AMERICAN SHARED HOSPITAL SERVICES 10-K

ITEM 9A. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. 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. (b) Management ’ s report on internal control over financial reporting. The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to its management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. 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 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 26 Table of Contents (c) Changes in internal controls 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.. ITEM 9B. 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. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding directors is incorporated herein by reference from the Company’s definitive Proxy Statement for the 2025 Annual Meeting of Shareholders (the “2025 Proxy Statement”). Information regarding executive officers of the Company, included herein under the caption “Executive Officers of the Company” in “Part I, Item 1. Business” above, is incorporated herein by reference. Information concerning the identification of our standing audit committee required by this Item is incorporated by reference from the 2025 Proxy Statement. Information concerning our audit committee financial experts required by this Item is incorporated by reference from the 2025 Proxy Statement . Information concerning compliance with Section 16(a) of the Exchange Act required by this Item is incorporated by reference from the 2025 Proxy Statement. We have adopted a Code of Ethics that is available on our website at www.ashs.com . The information on our website is not part of this report. 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 ITEM 11. EXECUTIVE COMPENSATION Information required by this Item is incorporated herein by reference from the 2025 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by this Item is incorporated herein by reference from the 2025 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information required by this Item is incorporated herein by reference from the 2025 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated by reference to the section entitled “Ratification of the Appointment of Our Independent Registered Public Accounting Firm” in our Proxy Statement for the 2025 Annual Meeting of Stockholders. Auditor Firm Id: 659 Auditor Name: Moss Adams LLP Auditor Location: Seattle, WA United States PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements and Schedules. The following Financial Statements and Schedules are filed with this Report: Report of Independent Registered Public Accounting Firm Audited Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statement of Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Financial Statement Schedules- no schedules are included since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto. 27 Table of Contents (b) Exhibits. The following Exhibits are filed with this Report. Exhibit Incorporated by reference herein Number Description Form Exhibit Date 3.1 Articles of Incorporation of the Company. 10-Q 001-08789 3.1 5/15/2017 3.1a Certificate of Amendment to Articles of Incorporation of the Company. 10-K 001-08789 3.1 3/27/2017 3.2 By-laws of the Company, as amended to date. 10-Q 001-08789 3.2 8/15/2022 4.1 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 10-K 001-08789 4.1 4/6/2021 10.1 Operating Agreement for GK Financing, LLC dated as of October 17, 1995 between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. S-1 033-63721 10.12 10/26/1995 10.1a Amendment Agreement dated as of October 26, 1995 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. S-1/A 033-63721 10.13 3/29/1996 10.1b Second Amendment Agreement dated as of December 20, 1995 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. S-1/A 033-63721 10.13 3/29/1996 10.1c Third Amendment Agreement dated as of October 16, 1996 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.13b 3/31/1998 10.1d Amendment Four Agreement dated as of March 31, 1998 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.8 3/31/1999 10.1e Fifth Amendment Agreement dated as of March 31, 1998 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.9 3/31/1999 10.1f Sixth Amendment Agreement dated as of June 5, 1998 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.10 3/31/1999 10.1g Seventh Amendment Agreement dated as of October 18, 2006 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.52 4/2/2007 10.1h Eighth Amendment Agreement dated as of April 28, 2010 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.1h 3/30/2016 10.1i Ninth Amendment Agreement dated as of May 16, 2011 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.1i 3/30/2016 10.1j Tenth Amendment Agreement dated as of March 25, 2021 to the GK Financing, LLC Operating Agreement between American Shared Radiosurgery Services, Inc. and GKV Investments, Inc. 10-K 001-08789 10.1j 3/30/2022 28 Table of Contents 10.2 Lease Agreement for a Gamma Knife Unit dated as of October 29, 1996 between GK Financing, LLC and Methodist Healthcare Systems of San Antonio, Ltd., dba Southwest Texas Methodist Hospital. 10-K 001-08789 10.2 3/30/2016 10.2a Addendum to Lease Agreement for a Gamma Knife Unit dated as of October 31, 1996 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., dba Southwest Texas Methodist Hospital. 10-K 001-08789 10.2a 3/30/2016 10.2b Addendum Two to Lease Agreement for a Gamma Knife Unit dated as of October 16, 1997 between Methodist Healthcare System of San Antonio, Ltd., d.b.a. Southwest Texas Methodist Hospital and GK Financing, LLC. 10-K 001-08789 10.2b 3/30/2016 10.2c Amendment to Lease Agreement for a Gamma Knife Unit dated as of December 13, 2003 between Methodist Healthcare Systems of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital and GK Financing, LLC. 10-K 001-08789 10.2c 3/30/2016 10.2d # Second Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated as of December 23, 2009 between GK Financing, LLC and Methodist Healthcare Systems of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital. 10-Q 001-08789 10.18b 11/15/2010 10.2e Third Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion Upgrade) dated June 1, 2020 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., d/b/a Southwest Texas Methodist Hospital 10-Q 001-08789 10.4 5/12/2023 10.2f Fourth Amendment to Lease Agreement for a Gamma Knife Unit (Esprit Upgrade) dated July 28, 2023 between GK Financing, LLC and Methodist Healthcare System of San Antonio, Ltd., L.L.P. (f/k/a Methodist Healthcare System of San Antonio, Ltd.) d/b/a Southwest Texas Methodist Hospital. 10-K 001-08789 10.2f 4/1/2024 10.4 Purchased Services Agreement (for a Gamma Knife Unit) dated as of November 19, 2008 between GK Financing, LLC and Kettering Medical Center. 10-Q 001-08789 10.1 8/11/2016 10.4a First Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of June 11, 2009 between GK Financing, LLC and Kettering Medical Center. 10-Q 001-08789 10.1a 8/11/2016 10.4b # Second Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of February 27, 2014 between GK Financing, LLC and Kettering Medical Center. 10-K 001-08789 10.21c 4/1/2015 10.4c # Third Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of March 28, 2019 between GK Financing, LLC and Kettering Medical Center 10-Q 001-08789 10.1 11/7/2019 10.4d # Fourth Amendment to Purchased Services Agreement dated April 20, 2021 between GK Financing, LLC and Kettering Medical Center. 10-Q 001-08789 10.1 8/14/2023 10.4e Fifth Amendment to Purchased Services Agreement dated May 1, 2023 between GK Financing, LLC and Kettering Medical Center. 10-Q 001-08789 10.2 8/14/2023 10.10 Lease Agreement for a Gamma Knife Unit dated as of November 1, 1999 between GK Financing, LLC and Jackson HMA, Inc. d/b/a Central Mississippi Medical Center. 10-K 001-08789 10.10 3/30/2016 10.10a Addendum to Lease Agreement for a Gamma Knife Unit dated as of November 1, 1999 between Jackson HMA, Inc. dba Central Mississippi Medical Center and GK Financing, LLC. 10-Q 001-08789 10.34 8/10/2001 10.10b # Addendum Two to Lease Agreement for a Gamma Knife Unit dated as of November 6, 2006 between GK Financing, LLC and Jackson HMA, Inc. d/b/a Central Mississippi Medical Center. 10-K 001-08789 10.51 4/2/2007 29 Table of Contents 10.10c Amendment Three to Lease Agreement for a Gamma Knife Unit dated as of February 23, 2010 between GK Financing, LLC and Jackson HMA, LLC d/b/a Central Mississippi Medical Center. 