UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31,
2015 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 1-08789
American Shared Hospital Services
(Exact name of registrant as specified in
its charter)
California |
94-2918118 |
(State or other jurisdiction of |
(IRS Employer |
Incorporation or organization) |
Identification No.) |
Four Embarcadero Center, Suite 3700, San Francisco, California |
94111 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including
area code: (415) 788-5300
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 x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes x
No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
Accelerated Filer ¨ Accelerated Filer ¨
Non-Accelerated Filer ¨ Smaller reporting company x
As of May
1, 2015, there are outstanding 5,361,000 shares of the Registrant’s common stock.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
(unaudited) | | |
| |
ASSETS | |
March 31, 2015 | | |
December 31, 2014 | |
| |
| | |
| |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 927,000 | | |
$ | 1,059,000 | |
Restricted cash | |
| 50,000 | | |
| 50,000 | |
Certificate of deposit | |
| - | | |
| 9,000,000 | |
Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2015 and $100,000 at
March 31, 2014 | |
| 3,867,000 | | |
| 3,192,000 | |
| |
| | | |
| | |
Other receivables | |
| 191,000 | | |
| 131,000 | |
Prepaid expenses and other current assets | |
| 451,000 | | |
| 448,000 | |
Current deferred tax assets | |
| 367,000 | | |
| 367,000 | |
| |
| | | |
| | |
Total current assets | |
| 5,853,000 | | |
| 14,247,000 | |
| |
| | | |
| | |
Property and equipment: | |
| | | |
| | |
Medical equipment and facilities | |
| 85,431,000 | | |
| 82,151,000 | |
Office equipment | |
| 721,000 | | |
| 721,000 | |
Deposits and construction in progress | |
| 11,433,000 | | |
| 13,736,000 | |
| |
| 97,585,000 | | |
| 96,608,000 | |
Accumulated depreciation and amortization | |
| (47,711,000 | ) | |
| (46,572,000 | ) |
Net property and equipment | |
| 49,874,000 | | |
| 50,036,000 | |
| |
| | | |
| | |
Investment in equity securities | |
| 2,709,000 | | |
| 2,709,000 | |
Other assets | |
| 517,000 | | |
| 536,000 | |
| |
| | | |
| | |
Total assets | |
$ | 58,953,000 | | |
$ | 67,528,000 | |
LIABILITIES AND | |
(unaudited) | | |
| |
SHAREHOLDERS' EQUITY | |
March 31, 2015 | | |
December 31, 2014 | |
| |
| | |
| |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 301,000 | | |
$ | 421,000 | |
Employee compensation and benefits | |
| 111,000 | | |
| 179,000 | |
Other accrued liabilities | |
| 1,126,000 | | |
| 763,000 | |
| |
| | | |
| | |
Current portion of long-term debt | |
| 2,016,000 | | |
| 2,005,000 | |
Current portion of obligations under capital leases | |
| 4,029,000 | | |
| 4,103,000 | |
Advances on line of credit | |
| - | | |
| 8,780,000 | |
| |
| | | |
| | |
Total current liabilities | |
| 7,583,000 | | |
| 16,251,000 | |
| |
| | | |
| | |
Long-term debt, less current portion | |
| 8,186,000 | | |
| 8,586,000 | |
Long-term capital leases, less current portion | |
| 12,420,000 | | |
| 12,190,000 | |
Deferred revenue, less current portion | |
| 857,000 | | |
| 874,000 | |
| |
| | | |
| | |
Deferred income taxes | |
| 3,473,000 | | |
| 3,473,000 | |
| |
| | | |
| | |
Shareholders' equity: | |
| | | |
| | |
Common stock (5,361,000 shares at March 31, 2015 and 5,361,000 shares at December 31, 2014) | |
| 10,376,000 | | |
| 10,376,000 | |
Additional paid-in capital | |
| 5,544,000 | | |
| 5,508,000 | |
Retained earnings | |
| 5,670,000 | | |
| 5,542,000 | |
Total equity-American Shared Hospital Services | |
| 21,590,000 | | |
| 21,426,000 | |
Non-controlling interest in subsidiary | |
| 4,844,000 | | |
| 4,728,000 | |
Total shareholders'
equity | |
| 26,434,000 | | |
| 26,154,000 | |
| |
| | | |
| | |
Total liabilities
and shareholders' equity | |
$ | 58,953,000 | | |
$ | 67,528,000 | |
See accompanying notes
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| |
Three Months ended March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Medical services revenue | |
$ | 4,117,000 | | |
$ | 4,064,000 | |
| |
| | | |
| | |
Costs of revenue: | |
| | | |
| | |
| |
| | | |
| | |
Maintenance and supplies | |
| 333,000 | | |
| 487,000 | |
| |
| | | |
| | |
Depreciation and amortization | |
| 1,505,000 | | |
| 1,611,000 | |
| |
| | | |
| | |
Other direct operating costs | |
| 682,000 | | |
| 677,000 | |
| |
| | | |
| | |
| |
| 2,520,000 | | |
| 2,775,000 | |
| |
| | | |
| | |
Gross Margin | |
| 1,597,000 | | |
| 1,289,000 | |
| |
| | | |
| | |
Selling and administrative expense | |
| 821,000 | | |
| 922,000 | |
| |
| | | |
| | |
Interest expense | |
| 320,000 | | |
| 470,000 | |
| |
| | | |
| | |
Operating income (loss) | |
| 456,000 | | |
| (103,000 | ) |
| |
| | | |
| | |
Gain foreign currency transactions | |
| - | | |
| 15,000 | |
Interest and other income | |
| 6,000 | | |
| 9,000 | |
| |
| | | |
| | |
Income (loss) before income taxes | |
| 462,000 | | |
| (79,000 | ) |
| |
| | | |
| | |
Income tax expense (benefit) | |
| 130,000 | | |
| (30,000 | ) |
| |
| | | |
| | |
Net income (loss) | |
