in Orlando, Florida and Long Beach, California, respectively;

and AGKE and JGKE to provide Gamma Knife equipment and services in Albuquerque, New Mexico and Jacksonville, Florida, respectively.

AGKE began operations in the second quarter of 2011 and JGKE began operations in the fourth quarter of 2011.

Orlando treated its first patient in April 2016.

GKPeru treated its first patient in July 2017.

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

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 Company owns 50 % of “The Operating Room for the 21st Century”SM, OR21, LLC ( “OR21” ).

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

OR21 is not expected to generate significant revenue within the next two years.

OR21 is not operational at this time.

MedLeader was formed to provide continuing medical education online and through videos for doctors, nurses, and other healthcare workers.

This subsidiary is not operational at this time.

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.

1 unchanged sentence

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, impairment of property and equipment, the obligation to remove this equipment at contract term (ARO), business combinations, and revenue recognition for revenue sharing customers.

Actual results could differ from those estimates.

3 unchanged sentences

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

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

3 unchanged sentences

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

AMERICAN SHARED HOSPITAL SERVICES

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”).

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 its financing agreement with the United States International Development Finance Corporation (“D FC”).

See further discussion at Note 5 - Long Term Debt.

2 unchanged sentences

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 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.

All of the Company’s revenue was provided by 17 locations or 1 PBRT unit, 4 LINACs and 12 Gamma Knife units in 2024 and by 15 locations or 1 PBRT unit and 14 Gamma Knife units in 2023 .

Two customers individually accounted for approximately 35 % and 27 % of the Company’s total revenue in 2024 , and one customer accounted for 48 % of the Company’s total revenue in 2023 , respectively.

At December 31, 2024 , one location accounted for 32 % of total accounts receivable.

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

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

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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.

An allowance for credit losses 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.

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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.

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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.

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

As of December 31, 2024 , the Company reduced its estimate of salvage value for all seven Gamma Knife units to $ 0 .

This change was made as of December 31, 2024, therefore there was no impact from the change in estimate for the current year, but this change in estimate will impact 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.

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As of December 31, 2024 and 2023 , the Company recognized a loss on the write down of impaired assets of $ 3,084,000 and $ 940,000 , respectively.

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.

The Company reviewed its long-lived assets during the fourth quarter of 2024 and concluded events and circumstances existed that indicated six of the Company ’ s domestic Gamma Knife units were impaired.

One of the assets was partially impaired in the prior year and is now fully impaired, and the Company expects to remove this equipment prior to the contract term.

The Company also increased and impaired it s asset removal obligation (“ARO”) liability for one of the impaired units where the Company does not plan to renew the contract in early 2025 and will remove this unit at its contract term.

The six sites that were impaired and ARO for two of the impaired sites, were recorded as write down of impaired assets for the December 31, 2024 .

Total ARO impairment for the year ended December 31, 2023 was $ 450,000 .

Total equipment impairment for the year ended December 31, 2023 was $ 2,634,000 .

During the year ended December 31, 2023 , the Company recorded an 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.

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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.

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

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

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.

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

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

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

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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.

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

For the years ended, December 31, 2024 and 2023 , the Company recognized leasing revenue of approximately $ 15,629,000 and $ 17,772,000 under ASC 842, respectively, of which approximately $ 9,952,000 and $ 10,133,000 were for PBRT services, respectively.

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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.

GKCE’s patient population is primarily covered by a government payor and payments are paid between six and nine months, following issuance of invoice.

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

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 .

On May 7, 2024, the Company acquired 60 % of the equity interests of the RI Companies.

The RI Companies operate three, existing, stand-alone radiation therapy cancer centers in Woonsocket, Warwick and Providence, Rhode Island, where contracts exist between the Company’s facilities and the individual patients treated at the facility.

Under ASC 606, the Company acts as the principal in these transactions and provides, at a point in time, a single performance obligation, in the form of radiation therapy treatment.

The Company’s stand alone radiation therapy facility in Puebla, Mexico is also accounted for under ASC 606.