10-K 001-08789 10.10c 3/30/2016 10.10d Amendment Four to Lease Agreement for a Gamma Knife Unit dated as of May 1, 2019 between GK Financing, LLC and Jackson HMA, LLC d/b/a Central Mississippi Medical Center. 10-Q 001-08789 10.1 5/11/2020 10.11 Lease Agreement for a Gamma Knife Unit dated as of February 18, 2000 between GK Financing, LLC and OSF HealthCare System. 10-K 001-08789 10.11 3/30/2016 10.11a Addendum to Lease Agreement for a Gamma Knife Unit dated as of April 13, 2007, between GK Financing, LLC and OSF Healthcare System. 10-Q 001-08789 10.2 8/11/2016 10.11b Addendum Two to Lease Agreement for a Gamma Knife Unit dated as of October 31, 2012 between GK Financing, LLC and OSF Healthcare System. 10-Q 001-08789 10.2a 8/11/2016 10.11c # Addendum Three to Lease Agreement for a Gamma Knife Unit dated as of June 7, 2016 between GK Financing, LLC and OSF Healthcare System. 10-Q 001-08789 10.2b 8/11/2016 10.11d Addendum Four to Lease Agreement for a Gamma Knife Unit dated as of February 6, 2020 between GK Financing, LLC and OSF Healthcare System. 10-K 001-08789 10.11d 4/6/2021 10.11e # Addendum Five to Lease Agreement for a Gamma Knife Unit dated as of April 28, 2021 between GK Financing, LLC and OSF Healthcare System. 10-K 001-08789 10.11e 3/30/2022 10.13 Equipment Lease Agreement (for a Gamma Knife Unit) dated as of February 13, 2003 between GK Financing, LLC and AHS Albuquerque Regional Medical Center, LLC. 10-K 001-08789 10.13 3/30/2016 10.13a # Amendment to Equipment Lease Agreement (Perfexion Upgrade) dated as of April 8, 2011 between GK Financing, LLC and Lovelace Health System, Inc., d/b/a Lovelace Medical Center. 10-Q 001-08789 10.62 8/15/2011 10.13b Assignment and Assumption of Purchase and License Agreement dated as of February 2, 2011 between Elekta, Inc., GK Financing, LLC and Albuquerque GK Equipment, LLC. 10-Q 001-08789 10.62a 8/15/2011 10.13c # Icon Upgrade and Amendment Two to Equipment Lease Agreement for a Gamma Knife Unit dated as of October 15, 2019 between GK Financing, LLC and Lovelace Health System, Inc., d/b/a Lovelace Medical Center. 10-Q 001-08789 10.1 11/13/2020 10.13d Amendment Three to Equipment Lease Agreement dated as of November 9, 2023 between GK Financing, LLC and Lovelace Health System, LLC d/b/a Lovelace Medical Center. 10-K 001-08789 10.13d 4/1/2024 10.14 Equipment Lease Agreement (for a Gamma Knife Unit) dated as of March 21, 2003 between GK Financing, LLC and Northern Westchester Hospital Center. 10-K 001-08789 10.14 3/30/2016 10.14a # Amendment to Equipment Lease Agreement (Perfexion Upgrade) dated as of June 8, 2012 between GK Financing, LLC and Northern Westchester Hospital Center. 10-Q 001-08789 10.46a 8/14/2013 10.14b # Amendment Two to Equipment Lease Agreement (Reload) dated as of October 7, 2020 between GK Financing, LLC and Northern Westchester Hospital Association. 10-Q 001-08789 10.1 5/13/2021 10.14c # Amendment Three to Equipment Lease Agreement (Esprit Upgrade) dated as of April 24, 2024 between GK Financing, LLC and Northern Westchester Hospital Center. 10-Q 001-08789 10.1 5/15/2024 10.16 # Purchased Services Agreement (for a Gamma Knife Unit) dated as of March 5, 2008 between GK Financing, LLC and USC University Hospital, Inc. 10-Q 001-08789 10.57 5/14/2008 10.16a # First Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of April 1, 2009 between GK Financing, LLC and University of Southern California. 10-Q 001-08789 10.57a 8/14/2009 10.16b # Second Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of October 1, 2013 between GK Financing, LLC and University of Southern California. 10-Q 001-08789 10.57b 8/14/2014 30 Table of Contents 10.16c Third Amendment to Purchased Services Agreement dated as June 30, 2020 between GK Financing, LLC and University of Southern California. 10-Q 001-08789 10.2 11/13/2020 10.16d Fourth Amendment to Purchased Services Agreement dated as of July 28, 2021 between GK Financing, LLC and University of Southern California. 10-Q 001-08789 10.1 11/10/2021 10.18 # Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of August 5, 2011 between Jacksonville GK Equipment, LLC and St. Vincent’s Medical Center, Inc. 10-K 001-08789 10.63 3/30/2012 10.18a # First Amendment to the Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of October 10, 2011 between Jacksonville GK Equipment, LLC and St. Vincent’s Medical Center, Inc. 10-K 001-08789 10.63a 3/30/2012 10.19 # Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of January 19, 2012 between GK Financing, LLC and Sacred Heart Health System, Inc. 10-Q 001-08789 10.65 5/15/2013 10.20 # Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of March 27, 2014 between GK Financing, LLC and PeaceHealth doing business through its operating division PeaceHealth Sacred Heart Medical Center at RiverBend. 10-K 001-08789 10.67 4/1/2015 10.20a Amendment One to Leksell Gamma Knife Perfexion Purchased Services Agreement dated as of March 27, 2014 between GKF Financing, LLC and PeaceHealth Sacred Heart Medical Center at Riverbend. 10-Q 001-08789 10.2 5/13/2021 10.20b 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, 10-K 001-08789 10.20b 4/1/2024 10.20c 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. 10-Q 001-08789 10.1 8/14/2024 10.21 # Equipment Lease Agreement (for a Gamma Knife Unit) dated as of February 21, 2017 between Bryan Medical Center, and GK Financing, LLC. 10-Q 001-08789 10.1 11/13/2017 10.21a # First Amendment to Equipment Lease Agreement (for a Gamma Knife unit) dated as of February 14, 2018 between Bryan Medical Center and GK Financing, LLC 10-Q 001-08789 10.1 5/10/2018 10.22 # Proton Beam Radiation Therapy Lease Agreement dated as of October 18, 2006 between American Shared Hospital Services and Orlando Regional Healthcare System, Inc. 10-Q 001-08789 10.3 8/11/2016 10.22a # Amendment One to Proton Beam Radiation Therapy Lease Agreement dated as of August 12, 2012 between American Shared Hospital Services and Orlando Health, Inc., formerly known as Orlando Regional Healthcare System, Inc. 10-Q 001-08789 10.3a 8/11/2016 10.23a # Equipment Lease Agreement (for a Gamma Knife Unit) dated as of May 8, 2018 between The Methodist Hospitals, Inc. and GK Financing, LLC 10-Q 001-08789 10.1 5/13/2019 10.23b First Amendment to Lease Agreement for a Gamma Knife Unit (Perfexion on site upgrade to Elekta Esprit) dated as of April 18, 2023 between The Methodist Hospitals, Inc. and GK Financing, LLC. 10-K 001-08789 10.23b 4/1/2024 10.23c Second Amendment to Lease Agreement for a Gamma Knife Unit (Cobalt-60 Reload) dated as of June 13, 2023 between The Methodist Hospitals, Inc. and GK Financing, LLC. 10-K 001-08789 10.23c 4/1/2024 10.24 • American Shared Hospital Services Incentive Compensation Plan as Amended and Restated effective June 25, 2021 8-K 001-08789 10.1 7/1/2021 10.25 • Form of Indemnification Agreement between American Shared Hospital Services and members of its Board of Directors. 10-K 001-08789 10.26 3/30/2016 10.26 • Form of American Shared Hospital Services Incentive Compensation Plan Performance Share Award Agreement. 10-K 001-08789 10.25 3/27/2017 10.27 • Form of American Shared Hospital Services Incentive Compensation Plan Restricted Stock Unit Issuance Agreement. 10-Q 001-08789 10.2 5/12/2023 10.28 • Form of American Shared Hospital Services Incentive Compensation Plan Notice of Grant of Incentive Stock Option. 10-Q 001-08789 10.3 5/12/2023 10.29 • Offer Letter between the Company and Mr. Raymond C. Stachowiak dated April 22, 2020 8-K 001-08789 99.1 4/22/2020 31 Table of Contents 10.30 • Offer of Employment from the Company to Mr. Gary Delanois dated October 4, 2024. 8-K 001-08789 10.1 10/18/2024 10.31 • Offer Letter from the Company to Mr. Scott Frech dated December 19, 2024. 8-K 001-08789 10.3 12/26/2024 1 0. 32a 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. 8-K 001-08789 10.1 4/15/2021 10.32b 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. 8-K 001-08789 10.1 1/31/2024 10.32c 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. 8-K 001-08789 10.1 12/26/2024 10.33a Investment Agreement dated as of November 10, 2023 between GenesisCare USA, Inc., GenesisCare USA Holdings, Inc., and the Company. 