| 332,000 | | |
| (49,000 | ) |
Less: Net income attributable to non-controlling interest | |
| (204,000 | ) | |
| (47,000 | ) |
| |
| | | |
| | |
Net income (loss) attributable to American Shared Hospital Services | |
$ | 128,000 | | |
$ | (96,000 | ) |
| |
| | | |
| | |
Net income (loss) per share: | |
| | | |
| | |
| |
| | | |
| | |
Earnings (loss) per common share - basic | |
$ | 0.02 | | |
$ | (0.02 | ) |
| |
| | | |
| | |
Earnings (loss) per common share - diluted | |
$ | 0.02 | | |
$ | (0.02 | ) |
See accompanying notes
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
| |
Three months ended March 30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Net income (loss) attributable to American Shared Hospital Services | |
$ | 128,000 | | |
$ | (96,000 | ) |
| |
| | | |
| | |
Other comprehensive income: | |
| | | |
| | |
Foreign currency translation adjustments | |
| - | | |
| 1,000 | |
| |
| | | |
| | |
Total comprehensive income (loss) | |
| 128,000 | | |
| (95,000 | ) |
Less comprehensive income attributable to the non-controlling interest | |
| - | | |
| - | |
| |
| | | |
| | |
Comprehensive income (loss) attributable to American Shared Hospital Services | |
$ | 128,000 | | |
$ | (95,000 | ) |
See accompanying notes
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS'
EQUITY
| |
YEARS ENDED DECEMBER
31, 2013 AND 2014 AND THREE MONTH PERIOD MARCH 31, 2015 | |
| |
| | |
| | |
| | |
Accumulated | | |
| | |
| | |
| | |
| |
| |
| | |
| | |
Additional | | |
Other | | |
| | |
| | |
Non-controlling | | |
| |
| |
Common | | |
Common | | |
Paid-in | | |
Comprehensive | | |
Retained | | |
Sub-Total | | |
Interests in | | |
| |
| |
Shares | | |
Stock | | |
Capital | | |
(Loss) Income | | |
Earnings | | |
ASHS | | |
Subsidiaries | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balances at January 1, 2013 | |
| 4,606,000 | | |
| 8,578,000 | | |
| 4,902,000 | | |
| (357,000 | ) | |
| 6,806,000 | | |
| 19,929,000 | | |
| 4,901,000 | | |
| 24,830,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stock-based compensation expense | |
| 3,000 | | |
| - | | |
| 88,000 | | |
| - | | |
| - | | |
| 88,000 | | |
| - | | |
| 88,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interest investment in subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 184,000 | | |
| 184,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash distributions to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (792,000 | ) | |
| (792,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cumulative translation adjustment | |
| - | | |
| - | | |
| - | | |
| (85,000 | ) | |
| - | | |
| (85,000 | ) | |
| (57,000 | ) | |
| (142,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net (loss) income | |
| - | | |
| - | | |
| - | | |
| - | | |
| (312,000 | ) | |
| (312,000 | ) | |
| 199,000 | | |
| (113,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balances at December 31, 2013 | |
| 4,609,000 | | |
| 8,578,000 | | |
| 4,990,000 | | |
| (442,000 | ) | |
| 6,494,000 | | |
| 19,620,000 | | |
| 4,435,000 | | |
| 24,055,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Repurchase of common stock | |
| (1,000 | ) | |
| (2,000 | ) | |
| - | | |
| - | | |
| - | | |
| (2,000 | ) | |
| - | | |
| (2,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stock-based compensation expense | |
| 3,000 | | |
| - | | |
| 373,000 | | |
| - | | |
| - | | |
| 373,000 | | |
| - | | |
| 373,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Private placement common stock | |
| 750,000 | | |
| 1,800,000 | | |
| - | | |
| - | | |
| - | | |
| 1,800,000 | | |
| - | | |
| 1,800,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of warrants issued with promissory
notes | |
| - | | |
| - | | |
| 145,000 | | |
| - | | |
| - | | |
| 145,000 | | |
| - | | |
| 145,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interest investment in subsidiaries | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 517,000 | | |
| 517,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash distributions to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (951,000 | ) | |
| (951,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cumulative translation adjustment | |
| - | | |
| - | | |
| - | | |
| 442,000 | | |
| - | | |
| 442,000 | | |
| 337,000 | | |
| 779,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net (loss) income | |
| - | | |
| - | | |
| - | | |
| - | | |
| (952,000 | ) | |
| (952,000 | ) | |
| 390,000 | | |
| (562,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balances at December 31, 2014 | |
| 5,361,000 | | |
| 10,376,000 | | |
| 5,508,000 | | |
| - | | |
| 5,542,000 | | |
| 21,426,000 | | |
| 4,728,000 | | |
| 26,154,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stock-based compensation expense | |
| - | | |
| - | | |
| 36,000 | | |
| - | | |
| - | | |
| 36,000 | | |
| - | | |
| 36,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| - | | |
| | | |
| | |
Cash distributions to non-controlling interests | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (88,000 | ) | |
| (88,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| - | | |
| - | | |
