UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________________

FORM ~~10-Q/A~~10-Q

~~Amendment No. 1~~

(Mark One)


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

For the quarterly period ended March 31, ~~2020~~2021 or


¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________.

Commission file number 001-08789

________________________

American Shared Hospital Services

(Exact name of registrant as specified in its charter)


California			94-2918118
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

Two Embarcadero Center,

Suite 410

San Francisco,

California

94111

(Address of principal executive offices)

~~94111~~
(Zip code)

(415) 788-5300

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

American Shared Hospital Services Common Stock, No Par Value

AMS

~~NYSE AMERICAN~~NYSEAMER

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No ¨☐

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

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

Large Accelerated Filer ¨☐ Accelerated Filer ¨☐ Non-Accelerated Filer ý☒ Smaller reporting company ý☒

Emerging Growth Company ¨☐

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

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

As of May ~~1, 2020,~~3, 2021, there were outstanding ~~5,688,000~~5,801,000 shares of the registrant’s common stock.

~~EXPLANATORY NOTE~~

This Amendment No. 1 on Form 10-Q/A (the “Amendment”) of American Shared Hospital Services (the “Company”) amends the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, originally filed with the Securities and Exchange Commission on May 11, 2019 (the “Original Report”).~~The Original Report inadvertently excluded certain XBRL (eXtensible Business Reporting Language) information.~~

This Amendment is being provided for the sole purpose of furnishing the XBRL files in Exhibits 101 and 104 hereto that were inadvertently omitted from the Original Report and no other changes have been made to the Original Report.This Amendment speaks as of the filing date of the Original Report and does not reflect events that may have occurred subsequent to that original filing date, and does not modify or update in any way disclosure made in the Original Report.~~No attempt has been made in this Amendment to modify or update the disclosures presented in the Original Report.~~

In addition, as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, as a result of this Amendment, the certifications from our Chief Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed as exhibits to the Original Report, have been re-executed and re-filed as of the date of this Amendment and are included as Exhibits 31.1, 31.2 and 32.1 hereto.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(Unaudited)~~


							(Unaudited)
ASSETS	ASSETS	March 31, 2020		December 31, 2019		ASSETS	March 31, 2021		December 31, 2020
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,673,000	$	1,429,000	Cash and cash equivalents	$	4,895,000	$	3,961,000
Restricted cash	Restricted cash	350,000		350,000		Restricted cash	118,000		364,000
Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2020 and $100,000 at December 31, 2019		5,988,000		6,894,000

Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2021 and $100,000 at December 31, 2020						Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2021 and $100,000 at December 31, 2020	4,792,000		4,303,000

Other receivables	Other receivables	265,000		169,000		Other receivables	280,000		272,000
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,362,000		1,900,000		Prepaid expenses and other current assets	1,364,000		1,950,000

Total current assets	Total current assets	10,638,000		10,742,000		Total current assets	11,449,000		10,850,000

Property and equipment:	Property and equipment:					Property and equipment:
Medical equipment and facilities	Medical equipment and facilities	93,429,000		92,132,000		Medical equipment and facilities	70,718,000		75,657,000
Office equipment	Office equipment	597,000		594,000		Office equipment	394,000		330,000
Deposits and construction in progress		4,256,000		4,215,000
Construction in progress						Construction in progress	1,178,000		170,000
		98,282,000		96,941,000			72,290,000		76,157,000
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(57,112,000)		(55,461,000)		Accumulated depreciation and amortization	(41,944,000)		(45,739,000)
Net property and equipment	Net property and equipment	41,170,000		41,480,000		Net property and equipment	30,346,000		30,418,000

Land						Land	19,000		19,000
Goodwill						Goodwill	1,265,000		1,265,000
Right of use assets	Right of use assets	972,000		1,106,000		Right of use assets	812,000		886,000

Intangible asset						Intangible asset	78,000		78,000
Other assets	Other assets	411,000		455,000		Other assets	78,000		137,000

Total assets	Total assets	$	53,191,000	$	53,783,000	Total assets	$	44,047,000	$	43,653,000

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY	March 31, 2020		December 31, 2019		LIABILITIES AND SHAREHOLDERS' EQUITY	March 31, 2021		December 31, 2020
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	851,000	$	557,000	Accounts payable	$	885,000	$	683,000
Employee compensation and benefits	Employee compensation and benefits	285,000		234,000		Employee compensation and benefits	432,000		405,000
Other accrued liabilities	Other accrued liabilities	1,681,000		1,779,000		Other accrued liabilities	2,712,000		1,574,000
Asset retirement obligations						Asset retirement obligations	1,214,000		1,270,000
Income taxes payable	Income taxes payable	95,000		130,000		Income taxes payable	399,000		373,000

Working capital payment due						Working capital payment due	197,000		197,000
Short term financing						Short term financing	355,000		471,000
Current portion of lease liabilities	Current portion of lease liabilities	255,000		279,000		Current portion of lease liabilities	310,000		305,000
Current portion of long-term debt	Current portion of long-term debt	1,451,000		1,526,000		Current portion of long-term debt	782,000		1,157,000
Current portion of finance leases	Current portion of finance leases	3,211,000		3,709,000		Current portion of finance leases	0		5,945,000

Total current liabilities	Total current liabilities	7,829,000		8,214,000		Total current liabilities	7,286,000		12,380,000

Long-term lease liabilities, less current portion	Long-term lease liabilities, less current portion	717,000		827,000		Long-term lease liabilities, less current portion	502,000		581,000
Long-term debt, less current portion	Long-term debt, less current portion	2,923,000		1,954,000		Long-term debt, less current portion	11,820,000		3,440,000
Long-term finance leases, less current portion	Long-term finance leases, less current portion	7,499,000		8,177,000		Long-term finance leases, less current portion	0		2,974,000
Deferred revenue, less current portion	Deferred revenue, less current portion	264,000		286,000		Deferred revenue, less current portion	193,000		210,000

Deferred income taxes	Deferred income taxes	2,486,000		2,514,000		Deferred income taxes	402,000		418,000

Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Common stock, no par value (10,000,000 authorized; 5,688,000 and 5,817,000 shares issued and outstanding at March 31, 2020 and at December 31, 2019, respectively)		10,753,000		10,753,000

Common stock, 0 par value (10,000,000 authorized; 5,801,000 and 5,791,000 shares issued and outstanding at March 31, 2021 and at December 31, 2020, respectively)						Common stock, 0 par value (10,000,000 authorized; 5,801,000 and 5,791,000 shares issued and outstanding at March 31, 2021 and at December 31, 2020, respectively)	10,753,000		10,753,000

Additional paid-in capital	Additional paid-in capital	6,781,000		6,725,000							Additional paid-in capital	7,131,000	7,024,000
Retained earnings	Retained earnings	8,420,000		8,555,000		Retained earnings	1,526,000		1,497,000
Total equity-American Shared Hospital Services	Total equity-American Shared Hospital Services	25,954,000		26,033,000		Total equity-American Shared Hospital Services	19,410,000		19,274,000
Non-controlling interests in subsidiaries	Non-controlling interests in subsidiaries	5,519,000		5,778,000		Non-controlling interests in subsidiaries	4,434,000		4,376,000
Total shareholders' equity	Total shareholders' equity	31,473,000		31,811,000		Total shareholders' equity	23,844,000		23,650,000

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	53,191,000	$	53,783,000	Total liabilities and shareholders' equity	$	44,047,000	$	43,653,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months ended March 31,
2020 2019
Revenues $ 4,568,000 $ 5,321,000
Costs of revenue:
Maintenance and supplies 633,000 668,000
Depreciation and amortization 1,647,000 1,894,000
Other direct operating costs 894,000 822,000
3,174,000 3,384,000
Gross Margin 1,394,000 1,937,000
Selling and administrative expense 1,211,000 1,055,000
Interest expense 282,000 367,000
Operating (loss) income (99,000) 515,000
Interest and other income 3,000 4,000
(Loss) income before income taxes (96,000) 519,000
Income tax (benefit) expense (28,000) 124,000
Net (loss) income (68,000) 395,000
Less: Net income attributable to non-controlling interest (67,000) (125,000)
Net (loss) income attributable to American Shared Hospital Services $ (135,000) $ 270,000
Net (loss) income per share:
(Loss) earnings per common share - basic $ (0.02) $ 0.05
(Loss) earnings per common share - diluted $ (0.02) $ 0.05


	Three Months ended March 31,
	2021		2020

Revenues	$	4,364,000	$	4,568,000

Costs of revenue:

Maintenance and supplies	672,000		633,000

Depreciation and amortization	1,198,000		1,647,000

Other direct operating costs	1,060,000		894,000

	2,930,000		3,174,000

Gross margin	1,434,000		1,394,000

Selling and administrative expense	1,084,000		1,211,000

Interest expense	260,000		282,000

Operating income (loss)	90,000		(99,000)



Interest and other income	3,000		3,000

Income (loss) before income taxes	93,000		(96,000)

Income tax expense (benefit)	6,000		(28,000)

Net income (loss)	87,000		(68,000)
Less: Net (income) attributable to non-controlling interest	(58,000)		(67,000)