8-K 001-08789 10.1 11/16/2023 10.33b First Amendment to Investment Agreement dated as of March 1, 2024 between the Company, GenesisCare USA, Inc., and GenesisCare USA Holdings, Inc. 10-K 001-08789 10.33b 4/1/2024 10.33c Second Amendment to Investment Agreement dated as of April 18, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc. 10-Q 001-08789 10.2 5/15/2024 10.33d Third Amendment to Investment Agreement dated as of April 24, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc. 10-Q 001-08789 10.3 5/15/2024 10.33e Fourth Amendment to Investment Agreement dated as of May 7, 2024 between the Company, GenesisCare USA Inc., and GenesisCare USA Holdings, Inc.. 10-Q 001-08789 10.4 5/15/2024 10.34 • Transition and Severance Agreement between the Company and Robert Hiatt, dated December 19, 2024. 8-K 001-08789 10.2 12/26/2024 19.1 * American Shared Hospital Services Policy on Inside Information and Insider Trading. 21.1 * Subsidiaries of the Company 23.1 * Consent of Independent Registered Public Accounting Firm 31.1 * Certification of Principal Executive Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 * Certification of Principal Financial Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 ǂ Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97 * American Shared Hospital Services Compensation Recoupment Policy, effective October 2, 2023. 10-K 001-08789 97 4/1/2024 101.INS * Inline XBRL Instance Document 101.SCH * Inline XBRL Taxonomy Extension Schema Document 101.CAL * Inline XBRL Taxonomy Calculation Linkbase Document 101.DEF * Inline XBRL Taxonomy Definition Linkbase Document 101.LAB * Inline XBRL Taxonomy Label Linkbase Document 101.PRE * Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 * Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline Instance XBRL contained in Exhibit 101 * Filed herewith. ǂ Furnished herewith. # As permitted by Regulation S-K, Item 601(b)(10)(iv) of the Securities Exchange Act of 1934, as amended, certain confidential portions of this exhibit have been redacted from the publicly filed document. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request. Omitted information has been replaced with asterisks. • Indicates management compensatory plan, contract, or arrangement. ITEM 16. FORM 10-K SUMMARY The optional summary in Item 16 has not been included in this Form 10-K. 32 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN SHARED HOSPITAL SERVICES (Registrant) April 4, 2025 By: /s/ Raymond C. Stachowiak Raymond C. Stachowiak Executive Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date /s/ Raymond C. Stachowiak Executive Chairman of the Board (principal executive officer) April 4, 2025 Raymond C. Stachowiak /s/ Daniel G. Kelly Jr. Director April 4, 2025 Daniel G. Kelly JR. /s/ Kathleen Miles Director April 4, 2025 Kathleen Miles /s/ Vicki L. Wilson Director April 4, 2025 Vicki L. Wilson /s/ Raymond S. Frech Chief Financial Officer April 4, 2025 Raymond S. Frech (principal financial officer and principal accounting officer) 33 Table of Contents AMERICAN SHARED HOSPITAL SERVICES REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM and CONSOLIDATED FINANCIAL STATEMENTS AS OF December 31, 2024 and 2023 , and FOR THE YEARS THEN ENDED CONTENTS PAGE REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F- 1 CONSOLIDATED FINANCIAL STATEMENTS Balance sheets F- 2 Statements of income F- 3 Statement of shareholders’ equity F- 4 Statements of cash flows F- 5 Notes to financial statements F- 7 34 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of American Shared Hospital Services, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of American Shared Hospital Services, Inc. (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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. 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. 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: o Obtaining third party confirmations from a selection of locations to evaluate the inputs to management’s calculation. o Testing cash receipts subsequent to year end. o Evaluating management’s ability to estimate by comparing collections in 2024 to prior year estimated accounts receivable. o 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 San Francisco, California April 4, 2025 We have served as the Company’s auditor since 2000. F- 1 Table of Contents AMERICAN SHARED HOSPITAL SERVICES CONSOLIDATED BALANCE SHEETS December 31, 2024 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,025,000 $ 13,690,000 Restricted cash 250,000 118,000 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 550,000 — Other receivables 503,000 504,000 Prepaid maintenance 1,392,000 1,275,000 Prepaid expenses and other current assets 928,000 526,000 Total current assets 26,258,000 20,456,000 PROPERTY AND EQUIPMENT, net 31,125,000 25,844,000 LAND 19,000 19,000 GOODWILL 1,265,000 1,265,000 INTANGIBLE ASSETS 78,000 78,000 RIGHT OF USE ASSETS, net 1,015,000 57,000 OTHER ASSETS 437,000 443,000 TOTAL ASSETS $ 60,197,000 $ 48,162,000 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 1,562,000 $ 315,000 Employee compensation and benefits 1,368,000 757,000 Other accrued liabilities 1,888,000 1,226,000 Related party liabilities 1,320,000 1,961,000 Asset retirement obligations, related party (includes $ 250,000 and $ 250,000 non-related party at December 31, 2024 and 2023, respectively) 1,200,000 650,000 Income taxes payable — 1,229,000 Current portion of lease liabilities 226,000 57,000 Line of credit — 2,500,000 Current portion of long-term debt, net 2,841,000 2,084,000 Total current liabilities 10,405,000 10,779,000 LONG-TERM LEASE LIABILITIES, less current portion 1,500,000 — LONG-TERM DEBT, net, less current portion 17,341,000 11,041,000 DEFERRED INCOME TAXES 924,000 63,000 TOTAL LIABILITIES 30,170,000 21,883,000 COMMITMENTS AND CONTINGENCIES (See Note 10) SHAREHOLDERS’ EQUITY Common stock Common stock, no par value ( 10,000,000 authorized shares; Issued and outstanding shares – 6,420,000 at December 31, 2024 and 6,300,000 at December 31, 2023) 10,763,000 10,763,000 Additional paid-in capital 8,605,000 8,232,000 Retained earnings 5,815,000 3,629,000 Total equity- American Shared Hospital Services 25,183,000 22,624,000 Non-controlling interests in subsidiaries 4,844,000 3,655,000 Total shareholders’ equity 30,027,000 26,279,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 60,197,000 $ 48,162,000 See accompanying notes F- 2 Table of Contents AMERICAN SHARED HOSPITAL SERVICES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED December 31, 2024 2023 Revenues: Rental revenue from medical equipment leasing $ 15,629,000 $ 17,772,000 Direct patient services revenue 12,556,000 3,353,000 Equipment sales, net 155,000 200,000 28,340,000 21,325,000 Costs of revenue: Maintenance and supplies 2,343,000 2,032,000 Depreciation and amortization 6,069,000 5,073,000 Other direct operating costs 10,065,000 4,025,000 Other direct operating costs, related party 678,000 851,000 19,155,000 11,981,000 Gross margin 9,185,000 9,344,000 Selling and administrative expense 7,407,000 7,022,000 Interest expense 1,499,000 1,112,000 Loss on write down of impaired assets and associated removal costs 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 3,794,000 — Interest and other income, net 248,000 426,000 Income before income taxes 1,237,000 696,000 Income tax (benefit) expense ( 295,000 ) 431,000 Net income 1,532,000 265,000 (Plus): net loss attributable to non-controlling interests 654,000 345,000 Net income attributable to American Shared Hospital Services $ 2,186,000 $ 610,000 Net income per share attributable to American Shared Hospital Services: Earnings per common share - basic $ 0.34 $ 0.10 Earnings per common share - diluted $ 0.33 $ 0.10 Weighted average common shares for basic earnings per share 6,497,000 6,358,000 Weighted average common shares for diluted earnings per share 6,703,000 6,393,000 See accompanying notes F- 3 Table of Contents AMERICAN SHARED HOSPITAL SERVICES CONSOLIDATED STATEMENT OF SHAREHOLDERS ’ EQUITY YEARS ENDED December 31, 2024 and 2023 Common Shares Common Stock Additional Paid-in Capital Retained Earnings Sub-Total ASHS Non-controlling Interests in Subsidiaries Total Balances at December 31, 2022 6,184,000 $ 10,763,000 $ 7,843,000 $ 3,019,000 $ 21,625,000 $ 4,000,000 $ 25,625,000 Stock-based compensation expense — — 389,000 — 389,000 — 389,000 Vested restricted stock awards 116,000 — — — — — — Cash distributions to non-controlling interests — — — — — — — Net income (loss) — — — 610,000 610,000 ( 345,000 ) 265,000 Balances at December 31, 