| - | | |
| - | | |
| 128,000 | | |
| 128,000 | | |
| 204,000 | | |
| 332,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balances at March 31, 2015 (unaudited) | |
| 5,361,000 | | |
$ | 10,376,000 | | |
$ | 5,544,000 | | |
$ | - | | |
$ | 5,670,000 | | |
$ | 21,590,000 | | |
$ | 4,844,000 | | |
$ | 26,434,000 | |
See accompanying notes
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| |
Three Months ended March 31, | |
| |
2015 | | |
2014 | |
Operating activities: | |
| | | |
| | |
Net income (loss) | |
$ | 332,000 | | |
$ | (49,000 | ) |
| |
| | | |
| | |
Adjustments to reconcile net income (loss) to net cash from operating activities: | |
| | | |
| | |
| |
| | | |
| | |
Depreciation and amortization | |
| 1,517,000 | | |
| 1,679,000 | |
| |
| | | |
| | |
Deferred income tax | |
| - | | |
| (52,000 | ) |
| |
| | | |
| | |
(Gain) on foreign currency transactions | |
| - | | |
| (15,000 | ) |
| |
| | | |
| | |
Stock-based compensation expense | |
| 36,000 | | |
| 26,000 | |
| |
| | | |
| | |
Other non-cash items | |
| 12,000 | | |
| - | |
| |
| | | |
| | |
Changes in operating assets and liabilities: | |
| | | |
| | |
| |
| | | |
| | |
Receivables | |
| (735,000 | ) | |
| (456,000 | ) |
| |
| | | |
| | |
Prepaid expenses and other assets | |
| 9,000 | | |
| - | |
| |
| | | |
| | |
Customer deposits/deferred revenue | |
| 17,000 | | |
| (12,000 | ) |
| |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 141,000 | | |
| 283,000 | |
| |
| | | |
| | |
Net cash from operating activities | |
| 1,329,000 | | |
| 1,404,000 | |
| |
| | | |
| | |
Investing activities: | |
| | | |
| | |
Payment for purchase of property and equipment | |
| (188,000 | ) | |
| (147,000 | ) |
| |
| | | |
| | |
Net cash used in investing activities | |
| (188,000 | ) | |
| (147,000 | ) |
| |
| | | |
| | |
Financing activities: | |
| | | |
| | |
Principal payments on long-term debt | |
| (401,000 | ) | |
| (956,000 | ) |
| |
| | | |
| | |
Principal payments on capital leases | |
| (1,004,000 | ) | |
| (1,079,000 | ) |
| |
| | | |
| | |
Proceeds from certificate of deposit | |
| 9,000,000 | | |
| - | |
| |
| | | |
| | |
Advances on line of credit | |
| - | | |
| 60,000 | |
| |
| | | |
| | |
Payments on line of credit | |
| (8,780,000 | ) | |
| - | |
| |
| | | |
| | |
Capital contributions from non-controlling interests | |
| - | | |
| 59,000 | |
| |
| | | |
| | |
Distributions to non-controlling interests | |
| (88,000 | ) | |
| (274,000 | ) |
| |
| | | |
| | |
Common stock repurchased | |
| - | | |
| (2,000 | ) |
| |
| | | |
| | |
Net cash used in financing activities | |
| (1,273,000 | ) | |
| (2,192,000 | ) |
| |
| | | |
| | |
Effect of changes in foreign exchange rates on cash | |
| - | | |
| (17,000 | ) |
| |
| | | |
| | |
Net change in cash and cash equivalents | |
| (132,000 | ) | |
| (952,000 | ) |
| |
| | | |
| | |
Cash and cash equivalents at beginning of period | |
| 1,059,000 | | |
| 1,909,000 | |
| |
| | | |
| | |
Cash and cash equivalents at end of period | |
$ | 927,000 | | |
$ | 957,000 | |
| |
| | | |
| | |
Supplemental cash flow disclosure: | |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | |
| |
| | | |
| | |
Interest | |
$ | 438,000 | | |
$ | 541,000 | |
| |
| | | |
| | |
Income taxes | |
$ | (5,000 | ) | |
$ | 21,000 | |
| |
| | | |
| | |
Schedule of non-cash investing and financing activities | |
| | | |
| | |
Acquisition of equipment with capital lease financing | |
$ | 1,160,000 | | |
$ | - | |
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 (consisting
of only normal recurring accruals) necessary to present fairly American Shared Hospital Services’ consolidated financial
position as of March 31, 2015 and the results of its operations for the three month periods ended March 31, 2015 and 2014, which
results are not necessarily indicative of results on an annualized basis. Consolidated balance sheet amounts as of December 31,
2014 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, 2014 included in the Company’s 10-K filed with the Securities and Exchange Commission.
These
condensed consolidated financial statements include the accounts of American Shared Hospital Services (the “Company”)
and its wholly-owned subsidiaries: OR21, Inc. (“OR21”); MedLeader.com, Inc. (“MedLeader”); and American
Shared Radiosurgery Services (“ASRS”); ASRS’ majority-owned subsidiary, GK Financing, LLC (“GKF”);
GKF’s wholly-owned subsidiaries, GK Financing U.K., Limited (“GKUK”), Instituto de Gamma Knife del Pacifico S.A.C.
(“GKPeru”); ASHS’ majority owned subsidiary, Long Beach Equipment, LLC (“LBE”), GKF’s majority
owned subsidiaries, Albuquerque GK Equipment, LLC (“AGKE”), Jacksonville GK Equipment, LLC (“JGKE”) and
EWRS, LLC (“EWRS”). EWRS owned 100% of EWRS Turkey. The Company sold EWRS Turkey on June 10, 2014.
The
Company through its majority-owned subsidiary, GKF, provided Gamma Knife units to eighteen medical centers as of March 31, 2015
in the states of Arkansas, California, Connecticut, Florida, Illinois, Massachusetts, Mississippi, Nevada, New Jersey, New Mexico,
New York, Tennessee, Oklahoma, Ohio, Texas, Washington, and Wisconsin.