Net income (loss) attributable to American Shared Hospital Services	$	29,000	$	(135,000)

Net income (loss) per share:

Earnings (loss) per common share - basic	$	0.00	$	(0.02)

Earnings (loss) per common share - diluted	$	0.00	$	(0.02)

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019
Common
Shares Common
Stock Additional
Paid-in
Capital Retained
Earnings Sub-Total
ASHS Non-controlling
Interests in
Subsidiaries Total
Balances at January 1, 2019 5,714,000 $ 10,711,000 $ 6,495,000 $ 7,896,000 $ 25,102,000 $ 5,946,000 $ 31,048,000
Stock-based compensation expense — — 55,000 — 55,000 — 55,000
Cash distributions to non-controlling interests — — — — — (19,000) (19,000)
Net income — — — 270,000 270,000 125,000 395,000
Balances at March 31, 2019 5,714,000 $ 10,711,000 $ 6,550,000 $ 8,166,000 $ 25,427,000 $ 6,052,000 $ 31,479,000
5,817,000 $ 10,753,000 $ 6,725,000 $ 8,555,000 $ 26,033,000 $ 5,778,000 $ 31,811,000
Stock-based compensation expense — — 56,000 — 56,000 — 56,000
Restricted common shares returned to plan (129,000) — — — — — —
Cash distributions to non-controlling interests — — — — — (326,000) (326,000)
Net (loss) income — — — (135,000) (135,000) 67,000 (68,000)
Balances at March 31, 2020 5,688,000 $ 10,753,000 $ 6,781,000 $ 8,420,000 $ 25,954,000 $ 5,519,000 $ 31,473,000



	FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
	Common Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Sub-Total ASHS		Non-controlling Interests in Subsidiaries		Total

Balances at January 1, 2020	5,817,000	$	10,753,000	$	6,725,000	$	8,555,000	$	26,033,000	$	5,778,000	$	31,811,000

Stock-based compensation expense	—	—		56,000		—		56,000		—		56,000

Restricted common shares returned to the plan	(129,000)	—		—		—		—		—		—

Cash distributions to non-controlling interests	—	—		—		—		—		(326,000)		(326,000)

Net (loss) income	—	—		—		(135,000)		(135,000)		67,000		(68,000)

Balances at March 31, 2020	5,688,000	$	10,753,000	$	6,781,000	$	8,420,000	$	25,954,000	$	5,519,000	$	31,473,000
























Balances at January 1, 2021	5,791,000	$	10,753,000	$	7,024,000	$	1,497,000	$	19,274,000	$	4,376,000	$	23,650,000

Stock-based compensation expense	10,000	—		107,000		—		107,000		—		107,000





Net income	—	—		—		29,000		29,000		58,000		87,000

Balances at March 31, 2021	5,801,000	$	10,753,000	$	7,131,000	$	1,526,000	$	19,410,000	$	4,434,000	$	23,844,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months ended March 31,
2020 2019
Operating activities:
Net (loss) income $ (68,000) $ 395,000
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 1,676,000 1,910,000
Non cash lease expense 67,000 —
Deferred income taxes (28,000) 124,000
Stock-based compensation expense 56,000 55,000
Accrued interest on lease financing — 2,000
Interest expense associated with lease liabilities 17,000 —
Changes in operating assets and liabilities:
Receivables 848,000 (477,000)
Prepaid expenses and other assets 557,000 254,000
Accounts payable, accrued liabilities and deferred revenue 383,000 37,000
Income taxes payable (35,000) —
Lease liability (84,000) —
Net insurance proceeds receivable — 160,000
Net cash provided by operating activities 3,389,000 2,460,000
Investing activities:
Payment for purchase of property and equipment (195,000) (272,000)
Net cash used in investing activities (195,000) (272,000)
Financing activities:
Principal payments on long-term debt (554,000) (516,000)
Principal payments on finance leases (912,000) (1,046,000)
Principal payments on short-term financing (158,000) —
Distributions to non-controlling interests (326,000) (19,000)
Net cash used in financing activities (1,950,000) (1,581,000)
Net change in cash, cash equivalents, and restricted cash 1,244,000 607,000
Cash, cash equivalents, and restricted cash at beginning of period 1,779,000 1,792,000
Cash, cash equivalents, and restricted cash at end of period $ 3,023,000 $ 2,399,000


							Three Months ended March 31,
							2021		2020
Operating activities:						Operating activities:
Net income (loss)						Net income (loss)	$	87,000	$	(68,000)

Adjustments to reconcile net income (loss) to net cash from operating activities						Adjustments to reconcile net income (loss) to net cash from operating activities

Depreciation and amortization						Depreciation and amortization	1,231,000		1,676,000

Non cash lease expense						Non cash lease expense	74,000		67,000

Deferred income taxes						Deferred income taxes	(16,000)		(28,000)

Stock-based compensation expense						Stock-based compensation expense	107,000		56,000

Interest expense associated with lease liabilities						Interest expense associated with lease liabilities	12,000		17,000

Changes in operating assets and liabilities:						Changes in operating assets and liabilities:

Receivables						Receivables	(497,000)		848,000

Prepaid expenses and other assets						Prepaid expenses and other assets	551,000		557,000

Accounts payable, accrued liabilities and deferred revenue						Accounts payable, accrued liabilities and deferred revenue	1,294,000		383,000

Income taxes payable (receivable)						Income taxes payable (receivable)	26,000		(35,000)

Lease liabilities						Lease liabilities	(86,000)		(84,000)

Net cash provided by operating activities						Net cash provided by operating activities	2,783,000		3,389,000

Investing activities:						Investing activities:
Payment for purchase of property and equipment						Payment for purchase of property and equipment	(1,065,000)		(195,000)

Net cash used in investing activities						Net cash used in investing activities	(1,065,000)		(195,000)

Financing activities:						Financing activities:
Principal payments on long-term debt						Principal payments on long-term debt	(276,000)		(554,000)

Principal payments on finance leases						Principal payments on finance leases	(638,000)		(912,000)

Principal payments on short-term financing						Principal payments on short-term financing	(116,000)		(158,000)

Distributions to non-controlling interests						Distributions to non-controlling interests	0		(326,000)

Net cash used in financing activities						Net cash used in financing activities	(1,030,000)		(1,950,000)

Net change in cash, cash equivalents, and restricted cash						Net change in cash, cash equivalents, and restricted cash	688,000		1,244,000

Cash, cash equivalents, and restricted cash at beginning of period						Cash, cash equivalents, and restricted cash at beginning of period	4,325,000		1,779,000

Cash, cash equivalents, and restricted cash at end of period						Cash, cash equivalents, and restricted cash at end of period	$	5,013,000	$	3,023,000

Supplemental cash flow disclosure:	Supplemental cash flow disclosure:					Supplemental cash flow disclosure:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:

Interest	Interest	$	282,000	$	367,000	Interest	$	260,000	$	282,000

Income taxes paid		$	34,000	$	67,000
Income taxes (refunded) paid						Income taxes (refunded) paid	$	(4,000)	$	34,000

Schedule of non-cash investing and financing activities	Schedule of non-cash investing and financing activities					Schedule of non-cash investing and financing activities
Lease reassessment right of use assets and lease liabilities	Lease reassessment right of use assets and lease liabilities	$	67,000	$	—	Lease reassessment right of use assets and lease liabilities	$	0	$	67,000

Right of use assets and lease liabilities		$	—	$	1,300,000

Interest capitalized to property and equipment	Interest capitalized to property and equipment	$	32,000	$	27,000	Interest capitalized to property and equipment	$	0	$	32,000

Acquisition of equipment with long-term debt financing	Acquisition of equipment with long-term debt financing	$	1,184,000	$	—	Acquisition of equipment with long-term debt financing	$	0	$	1,184,000

See accompanying notes

AMERICAN SHARED HOSPITAL SERVICES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for the fair presentation of American Shared Hospital Services’ consolidated financial position as of March 31, ~~2020,~~2021, the results of its operations for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, and the cash flows for the three-month periods ended March 31, ~~2020~~2021 and ~~2019.~~2020. The results of operations for the three-months ended March 31, ~~2020~~2021 are not necessarily indicative of results on an annualized basis. Consolidated balance sheet amounts as of December 31, ~~2019~~2020 have been derived from audited consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2019~~2020 included in American Shared Hospital Services’ Annual Report on Form 10-K filed with the Securities and Exchange Commission.

These condensed consolidated financial statements include the accounts of American Shared Hospital Services and its subsidiaries (the “Company”) as follows: the Company wholly-owns the subsidiaries American Shared Radiosurgery Services (“ASRS”), PBRT Orlando, LLC (“Orlando”), OR21, Inc., and MedLeader.com, Inc. (“MedLeader”); the Company is the majority owner of Long Beach Equipment, LLC (“LBE”); ASRS is the majority-owner of GK Financing, LLC (“GKF”) which wholly-owns the subsidiary Instituto de Gamma Knife del Pacifico S.A.C. (“GKPeru”); and HoldCo GKC S.A. (“HoldCo”). GKF is the majority owner of the subsidiaries Albuquerque GK Equipment, LLC (“AGKE”) and Jacksonville GK Equipment, LLC (“JGKE”). GKF acquired Gamma Knife Center Ecuador S.A. (“GKCE”) through HoldCo in June 2020.