2023 6,300,000 10,763,000 8,232,000 3,629,000 22,624,000 3,655,000 26,279,000 Stock-based compensation expense — — 373,000 — 373,000 — 373,000 Vested restricted stock awards 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 6,420,000 $ 10,763,000 $ 8,605,000 $ 5,815,000 $ 25,183,000 $ 4,844,000 $ 30,027,000 S ee accompanying notes F- 4 Table of Contents AMERICAN SHARED HOSPITAL SERVICES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED December 31, 2024 2023 OPERATING ACTIVITIES Net income $ 1,532,000 $ 265,000 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 6,174,000 5,165,000 Non cash lease expense 228,000 ( 34,000 ) Accretion of deferred issuance costs 95,000 46,000 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 ( 65,000 ) — Stock-based compensation 373,000 389,000 Changes in operating assets and liabilities: Receivables ( 6,939,000 ) ( 719,000 ) Prepaid expenses and other assets ( 513,000 ) 21,000 Asset retirement obligations, related party ( 588,000 ) — Related party liabilities 324,000 ( 491,000 ) Lease liability ( 228,000 ) — Accounts payable and accrued liabilities 2,227,000 ( 79,000 ) Income taxes payable ( 1,229,000 ) 974,000 Net cash provided by operating activities 167,000 5,718,000 INVESTING ACTIVITIES Payment for purchases of property and equipment ( 7,938,000 ) ( 6,273,000 ) Cash received in excess of cash paid for RI Acquisition 538,000 — Proceeds from sale of equipment 295,000 — Net cash (used in) investing activities ( 7,105,000 ) ( 6,273,000 ) FINANCING ACTIVITIES Principal payments on long-term debt ( 2,734,000 ) ( 2,129,000 ) Principal payments on line of credit ( 13,400,000 ) ( 1,400,000 ) Advances on line of credit 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 ) Distributions to non-controlling interests ( 95,000 ) — Capital contributions from non-controlling interests 38,000 — Principal payments on short-term financing prepaid insurance — ( 202,000 ) Net cash provided by financing activities 4,405,000 1,910,000 Net change in cash and cash equivalents ( 2,533,000 ) 1,355,000 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year 13,808,000 12,453,000 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of year $ 11,275,000 $ 13,808,000 S ee accompanying notes F- 5 Table of Contents SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid for interest $ 1,404,000 $ 1,066,000 Cash paid for income taxes $ 1,846,000 $ 297,000 SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Equipment included in accounts payable and accrued liabilities $ 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 Cash and cash equivalents $ 11,025,000 $ 13,690,000 Restricted cash 250,000 118,000 Cash, cash equivalents, and restricted cash at end of period $ 11,275,000 $ 13,808,000 S ee accompanying notes F- 6 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – BUSINESS AND BASIS OF PRESENTATION Business – These consolidated financial statements include the accounts of American Shared Hospital Services (“ASHS”) and its subsidiaries (the “Company”) as follows: ASHS wholly owns the subsidiaries American Shared Radiosurgery Services (“ASRS”), PBRT Orlando, LLC (“Orlando”), ASHS-Mexico, S.A. de C.V. (“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 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”). HoldCo wholly owns the subsidiary Gamma Knife Center Ecuador S.A. (“GKCE”). ASHS-Mexico is the majority owner of AB Radiocirugia y Radioterapia de Puebla, S.A.P.I. de C.V. 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 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. 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. de C.V. signed a Joint Venture Agreement with Hospital San Javier, S.A. de C.V. (“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. de C.V. (“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. LBE is not expected to generate revenue within the next two years. 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 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. All intercompany accounts and transactions have been eliminated in consolidation. NOTE 2 – ACCOUNTING POLICIES Use of estimates in the preparation of financial statements – In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s consolidated financial statements include the estimated useful lives of property and equipment and its salvage values, 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. Advertising and marketing – The Company expenses advertising and marketing costs as incurre d (collectively, “ marketing costs”). Marketing costs were $ 98,000 and $ 165,000 during the years ended December 31, 2024 and 2023 , respectively. Marketing costs include joint marketing with customers and corporate advertising costs. Marketing costs are recorded in other direct operating costs and sales and administrative costs in the consolidated statements of income. F- 7 Table of Contents 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. Sales expense includes payroll and travel costs for the Company’s sales staff. The Company also typically provides the equipment, as well as planning, installation, reimbursement and marketing support services to its customers. Cash and cash equivalents – The Company considers all liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Restricted cash is not considered a cash equivalent for purposes of the consolidated statements of cash flows. 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. Business and credit risk – The Company maintains its cash balances, which exceed federally insured limits, in financial institutions. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. The Company monitors the financial condition of the financial institutions it uses on a regular basis. All of the Company’s revenue was provided by 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. The Company has not experienced significant losses related to receivables from individual customers or groups of customers in any particular geographic area. All of the Company’s radiosurgery devices have been purchased through Elekta, to date. However, there are other manufacturers that also make radiosurgery devices. Accounts receivable and allowance for credit losses – Accounts receivable are recorded at net realizable value. 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. Recoveries of receivables previously charged off are offset against bad debt expense when received. Non-controlling interests - The Company reports its non-controlling interests as a separate component of shareholders’ 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 the RI Companies and in the 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 income. Property and equipment – Property and equipment are stated at cost less accumulated depreciation. Depreciation for Gamma Knife and other equipment is determined using the straight-line method over the estimated useful lives of the assets, which for medical and office equipment is generally 3 – 10 years, and after accounting for salvage value on the equipment where applicable. The Company acquired a building as part of the acquisition of GKCE in June 2020. Depreciation for buildings is determined using the straight-line method over 20 years. The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life. As of 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. This depreciation method allocates costs considering the projected volume of usage through the useful life of the PBRT unit, which has been estimated at 20 years. The estimated useful life of the PBRT unit is consistent with the estimated economic life of 20 years. The Company leases Gamma Knife and radiation therapy equipment to its customers under arrangements accounted for as operating leases. At December 31, 2024 , the Company held equipment under operating lease contracts with customers with an original cost of $ 54,266,000 and accumulated depreciation of $ 37,002,000 . At December 31, 2023 , the Company held equipment under operating lease contracts with customers with an original cost of $ 70,635,000 and accumulated depreciation of $ 51,976,000 . 