The
Company also directly provides radiation therapy and related equipment, including Intensity Modulated Radiation Therapy (“IMRT”),
Image Guided Radiation Therapy (“IGRT”) and a CT Simulator to the radiation therapy department at an existing Gamma
Knife site in the United States.
The
Company formed the subsidiaries GKUK and GKPeru, for the purposes of expanding its business internationally into the United Kingdom
and Peru; LBE to provide proton beam therapy services in Long Beach, California; and AGKE and JGKE to provide Gamma Knife services
in Albuquerque, New Mexico and Jacksonville, Florida. AGKE began operation in the second quarter 2011 and JGKE began operation
in the fourth quarter 2011. GKPeru is expected to begin operation in the latter part of 2015. GKUK is inactive and LBE is not expected
to generate revenue within the next two years.
Based
on guidance provided in accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters
(“ASC 830”), the Company has analyzed its operations outside the United States to determine the functional currency
of each operation. Management determined that these operations were initially accounted for in U.S. dollars since the primary transactions
incurred were in U.S. dollars and the Company provided significant funding towards the startup of the operation. When Management
determined that the operation had become predominantly self-sufficient, the Company changed its accounting for the operation to
the local currency from the U.S. dollar.
As
of March 31, 2014, EWRS Turkey’s balance sheet accounts were translated at rates in effect as of those dates, respectively,
and income and expense accounts were translated at the weighted average rates of exchange during those respective periods. Gains
and losses from foreign currency transactions and remeasurement are listed in the Company’s consolidated statements of operations.
The net foreign currency gain as of March 31, 2014 was $15,000.
Based
on guidance provided in accordance with Accounting Standards Update (“ASU”) No. 2014-08 Reporting Discontinued Operations
and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), the Company has analyzed the factors that
define a discontinued operation and determined that the sale of EWRS Turkey is considered the sale of a significant component,
but does not represent a major shift in the business, and therefore is not a discontinued operation.
Based
on guidance provided in accordance with ASU No 2013-05 Parent’s Accounting for the Cumulative Translation Adjustment upon
Derecognition of Certain Subsidiaries of Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU
2013-05”), the Company no longer holds a financial interest in EWRS Turkey. As of December 31, 2014, the cumulative translation
adjustments previously recognized under accumulated other comprehensive income (loss) were released into net income as a component
of the loss for the sale of EWRS Turkey in the statement of operations. The total cumulative translation adjustment of $779,000,
previously recognized under accumulated other comprehensive income (loss), was included as a component of the loss calculation
for the sale of EWRS Turkey, reported in the statement of operations for the year ended 2014.
Based
on guidance provided in accordance with ASC 280 Segment Reporting (“ASC 280”), the Company has analyzed the
factors that define an operating segment and determined that there is only one operating segment. The eighteen locations are aggregated
into one reportable segment because, in the Company’s judgment, these operating segments have similar historical economic
characteristics and are expected to have similar economic characteristics in the future. Furthermore, each operating segment utilizes
the same business model and technologies, servicing the same end users (radiation therapy patients). All significant intercompany
accounts and transactions have been eliminated in consolidation.
Effective
May 31, 2014 (with closing occurring June 10, 2014) the Company sold EWRS Turkey for EUR 4.2 million (approximately $6.0M).
The proceeds were used to reduce outstanding debt and the excess was cash to the Company of $768,000. Cash transactions were
recorded for the time period June 1 to June 10, 2014, the date of closing. The Company recorded a loss on sale of subsidiary
of $572,000. The Company was eligible for an earn-out in fiscal year 2014 based on future revenue derived from the units sold
to Euromedic. The Company did not meet its 2014 earn-out milestone. The Company is also eligible for an earn-out in fiscal
year 2015 based on future revenues. It is not practicable to estimate the revenue from the 2015 earn-out at this time
therefore no amounts have been recorded as of March 31, 2015.
In
January 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-01, Income Statement - Extraordinary
and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items
(“ASU No. 2015-01”), which eliminates from United States Generally Accepted Accounting Principles (“GAAP”)
the concept of extraordinary items and requires that an entity separately classify, present, and disclose extraordinary events
and transactions. This ASU will also align more closely GAAP income statement presentation guidance with International Accounting
Standards (“IAS”) 1, Presentation of Financial Statements, which prohibits the presentation and disclosure
of extraordinary items. The new standard is effective for the Company on January 1, 2016. Early application is permitted. The
standard permits the use of either the retrospective or prospective application. The Company is evaluating the effect that ASU
2015-01 will have on its consolidated financial statements and related disclosures and has not yet selected a transition method.
In
February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU
No. 2015-02”), which is intended to improve targeted areas of consolidation guidance for legal entities. The ASU focuses
on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain
legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB
ASC and improves current GAAP. The new standard is effective for the Company on January 1, 2016. Early adoption is permitted. The
Company is evaluating the effect that ASU 2015-02 will have on its consolidated financial statements and related disclosures and
has not yet selected a transition method.
In
April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation
of Debt Issuance Costs (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability
be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The
new standard is effective for the Company on January 1, 2016. Early adoption is permitted. The amendments should be applied on
a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific
effects of applying the new guidance. The Company is evaluating the effect that ASU 2015-03 will have on its consolidated financial
statements and related disclosures and has not yet selected a transition method.