Revenue related to radiation therapy is recognized at the expected amount to be received, based on insurance contracts and payor mix, 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.

Payment terms at these facilities are typically prepaid for self-pay patients and insurance providers are paid net 30 to 60 days.

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

The Company also concluded these facilities are part of its retail segment, see further discussion below.

Accounts receivable under ASC 606 at December 31, 2024 and January 1, 2024 were $ 11,229,000 and $ 1,626,000 .

Accounts receivable under ASC 606 at December 31, 2023 and January 1, 2023 were $ 1,626,000 and $ 1,118,000 .

For the years ended December 31, 2024 and 2023 , the Company recognized retail revenues of approximately $ 12,556,000 and $ 3,553,000 under ASC 606, respectively.

Equipment sales – During the year-ended December 31, 2023 , the Company completed a sale of equipment to a new customer.

Equipment sales – During the year-ended December 31, 2024 , the Company sold one of its Gamma Knife Perfexion units with an Icon upgrade to the customer it was leased to and recorded a net gain on equipment sale.

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.

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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 .

The Company recognized net revenues of $ 155,000 and $ 200,000 on the sale of equipment for the years ended December 31, 2024 and 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.

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

Business Combinations - Business combinations are accounted for under ASC 805 Business Combinations (“ASC 805” ) using the acquisition method of accounting.

Under the acquisition method of accounting, all assets acquired, identifiable intangible assets, liabilities assumed and applicable non-controlling interests are recognized at fair value as of the acquisition date.

Costs incurred associated with the acquisition of a business are expensed as incurred.

The allocation of purchase price requires management to make significant estimates and assumptions, especially with respect to tangible assets, any intangible assets identified and non-controlling interests.

These estimates include, but are not limited to, a market participant’s expectation of future cash flows from acquired customers, acquired trade names, useful lives of acquired assets, and discount rates.

See Note 12 - Rhode Island Acquisition to the consolidated financial statements for further discussion on acquisitions.

Fair Values of Financial Instruments - Financial assets and liabilities measured at fair value on a recurring basis are classified in one of the three following categories, which are described below:

Level 1 — Valuations based on unadjusted quoted prices for identical assets in an active market.

Level 2 — Valuations based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

Level 3 — Valuations based on inputs that are unobservable and involve management judgment and our own assumptions about market participants and pricing.

The Company does not have any financial assets or liabilities that are measured at fair value on a recurring basis.

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.

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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 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.

The Company analyzed its Gamma Knife site in Peru and its startup operations in Mexico for Puebla under ASC 830 as of December 31, 2024 and 2023 and concluded the functional currency was the U.S.

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

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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 .

As of December 31, 2024 , the Company had two AROs recorded for the two customer sites that will expire during 2025, totaling $ 1,200,000 .

One ARO was recorded and impaired in a prior period.

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

The Company recorded and impaired an ARO for a second customer site during 2024.

No liability has been recorded as of December 31, 2024 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.

Asset retirement obligations, included in related party liabilities, were $ 1,200,000 and $ 650,000 at December 31, 2024 and 2023 , respectively.

The following illustrates the change in asset retirement obligations, related party as of December 31, 2024 and 2023 :

Balance at beginning of period

$ 650,000 $ 360,000

Increase in obligations

1,138,000 290,000

( 588,000 ) —

Balance at end of period

$ 1,200,000 $ 650,000

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

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Effect of dilutive securities employee stock options and restricted stock

206,000 35,000

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

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$ 0.33 $ 0.10

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 2024, t he Company provided Gamma Knife and PBRT equipment to eleven hospitals in the United States, which constitutes the leasing segment.

As of December 31, 2024 , the Company owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador, one single-unit radiation therapy facility in Puebla, Mexico, and following the RI Acquisition on May 7, 2024, the Company also owns a 60 % interest in and operates three single-unit radiation therapy facilities in Rhode Island, which collectively constitute the retail segment.