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 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. For the ARO recorded during 2023, the Company concluded the related increase to the underlying assets could not be supported by the cash flows of the equipment and therefore the Company recorded a loss on the write-down of the ARO in June 2023. The Company’s estimate for the ARO liability was subsequently adjusted during the fourth quarter of 2023 based on new information. Total ARO impairment for the year ended December 31, 2023 was $ 290,000 . The Company also reviewed its long-lived assets during the fourth quarter of 2023 and concluded events and circumstances existed that indicated additional impairment existed at a third Gamma Knife site related to the existing equipment. Total equipment impairment for the year ended December 31, 2023 was $ 650,000 . See further discussion under Note 2 - Long-lived asset impairment and Note 3 - Property and Equipment. F- 8 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – ACCOUNTING POLICIES (CONTINUED) Revenue recognition - The Company recognizes revenues under ASC 842 Leases (“ASC 842” ) and ASC 606 Revenue from Contracts with Customers (“ASC 606” ). Rental income from medical 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 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. The amount the Company expects to receive is recorded as revenue and estimated based on historical experience. Revenue estimates are reviewed periodically and adjusted as necessary. 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 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 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. Revenue sharing arrangements amounted to approximately 70 % and 67 % of total revenue for the years ended December 31, 2024 and 2023 , respectively. Because the revenue estimates are reviewed on a quarterly basis, any adjustments required for past revenue estimates would result in an increase or reduction in revenue during the current quarterly period. Payor mix is a significant variable in the Company’s estimate for revenue sharing revenues. Direct patient services income ( “ retail ” ) – The Company has stand-alone facilities in Lima, Peru and Guayaquil, Ecuador, where a contract exists between the Company’s facilities and the individual patient treated at the facility. Under ASC 606, the Company acts as the principal in this transaction and provides, at a point in time, a single performance obligation, in the form of a Gamma Knife treatment. Revenue related to a Gamma Knife treatment is recognized on a gross basis at the time when the patient receives treatment. There is no variable consideration present in the Company’s performance obligation and the transaction price is agreed upon per the stated contractual rate. GKPeru's payment terms are typically prepaid for self-pay patients and insurance provider payments are paid net 30 days. GKCE’s patient population is primarily covered by a government payor and payments are paid between six and nine months, following issuance of invoice. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts. 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, 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. The performance obligation to sell, assign, transfer and deliver the equipment to the customer was carried out via Elekta. Revenue related to the equipment sale is recognized on a net basis when the sale is complete. The Company recognized net 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. See Note 8 - Stock-Based Compensation Expense for additional information on the Company’s stock-based compensation programs. Costs of revenue – The Company’s costs of revenue consist primarily of maintenance and supplies, depreciation and amortization, and other operating expenses (such as insurance, property taxes, sales taxes, marketing costs and operating costs from the Company’s revenue sharing and retail sites). Costs of revenue are recognized as incurred. Income taxes – The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. F- 9 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – ACCOUNTING POLICIES (CONTINUED) The Company accounts for uncertainty in income taxes as required by the provisions of ASC 740 Income taxes (“ASC 740” ), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible outcomes. The Company considers many factors when evaluating and estimating the Company’s tax positions and tax benefits, which may require periodic adjustments and may not accurately anticipate actual outcomes. See Note 7 - Income Taxes for further discussion on income taxes. 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. Management has determined that these operations are accounted for in U.S. dollars since the primary transactions incurred are in U.S. dollars and the Company provides significant funding towards the startup of the operation. 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. dollar. 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. dollar. As facts and circumstances change, the Company will revisit this conclusion. The functional currency of the Company’s Gamma Knife site in Ecuador is the U.S. dollar because that is the local currency of Ecuador. Asset Retirement Obligations – Based on the guidance provided in ASC 410, Asset Retirement Obligations (“ASC 410” ), the Company analyzed its existing lease agreements and determined whether an ARO exists to remove the respective units at the end of the lease terms. As of December 31, 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 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 : 2024 2023 Balance at beginning of period $ 650,000 $ 360,000 Increase in obligations 1,138,000 290,000 Payments ( 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. Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the year. The fully vested restricted stock units not issued and outstanding and unvested restricted stock units, are also included therein. Diluted earnings per share reflect the potential dilution that could occur if common shares were issued pursuant to the exercise of options and from unvested restricted stock units. The computation for the years ended December 31, 2024 and 2023 excluded approximately 0 and 144 ,000 , respectively, of the Company’s stock options because the exercise price of the options was higher than the average market price during the period. The weighted average common shares outstanding for the years ended December 31, 2024 and 2023 , included approximately 123,000 and 123,000 , respectively, of the Company's restricted stock awards that are fully vested but are deferred for issuance. The following table illustrates the computations of basic and diluted earnings per share for the years ended December 31, 2024 and 2023 . 2024 2023 Numerator for basic and diluted earnings per share $ 2,186,000 $ 610,000 Denominator: Denominator for basic earnings per share – weighted-average shares 6,497,000 6,358,000 Effect of dilutive securities employee stock options and restricted stock 206,000 35,000 Denominator for diluted earnings per share – adjusted weighted-average shares 6,703,000 6,393,000 Earnings per common share- basic $ 0.34 $ 0.10 Earnings per common share- diluted $ 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. F- 10 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – ACCOUNTING POLICIES (CONTINUED) 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, 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: 2024 2023 Revenues Leasing $ 15,784,000 $ 17,772,000 Retail 12,556,000 3,553,000 Total $ 28,340,000 $ 21,325,000 2024 2023 Depreciation expense Leasing $ 4,535,000 $ 4,429,000 Retail 1,639,000 736,000 Total $ 6,174,000 $ 5,165,000 2024 2023 Interest expense Leasing $ 1,367,000 $ 1,087,000 Retail 132,000 25,000 Total $ 1,499,000 $ 1,112,000 2024 2023 Bargain purchase gain RI Acquisition Leasing $ — $ — Retail 3,794,000 — Total $ 3,794,000 $ — 2024 2023 Loss on write down of impaired assets and associated removal costs Leasing $ 3,084,000 $ 940,000 Retail — — Total $ 3,084,000 $ 940,000 2024 2023 Interest income Leasing $ 310,000 $ 458,000 Retail 32,000 — Total $ 342,000 $ 458,000 2024 2023 Income tax (benefit) expense Leasing $ ( 623,000 ) $ 306,000 Retail 328,000 125,000 Total $ ( 295,000 ) $ 431,000 2024 2023 Net (loss) income attributable to American Shared Hospital Services Leasing $ ( 3,380,000 ) $ 518,000 Retail 5,566,000 92,000 Total $ 2,186,000 $ 610,000 2024 2023 Total assets Leasing $ 35,455,000 $ 39,854,000 Retail 24,742,000 8,308,000 Total $ 60,197,000 $ 48,162,000 F- 11 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 – ACCOUNTING POLICIES (CONTINUED) Long lived asset impairment – The Company assesses the recoverability of its long-lived assets when events or changes in circumstances indicate their carrying value may not be recoverable. Such events or changes in circumstances may include: a significant adverse change in the extent or manner in which a long-lived asset is being used, significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. 