Note 2. Per
Share Amounts
Per
share information has been computed based on the weighted average number of common shares and dilutive common share equivalents
outstanding. For the three months ended March 31, 2015, basic earnings per share was computed using 5,477,000 and diluted earnings
per share was computed using 5,526,000, common shares and equivalent common shares. The computation for the three month period
ended March 31, 2015 excluded approximately 617,000 of the Company’s stock options because the exercise price of the options
was higher than the average market price during those periods.
For
the three months ended March 31, 2014 basic loss per share was computed using 4,608,000 common shares. Pursuant to GAAP, potentially
dilutive common stock equivalents, such as dilutive stock options are not considered when their inclusion in reporting earnings
per share would be dilutive to reported losses incurred per share. Because the Company reported loss for the quarter ending March
31, 2014, the potentially dilutive effects of approximately 26,000 of the Company’s stock options and 23,000 unvested restricted
stock units were not considered for this reporting period.
Note 3. Stock-based
Compensation
On
June 2, 2010, the Company’s shareholders approved an amendment and restatement of the 2006 Stock Incentive Plan (the “2006
Plan”). Among other things, the amendment and restatement renamed the 2006 Plan as the Incentive Compensation Plan (the “Plan”)
and increased the number of shares of the Company’s common stock reserved for issuance under the Plan by an additional 880,000
shares from 750,000 shares to 1,630,000 shares. The shares are reserved for issuance to officers of the Company, other key employees,
non-employee directors, and advisors. The Plan serves as successor to the Company’s previous two stock-based employee compensation
plans, the 1995 and 2001 Stock Option Plans. The shares reserved under those two plans, including the shares of common stock subject
to currently outstanding options under the plans, were transferred to the Plan, and no further grants or share issuances will be
made under the 1995 and 2001 Plans. Under the Plan, there have been 176,000 restricted stock units granted, consisting primarily
of annual automatic grants and deferred compensation to non-employee directors, and there are 655,000 options granted, of which
121,000 options are vested as of March 31, 2015.
Stock-based
compensation expense associated with the Company’s stock-based awards to employees is calculated using the Black-Scholes
valuation model. The Company’s stock-based awards have characteristics significantly different from those of traded options,
and changes in the subjective input assumptions can materially affect the 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 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 in the amount of $36,000 is reflected in net income for the
three month period ended March 31, 2015, compared to $26,000 in the same period in the prior year. There were no options issued
and no options exercised during either of the three month periods ended March 31, 2015 or March 31, 2014. There were no excess
income tax benefits to report.
Note 4. Investment
in Equity Securities
As of
March 31, 2015 and December 31, 2014 the Company had a $2,709,000 investment in the common stock of Mevion Medical Systems, Inc.
(“Mevion”), formerly Still River Systems, Inc., representing an approximate 0.77% interest in Mevion. The Company accounts
for this investment under the cost method. As of March 31, 2015, the Company also has $5,000,000 in non-refundable deposits toward
the purchase of three MEVION S250 systems from Mevion.
The
Company carries its investment in Mevion at cost and reviews it for impairment on a quarterly basis, or as events or circumstances
might indicate that the carrying value of the investment may not be recoverable. The Company evaluated this investment for impairment
at December 31, 2014 and reviewed it at March 31, 2015 in light of both current market conditions and the ongoing needs of Mevion
to raise cash to continue its development of the first compact, single room proton beam radiation therapy (“PBRT”)
system. Based on its analysis, the Company estimates that there is currently an unrealized loss (impairment) of approximately $2.4
million.
In assessing whether the
impairment is other than temporary, we evaluated the length of time and extent to which market value has been below cost, the financial
condition and near term prospects of Mevion and our ability and intent to retain our investment for a period sufficient to allow
for an anticipated recovery in the market value. Although the investment is not without risk, and the manufacture of the first
unit took longer than originally anticipated, the Company believes that the current market value is a temporary situation and the
successful operation of the first MEVION S250 PBRT system (“MEVION S250”) and Mevion’s significant revenue backlog
provide a significantly higher potential valuation.
The first MEVION S250, located at Barnes-Jewish
Hospital in St. Louis, MO (“Barnes-Jewish Hospital”), treated its first patient on December 19, 2013. The second MEVION
S250, located at the Ackerman Cancer Center in Jacksonville, Florida (“Ackerman Cancer Center”), treated its first
patient in April 2015. The Company’s first MEVION S250 system was delivered to UF Health Cancer Center at Orlando Health
in November 2014 and anticipates treating patients in the first quarter 2016.
Note 5. Line of Credit
As
of December 31, 2014, the Company had a $9,000,000 renewable line of credit with a bank secured by a certificate of deposit. The
line of credit had been in place since June 2004. The Company’s earnings in 2013 were insufficient to satisfy the “profitability”
covenant in the line of credit. The Bank waived this default on August 8, 2014 and agreed to change the maturity date of the facility
to December 31, 2014. The line was paid-off using the proceeds from the certificate of deposit on January 2, 2015.
Borrowing
under the line of credit was subject to interest expense at a rate equal to the bank’s prime rate minus 0.5 percentage point,
or alternatively at the Company’s discretion, the LIBOR rate plus 1.0 percentage point. The weighted average interest rate
on money borrowed against the line of credit during 2014 was 1.40%. As of December 31, 2014, there was $8,780,000 borrowed against
the line of credit.