AMERICAN SHARED HOSPITAL SERVICES

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NOTE 2 – ACCOUNTING POLICIES (CONTINUED)

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 type of equipment varies by segment, but the method for recognizing revenue is the same.

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, 2024 and 2023 , 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:

The revenues, depreciation, interest expense, interest income, tax expense, net income attributable to American Shared Hospital Services, total asset allocations, and other non-recurring expense for the Company’s two reportable segments as of December 31, 2024 and 2023 consists of the following:

$ 15,784,000 $ 17,772,000

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132,000 25,000

$ 1,499,000 $ 1,112,000

Bargain purchase gain RI Acquisition

$ 3,794,000 $ —

Loss on write down of impaired assets and associated removal costs

$ 3,084,000 $ 940,000

Interest income

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$ 342,000 $ 458,000

Income tax expense

Income tax (benefit) expense

$ ( 623,000 ) $ 306,000

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$ ( 295,000 ) $ 431,000

Net income attributable to American Shared Hospital Services

Net (loss) income attributable to American Shared Hospital Services

$ ( 3,380,000 ) $ 518,000

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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.

As of December 31, 2024 and 2023 , the Company recognized a loss on the write down of impaired assets of $ 3,084,000 and $ 940,000 , respectively.

See Note 3 - Property and Equipment for further discussion.

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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.

The Company assesses goodwill at the reporting unit level, which has been determined to be direct patient services, or retail.

Each reporting period, the Company assesses whether events or circumstances continue to support an indefinite useful life for the intangible asset.

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.

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

As of December 31, 2024 and 2023 , 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 ):

Accounting pronouncements issued and 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.

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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:

The Company adopted ASU 2023 - 07 for the year-ended December 31, 2024 and enhanced its disclosure requirements, accordingly.

See previous disclosure related to Business Segment Reporting in Note 2 - Accounting Policies.

Accounting pronouncements issued and not yet adopted - 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 disclosures to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024 - 03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024 - 03” ) which requires entities to 1.

disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, 2.

include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, 3.

disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and 4.

disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense.

ASU 2024 - 03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating ASU 2024 - 03 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.

Reclassifications - Certain comparative balances as of December 31, 2023 have been reclassified to make them consistent with the current year presentation.

NOTE 3 – PROPERTY AND EQUIPMENT

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$ 31,125,000 $ 25,844,000

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.

Equipment outside of the US

$ 6,104,000 $ 6,174,000

Depreciation expense recorded in costs of revenue and selling and administrative expense in the consolidated statements of income for the years ended December 31, 2024 and 2023 is as follows:

Depreciation expense

$ 6,174,000 $ 5,165,000

As of December 31, 2024 and 2023 , the Company recognized a loss on the write down of impaired assets of $ 3,084,000 and $ 940,000 , respectively.

The impairment as of December 31, 2024 , related to cash flow impairment for six of the Company’s domestic Gamma Knife units and estimated removal costs for one of the impaired units, which the Company expects to remove in the second quarter of 2025 .

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.

The Company reviewed its PBRT equipment, in light of available information as of December 31, 2024 and 2023 and concluded no impairment exists.

AMERICAN SHARED HOSPITAL SERVICES

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Other accrued liabilities consists of the following:

Insurance financing

$ — $ 591,000

Professional services

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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 facilities have a five -year maturity, carry a floating interest of SOFR plus 3.0 % and are secured by a lien on substantially all of the assets of the Loan Parties and guaranteed by ASHS.

On January 25, 2024 ( the “First Amendment Effective Date”), the Company and Fifth Third entered into a First Amendment to the Credit Agreement (the “First Amendment”), 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 were 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 %.

On December 18, 2024 ( the “Second Amendment Effective Date”), the Company and Fifth Third entered into a Second Amendment to the Credit Agreement (the “Second Amendment”), which amended the Credit Agreement to add a new term loan in the aggregate principal amount of $ 7,000,000 (the “Second Supplemental Term Loan”).

The proceeds of the Second Supplemental Term Loan were advanced in a single borrowing on December 18, 2024, and were used for capital expenditures related to the Company’s domestic Gamma Knife leasing operations and the RI Acquisition and related transaction costs.