The Company (through ASRS) and Elekta AB, the manufacturer of the Gamma Knife (through its wholly-owned United States subsidiary, GKV Investments, Inc.), entered into an operating agreement and formed GKF. As of March 31, ~~2020,~~2021, GKF provides Gamma Knife units to ~~fifteen~~13 medical centers in the United States in the states of Arkansas, California, Florida, Illinois, Indiana, ~~Massachusetts,~~ Mississippi, Nebraska, New Mexico, New York, Ohio, Oregon, ~~Tennessee,~~ and Texas. GKF also owns and operates a single-unit Gamma Knife ~~facility~~facilities in Lima, ~~Peru.~~

Peru and Guayaquil, Ecuador. The Company through its wholly-owned subsidiary, Orlando, provided proton beam radiation therapy (“PBRT”) and related equipment to a customer in the United States. The Company also directly provides radiation therapy and related equipment, including Intensity Modulated Radiation Therapy, Image Guided Radiation Therapy (“IGRT”) and a CT Simulator to the radiation therapy department at an existing Gamma Knife site in Massachusetts.

The Company formed the subsidiaries GKPeru and acquired GKCE for the purposes of expanding its business internationally; Orlando and LBE to provide ~~proton beam therapy~~PBRT equipment and services in Orlando, Florida and Long Beach, California, respectively; and AGKE and JGKE to provide Gamma Knife equipment and services in Albuquerque, New Mexico and Jacksonville, Florida, respectively. AGKE began operations in the second quarter of 2011 and JGKE began operations in the fourth quarter of 2011. Orlando treated its first patient in April 2016. GKPeru treated its first patient in July 2017. LBE is not expected to generate revenue within the next two years.

On June 12, 2020, GKF purchased approximately 98% of the total outstanding shares of GKCE, from GKCE’s majority shareholders (the “Acquisition”). As of March 31, 2021, the Company had acquired approximately 99.3% of the total outstanding shares of GKCE. The base purchase price for the Acquisition, including acquisition of the minority shares was approximately $2,000,000. This purchase price was paid with $575,000 in cash and a $1,425,000 loan from the United States International Development Finance Corporation (“DFC”). The purchase price is subject to certain post-closing adjustments, including adjustment for GKCE's working capital and excess cash. The DFC loan is denominated in U.S. dollars, which is also the currency of Ecuador. See “Note 9. GKCE Acquisition” for further discussion.

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

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 significant intercompany accounts and transactions have been eliminated in consolidation.

The COVID-19 pandemic, the resulting recession in the United States and its follow-on effects have impacted and will likely continue to impact business activity across industries, including the Company’s. During 2020, due to factors related to the COVID-19 pandemic such as delays in service at medical facilities and restrictions imposed by government agencies, and the Company’s customers in response to the spread of COVID-19, the Company experienced some delays in delivering certain Gamma Knife procedures and PBRT treatments. Similarly, the Company’s ability to conduct commercial efforts with its customers have been and are likely to continue to be disrupted as customers have turned their focus to dealing with the impact of the COVID-19 pandemic on their operations and have restricted access to their sites in efforts to contain the spread of the virus. The global nature of the pandemic has resulted in authorities implementing numerous measures designed to contain the virus, including travel bans and restrictions, border closures, quarantines, shelter-in-place orders, business limitations and shutdowns. The impact of the COVID-19 pandemic on the global economy and capital markets is significant, and on June 8, 2020 the National Bureau of Economic Research announced that the United States was in an economic recession. An extended economic recession in the United States or elsewhere could have a material adverse effect on the Company’s ability to conduct its business and to access financing, as well as on the Company’s results of operation, financial condition, liquidity and cash flows. The prioritization of COVID-19 treatment and containment has resulted in delays in decisions by the Company’s customers and their patients, obstacles to the Company’s ability to market and deliver its services, declines in treatment volumes and adverse impacts to revenues for both Gamma Knife procedures and PBRT treatments. As a result of the pandemic and related governmental actions, Gamma Knife procedures and PBRT treatments, which currently make up all of the Company’s revenue, may be impacted differently at each of the Company’s various locations and may take longer to recover than other areas of the economy, which may have a material impact on the Company's business. The Company’s Gamma Knife operations in Latin America have experienced a decline in procedures due to the COVID-19 pandemic. Our Gamma Knife and PBRT operations in the United States have also experienced negative impacts from the COVID-19 pandemic. As the COVID-19 pandemic continues to develop, additional impacts may arise that we are not aware of currently.

Based on the guidance provided in accordance with ASC 280 Segment Reporting (“ASC 280”), the Company analyzed its subsidiaries which are all in the business of leasing radiosurgery and radiation therapy equipment to healthcare providers, and concluded there are 2 reportable segments, domestic and foreign. The Company provides Gamma Knife and PBRT equipment to fourteen hospitals in the United States and owns and operates two single-unit facilities in Lima, Peru and Guayaquil, Ecuador as of March 31, 2021. The Company determined 2 reportable segments existed due to similarities in economics of business operations and geographic location. The operating results of the 2 reportable segments are reviewed by the Company’s CEO and President, Chief Operating and Financial Officer, who are also deemed the Company’s Chief Operating Decision Makers (“CODMs”). As of March 31, 2020, the Company had one reportable segment. Following the Company's acquisition of GKCE in June 2020, the Company concluded it had 2 reportable segments.

The revenues and profit or loss, allocations for the Company's two reportable segments as of March 31, 2021 consists of the following:


	March 31,
	2021
Revenues
Domestic	$	3,699,000
Foreign	665,000
Total	$	4,364,000

Profit or (loss)
Domestic	$	73,000
Foreign	(44,000)
Total	$	29,000

Accounting Pronouncements Issued and Adopted

In ~~February 2018, the FASB issued ASU No. 2018-03~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“ASU 2018-03”), which clarifies certain aspects of ASU 2016-1. These are: equity securities without a readily determinable fair value – discontinuation, equity securities without a readily determinable fair value – adjustments, forward contracts and purchased options, presentation requirements for certain fair value option liabilities, fair value option liabilities denominated in a foreign currency, and transition guidance for equity securities without a readily determinable fair value. In August 2018, the FASB issued ASU No. 2018-13 ~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements to Fair Value Measurement~~ (“ASU 2018-13”), which amended the effective date and other certain measurement aspects of ASU 2018-03. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The Company adopted ASU 2018-03 and ASU 2018-13 on January 1, 2020. There was no significant impact on its condensed consolidated financial statements and related disclosures.

~~Accounting Pronouncements Issued and Not Yet Adopted~~

In December 2019, the FASB issued ASU 2019-12 Income ~~taxes~~Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) which removes specific exceptions to the general principles in Topic 740 and eliminates the need for an organization to analyze whether the following apply in a given period: exception to the incremental approach for intraperiod tax allocation; exceptions to accounting for basis differences when there are ownership changes in foreign investments; exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2020. The Company ~~is currently evaluating~~adopted ASU 2019-12 ~~to determine the~~on January 1, 2021. There was no significant impact ~~it may have~~ on its condensed consolidated financial ~~statements.~~statements and related disclosures.

Note 2. Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation for Gamma Knife ~~IGRT,~~units and other equipment is determined using the straight-line method over the estimated useful lives of the assets, which for medical and office equipment is generally 3 – 10 years, and after accounting for salvage value on the equipment where indicated. Salvage value is based on the estimated fair value of the equipment at the end of its useful life.

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

The following table summarizes property and equipment as of March 31, ~~2020~~2021 and December 31, ~~2019:~~

March 31, December 31,
2020 2019
Medical equipment and facilities $ 93,429,000 $ 92,132,000
Office equipment 597,000 594,000
Deposits and construction in progress 2,006,000 1,965,000
Deposits towards purchase of proton beam systems 2,250,000 2,250,000
98,282,000 96,941,000
Accumulated depreciation (57,112,000) (55,461,000)
Net property and equipment $ 41,170,000 $ 41,480,000
2020:


	March 31,		December 31,
	2021		2020

Medical equipment and facilities	$	70,718,000	$	75,657,000
Office equipment	394,000		330,000
Construction in progress	1,178,000		170,000


	72,290,000		76,157,000
Accumulated depreciation	(41,944,000)		(45,739,000)

Net property and equipment	$	30,346,000	$	30,418,000

As of March 31, ~~2020,~~2021, approximately ~~$2,820,000~~$3,064,000 of the net property and equipment balance is outside of the United States. As of March 31, 2020, the Company has two idle Gamma Knife units with a cumulative net book value of $943,000. There are currently no commitments to place into service or trade in these units during 2020.

Note 3. Long-Term Debt Financing

Long-term debt ~~consists~~consisted of 85 notes with three financing companies collateralized by the Gamma Knife ~~equipment,~~units, the individual customer contracts, and related accounts receivable at March 31, ~~2020.~~2021. The Company’s loan with DFC for the Acquisition was obtained through the Company’s wholly-owned subsidiary, HoldCo and is guaranteed by GKF. As of March 31, ~~2020,~~2021, long-term debt on the Condensed Consolidated Balance Sheets, before the refinancing, was ~~$4,374,000.~~$4,321,000.