Note 6. Fair Value of Financial Instruments
The Company’s disclosures
of the fair value of financial instruments is based on a fair value hierarchy which prioritizes the inputs to the valuation techniques
used to measure fair value into three levels. Level 1 inputs are unadjusted quoted market prices in active markets for identical
assets and liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than
quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are
unobservable inputs for assets or liabilities, and reflect the Company’s own assumptions about the assumptions that market
participants would use in pricing the asset or liability. The estimated fair value of the Company’s assets and liabilities
as of March 31, 2015 and December 31, 2014 were as follows (in thousands):
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | | |
Carrying
Value | |
March 31, 2015 | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash, cash equivalents, restricted cash | |
$ | 977 | | |
$ | - | | |
$ | - | | |
$ | 977 | | |
$ | 977 | |
Investment in equity securities | |
| - | | |
| - | | |
| 330 | | |
| 330 | | |
| 2,709 | |
Total | |
$ | 977 | | |
$ | - | | |
$ | 330 | | |
$ | 1,307 | | |
$ | 3,686 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
Debt obligations | |
$ | - | | |
$ | 10,421 | | |
$ | - | | |
$ | 10,421 | | |
$ | 10,202 | |
Total | |
$ | - | | |
$ | 10,421 | | |
$ | - | | |
$ | 10,421 | | |
$ | 10,202 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
December 31, 2014 | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash, cash equivalents, restricted cash | |
$ | 1,109 | | |
$ | - | | |
$ | - | | |
$ | 1,109 | | |
$ | 1,109 | |
Certificate of deposit | |
| 9,000 | | |
| - | | |
| - | | |
| 9,000 | | |
| 9,000 | |
Investment in equity securities | |
| - | | |
| - | | |
| 330 | | |
| 330 | | |
| 2,709 | |
Total | |
$ | 10,109 | | |
$ | - | | |
$ | 330 | | |
$ | 10,439 | | |
$ | 12,818 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | |
Advances on line of credit | |
$ | 8,780 | | |
$ | - | | |
$ | - | | |
$ | 8,780 | | |
$ | 8,780 | |
Debt obligations | |
| - | | |
| 10,658 | | |
| - | | |
| 10,658 | | |
| 10,591 | |
Total | |
$ | 8,780 | | |
$ | 10,658 | | |
$ | - | | |
$ | 19,438 | | |
$ | 19,371 | |
Note 7. Repurchase of Common Stock
In
1999 and 2001, the Board of Directors approved resolutions authorizing the Company to repurchase up to a total of 1,000,000 shares
of its own stock on the open market, which the Board reaffirmed in 2008. There were no shares repurchased in 2015. There were 1,000
shares repurchased in the first quarter of 2014. There are approximately 72,000 shares remaining under this repurchase authorization.
Note 8. Income Taxes
We
generally calculate our 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, we compute our provision for income taxes using the actual effective income tax rate for the results
of operations reported within the year-to-date periods. Our 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 our common stock options
and historically 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, we have
computed our provision for income taxes for the three month periods ended March 31, 2015 and 2014 by applying the actual effective
tax rates to income or (loss) reported within the condensed consolidated financial statements through those periods.
| 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, which involve risks and
uncertainties including, but not limited to, the risks of the Gamma Knife and radiation therapy businesses, the risks of developing
The Operating Room for the 21st CenturySM program, and the risks of investing in a development-stage company,
Mevion. 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, 2014 and the definitive Proxy Statement for the
Annual Meeting of Shareholders held to be held on June 16, 2015.
The
Company had eighteen Gamma Knife units in operation at March 31, 2015 and nineteen at March 31, 2014. One Gamma Knife customer
contract expired at the end of first quarter 2015. Two of the Company’s customer contracts are through subsidiaries where
GKF or its subsidiary is the majority owner and managing partner. Eleven of the Company’s eighteen current Gamma Knife customers
are under fee-per-use contracts, and seven customers are under retail arrangements. The Company’s contract to provide radiation
therapy and related equipment services to an existing Gamma Knife customer is also considered a retail arrangement. Retail arrangements
are further classified as either turn-key or revenue sharing. Revenue from fee per use contracts is determined by each hospital’s
contracted rate. For revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by
the hospital. Under turn-key arrangements, the Company receives payment from the hospital in the amount of its reimbursement from
third party payors, and 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 the
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.
On
January 2, 2013, Congress enacted the American Taxpayer Relief Act of 2012 which reduced Gamma Knife delivery code reimbursement
from $7,910 to $3,300, effective April 1, 2013. All other Gamma Knife reimbursement codes remained unchanged. Effective January
1, 2014, the Gamma Knife delivery code reimbursement was increased by approximately 9%.
Effective
January 1, 2015, CMS has established a comprehensive Ambulatory Payment Classification (APC) for both Gamma Knife and LINAC one
session cranial radiosurgery. The comprehensive reimbursement rate of approximately $9,768 will be inclusive of the delivery and
ancillary codes, but exclusive of co-insurance payments or other adjustments. The average current CMS reimbursement rate for delivery
and ancillary codes (exclusive of co-insurance and other adjustments) is approximately $5,600. Prior to 2013, the Gamma Knife reimbursement
rate had been relatively stable for many years.
Medical
services revenue increased by $53,000 to $4,117,000 for the three month period ended March 31, 2015 from $4,064,000 for the three
month period ended March 31, 2014. Gamma Knife revenue, excluding Gamma Knife revenue from EWRS Turkey in 2014, increased $490,000
compared to the prior year. The increase in Gamma Knife revenue was also due to a new site that began in fourth quarter 2014 and
increased procedures at existing sites. Revenue from the Company’s radiation therapy contract, however, decreased for the
three month period by $229,000, to $119,000 from $348,000 for the same period in the prior year. Excluding EWRS Turkey, IGRT revenues
decreased $106,000 compared to the three month period ended March 31, 2014. The decrease was due to a decline in volume at the
existing radiation therapy site.
The
number of Gamma Knife procedures decreased by 114 to 479 in the first quarter 2015 from 593 in the same quarter in the prior year.