The Second Supplemental Term Loan will mature on December 18, 2029 ( the “Second Maturity Date”).

Interest on the Second Supplemental Term Loan is payable monthly during the initial twelve month period following the Second 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 Second Supplemental Term Loan over a period of seven years.

All unpaid principal of the Second Supplemental Term Loan and accrued and unpaid interest thereon is due and payable in full on the Second Maturity Date.

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

The long-term debt on the consolidated balance sheets related to the Term Loan, DDTL, Supplemental Term Loan and Second Supplemental Term Loan was $ 18,462,000 and $ 10,825,000 as of December 31, 2024 and December 31, 2023 , respectively.

The Company capitalized debt issuance costs of $ 164,000 as of December 31, 2024 related to issuance of the Supplemental Term Loan and Second Supplemental Term Loan.

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

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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 Company did not draw on the Revolving Line as of December 31, 2024 .

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), that the Company maintain at least $ 5,000,000 of unrestricted cash, 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, 2024 .

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.

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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.

On March 3, 2025 the Company received an additional waiver from DFC for certain covenants as of December 31, 2024 and through December 31, 2025.

In November and December 2024, GKCE obtained two loans with banks locally in Ecuador (the “GKCE Loans”).

The GKCE Loans carry interest rates of 12.60 % and 12.78 % and are payable in twelve and thirty-six equal monthly installments of principal and interest, respectively.

Total long-term debt on the consolidated balance sheets related to the GKCE Loans was $ 145,000 .

The Company did not capitalize any debt issuance costs related to the GKCE Loans.

The accretion of debt issuance costs for the years ended December 31, 2024 and 2023 , was $ 95,000 and $ 46,000 , respectively.

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As such, the Company does not measure future operating lease receivables.

On November 3, 2021, the Company entered into an agreement to sublease (the “Sublease”) its corporate office located at Two Embarcadero Center, Suite 410, San Francisco, California, where it leased approximately 3,253 square feet for $ 22,011 per month.

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 had a lease for corporate office space at 601 Montgomery, Suite 1112, San Francisco, CA for approximately 900 square feet for $ 4,500 per month, and the Lease term ended in November 2024.

The Company assessed the Lease under ASC 842 and concluded the lease should be classified as an operating lease.

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.

In 2023, the Company had a lease for corporate office space located at Two Embarcadero Center, Suite 410, San Francisco, California, where it leased approximately 3,253 square feet for $ 22,011 per month.

On November 3, 2021, the Company entered into an agreement to sublease (the “Sublease”) this office.

The lease and Sublease expired in August 2023.

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

On May 7, 2024, the Company completed the RI Acquisition and acquired 60 % of the equity interests of the RI Companies.

The RI Companies operate three single-unit radiation therapy facilities.

The Company assessed the existing lease agreements under ASC 842 and concluded two of the three facilities contained operating leases.

The Company included these leases in its presentation of the consolidated financial statements for year ended December 31, 2024 .

The Company’s operating lease in Woonsocket contains a sublease for a 1,950 square feet of the clinic space, which is leased back to the lessor.

The Company did not make any lease payments during the year-ended December 31, 2024 related to the RI Companies and its leases.

Sublease income for the twelve months ended December 31, 2024 and 2023 was $ 40,000 and $ 129,000 , respectively.

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

The Company’s operating lease contracts do not provide an implicit rate for calculating the present value of future lease payments.

The Company determined its incremental borrowing rate to be in the range of approximately 4 % and 8 % by using available market rates and expected lease terms.

The operating lease ROU assets and liabilities include any lease payments made and there were no lease incentives or initial direct costs incurred.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company’s lessee operating lease agreements are for administrative office space and related equipment, and the agreement to lease clinic space for its stand-alone facility in Lima, Peru.

These leases have remaining lease terms of approximately 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 Company’s lessee operating lease agreements are for administrative office space and related equipment and two of its recently acquired stand-alone facilities in Rhode Island.