On April 9, 2021, the Company refinanced its existing debt and finance lease obligations, with the exception of its loan with DFC. A total of $8,281,000 of the Company’s finance leases were refinanced by long-term debt. Total long-term debt following this transaction was $12,602,000. The classification on the Condensed Consolidated Balance Sheets as of March 31, 2021 reflect the terms of the refinancing. See ~~disclosure of future payments below~~further details on the refinancing under ~~the heading “Commitments”.~~Note 10 - Subsequent Event.

Note 4. Finance Leases

Finance lease obligations, ~~consist~~before the refinancing, of 9$8,281,000 consisted of 6 leases with ~~three~~2 financing companies, collateralized by Gamma Knife units and PBRT equipment, the individual customer contracts, and related accounts receivable at March 31, ~~2020. As of March 31, 2020,~~2021.

On April 9, 2021, the Company's finance lease obligations ~~under finance leases~~were refinanced by long-term debt. The classification on the Condensed Consolidated Balance Sheets ~~were $10,710,000.~~as of March 31, 2021 reflect the terms of the refinancing. See ~~disclosure of future payments below~~further details on the refinancing under ~~the heading “Commitments”.~~

Note 10 - Subsequent Event.

Note 5. Leases

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

The Company’s lessee operating leases are accounted for as right-of-use (“ROU”) assets, other current liabilities, and lease liabilities on the condensed consolidated balance sheets. Operating lease ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s operating lease contracts do not provide an implicit rate for calculating the present value of future lease ~~payments, so the~~payments. The Company determined its incremental borrowing rate, to be in the range of approximately 4.0% and 6.0%, by using available market rates and expected lease terms. The operating lease ROU assets and liabilities also include any lease payments made and excludes lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company’s lessee operating lease agreements are for administrative office space and related equipment, and the agreement to lease clinic space for its stand-alone facility in Lima, Peru. These leases have remaining lease terms between 32 and 43 years, some of which include options to renew or extend the lease. As of March 31, ~~2020,~~2021, operating ROU assets and liabilities were ~~$972,000.~~$812,000.

During the three-month period ended March 31, 2020, the Company elected to not renew its lease for a satellite office in Fairfield, California. The Company previously included the renewal term in its assessment of the lease term for the ROU asset and liability. The Company accounted for this change as a lease reassessment under ASC 842. At the reassessment date, the remaining lease balance was not material to the Company's condensed consolidated balance sheets and the Company wrote off the related ROU assets and liabilities of $67,000.

The following table summarizes maturities of lessee operating lease liabilities as of March 31, ~~2020:~~

Year ending December 31, Operating Leases
2020 (excluding the three-months ended March 31, 2020) $ 229,000
2021 313,000
2022 321,000
2023 214,000
2024 5,000
Total lease payments 1,082,000
Less imputed interest (110,000)
Total $ 972,000
2021:


Year ending December 31,	Operating Leases

2021 (excluding the three-months ended March 31, 2021)	$	261,000
2022	353,000
2023	248,000
2024	8,000



Total lease payments	870,000
Less imputed interest	(58,000)
Total	$	812,000

Note 6. Per Share Amounts

Per share information has been computed based on the weighted average number of common shares and dilutive common share equivalents outstanding. The computation for the three-month periods ended March 31, ~~2020~~2021 and ~~2019~~2020 excluded approximately ~~430,000~~370,000 and ~~547,000,~~430,000, respectively, of the ~~Company’s~~Company's stock options because the exercise price of the options was higher than the average market price during those periods.

~~As of~~On March 31, 2020, the Company’s Award Agreements (as defined below) expired and the unvested performance share awards were returned to the Company’s stock incentive plan - see Note 7 for further discussion. Based on the guidance provided in accordance with ASC 260 Earnings Per Share (“(“ASC 260”), the weighted average common shares for basic earnings per share, for the three-month period ended March 31, ~~2019,~~2020, excluded the weighted average impact of the unvested performance share awards. These awards were legally outstanding but not deemed participating securities and therefore were excluded from the calculation of basic earnings per share. The unvested shares were also excluded from the denominator for diluted earnings per share because they were considered contingent shares not deemed probable as of March 31, ~~2019.~~2020.

The following table sets forth the computation of basic and diluted earnings per share for the three-month periods ended March 31, ~~2020~~2021 and ~~2019:~~

Three Months ended March 31,
2020 2019
Net (loss) income attributable to American Shared Hospital Services $ (135,000) $ 270,000
Weighted average common shares for basic earnings per share 6,126,000 5,853,000
Diluted effect of stock options and restricted stock 27,000 33,000
Weighted average common shares for diluted earnings per share 6,153,000 5,886,000
Basic (loss) earnings per share $ (0.02) $ 0.05
Diluted (loss) earnings per share $ (0.02) $ 0.05
2020:


	Three Months ended March 31,
	2021		2020
Net income (loss) attributable to American Shared Hospital Services	$	29,000	$	(135,000)

Weighted average common shares for basic earnings per share	6,254,000		6,126,000
Diluted effect of stock options and restricted stock awards	68,000		27,000
Weighted average common shares for diluted earnings per share	6,322,000		6,153,000

Basic earnings (loss) per share	$	0.00	$	(0.02)
Diluted earnings (loss) per share	$	0.00	$	(0.02)

Note 7. Stock-based Compensation

In June 2010, the Company’s shareholders approved an amendment and restatement of the Company’s stock incentive plan, renaming it the Incentive Compensation Plan (the “Plan”), and among other things, increasing the number of shares of the Company’s common stock reserved for issuance under the Plan to 1,630,000. 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. ~~The Plan is a successor to the Company’s previous plans, and any shares awarded and outstanding under those plans were transferred to the Plan.~~ No further grants or share issuances will be made under the previous plans. On June 21, 2019, the Company’s shareholders approved an amendment and restatement of the Plan in order to extend the term of the Plan by two years to February 22, 2022.

Stock-based compensation expense associated with the Company’s stock options to employees is calculated using the Black-Scholes valuation model. The Company’s stock awards have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimates. The estimated fair value of the Company’s option grants is estimated using assumptions for expected life, volatility, dividend yield, and risk-free interest rate which are specific to each award. The estimated fair value of the Company’s options is ~~amortized~~expensed over the period during which an employee is required to provide service in exchange for the award (requisite service period), usually the vesting period. Accordingly, stock-based compensation cost before income tax effect for the Company’s options and restricted stock awards in the amount of ~~$56,000~~$107,000 and ~~$55,000~~$56,000 is reflected in net income (loss) for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. At March 31, ~~2020,~~2021, there was approximately ~~$18,000~~$10,000 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the ~~Plan, excluding unrecognized compensation cost associated with the performance share awards, discussed below.~~Plan. This cost is expected to be recognized over a period of approximately ~~two~~three years.

On January 4, 2017, the Company entered into a Performance Share Award Agreement with three executive officers of the Company (the “Award Agreements”) for 161,766 restricted stock awards which vest upon the achievement of certain performance metrics. The Award Agreements expired on March 31, 2020. Based on the guidance in ASC 718 Stock Compensation (“ASC 718”), the Company concluded these were performance-based awards with vesting criteria tied to performance metrics. As of December 31, ~~2018,~~2019, the Company achieved one of those certain performance metrics under the Award Agreements and recognized stock compensation expense of approximately $108,000 related to these awards. The unrecognized stock-based compensation expense for these awards was approximately $434,000 and the unvested awards of approximately 129,000 shares were returned to the Plan as of March 31, 2020.

The following table summarizes stock option activity for the three-month periods ended March 31, ~~2020~~2021 and ~~2019:~~

Stock
Options Grant Date
Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Life (in
Years) Intrinsic
Value
Outstanding at January 1, 2020 450,000 $ 2.78 2.44 $ 27,000
Outstanding at March 31, 2020 450,000 $ 2.78 2.20 $ —
Exercisable at March 31, 2020 425,000 $ 2.79 2.00 $ —
Outstanding at January 1, 2019 613,000 $ 2.85 3.14 $ —
Outstanding at March 31, 2019 613,000 $ 2.85 2.43 $ 34,000
Exercisable at March 31, 2019 489,000 $ 2.87 2.31 $ —
2020:


	Stock Options	Grant Date Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in Years)	Intrinsic Value
Outstanding at January 1, 2020	450,000	$	2.78	2.44	$	27,000



Outstanding at March 31, 2020	450,000	$	2.78	2.20	$	0
Exercisable at March 31, 2020	425,000	$	2.79	2.00	$	0

Outstanding at January 1, 2021	417,000	$	2.79	1.61	$	2,000



Outstanding at March 31, 2021	417,000	$	2.79	1.36	$	19,000
Exercisable at March 31, 2021	407,000	$	2.80	1.27	$	0

Note 8. Income Taxes

The Company generally calculates its effective income tax rate at the end of an interim period using an estimate of the annualized effective income tax rate expected to be applicable for the full fiscal year. However, when a reliable estimate of the annualized effective income tax rate cannot be made, the Company computes its provision for income taxes using the actual effective income tax rate for the results of operations reported within the year-to-date periods. The Company’s effective income tax rate is highly influenced by relative income or losses reported and the amount of the nondeductible stock-based compensation associated with grants of its common stock options and from the results of foreign operations. A small change in estimated annual pretax income (loss) can produce a significant variance in the annualized effective income tax rate given the expected amount of these items. As a result, the Company has computed its provision for income taxes for the three-month ~~period~~periods ended March 31, 2021 and 2020 by applying the actual effective tax rates to income or (loss) reported within the condensed consolidated financial statements through those periods.