Excluding procedures reported from EWRS Turkey, Gamma Knife procedures increased by 36 compared to prior year. The increase was
primarily due to the addition of a new site in the fourth quarter of 2014 and increased volumes at existing sites.
Total
costs of revenue decreased by $255,000 to $2,520,000 for the three month period ended March 31, 2015 from $2,775,000 for the three
month period ended March 31, 2014. Maintenance and supplies decreased by $154,000 for the three month period ended March 31, 2015
compared to the same period in the prior year, primarily due to the sale of EWRS Turkey and the expiration of two maintenance contracts
at existing sites. Depreciation and amortization decreased by $106,000 for the three month period ended March 31, 2015 compared
to the same period in the prior year. This was due to the sale of EWRS Turkey, effective May 31, 2014, offset by one new site which
began in December 2014, and one upgrade performed in the second quarter 2014. When an upgrade is performed the book value of the
unit increases which increases depreciation expense. Other direct operating costs increased by $5,000 for the three month period
ended March 31, 2015 compared to the same period in the prior year.
Selling
and administrative costs decreased by $101,000 to $821,000 for the three month period ended March 31, 2015 from $922,000 for the
three month period ended March 31, 2014. This decrease was primarily due to the sale of EWRS Turkey, in addition to lower payroll
related costs, and rent expense. Building rent decreased due to the recognition of the
Company’s sublease for a portion of its existing office space through the remainder of its lease term.
Interest
expense decreased by $150,000 to $320,000 for the three month period ended March 31, 2015 from $470,000 for the three month
period ended March 31, 2014. The decrease was due to the sale of EWRS Turkey, which incurred interest expense prior to its
sale. Also, the Company paid off two existing loans in the second and fourth quarters of 2014, and closed its line of credit
in early 2015.
Gain
from foreign currency transactions was $0 compared to $15,000 for the same period in the prior year. There were no gains or losses
from foreign currency transactions in 2015 due to the sale of EWRS Turkey in 2014. The gain from foreign currency transactions
was $15,000 for the three month period ended March 31, 2014. The gain or loss from foreign currency transactions was driven by
fluctuations in the exchange rate between the US Dollar and Turkish Lira.
Interest
and other income decreased by $3,000 to $6,000 for the three month period ended March 31, 2015 from $9,000 for the three month
period ended March 31, 2014. Interest income is generated from interest earned on the Company’s certificate of deposit and
other investments.
The
Company had income tax expense of $130,000 for the three month period ended March 31, 2015 compared to an income tax benefit of
$30,000 for the three month period ended March 31, 2014. The increase in income tax expense is primarily due to higher taxable
income attributable to American Shared Hospital Services.
Net
income attributable to non-controlling interest increased by $157,000 to $204,000 for the three month period ended March 31, 2015
from $47,000 for the three month period ended March 31, 2014. 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.
The
Company had net income of $128,000, or $0.02 per basic and diluted share, for the three month period ended March 31, 2015 compared
to a net loss of $96,000, or $0.02 per basic share, in the same period in the prior year. The increase in net income was primarily
due to an increase in medical services revenue and decreased operating and other costs for the period.
Liquidity and Capital
Resources
The
Company had cash and cash equivalents of $927,000 at March 31, 2015 compared to $1,059,000 at December 31, 2014. The Company’s
cash position decreased by $132,000 due to payments for the purchase of property and equipment of $188,000, principal payments
on long term debt and capital leases of $1,405,000, and distributions to non-controlling interests of $88,000. These decreases
were offset by net cash from operating activities of $1,329,000 and net proceeds from the certificate of deposit and pay-down
on the line of credit of $220,000.
The
Company had cash and cash equivalents of $957,000 at March 31, 2014 compared to $1,909,000 at December 31, 2013. The Company’s
cash position decreased by $952,000 due to payments for the purchase of property and equipment of $147,000, principal payments
on long term debt and capital leases of $2,035,000, distributions to non-controlling interests of $274,000, repurchased of common
stock of $2,000, and a net loss due to the effect on cash from changes in foreign exchange rates of $17,000. These decreases were
offset by net cash from operating activities of $1,404,000, advances on the line of credit of $60,000 and an investment by a non-controlling
interest of $59,000.
The
Company has scheduled interest and principal payments under its debt obligations of approximately $2,745,000 and scheduled capital
lease payments of approximately $5,111,000 during the next 12 months. The Company believes that its cash flow from cash on hand,
operations, and other cash resources are adequate to meet its scheduled debt and capital lease obligations during the next 12 months.
The
Company as of March 31, 2015 had shareholders’ equity of $26,434,000, negative working capital of $1,730,000 and total assets
of $58,953,000.
Commitments
The Company has a $2,709,000
common stock investment in Mevion, which is considered a long-term investment on the balance sheet and is recorded at cost.
As of March 31, 2015, the Company also has $5,000,000 in non-refundable deposits toward the purchase of three MEVION S250 systems
from Mevion. The non-refundable deposits are recorded in the condensed consolidated balance sheets as deposits and construction
in progress. The Company has entered into an agreement with a radiation oncology physician group which has contributed $400,000
towards the deposits on the third system. The $400,000 contribution from the physician group is recorded in the condensed consolidated
balance sheet as non-controlling interest in subsidiary as of March 31, 2015. The Company’s first PBRT system was delivered
in November 2014.
The Company has commitments
to purchase three PBRT systems, one Gamma Knife Perfexion system, one Gamma Knife model 4C system, and one Cobalt-60 reloads at
an existing site, as of March 31, 2015. Financing has been committed to the Model 4C unit and the Cobalt-60 reload. The Company
has a lease financing commitment, pending execution of definitive documents, for an additional $9,000,000, for its first PBRT project.