These leases have remaining lease terms of approximately 5 to 17 years, some of which include options to renew or extend the lease.

As of December 31, 2024 , operating ROU assets, net of unfavorable leasehold interests were $ 1,015,000 ., and lease liabilities were $ 1,726,000 .

The following table summarizes maturities of lessee operating lease liabilities as of December 31, 2024 :

4 unchanged sentences

Year Ended December 31,

Operating lease cost, net of impairment

Operating lease cost

$ 303,000 $ 302,000

9 unchanged sentences

8.02 % 4.65 %

The Company’s corporate offices are located at

The Company’s corporate offices were located at

601 Montgomery Street, Suite

1112, San Francisco, California, where it leases approximately

1112, San Francisco, California, where it leased approximately

900 square feet for

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

$ 4,500 per month and the lease term ended in

November 2024.

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

410, San Francisco, California, where it leased approximately

November 2024, the Company closed this office and signed

two sublease agreements for small, office spaces in San Francisco, California and Downers Grove, Illinois.

The sublease in San Francisco is for

80 square feet for

$ 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.

$ 1,003 per month located at

601 Montgomery Street, Suite

Total ROU assets and lease liabilities for the San Francisco sublease were

The sublease in Downers Grove was signed in

February 2025 and is for

two offices and

three cubicle spaces for

$ 2,300 per month located at

3041 Woodcreek Drive.

May 7, 2024, the Company completed the RI Acquisition and acquired

60 % of the equity interests of the RI Companies.

The RI Companies operate

three single-unit radiation therapy facilities, and each location contains a lease.

The facility in Woonsocket, RI has a ground lease with a sublease for

1,950 square feet of the clinic space, which is leased back to the lessor.

The Woonsocket ground lease has an annual prepayment of approximately

$ 44,000 located at

115 Cass Avenue.

The facility in Warwick, RI has a lease for

15,019 square feet for

$ 32,790 per month located at

450 Toll Gate Road.

The facility in Providence, RI also has a ground lease, which was contributed by

one of the minority partners, located at

825 Chalkstone Avenue.

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

6 unchanged sentences

10,135 of related land and parking spaces.

The Company’s stand-alone radiation therapy facility in Puebla, Mexico also has a lease for approximately

536 square meters for

$ 1,800 per month with a lease expiration in

Total ROU assets and lease liabilities for the Puebla lease were

Net rent expense was

11 unchanged sentences

$ 1,237,000 $ 696,000

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

For the year ended December 31, 2024 and 2023 , the Company recorded an income tax benefit of $ 295,000 and income tax expense of $ 431,000 , respectively.

The components of the provision for income taxes for the years ended December 31, 2024 and 2023 consists of the following:

17 unchanged sentences

( 444,000 ) ( 409,000 )

Investment in partnerships

( 956,000 ) —

7 unchanged sentences

Lease liabilities

12,000 61,000

Transaction costs

169,000 140,000

Capital loss carryover

646,000 646,000

Total deferred tax assets

17 unchanged sentences

Foreign rate differential

14,000 38,000

Pass-through income

Bargain purchase gain

( 790,000 ) —

Stock compensation

2 unchanged sentences

Return to provision true-up

18,000 52,000

Uncertain tax positions

( 72,000 ) 9,000

Alternative minimum tax payable adjustment

Capital loss expired

Change in valuation allowance

( 627,000 ) 17,000

Other deferred tax adjustments

1 unchanged sentence

$ ( 295,000 ) $ 431,000

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.

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.

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

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 $ 17,000 and $ 0 for the years ended December 31, 2023 and 2022 , respectively.

The net valuation allowance decreased by $ 627,000 and increased by $ 17,000 for the years ended December 31, 2024 and 2023 , respectively.

The Company has federal net operating loss carryforwards of appr oximately $ 1,966,000 and $ 0 as of December 31, 2024 and 2023 , respectively.

All federal net operating losses have an indefinite carryforward period.

The Company has various state net operating loss carryforwards.

The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards.