Note 9. GKCE Acquisition

On June 18, 2019, the Company entered into a Stock Purchase Agreement (the “Agreement”) to acquire Gamma Knife Center Ecuador S.A. (“GKCE”) from GKCE’s selling majority shareholders. GKCE is a well-established Gamma Knife operation founded in 2009 as a private clinic to introduce advanced stereotactic radiosurgery into Ecuador and continues to operate the only Gamma Knife unit in the country. The Company acquired GKCE for the continued expansion of its business internationally.

The Acquisition has been accounted for according to ASC 805 Business Combinations (“ASC 805”) using the acquisition method of accounting. Under the acquisition method of accounting, all assets acquired, including goodwill and other intangible assets, should be stated at fair value at the time of acquisition. The allocation of purchase price consideration is preliminary, pending the completion of the fair value of certain tangible, intangible assets, and residual goodwill. During the measurement period, which can be no more than one year from June 12, 2020 (the “Closing Date”), the Company expects to continue to obtain information to assist in determining the final fair value of assets acquired. The assets acquired were recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. Thus, the provisional measurements of fair value discussed below are subject to change.

As of March ~~27, 2020, President Trump signed~~31, 2021, accounting for the Closing Date accounts receivable balances, allowance on the uncollected accounts receivable balances, and related liabilities, was not complete. The accounting for these amounts will be complete following the twelve-month period after the Closing Date, per the terms of the Agreement. The Company expects to finalize the valuation as soon as practicable, but no later than one year from the Closing Date. 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 goodwill.

After the Closing Date, the Company received additional information regarding the amounts recorded as accounts receivable as of June 12, 2020. After reviewing the information obtained, the Company booked an additional $27,000 of accounts receivable as of December 31, 2020. As a result, related liabilities were increased by $13,000 and the contingent consideration increased by $14,000. There was no impact to goodwill or net loss as of December 31, 2020.

Note 10. Subsequent Event

On April 9, 2021 the Company entered into ~~law the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"~~a five year $22.0 million credit agreement with Fifth Third Bank, N.A. (the “Credit Agreement”). The ~~CARES Act, among other things,~~Credit Agreement includes ~~provisions relating~~3 loan facilities. The first facility is a $9.5 million term loan of which $6.8 million was used to ~~refundable payroll tax credits, deferment~~refinance the domestic Gamma Knife debt and finance leases, and associated closing costs, $1.6 million was used to finance two Gamma Knife reloads in the first quarter of ~~employer side social security payments, net operating loss carryback periods, alternative minimum tax~~2021, with the remaining $1.1 million available for future projects. The second loan facility of $5.5 million was used to refinance the Company's PBRT finance leases, as well as to provide additional working capital. The third loan facility provides for a $7.0 million revolving line of credit ~~refunds, modifications to the net~~available for future projects and general corporate purposes. The facilities carry a floating interest ~~deduction limitations~~of LIBOR plus 3.0% and ~~technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740, the effects of new legislation~~ are ~~recognized upon enactment. Accordingly, the effects~~collateralized by a blanket lien on substantially all of the ~~CARES Act are effective for~~Company's assets.

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 ~~three-month period ending~~end of each fiscal quarter), reporting obligations, limitations on dispositions, changes in ownership, mergers and acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and capital expenditures

As of March 31, ~~2020. The CARES Act did not have a material impact on~~2021, the ~~financial statements.~~Company's short-term debt and finance lease obligations were $6,669,000. Following the completion of the Credit Agreement, these short-term obligations were refinanced and reduced to $782,000.

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

This quarterly report to the Securities and Exchange Commission may be deemed to contain certain forward-looking statements with respect to the financial condition, results of operations and future plans of American Shared Hospital Services (including statements regarding the expected continued treatment growth of the Company's MEVION S250 system, the expansion of the Company’s ~~proton therapy~~PBRT business, ~~and~~ the timing and expansion of treatments by new Gamma Knife systems, the Company's expansion into new markets and the Company's acquisitions and potential market segments for its services, which involve risks and uncertainties including, but not limited to, the risks of economic and market conditions, the risks of variability of financial results between quarters, the risks of the Gamma Knife and radiation therapy businesses, the risks of developing The Operating Room for the 21st Century program, the risks of changes to CMS reimbursement rates or reimbursement methodology, the risks of the timing, financing, and operations of the Company’s ~~proton therapy~~PBRT business, the risks of the COVID-19 ~~outbreak~~pandemic and its effect on the Company’s business operations and financial condition, the risk of expanding within or into new markets, and the risk that the ~~Company will be unable to identify~~integration or continued operation of acquired businesses could adversely affect financial results and ~~attract a permanent successor to~~ the ~~Company’s former President~~risk that current and ~~Chief Executive Officer.~~future acquisitions may negatively affect the Company's financial position. Further information on potential factors that could affect the financial condition, results of operations and future plans of American Shared Hospital Services is included in the filings of the Company with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and the definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June ~~26, 2020.~~25, 2021.

The Company recognizes revenues under ASC 842 and ASC 606 Revenue from Contracts with Customers (“ASC 606”). The Company had ~~sixteen (16)~~thirteen Gamma Knife units and one PBRT system, and fifteen Gamma Knife units, one ~~(1)~~ PBRT system and one ~~(1)~~ IGRT machine in operation in the United States as of March 31, 2021 and 2020, ~~and 2019.~~respectively. Three ~~(3)~~ of the Company’s customer contracts are through subsidiaries where GKF or its subsidiary is the majority owner and managing partner. ~~Seven (7)~~Six of the Company’s ~~sixteen (16)~~fifteen current Gamma Knife customers are under fee-per-use contracts, and ~~eight (8)~~seven customers are under retail arrangements. The Company, through GKF, also owns and operates atwo single-unit, international Gamma Knife ~~facility~~facilities in Lima, ~~Peru. This unit~~Peru and Guayaquil, Ecuador. These two units economically ~~functions~~function similarly to the Company’s turn-key retail arrangements. The ~~Company’s contracts to provide radiation therapy and related equipment services to an existing Gamma Knife customer and the~~ Company’s PBRT system at Orlando Health – UF Health Cancer Center (“Orlando Health”)~~, are~~ is also considered a retail ~~arrangements.~~arrangement. The Company’s contract for IGRT equipment and related equipment services expired in April 2020 and the Company agreed to sell the equipment to its existing customer for $150,000, which is equal to the equipment's salvage value.

Rental income from medical services – The Company recognizes revenues under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee per use or revenue sharing basis. The terms of the contracts do not contain any guaranteed minimum payments. The Company’s contracts are typically for a ten-year term and are classified as either fee per use or retail. Retail arrangements are further classified as either turn-key or revenue sharing. Revenues from fee per use contracts is determined by each hospital’s contracted rate. Revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed. 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. Under turn-key arrangements, the Company receives payment from the hospital ~~in the amount~~at an agreed upon percentage share of the hospital’s reimbursement from third party payors, and the Company is responsible for paying all the operating costs of the equipment. Operating costs are determined primarily based on historical treatment protocols and cost schedules with the hospital. The Company records an estimate of operating costs which are reviewed on a regular basis and adjusted as necessary to more accurately reflect the actual operating costs. For turn-key sites, the Company also shares a percentage of net operating profit. The Company records an estimate of net operating profit based on estimated revenues, less estimated operating costs. The operating costs and estimated net operating profit are recorded as other direct operating costs in the condensed consolidated statement of operations. For the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenues of approximately ~~$4,339,000~~$3,699,000 and ~~$5,107,000,~~$4,339,000, respectively, under ASC 842.

Patient income – The Company has a stand-alone ~~facility~~facilities in Lima, Peru and Guayaquil, Ecuador, where a contract exists between ~~GKPeru~~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. ~~Payment~~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 approximately 30 to 60 days upon invoice. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts. Accounts receivable earned by GKPeru were not significant for the three-month periods ended March 31, ~~2020~~2021 and ~~2019.~~2020. GKCE’s accounts receivable were $478,000 for the three-month period ended March 31, 2021. For the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenues of approximately ~~$229,000~~$665,000 and ~~$214,000,~~$229,000, respectively, under ASC 606.