The total of these commitments is approximately $44,534,000, towards which the Company has made non-refundable deposits totaling
approximately $7,784,000. The timing of progress payments for PBRT contracts two and three are dependent upon future events and
the Company has some flexibility to delay the due dates of these commitments. Approximately $27,000,000 of these commitments are
not expected to start becoming due until 2016.
| |
Commitment | | |
Cash Deposits | |
| |
| | |
| |
Proton Beam Units | |
$ | 38,600,000 | | |
$ | 5,000,000 | |
| |
| | | |
| | |
Gamma Knife Units | |
| 5,934,000 | | |
| 2,784,000 | |
| |
| | | |
| | |
Total Commitments | |
$ | 44,534,000 | | |
$ | 7,784,000 | |
The
Gamma Knife model 4C system is projected to be installed in late 2015 at the Company’s new customer site in Peru. The Perfexion
is for a site yet to be determined. The first PBRT system was delivered in November 2014 and the remaining two currently do not
have anticipated delivery dates. The deposits and progress payments are classified as deposits and construction in progress under
Property and Equipment in the condensed consolidated balance sheets as of March 31, 2015.
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, trust 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, 2015 the Company had no
significant long-term, market-sensitive investments.
Item 4. Controls and Procedures
Under
the supervision and with the participation of our management, including our chief executive officer and our chief 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, 2015, our disclosure controls
and procedures are 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, 2015 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
| Item 1. | Legal Proceedings. |
None.
There
are no changes from those listed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
| 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.
Exhibit |
|
|
|
Incorporated by reference herein |
Number |
|
Description |
|
Form |
|
Exhibit |
|
Date |
|
|
|
|
|
|
|
|
|
4.1 |
|
Second Amendment to Rights Agreement, dated as of October 22, 2014, between American Shared Hospital Services and American Stock Transfer & Trust Company. |
|
Current Report on Form 8-K |
|
3.1 |
|
October 24, 2014 |
10.1 |
|
Common Stock Purchase Agreement, dated as of June 11, 2014, by and among the Company and the Investors. |
|
Current Report on Form 8-K |
|
10.1 |
|
June 13, 2014 |
10.2 |
|
Common Stock Purchase Agreement, dated as of October 22, 2014, by and between the Company and Raymond C. Stachowiak. |
|
Current Report on Form 8-K |
|
10.2 |
|
October 24, 2014 |
10.3 |
|
Note and Warrant Purchase Agreement, dated as of October 22, 2014, by and among the Company and the Investors. |
|
Current Report on Form 8-K |
|
10.1 |
|
October 24, 2014 |
10.4 |
|
Warrant Amendment Agreement dated as of December 5, 2014, by and among the Company and the Investors. |
|
Current Report on Form 8-K |
|
10.1 |
|
December 5, 2014 |
31.1 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
* |
|
|
|
|
31.2 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
* |
|
|
|
|
32.1 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
* |
|
|
|
|
101 |
|
The following materials from the Quarterly Report on Form 10-Q for American Shared Hospital Services for the quarter ended March 31, 2015, filed on May 15, 2015, formatted in XBRL: Condensed Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014; Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014; Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014; Condensed Consolidated Statement of Shareholders’ Equity for the periods ended December 31, 2013 and 2014 and three months ended March 31, 2015 (unaudited); Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014; and Notes to the Unaudited Condensed Consolidated Financial Statements, detail tagged. |
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Filed herewith. |
|
|
|
|
|
|
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: |
May 14, 2015 |
/s/ Ernest A. Bates, M.D. |
|
|
|
Ernest A. Bates, M.D. |
|
|
|
Chairman of the Board and Chief Executive Officer |
|
|
|
|
|
|
|
|
Date: |
May 14, 2015 |
/s/ Craig K. Tagawa |
|
|
|
Craig K. Tagawa |
|
|
|
Senior Vice President |
|
|
|
Chief Operating and Financial Officer |
Exhibit 31.1
CERTIFICATION
I, Ernest A. Bates, M.D., as chief executive officer of American
Shared Hospital Services, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American
Shared Hospital Services;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; and
c) evaluated the effectiveness of the registrant’s disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any changes in the registrant’s
internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (or the fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information; and
b) any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
May 14, 2015 |
|
|
|
/s/ Ernest A. Bates, M.D. |
|
Ernest A. Bates, M.D. |
|
|
|
Chief Executive Officer |
|
Exhibit 31.2
CERTIFICATION
I, Craig K. Tagawa., as chief financial officer of American Shared
Hospital Services, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American
Shared Hospital Services;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; and
c) evaluated the effectiveness of the registrant’s disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any changes in the registrant’s
internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (or the fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability
to record, process, summarize and report financial information; and
b) any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
May 14, 2015 |
|
|
|
/s/ Craig K. Tagawa |
|
Craig K. Tagawa |
|
|
|
Chief Financial Officer |
|
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
The certification set forth below is being submitted
in connection with the Quarterly Report on Form 10-Q of American Shared Hospital Services for the quarterly period ended March
31, 2015 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange
Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Ernest A. Bates, M.D., the Chief Executive Officer
and Craig K. Tagawa, the Chief Financial Officer of American Shared Hospital Services, each certifies that, to the best of his
knowledge:
1. the Report fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of American Shared Hospital Services.
May 14, 2015 |
|
|
/s/ Ernest A. Bates, M.D. |
|
Ernest A. Bates, M.D. |
|
Chief Executive Officer |
|
|
|
/s/ Craig K. Tagawa |
|
Craig K. Tagawa |
|
Chief Financial Officer |
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