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, measured as the amount by which the carrying amount exceeds estimated fair value. An impairment loss is charged to the consolidated statement of operations in the period in which management determines such impairment. 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. Goodwill and intangible assets - The Company recorded goodwill of $ 1,265,000 and an intangible asset with a fair value of $ 78,000 as part of the acquisition of GKCE in June 2020. The intangible asset identified was GKCE’s trade name and the Company assigned an indefinite useful life to the asset. Based on the guidance provided in accordance with ASC 350 Intangibles-Goodwill and Other (“ASC 350” ), the Company does not amortize the intangible asset because it has an indefinite life. The 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 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 adopted - In November 2023, the FASB issued ASU 2023 - 07 Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ) which enhances the disclosure requirements for segment reporting, primarily disclosures around significant segment expenses. The key provisions of the amendments require disclosure of significant segment expense reviewed by the CODM, require disclosure of an “other” segment category, require disclosure of segment profit or loss and assets for interim periods, clarify and require disclosure of other measurements used by the CODM in assessing segment performance and allocating resources, and require disclosure of the CODM's title and position and explanation of how the CODM assesses segment performance. ASU 2023 - 07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company 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 December 31, 2023 have been reclassified to make them consistent with the current year presentation. NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consists of the following: December 31, 2024 2023 Medical equipment and facilities $ 71,148,000 $ 77,150,000 Office equipment 594,000 306,000 Construction in progress 1,112,000 3,771,000 72,854,000 81,227,000 Accumulated depreciation ( 41,729,000 ) ( 55,383,000 ) Net property and equipment $ 31,125,000 $ 25,844,000 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: 2024 2023 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 PBRT equipment, in light of available information as of December 31, 2024 and 2023 and concluded no impairment exists. F- 12 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - OTHER ACCRUED LIABILITIES Other accrued liabilities consists of the following: December 31, 2024 2023 Professional services 167,000 472,000 Operating costs 858,000 450,000 Other 863,000 304,000 Total other accrued liabilities $ 1,888,000 $ 1,226,000 NOTE 5 - LONG TERM DEBT On April 9, 2021, the Company along with certain of its domestic subsidiaries (collectively, the “Loan Parties”) entered into a five year $ 22,000,000 credit agreement with Fifth Third Bank, N.A. (“the Credit Agreement”). The Credit Agreement includes three loan facilities. The first loan facility is a $ 9,500,000 term loan (the “Term Loan”) which was used to refinance the domestic Gamma Knife debt and finance leases, and associated closing costs. The second loan facility is a $ 5,500,000 delayed draw term loan (the “DDTL”) which was used to refinance the Company’s PBRT finance leases and associated closing costs, as well as to provide additional working capital. The third loan facility provides for a $ 7,000,000 revolving line of credit (the “Revolving Line”) available for future projects and general corporate purposes. The 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. The Term Loan and DDTL have interest and principal payments due quarterly. Principal amortization on an annual basis for the Term Loan and DDTL equates to 48 % of the original principal loan commitments in years one through five and an end of term payment of the remaining principal balance. The 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 . The loan entered into with DFC in connection with the acquisition of GKCE in June 2020 ( the “DFC Loan”) was obtained through the Company’s wholly-owned subsidiary, HoldCo, and is guaranteed by GKF. The DFC Loan is secured by a lien on GKCE’s assets. The first tranche of the DFC Loan was funded in June 2020. During the fourth quarter of 2023, the second tranche of the DFC loan was funded to finance the equipment upgrade in Ecuador. The amount outstanding under the first tranche of the DFC Loan is payable in 29 quarterly installments with a fixed interest rate of 3.67 %. The amount outstanding under the second tranche of the DFC Loan is payable in 16 quarterly installments with a fixed interest rate of 7.49 %. The long-term debt on the consolidated balance sheets related to the DFC loan was $ 1,806,000 and $ 2,464,000 as of December 31, 2024 and 2023 , respectively. The Company capitalized debt issuance costs of $ 0 and $ 9,000 as of December 31, 2024 and 2023 , respectively, related to maintenance and administrative fees on the DFC Loan. The DFC Loan contains customary covenants among other covenants and obligations, requirements that the Company maintain certain financial ratios related to liquidity and cash flow as well as depository requirements. On March 28, 2024 the Company received a waiver and amendment from DFC for certain covenants as of December 31, 2023 and through December 31, 2024 and amended other covenants and definitions permanently. 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. As of December 31, 2024 and 2023 , the unamortized debt issuance costs on the consolidated balances sheets were $ 231,000 and $ 164,000 . The following are contractual maturities of long-term debt by year at December 31, 2024 , excluding debt issuance costs of $ 231,000 : Year ending December 31, Principal 2025 $ 2,931,000 2026 9,299,000 2027 2,058,000 2028 1,540,000 2029 1,540,000 Thereafter 3,045,000 $ 20,413,000 F- 13 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - LEASES The Company determines if a contract is a lease at inception. Under ASC 842, the Company is a lessor of equipment to various customers. Leases that commenced prior to ASC 842 adoption date were classified as operating leases under historical guidance. As the Company has elected the package of practical expedients allowing it to not reassess lease classification, these leases are classified as operating leases under ASC 842 as well. All of the Company’s lessor arrangements entered into after ASC 842 adoption are also classified as operating leases. Some of these lease terms have an option to extend the lease after the initial term, but do not contain the option to terminate early or purchase the asset at the end of the term. The Company has elected not to recognize right-of-use (“ROU”) assets and lease liabilities that arise from short-term ( 12 months or less) leases for any class of underlying asset. The Company’s Gamma Knife and PBRT contracts with hospitals are classified as operating leases under ASC 842. The related equipment is included in medical equipment and facilities on the Company’s consolidated balance sheets (see further discussion at Note 2 ). As all income from the Company’s lessor arrangements is solely based on procedure volume, all income is considered variable payments not dependent on an index or a rate. As such, the Company does not measure future operating lease receivables. 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. 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. 