~~Effective January 1, 2015, the~~The Centers for Medicare and Medicaid (“CMS”) have established a ~~Comprehensive Ambulatory Payment Classification for single session radiosurgery treatments. CMS has established a 2020~~2021 total reimbursement rate of approximately $9,600 ($~~9,300~~9,600 in ~~2019)~~2020) for a Medicare Gamma Knife treatment. The approximate CMS reimbursement rates for delivery of ~~proton therapy~~PBRT for a simple treatment without compensation for ~~2020~~2021 is ~~$539~~$543 ($~~520~~539 in ~~2019)~~2020) and ~~$1,246~~$1,298 ($~~1,079~~1,246 in ~~2019)~~2020) for simple with compensation, intermediate and complex treatments, respectively.

On ~~July 10, 2019,~~September 18, 2020, CMS issued ~~a proposed~~the final rule that would implement a new mandatory payment model for radiation oncology services: the ~~Radiation Oncology Alternative Payment Model (“~~RO ~~APM”). The proposed RO APM would treat prospective episode payments to hospital outpatient departments and freestanding radiation therapy centers for radiation therapy as episodes of care.~~APM. The RO APM ~~would~~is scheduled to commence January 1, 2022 and will be in effect for a five (5) year period. The RO APM significantly ~~alter CMS’~~alters CMS' payment methodology from a fee for service paradigm to a set reimbursement by cancer type methodology for radiation ~~oncology services.~~services provided within a 90 day episode of care. Under the RO APM, ~~payment would be determined by the patient’s cancer type, as opposed to a traditional volume-based fee-for-service model,~~hospital based and ~~would include select radiation therapy services provided within a 90-day episode. If the RO APM is finalized as proposed,~~free-standing radiation therapy providers ~~and suppliers may be~~are mandatorily required to participate in the model based on whether the radiation therapy provider is ~~provided~~located within ~~selected geographic areas. CMS projects that approximately 40% of the radiation oncology providers within~~a randomly selected Core Based Statistical ~~Areas (CBSAs) will be~~Area (“CBSA”). CMS projects that providers treating approximately 30% of radiation oncology patients have been selected to participate in the RO APM. The remaining providers not included in the ~~model and approximately 60%~~RO APM will continue to receive reimbursement based on a fee-for-service methodology. The ~~Company, along with other interested parties, submitted comments~~RO APM includes but is not limited to ~~CMS~~PBRT and Gamma Knife services. Four (4) of the Company's Gamma Knife centers are scheduled to be included in the RO APM. It is not anticipated that inclusion in the RO APM will have a significant impact on the ~~proposed rule as part of the notice-and-comment rulemaking process.~~Company's Gamma Knife revenues. The comment period concluded on September 16, 2019. It is uncertain whether CMS will finalize the rule as proposed. As a result, the Company cannot estimate the potential impact of adoption of the proposed rule. However, reductionsCompany's PBRT center was not selected for inclusion in the ~~reimbursement rates or changes in reimbursement methodology or administration for radiosurgery and radiation therapy could adversely affect the Company’s revenues and financial results.~~RO APM. For centers not included in the RO APM proposed model, Medicare reimbursement in ~~2020~~2021 for the most commonly used ~~proton therapy~~PBRT delivery codes ~~has recently been established by CMS and is expected to increase~~increases by approximately ~~15.5%~~4.1% and decreases by approximately ~~3.6%~~1.7% for Gamma Knife.

The COVID-19 pandemic, the ~~likely~~ resulting recession in the United States and its follow-on effects have impacted and will likely continue to impact business activity across industries, including the Company’s. ~~Due~~During 2020, due to factors related to the COVID-19 pandemic such as delays in service at medical facilities and restrictions imposed by government agencies, and the Company’s customers in response to the spread of COVID-19, the Company ~~has~~ experienced some delays in delivering certain Gamma Knife procedures and PBRT treatments. Similarly, the Company’s ability to conduct commercial efforts with its customers have been and are likely to continue to be disrupted as customers have turned their focus to dealing with the impact of the COVID-19 pandemic on their ~~operations.~~operations and have restricted access to their sites in efforts to contain the spread of the virus. The global nature of the pandemic has resulted in authorities implementing numerous measures designed to contain the virus, including travel bans and restrictions, border closures, quarantines, shelter-in-place orders, business limitations and shutdowns. The impact of the COVID-19 pandemic on the global economy and capital markets is significant, and on June 8, 2020 the National Bureau of Economic Research announced that the United States was in an economic recession. An extended economic recession in the United States or elsewhere could have a material adverse effect on the Company’s ability to conduct its business and to access financing, ~~could be materially impacted.~~as well as on the Company’s results of operation, financial condition, liquidity and cash flows. The prioritization of COVID-19 treatment and containment has resulted in delays in decisions by the Company’s customers and their patients, obstacles to the Company’s ability to market and deliver its services, declines in treatment volumes and adverse impacts to revenues for both Gamma Knife procedures and PBRT treatments. As a result of the pandemic and related governmental actions, Gamma Knife procedures and PBRT treatments, which currently make up all of the ~~majority~~Company’s revenue, may be impacted differently at each of ~~our revenue,~~the Company’s various locations and may take longer to recover than other areas of the economy, which may have a material impact on the ~~Company’s~~Company's business. The Company’s Gamma Knife operations in Latin America have experienced a decline in procedures due to the COVID-19 pandemic. Our Gamma Knife and PBRT operations in the United States have also experienced negative impacts from the COVID-19 pandemic. As the COVID-19 pandemic continues to develop, ~~rapidly, and~~ additional impacts may arise that we are not aware of currently.

The impact of the COVID-19 pandemic for the three-month ~~period~~periods ended March 31, 2021 and 2020 has varied by location based on the stage of containment and actions by government agencies. The impact on treatments and costs in the three-month ~~period~~periods ended March 31, 2021 and 2020 did not appear ~~material.~~material for the Gamma Knife. The ~~impact of the~~ COVID-19 pandemic ~~will potentially be~~appears to have had a greater ~~over the entire three (3) month period in the second quarter of 2020.~~

~~Revenues decreased by $753,000 to $4,568,000~~impact on PBRT fractions for the three-month period ended March 31, ~~2020~~2021.

Revenues decreased by $204,000 to $4,364,000 for the three-month period ended March 31, 2021 compared to ~~$5,321,000~~$4,568,000 for the same period in the prior year.

Revenues generated from the Company’s PBRT system ~~increased~~decreased by ~~$34,000~~$145,000 to ~~$1,676,000~~$1,531,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$1,642,000~~$1,676,000 for the same period in the prior year. The ~~increase~~decrease in PBRT revenues for the three-month period ended March 31, ~~2020~~2021 was due to lower fractions primarily due to the continued impact of the COVID-19 pandemic, offset by a higher ~~volumes.~~average reimbursement for the period.

The number of PBRT fractions ~~increased~~decreased by ~~130~~445 to ~~1,676~~1,231 for the three-month period ended March 31, ~~2020~~2021 compared to ~~1,546~~1,676 for the same period in the prior year. The ~~increase~~decrease in PBRT volume for the three-month period ended March 31, ~~2020~~2021 was primarily due to the ~~result of~~continued impact from the ~~continuing increased awareness of~~COVID-19 pandemic. The Company's PBRT system also experienced some down-time for maintenance during the ~~benefits of proton therapy treatment.~~three-month period ended March 31, 2021.

Gamma Knife revenues were $2,892,000 for the three-month periods ended March 31, 2021 and 2020. For the three-month period ended March 31, 2021, Gamma Knife procedures decreased, but this decrease was offset by an increase in average reimbursement. The increase in average reimbursement was partially driven by the Company’s contract that expired in the fourth quarter of 2020, which was reimbursed at a lower rate, and an increase in the average rate at the Company’s retail sites.

The number of Gamma Knife procedures decreased by ~~$519,000~~21 to ~~$2,892,000~~355 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$3,411,000~~376 for the same period in the prior year. The decrease in Gamma Knife ~~revenues~~procedures for the three-month period ended March 31, ~~2020,~~2021 was primarily due to ~~lower average reimbursement at~~the expiration of a contract in the fourth quarter of 2020 and in the first quarter of 2021. This decrease was offset by the Company’s ~~retail sites.~~ acquisition of GKCE in the second quarter of 2020.

The ~~number~~Company’s contract for IGRT equipment and related equipment services expired in April 2020. As of ~~Gamma Knife procedures increased~~March 31, 2021, the Company reviewed its estimate of related revenues and accounts receivable and determined the amount should be $0 and wrote off the balance of $59,000.

Total costs of revenue decreased by 1$244,000 to ~~376~~$2,930,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~375 for the same period in the prior year.~~

In April 2020, an existing Gamma Knife customer contract expired. The site is currently operating on a month-to-month basis and will continue to do so until the customer notifies the Company in writing of their intent to terminate. The Company expects the lease to end sometime in mid-2020.

Revenues generated from the Company’s IGRT contract decreased by $268,000 to $0 for the three-month period ended March 31, 2020 compared to $268,000 for the same period in the prior year. The decrease in IGRT revenues for the three-month period ended March 31, 2020 was the result of the winding down of the Company’s IGRT system, which was being used as a back-up system at the customer site. The Company’s contract for its IGRT equipment expired in April 2020 and the Company agreed to sell the equipment to it's existing customer for $150,000, which was equal to the equipment's salvage value.