If such net operating carryforwards are not utilized, they will begin to expire in 2029.

The tax return years 2019 through 2024 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.

AMERICAN SHARED HOSPITAL SERVICES

10 unchanged sentences

Additions based on tax positions of prior years

9,000 ( 17,000 )

Additions based on tax positions of current year

Reductions in tax positions of prior years

Lapse of statues of limitations

Removal of penalties

Balance at end of year

3 unchanged sentences

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.

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

NOTE 8 – STOCK-BASED COMPENSATION EXPENSE

Incentive Compensation Plan

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.

In June 2021, the Company’s shareholders approved an amendment and restatement of the Company’s Incentive Compensation Plan (the “Plan”), that among other things, increased the number of shares of the Company’s common stock reserved for issuance under the Plan to 2,580,000 and extended the term of the Plan by five years to February 22, 2027.

The Plan provides that the shares reserved under the Plan are available for issuance to officers of the Company, other key employees, non-employee directors, and advisors.

1 unchanged sentence

As of December 31, 2024 , approximately 578,000 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.

Under the Plan, a total of 1,188,000 restricted stock units have been granted, consisting o f 53,000 o f annual automatic grants to non-employee directors, 327,000 of deferred retainer fees to non-employee members of the Board, 58,000 grants issued in lieu of commission or bonus to employees of the Company, and 750,000 restricted stock units issued to the Executive Chairman of the Board and other members of executive management, 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, 864 ,000 are fully vested and outstanding, and 206,000 are outstanding as of December 31, 2024 .

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:

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 and other members of executive management, under the Incentive Compensation Plans during 2024 and 2023 are as follows:

Restricted Stock Units

1 unchanged sentence

Outstanding at January 1, 2023

146,000 $ 2.97

( 116,000 ) $ 2.94

Outstanding at December 31, 2023

36,000 $ 2.88

290,000 $ 3.09

( 120,000 ) $ 2.93

Outstanding at December 31, 2024

206,000 $ 3.07

AMERICAN SHARED HOSPITAL SERVICES

23 unchanged sentences

Stock Options

Changes in stock options outstanding under the Incentive Compensation Plans during 2023 and 2022 are as follows:

Changes in stock options outstanding under the Plan during 2024 and 2023 are as follows:

Number of Options

6 unchanged sentences

( 19,000 ) $ 2.69 — $ —

( 18,000 ) $ 2.64 — $ —

Balance at December 31, 2023

1 unchanged sentence

( 104,000 ) $ 2.86 — $ —

( 19,000 ) $ 2.69 — $ —

Balance at December 31, 2024

7 unchanged sentences

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 .

There were no options granted during 2024 .

The weighted average grant-date fair value of the options granted during 2023 was $ 2.89 .

There were no options exercised during the years ended December 31, 2024 and 2023 .

Total stock-based compensation expense recognized for stock options for the years ended December 2024 and 2023 was $ 17,000 and $ 34,000 , 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, 2024 , there was approximately $ 23,000 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.

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

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

3 unchanged sentences

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 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.

There were no options granted during 2024 .

The fair value of the Company’s option grants issued during 2023 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:

There were no options granted during 2024 .

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

Expected life (years)

32 unchanged sentences

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.

As of December 31, 2024 , the Company had commitments to purchase and install four Leksell Gamma Knife Esprit (“Esprit”) systems and two Linear Accelerator (“LINAC”) systems.

One LINAC and three Esprits will be placed at future customer sites during 2025.

The remaining Esprit and LINAC commitments are scheduled to occur during 2026 or later at existing customer sites.

Total Gamma Knife and LINAC commitments as of December 31, 2024 , were $ 13,053,000 .

3 unchanged sentences

However, the Company currently has cash on hand of $ 11,275,000 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.

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.

10 unchanged sentences

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

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

14 unchanged sentences

$ 5,946,000 $ 7,769,000

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.

The Company had related party commitments to purchase and install four Esprit upgrades, two LINACs, and service the related equipment.