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 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 : Year ending December 31, Operating Leases 2025 $ 446,000 2026 347,000 2027 347,000 2028 348,000 Thereafter 958,000 Total lease payments 2,446,000 Less imputed interest ( 720,000 ) Total $ 1,726,000 Year Ended December 31, 2024 2023 Lease cost Operating lease cost $ 303,000 $ 302,000 Sublease income ( 40,000 ) ( 129,000 ) Total lease cost $ 263,000 $ 173,000 Other information Cash paid for amounts included in the measurement of lease liabilities - Operating leases $ 303,000 $ 302,000 Weighted-average remaining lease term - Operating leases in years 7.64 0.80 Weighted-average discount rate - Operating leases 8.02 % 4.65 % The Company’s corporate offices were located at 601 Montgomery Street, Suite 1112, San Francisco, California, where it leased approximately 900 square feet for $ 4,500 per month and the lease term ended in November 2024. In 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 $ 1,003 per month located at 601 Montgomery Street, Suite 850. Total ROU assets and lease liabilities for the San Francisco sublease were $ 15,000 . 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. 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, 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 1,600 square feet for approximately $ 8,850 per month with a lease expiration date in January 2024. The lease in Peru is currently on a month-to-month basis. The Company also owns and operates a stand-alone Gamma Knife facility in Guayaquil, Ecuador where it owns 864 square feet of condominium space in an office building and approximately 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 July 3034. Total ROU assets and lease liabilities for the Puebla lease were $ 149,000 . Net rent expense was $ 427,000 and $ 234,000 for the years ended December 31, 2024 and 2023 , respectively, and includes the above operating leases as well as month-to-month rental and certain executory costs. F- 14 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – INCOME TAXES The components of income before income taxes for the years ended December 31, 2024 and 2023 are as follows: YEARS ENDED December 31, 2024 2023 Domestic $ 1,086,000 $ 666,000 Foreign 151,000 30,000 Income before income taxes $ 1,237,000 $ 696,000 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: YEARS ENDED December 31, 2024 2023 Current: Federal $ ( 83,000 ) $ 940,000 State ( 190,000 ) 115,000 Foreign 337,000 135,000 Total current 64,000 1,190,000 Deferred: Federal ( 380,000 ) ( 672,000 ) State 30,000 ( 77,000 ) Foreign ( 9,000 ) ( 10,000 ) Total deferred ( 359,000 ) ( 759,000 ) $ ( 295,000 ) $ 431,000 Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2024 and 2023 are as follows: December 31, 2024 2023 Deferred tax liabilities: Property and equipment $ ( 644,000 ) $ ( 323,000 ) Prepaid expenses ( 444,000 ) ( 409,000 ) Investment in partnerships ( 956,000 ) — Other ( 14,000 ) — ROU asset — ( 12,000 ) Total deferred tax liabilities ( 2,058,000 ) ( 744,000 ) Deferred tax assets: Net operating loss carryforwards 651,000 155,000 Accruals and allowances 168,000 438,000 Lease liabilities — 12,000 Tax credits — 4,000 Transaction costs 231,000 — Other 169,000 140,000 Capital loss carryover — 646,000 Total deferred tax assets 1,219,000 1,395,000 Valuation allowance ( 85,000 ) ( 714,000 ) Deferred tax assets net of valuation allowance 1,134,000 681,000 Net deferred tax liabilities $ ( 924,000 ) $ ( 63,000 ) F- 15 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – INCOME TAXES (CONTINUED) The provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate ( 21 % in 2024 and 2023 ) to income before taxes as follows: YEARS ENDED December 31, 2024 2023 Computed expected federal income tax $ 390,000 $ 218,000 State income taxes, net of federal benefit ( 84,000 ) 12,000 Foreign rate differential 14,000 38,000 Pass-through income ( 18,000 ) — Bargain purchase gain ( 790,000 ) — Stock compensation 1,000 7,000 Non-deductible expenses 230,000 6,000 Return to provision true-up 3,000 18,000 Uncertain tax positions ( 72,000 ) 9,000 Capital loss expired 645,000 — Change in valuation allowance ( 627,000 ) 17,000 Other deferred tax adjustments 13,000 106,000 $ ( 295,000 ) $ 431,000 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 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. F- 16 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 – INCOME TAXES (CONTINUED) The Company has adopted accounting standards which prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company ’ s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Additionally, these accounting standards specify that tax positions for which the timing of the ultimate resolution is uncertain should be recognized as long-term liabilities. The Company has made no reclassifications between current taxes payable and long term taxes payable under this guidance. As of December 31, 2024 , the unrecognized tax benefit was $ 161,000 which, if recognized, will not affect the annual effective tax rate as these unrecognized tax benefits would increase deferred tax assets, which would be subject to a full valuation allowance. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows: YEARS ENDED December 31, 2024 2023 Balance at beginning of year $ 287,000 $ 278,000 Additions based on tax positions of prior years 13,000 9,000 Additions based on tax positions of current year 12,000 — Reductions in tax positions of prior years ( 18,000 ) — Lapse of statues of limitations ( 75,000 ) — Removal of penalties ( 58,000 ) — Balance at end of year $ 161,000 $ 287,000 The Company’s policy for deducting interest and penalties is to treat interest as interest expense and penalties as income taxes. As of December 31, 2024 , the Company had $ 36,000 accrued for the payment of penalties and zero interest related to unrecognized tax benefits. The Company does not expect any material changes to our uncertain tax positions within the next 12 months. The Company 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, increased the number of shares of the Company’s common stock reserved for issuance under the Plan to 2,580,000 and extended the term of the Plan by five years to February 22, 2027. The Plan provides that the shares reserved under the Plan are available for issuance to officers of the Company, other key employees, non-employee directors, and advisors. No further grants or share issuances will be made under the previous plans. As of December 31, 2024 , approximately 578,000 shares remain available for grant under the Plan. 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 and other members of executive management, under the Incentive Compensation Plans during 2024 and 2023 are as follows: Restricted Stock Units Grant Date Weighted- Average Fair Value Outstanding at January 1, 2023 6,000 $ 2.33 Granted 146,000 $ 2.97 Vested ( 116,000 ) $ 2.94 Outstanding at December 31, 2023 36,000 $ 2.88 Granted 290,000 $ 3.09 Vested ( 120,000 ) $ 2.93 Outstanding at December 31, 2024 206,000 $ 3.07 F- 17 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 – STOCK-BASED COMPENSATION EXPENSE (CONTINUED) Certain Executive Equity Awards Effective May 4, 2020, the Company appointed Raymond C. Stachowiak as Interim President and Chief Executive Officer ( “CEO” ). Pursuant to his Offer Letter, Mr. Stachowiak was granted 50,000 restricted stock awards that vested in full on August 3, 2020. He was granted additional restricted stock awards totaling 10,000 common shares per month, which vested in full at the end of each 30 -day period following issuance. Mr. Stachowiak became CEO of the Company on October 1, 2020 and served in such position until he was appointed Executive Chairman of the Board on March 7, 2023. For the year ended December 31, 2023 , 120,000 restricted stock awards were issued to Mr. Stachowiak and 90,000 became fully vested. Total compensation expense recorded for the year ended December 31, 2023 in the consolidated financial statements of income related to executive equity awards was $ 351,000 . For the year ended December 31, 2024 , 120,000 restricted stock awards were issued to Mr. Stachowiak and 90,000 became fully vested. Total compensation expense recorded for the year ended December 31, 2024 in the consolidated financial statements of income related to the executive equity awards was $ 352,000 . For the year ended December 31, 2024 , stock compensation expense recorded in the consolidated financial statements is summarized as follows: Stock-Based Awards Issued Compensation and Vested Expense Options — $ 17,000 Management Bonus Program - vested and issued — — Board RSU Awards - other — 4,000 Executive Compensation 120,000 352,000 120,000 $ 373,000 Total stock-based compensation expense before income tax effect for the Company’s options and restricted stock awards in the amount of $ 373,000 and $ 389,000 for the years ended December 31, 2024 and 2023 , is reflected in selling and administrative expense in the consolidated statements of income, respectively. Stock Options Changes in stock options outstanding under the Plan during 2024 and 2023 are as follows: Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance at December 31, 2022 95,000 $ 2.76 4.83 $ 25,000 Granted 70,000 $ 2.89 7.00 $ — Forfeited ( 19,000 ) $ 2.69 — $ — Balance at December 31, 2023 146,000 $ 2.83 5.44 $ — Forfeited ( 104,000 ) $ 2.86 — $ — Balance at December 31, 2024 42,000 $ 2.74 3.65 $ 17,000 Exercisable at December 31, 2023 31,000 $ 2.84 3.38 $ — Exercisable at December 31, 2024 23,000 $ 2.69 2.43 $ — F- 18 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 – STOCK-BASED COMPENSATION EXPENSE (CONTINUED) 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. 