~~Total costs of revenue decreased by $210,000 to~~ $3,174,000 ~~for the three-month period ended March 31, 2020 compared to $3,384,000~~ for the same period in the prior year.

Maintenance and supplies ~~decreased~~increased by ~~$35,000~~$39,000 to ~~$633,000~~$672,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$668,000~~$633,000 for the same period in the prior year. The ~~decrease~~increase in maintenance and supplies for the three-month period ended March 31, ~~2020~~2021 was due to a ~~decrease~~maintenance contract for one of the Company's Gamma Knife Icon upgrades which commenced in ~~time and materials costs at~~ the ~~Company’s existing customer sites.~~fourth quarter of 2020.

Depreciation and amortization decreased by ~~$247,000~~$449,000 to ~~$1,647,000~~$1,198,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$1,894,000~~$1,647,000 for the same period in the prior year. The decrease in depreciation and amortization for the three-month period ended March 31, ~~2020~~2021 was primarily due to ~~depreciation recognized on~~ the ~~Company’s IGRT equipment~~expiration of ~~$220,000 in the prior year. The related equipment became fully depreciated~~a contract in the fourth quarter of ~~2019.~~

2020 and in the first quarter of 2021. In addition, the Company determined some of its Gamma Knife equipment was impaired as of December, 31, 2020 and the related equipment values were written off for the year-ended, therefore, there was no depreciation expense incurred on this equipment for the three-month period ended March 31, 2021.

Other direct operating costs increased by ~~$72,000~~$166,000 to ~~$894,000~~$1,060,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$822,000~~$894,000 for the same period in the prior year. The increase in other direct operating costs for the three-month period ended March 31, ~~2020~~2021 was ~~due to increased~~driven by the operating costs ~~at the Company’s newest Gamma Knife site~~of GKCE which was acquired in ~~Merrillville, Indiana and the Company’s stand-alone facility in Lima, Peru, as these sites continue to ramp up volumes.~~June 2020.

Selling and administrative costs ~~increased~~decreased by ~~$156,000~~$127,000 to ~~$1,211,000~~$1,084,000 for the three-month period ended March 31, ~~2020~~2021 compared to $1,055,000 for the same period in the prior year. The increase for the three-month period ended March 31, 2020, was primarily due to legal and other fees, including, but not limited to the COVID-19 pandemic and the transition in senior management.

~~Interest expense decreased by $85,000 to $282,000 for the three-month period ended March 31, 2020 compared to $367,000~~$1,211,000 for the same period in the prior year. The decrease for the three-month period ended March 31, ~~2020~~2021, was due to lower legal and other fees.

Interest expense decreased by $22,000 to $260,000 for the three-month period ended March 31, 2021 compared to $282,000 for the same period in the prior year. The decrease for the three-month period ended March 31, 2021 was due to a lower average principal base on the Company’s debt and leases ~~in the first quarter of 2020~~ compared to the same ~~period~~periods in the prior year, respectively, effectively reducing interest expense.

Interest and other income ~~decreased by $1,000 to~~was $3,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~$4,000~~$3,000 for the same period in the prior year. Interest and other income is comprised of interest expense and interest earned.

Income tax expense ~~decreased~~increased by ~~$152,000~~$34,000 to ~~a benefit of $28,000~~$6,000 for the three-month period ended March 31, ~~2020~~2021 compared to ~~expense~~an income tax benefit of ~~$124,000~~$28,000 for the same period in the prior year. The ~~decrease~~increase in income tax expense for the three-month period ended March 31, ~~2020~~2021 was due to ~~lower~~higher taxable income attributable to GKF and ~~its subsidiaries.~~the acquisition of GKCE.

Net income attributable to non-controlling interest decreased by $9,000 to $58,000 for the three-month period ended March 31, ~~2020~~2021 compared to $67,000 ~~compared to $125,000~~ for the same period in the prior year. Net income attributable to non-controlling interests represents net income earned by the 19% non-controlling interest in GKF, and net income of the non-controlling interests in various subsidiaries controlled by GKF. The decrease or increase in net income attributable to non-controlling interests reflects the relative profitability of GKF.

Net income ~~decreased~~increased by ~~$405,000~~$164,000 to ~~a loss of $135,000,~~$29,000, or ~~$0.02~~$0.00 per diluted share for the three-month period ended March 31, ~~2020~~2021 compared to a net ~~income~~loss of ~~$270,000,~~$135,000, or ~~$0.05~~$0.02 per diluted share for the same period in the prior year. The ~~decrease~~increase in net income for the three-month period ended March 31, ~~2020~~2021 was ~~primarily~~ due to ~~legal and other professional fees and~~ a decrease in ~~the average reimbursement rate at the Company’s retail sites.~~depreciation expense and selling and administrative costs.

1517

Liquidity and Capital Resources

The Company had cash, cash equivalents and restricted cash of ~~$3,023,000~~$5,013,000 at March 31, ~~2020~~2021 compared to ~~$1,779,000~~$4,325,000 at December 31, ~~2019.~~2020. The Company’s cash position increased by ~~$1,244,000~~$688,000 primarily due to cash from operating activities of ~~$3,389,000.~~$2,783,000. This increase was offset by payment for the purchase of property and equipment of ~~$195,000,~~$1,065,000, payments on long-term debt and finance leases of ~~$1,466,000,~~$914,000 and payments on short-term financing of ~~$158,000 and distributions to non-controlling interests of $326,000.~~$116,000.

The Company has scheduled interest and principal payments under its debt obligations of approximately ~~$1,670,000 and scheduled finance lease payments of approximately $4,053,000~~$1,209,000 during the next 12 months. The Company believes that its cash on hand, cash flow from ~~cash on hand,~~ operations, and other cash resources are adequate to meet its scheduled debt obligations and ~~finance lease obligations~~working capital requirements during the next 12 months. See additional discussion below related to commitments.

The Company as of March 31, ~~2020~~2021 had shareholders’ equity of ~~$31,473,000,~~$23,844,000, working capital of ~~$2,809,000~~$4,163,000 and total assets of ~~$53,191,000.~~$44,047,000.

1618

Commitments

On December 20, 2018, the Company signed Second Amendments to two System Build Agreements ~~(the “Amendments”)~~ for the Company’s second and third Mevion PBRT units. The Company and Mevion ~~Medical Systems, Inc. (“Mevion”)~~ have agreed to upgrade the second and third PBRT units for which the Company has purchase commitments. The Company is actively seeking sites for these units but, to date, has not entered into agreements with any party for either placement of a PBRT unit or the related financing. The Company projects that it will be required to commence delivery of the second and third PBRT units no later than 2023. In the event the Company is unable to enter into customer agreements within the requisite time frame or receive an extension from Mevion, the Company could forfeit its ~~deposits, which are described below.~~

deposits. As of March 31, ~~2020,~~2021, the Company had commitments, after deposits, to purchase two MEVION S250i PBRT systems for $34,000,000 and the Company had $2,250,000 in non-refundable deposits toward the purchase of these two PBRT systems from Mevion. The non-refundable deposits are recorded in the Condensed Consolidated Balance Sheets as deposits and construction in progress.$34,000,000.

As of March 31, ~~2020,~~2021, the Company had commitments to perform ~~three~~one Cobalt-60 ~~reloads~~reload and install ~~five~~four Leksell Gamma Knife Icon Systems (“Icon”) at existing customer sites, and purchase two Linear Accelerator (“LINAC”) systems, one ~~LINAC system,~~ to be placed at an existing customer site and one at a new customer site. ~~One of~~The Company also has a commitment to upgrade the ~~five Icon upgrades is scheduled~~Gamma Knife unit at it's stand-alone facility in Ecuador to ~~occur in mid-2020.~~a Perfexion. The Cobalt-60 ~~reloads, remaining~~reload, Icon upgrades, and LINAC ~~purchase~~purchases are scheduled to occur between ~~2021~~2022 and ~~2022.~~2023. The Company expects to upgrade the equipment in Ecuador in the third quarter of 2021. The Company has a commitment from DFC to finance this upgrade. Total Gamma Knife and LINAC commitments as of March 31, ~~2020~~2021 were ~~$5,560,000.~~$10,860,000. It is the Company’s intent to finance these commitments. There are no significant cash requirements, pending financing, for these commitments in the next 12 months. 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.

In April 2020, the Company signed a commitment to purchase a second LINAC system to potentially place at an existing customer site. This purchase commitment also includes a 5-year agreement to service the equipment. The total commitment for this LINAC system and service was $7,725,000.