Total related party commitments were $ 18,581,000 as of December 31, 2024 .

Related party liabilities on the consolidated balance sheets consist of the following as of December 31, 2024 and 2023 :

Accounts payable and other accrued liabilities

Accounts payable, asset retirement obligations and other accrued liabilities

$ 2,270,000 $ 2,361,000

Rhode Island Acquisition

On November 10, 2023, the Company entered into the IPA with GenesisCare and GC Holdings, pursuant to which GenesisCare agreed to sell to the Company its entire equity interest in each of the RI Companies and to assign certain payor contacts to the Company for a cash purchase price of $ 2,850,000 (such transaction, the “RI Acquisition”).

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

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

The Company acquired the RI Companies to expand its growing retail business model in the United States and continue to diversify its cancer treatment product offerings.

On March 1, 2024, the Company, GenesisCare and GC Holdings 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 (the “Permitted Termination Date”) from March 10, 2024 to April 30, 2024.

On April 18, 2024, the parties agreed to a Second Amendment to the Investment Agreement pursuant to which GenesisCare agreed to sell a GE Discovery RT CT Simulator (“CT Sim”) to the Company for $ 175,000 , payment for which was required 5 days following the close of the acquisition.

On April 24 2024, the Company, GenesisCare and GC Holdings, entered into a Third Amendment to the Investment Agreement that further extended the Permitted Termination Date to May 31, 2024.

On May 7, 2024, the parties entered into a Fourth Amendment to the Investment Purchase Agreement, pursuant to which GenesisCare agreed to transfer certain assets and payor contracts to the RI Companies, rather than transferring such assets and payor contracts to the Company.

The parties closed the RI Acquisition on May 7, 2024 ( the “Closing Date”).

The RI Acquisition has been accounted for as a business combination under ASC 805, which requires, among other things, that purchase consideration, assets acquired, liabilities assumed and non-controlling interest be measured at their fair values as of the acquisition date.

The allocation of purchase price considerations is preliminary, and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available.

During the measurement period, which can be no more than one year from the Closing Date, the Company expects to continue to obtain information to assist in determining the final fair value of assets acquired.

As of December 31, 2024, the accounting for the $ 150,000 of personal and property taxes payable was not complete.

The assets acquired were recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company.

Thus, the provisional measurement of fair value discussed below for personal and property taxes is subject to change.

While the Company believes its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired, and the resulting amount of the bargain purchase gain.

During the three -month periods ended September 30, 2024 and December 31, 2024 the Company concluded some of the fair value estimates for accounts receivable, non-controlling interests, and unfavorable leasehold interests required adjustment.

The adjusted allocations provided below reflect these changes.

The Company recorded medical equipment, facilities and non-controlling interest at fair value as of the Closing Date.

Sales comparison and cost approaches were used to value the medical equipment, including assumptions of estimated direct costs associated with acquiring the equipment.

Where appropriate, adjustments were made to the direct replacement cost to reflect depreciation and obsolescence.

The sales comparison approach was also utilized to value certain assets, involving secondary market research.

The cost approach was also used to value the facilities acquired and the unfavorable leasehold interest.

The non-controlling interest was recorded at fair value based on the purchase price paid for the acquisition, after consideration of any premium or discount derived from the operating agreement with the minority owners.

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded a preliminary allocation of the purchase price consideration as of the Closing Date, for the three -month period ended June 30, 2024.

During the three -month periods ended September 30, 2024 and December 31, 2024, the Company concluded some of the fair value estimates for accounts receivable, non-controlling interests, and unfavorable leasehold interests required adjustment.

The net effect of these changes was an increase to the bargain purchase gain of $ 115,000 , net of deferred taxes of $ 6,000 .

The net impact to the consolidated statement of operations, outside of the change in the bargain purchase gain, was not material for the year ended December 31, 2024.