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 three years. The Company’s stock option awards to employees are calculated using the Black-Scholes options valuation model. The Black-Scholes model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, the Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility. The Company’s stock-based awards have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the present value estimates. For these reasons, management believes that the existing models do not necessarily provide a reliable single measure of the fair value of its stock-based awards to employees. 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. 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: 2023 Expected life (years) 7.0 Expected forfeiture rate 0.0 % Expected volatility 50 % Dividend yield 0 % Risk-free interest rate 3.6 % The following summarizes the assumption inputs used for the Company’s Black-Scholes calculation: Expected life (years): The expected term represents the weighted average period that the Company’s stock options are expected to be outstanding. Expected forfeiture rate: Forfeitures are recognized as they occur. Expected volatility: The expected volatility was derived from the Company’s historical stock volatility. Dividend yield: The expected dividend yield was assumed to be zero, as the Company has not previously paid dividends on common stock and has no current plans to do so. Risk-free interest rate: The risk-free interest rate is based on the interest yield in effect at the date of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term. Repurchase of Common Stock, Common Stock Warrants and Stock Options In 1999 and 2001, the Board of Directors approved resolutions authorizing the Company to repurchase up to a total of 1,000,000 shares of its own stock on the open market, which the Board reaffirmed in 2008. There were no shares of the Company repurchased during 2024 or 2023 . There are approximately 72,000 shares remaining under this repurchase authorization. F- 19 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – RETIREMENT PLAN The Company has a defined-contribution retirement plan (the “Retirement Plan”) that allows for a matching safe harbor contribution. For 2024 , the Board of Directors elected to match participant deferred salary contributions up to a maximum of 4 % of the participant’s annual compensation. Discretionary profit sharing contributions are allowed under the Retirement Plan in years that the Board does not elect a safe harbor match. During 2024 , the Company contributed $ 116,000 to the Retirement Plan for the safe harbor match for the year ended December 31, 2024 . The Company has accrued approximately $ 10,000 for additional safe harbor matching contribution for the year ended December 31, 2024 . Also during 2024 , the Company contributed $ 35,000 to the Retirement Plan for the safe harbor match for the year ended December 31, 2023 . NOTE 10 – COMMITMENTS AND CONTINGENCIES On December 20, 2018, the Company signed Second Amendments to two System Build Agreements for the Company’s second and third Mevion PBRT units. These commitments expired in January 2024 and the Company was not able to utilize this equipment. During the year-ended December 31, 2020, the Company impaired these deposits and wrote-off the deposits and related capitalized interest. As of December 31, 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 . There are no deposits on the consolidated balance sheets related to these commitments as of December 31, 2024 . It is the Company's intent to finance substantially all of these commitments. There can be no assurance that financing will be available for the Company’s current or future projects, or at terms that are acceptable to the Company. However, the Company currently has cash on hand of $ 11,275,000 and a line of credit of $ 7,000,000 to fund these projects, if necessary. 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. The agreement requires an annual prepayment of $ 1,939,000 for the current contractual period ( one year). This payment portion was recorded as a prepaid contract and will be amortized over the one -year service period. As of December 31, 2024 , the Company had commitments to service and maintain its Gamma Knife and PBRT equipment. The service commitments are carried out via contracts with Mevion, Elekta and Mobius Imaging, LLC. The Company’s commitments to purchase t wo LINAC systems also include a 9 -year and 5 -year agreement to service the equipment, respectively. Total service commitments as of December 31, 2024 were $ 13,109,000 . The Gamma Knife and certain other service contracts are paid monthly, as service is performed. The Company believes that cash flow from cash on hand and operations will be sufficient to cover these payments. The Company’s customer contracts generally contain mutual indemnification provisions. The Company maintains general and professional liability insurance in the United States. The Company is not involved in the practice of medicine and therefore believes its present insurance coverage and indemnification agreements are adequate for its business. The Company’s Peruvian and Ecuadorian Gamma Knife centers 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. The Company maintains general and professional liability insurance consistent with the operations of these facilities and believes its present coverage is adequate for its business. F- 20 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 – RELATED PARTY TRANSACTIONS The Company’s Gamma Knife business is operated through its 81 % indirect interest in its GKF subsidiary. The remaining 19 % of GKF is owned by a wholly owned U.S. subsidiary of Elekta, which is the manufacturer of the Gamma Knife and other radiation therapy equipment. Since the Company purchases the majority of its equipment from Elekta, there are significant related party transactions with Elekta such as equipment purchases, commitments to purchase and service equipment, and costs to maintain the equipment . The following summarizes related party activity for the years ended December 31, 2024 and 2023 : December 31, 2024 2023 Equipment purchases and de-install costs $ 5,268,000 $ 6,918,000 Costs incurred to maintain equipment 678,000 851,000 Total related party transactions $ 5,946,000 $ 7,769,000 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 : December 31, 2024 2023 Accounts payable, asset retirement obligations and other accrued liabilities $ 2,270,000 $ 2,361,000 Note 12. 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. F- 21 Table of Contents 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: May 7, 2024 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 Facilities 4,697,000 — 4,697,000 ROU assets 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 ) CT Sim ( 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: Fair Value Average Useful Life (in Years) Facilities $ 4,697,000 15 Medical equipment 2,403,000 4 Total medical equipment and facilities acquired $ 7,100,000 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 Revenue $ 7,756,000 Operating income $ 1,289,000 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) Revenue $ 31,770,000 Operating loss $ ( 1,320,000 ) Diluted loss per share $ ( 0.10 ) F- 22 Table of Contents AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13 – SUBSEQUENT EVENT 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. F- 23