On July 21, 2017, the Company entered into a Maintenance and Support Agreement (the “Mevion Service Agreement”) with Mevion, which provides for maintenance and support of the Company’s PBRT unit at Orlando Health. The Mevion Service Agreement began September 5, 2017, was amended in 2018, and renews ~~annually.~~annually over a five year period. The agreement requires an annual prepayment of ~~$1,562,000 which was made on September 6, 2019~~$1,572,000 for the current contractual period. This payment portion was recorded as a prepaid contract and will be amortized over the one-year service period. ~~The Mevion Service Agreement is for a five (5) year period.~~

As of March 31, ~~2020,~~2021, 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. In addition, in April 2019, the Company signed agreements to service the Icon upgrades which will be installed at various dates between ~~2020~~2021 and 2022. The Company’s ~~commitment~~commitments to purchase atwo LINAC ~~system~~systems also ~~includes~~include a 9-year and 5-year agreement to service the ~~equipment.~~equipment, respectively. Total service commitments as of March 31, ~~2020~~2021 were ~~$10,036,000.~~$10,272,000. 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 estimates the following commitments for each of the equipment purchases, service contracts, long-term debt, finance lease obligations, and operating leases with expected timing of payments as follows as of March 31, 2020:

Payments Due by Period
Contractual Obligations Total amounts
committed 2020 2021-2023 2024 After
5 years
Long-term debt (includes interest) $ 4,970,000 $ 1,346,000 $ 2,482,000 $ 668,000 $ 474,000
Finance leases (includes interest) 12,149,000 3,179,000 8,449,000 521,000 —
Future equipment purchases 39,560,000 400,000 39,160,000 — —
Equipment service contracts 10,036,000 1,787,000 4,655,000 1,734,000 1,860,000
Operating leases 1,094,000 233,000 856,000 5,000 —
Total contractual obligations $ 67,809,000 $ 6,945,000 $ 55,602,000 $ 2,928,000 $ 2,334,000

1719

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company does not hold or issue derivative instruments for trading purposes and is not a party to any instruments with leverage or prepayment features. The Company does not have affiliation with partnerships, trusts or other entities whose purpose is to facilitate off-balance sheet financial transactions or similar arrangements, and therefore has no exposure to the financing, liquidity, market or credit risks associated with such entities. At March 31, ~~2020,~~2021, the Company had no significant long-term, market-sensitive investments.

1820

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our president and chief operating and financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934. These controls and procedures are designed to ensure that material information relating to the company and its subsidiaries is communicated to the chief executive officer and the chief financial officer. Based on that evaluation, our chief executive officer and our chief financial officer concluded that, as of March 31, ~~2020,~~2021, our disclosure controls and procedures ~~are~~were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to the chief executive officer and the chief financial officer, and recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

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

There were no changes in our internal control over financial reporting during the three-months ended March 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

1921

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

There were no material changes during the period covered in this report to the risk factors previously disclosed in Part 1, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019, except as follows:~~

~~Impact of the COVID-19 Pandemic May Continue to Adversely Affect the Company’s Business Operations and Financial Condition~~

~~The recent outbreak of the novel coronavirus COVID-19 is now a global pandemic as declared by the World~~

Health Organization. The COVID-19 pandemic has spread across the globe, has been declared a national emergency and has shut down many business operations around the globe. Many states and municipalities in the United States, including California, have announced aggressive and unprecedented actions to reduce the spread of the disease, including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing shelter-in-place” orders, which direct individuals to shelter at their places of residence (subject to limited exceptions). Across our business, although some governmental restrictions on certain medical procedures have been lifted, healthcare resources are being prioritized for the treatment and management of the outbreak in many cases. Consequently, there are delays in delivering certain Gamma Knife and proton therapy treatments. The COVID-19 pandemic poses the risk that the Company or its employees, contractors, customers, government and third party payors and others may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that have been and may continue to be requested or mandated by governmental authorities.

A broad, sustained continuation of the COVID-19 pandemic could negatively impact the Company for the following reasons: (i) operations at certain medical facilities, including medical professionals and other medical facility employees, may continue to be subject to prolonged closure or shut down; (ii) medical facilities may continue to defer certain Gamma Knife and proton therapy treatments for non-urgent patient cases in order to allocate resources to the care of patients with COVID-19; (iii) patients may continue to defer certain Gamma Knife and proton therapy treatments due to real or perceived concerns about the potential spread of COVID-19 in a medical facility setting; (iv) certain deferred Gamma Knife and proton therapy treatments may not be rescheduled for a later date; (v) the pandemic may materially impact the Company’s operations for a sustained period of time due to the current travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns, including at our corporate headquarters in San Francisco, California,which is currently subject to a shelter-in-place order that remains in force until May 31, 2020 and may be extended; and/or (vi) members of the board, management or employee team, some of whom are particularly at risk for the severe symptoms of COVID-19, or of our small number of other employees, may become ill or have family members who are ill and are absent as a result, or they may elect not to come to work due to the illness affecting others in our office or facilities.

The occurrence of any of the foregoing events could have a material adverse effect on our business, financial condition and results of operations. The COVID-19 pandemic and mitigation measures have had and may continue to have an adverse impact on global economic conditions which could have an adverse effect on the Company’s business and financial condition. The full impact of the COVID-19 pandemic remains unknown, including the impact on the global economy and the healthcare industry. The extent to which the COVID-19 outbreak impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus, actions to contain its impact,the efficacy of the current governmental orders in slowing down the pandemic, the governments’ changing calculations on the economic impact and the health implications of maintaining these orders, the progress in the healthcare industry’s ability to effectively combat the virus, and potential increase or decrease in healthcare demand resulting from COVID-19 responses, all of which are highly unpredictable. Likewise, the financial market as a whole has experienced extreme volatility as a result of the global economic impact of the COVID-19 pandemic, which has impacted, and may continue to impact, the Company’s stock price.2020.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

2122

Item 6. Exhibit Index

~~Incorporated by reference herein~~

~~Exhibit Number~~

~~Description~~

~~Form~~

~~Exhibit~~

~~Date~~

~~10.1~~

~~Fourth Amendment to Purchased Services Agreement (for a Gamma Knife Unit) dated as of May 1, 2019 between GK Financing, LLC and Jackson HMA, LLC~~

~~31.1~~

~~Certification of Chief 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 Chief Financial Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~32.1~~

~~Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~101.INS~~

~~XBRL Instance Document~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~XBRL Taxonomy Calculation Linkbase Document~~

~~101.DEF~~

~~XBRL Taxonomy Definition Linkbase Document~~

~~101.LAB~~

~~XBRL Taxonomy Label Linkbase Document~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~

~~104~~

~~Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline Instance XBRL~~

~~Filed herewith.~~

~~Furnished herewith.~~

Incorporated by reference herein

Exhibit Number

Description

Form

Exhibit

Date

10.1

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

10.2

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.

10.3

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

8-K
001-08789

10.1

4/15/2021

31.1

Certification of Chief 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 Chief Financial Officer pursuant to Rule 13a-14a/15d-14a, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Calculation Linkbase Document

101.DEF

XBRL Taxonomy Definition Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline Instance XBRL

Filed herewith.

Furnished herewith.

Portions of this exhibit (indicated therein by asterisks) have been omitted for confidential treatment.

2223

SIGNATURES

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

AMERICAN SHARED HOSPITAL SERVICES

Registrant


Date:	~~June 11, 2020~~May 13, 2021	/s/ ~~Ray~~Raymond C. Stachowiak
		~~Ray~~Raymond C. Stachowiak
		~~Interim President and CEO~~Chief Executive Officer

Date:	~~June 11, 2020~~May 13, 2021	/s/ Craig K. Tagawa
		Craig K. Tagawa
		~~Senior Vice~~ President,
		Chief Operating and Financial Officer

2324


	Three Months ended March 31,
	2020		2019

Revenues	$	4,568,000	$	5,321,000

Costs of revenue:

Maintenance and supplies	633,000		668,000

Depreciation and amortization	1,647,000		1,894,000

Other direct operating costs	894,000		822,000

	3,174,000		3,384,000

Gross Margin	1,394,000		1,937,000

Selling and administrative expense	1,211,000		1,055,000

Interest expense	282,000		367,000

Operating (loss) income	(99,000)		515,000



Interest and other income	3,000		4,000

(Loss) income before income taxes	(96,000)		519,000

Income tax (benefit) expense	(28,000)		124,000

Net (loss) income	(68,000)		395,000
Less: Net income attributable to non-controlling interest	(67,000)		(125,000)

Net (loss) income attributable to American Shared Hospital Services	$	(135,000)	$	270,000

Net (loss) income per share:

(Loss) earnings per common share - basic	$	(0.02)	$	0.05

(Loss) earnings per common share - diluted	$	(0.02)	$	0.05


Year ending December 31,	Operating Leases

2020 (excluding the three-months ended March 31, 2020)	$	229,000
2021	313,000
2022	321,000
2023	214,000
2024	5,000


Total lease payments	1,082,000
Less imputed interest	(110,000)
Total	$	972,000


	Payments Due by Period
Contractual Obligations	Total amounts committed		2020		2021-2023		2024		After 5 years

Long-term debt (includes interest)	$	4,970,000	$	1,346,000	$	2,482,000	$	668,000	$	474,000
Finance leases (includes interest)	12,149,000		3,179,000		8,449,000		521,000		—
Future equipment purchases	39,560,000		400,000		39,160,000		—		—
Equipment service contracts	10,036,000		1,787,000		4,655,000		1,734,000		1,860,000
Operating leases	1,094,000		233,000		856,000		5,000		—

Total contractual obligations	$	67,809,000	$	6,945,000	$	55,602,000	$	2,928,000	$	2,334,000