The major classes of assets and liabilities to which the Company has allocated the fair value of the purchase price consideration as of December 31, 2024 were as follows:

Remeasurement

December 31, 2024

Cash and cash equivalents

$ 3,388,000 $ — $ 3,388,000

Accounts receivable

919,000 ( 542,000 ) 377,000

Medical equipment

2,403,000 — 2,403,000

4,697,000 — 4,697,000

1,835,000 — 1,835,000

Unfavorable leasehold interests

( 1,227,000 ) 451,000 ( 776,000 )

Total assets acquired

12,015,000 ( 91,000 ) 11,924,000

Real and personal property taxes payable

( 150,000 ) — ( 150,000 )

Lease liabilities

( 1,835,000 ) — ( 1,835,000 )

Deferred income taxes

( 1,226,000 ) 6,000 ( 1,220,000 )

Gain on bargain purchase

( 3,679,000 ) ( 115,000 ) ( 3,794,000 )

Base purchase consideration

5,125,000 ( 200,000 ) 4,925,000

Non-controlling interest

( 2,100,000 ) 200,000 ( 1,900,000 )

( 175,000 ) — ( 175,000 )

Cash paid by the Company

$ 2,850,000 $ — $ 2,850,000

The Company recognized a bargain purchase, as defined by ASC 805, in connection with the RI Acquisition.

The Company purchased its interest in the RI Companies as part of the sale of certain of GenesisCare’s assets in its bankruptcy proceedings, resulting in a “bargain purchase”.

A bargain purchase gain of $ 3,794,000 , net of deferred taxes of $ 1,220,000 is reflected in other income in the consolidated statements of income for the year-ended December 31, 2024.

None of the purchase price was allocated to intangible assets because none were acquired as part of the transaction.

The Company recorded the unfavorable lease position received as part of the RI Acquisition as a reduction to ROU assets on the condensed consolidated balance sheet.

The preliminary value of the acquired tangible assets acquired were as follows:

Average Useful Life (in Years)

$ 4,697,000 15

Medical equipment

Total medical equipment and facilities acquired

Costs related to legal, financial and due diligence services performed in connection with the RI Acquisition recorded in selling and administrative expense in the condensed consolidated statement of operations were $ 560,000 for the year-ended December 31, 2024 .

The net impact of the RI Acquisition on the consolidated results of operations, since the date of acquisition, are as follows:

Twelve Months Ended

December 31, 2024

Operating income

Per the guidance in ASC 805, the Company determined its consolidated financial results as if the RI Acquisition occurred on January 1, 2024.

These pro forma results were based on estimates and assumptions, which the Company believes are reasonable.

They are not the results that would have been realized had the Company and the RI Companies been combined during the periods presented and are not necessarily indicative of the Company’s consolidated results of operations in future periods.

The pro forma results include adjustments related to purchase accounting.

Acquisition costs and other nonrecurring charges are included in the earlier period presented.

ASC 805 also requires presentation of proforma information for the comparable period, when the comparable period is presented.

Due to the lack of reliable financial information for the RI Companies following the protracted bankruptcy proceedings, the Company was not able to obtain financial information sufficient to make these disclosures.

Therefore, the Company has not made the comparable period proforma disclosure because it would be impracticable to do.

Following are the supplemental consolidated financial results of the Company on an unaudited, pro forma basis, as if the acquisition occurred on January 1, 2024.

The supplemental proforma disclosure excludes the non-recurring impact from the bargain purchase gain generated from the RI Acquisition.

Twelve Months Ended

December 31, 2024 (unaudited)

Operating loss

$ ( 1,320,000 )

Diluted loss per share

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – 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.

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 %.

On February 6, 2025, the Company’s subsidiary, Bristol, closed on the acquisition of certain parcels of real property located on Gooding Avenue, Bristol Rhode Island.

The purchase price for the property was $ 1,185,000 .

The transaction was effected pursuant to the terms of a Real Estate Purchase and Sale Agreement dated November 21, 2023 by and between the Company and the sellers identified therein, with the Company having assigned its rights under that agreement to Bristol effective February 5, 2025.

At closing the parties entered into other agreements related to the transaction, including with respect to the grant of certain easements and restrictive covenants imposed on the sellers.

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