AMS 10-K & 10-Q changes, risk factors and insider trading

Congress enacted legislation in 2013 that significantly reduced the Medicare reimbursement rate for outpatient Gamma Knife treatment by setting it at the same amount paid for linear accelerator-basedLINAC-based radiosurgery treatment. Gamma Knife treatment has been relatively stable during the last five years. There can be no assurance that CMS reimbursement levels will be maintained at levels providing the Company an adequate return on its investment. Any future reductions in the reimbursement rate would adversely affect the Company’s revenues and financial results.

The Company'sCompany’s revenue sharing is subject to payor mixpayor-mix variability which could negatively impact the Company'sCompany’s revenue and financial results.

The Company’s average reimbursement rate for its revenue sharing and retaildirect patient service customers is dependent on the percentage mix of government associated payors and commercial managed care payors. Commercial and managed care payors tend to reimburse at a higher level than government payors. Therefore, a shift in payor mix to a higher level of government payors will reduce the Company’s average reimbursement rate per treatment.

Each Gamma Knife, PBRT or advanced LINEAR acceleratorLINAC device requires a substantial capital investment. In some cases, we contribute additional funds for capital costs and/or annual operating and equipment related costs such as marketing, maintenance, insurance and property taxes. Due to the structure of our contracts with medical centers, there can be no assurance that these costs will be fully recovered or that we will earn a satisfactory return on our investment, which could have a material negative impact on our revenues and financial results. Additionally, the Company ismay be obligated to remove the equipment at the end of the lease term. In the event the customer does not purchase the equipment from the Company or the Company is not able to trade in the equipment, the Company is required to remove the equipment and record an Asset Retirement Obligation (“ARO”).

The Company has commenced remediation of the above discussed material weakness as it has expanded its accounting staff and personnel since late in fiscal 2024.year 2024, including during fiscal year 2025. The Company will continue to evaluate its accounting and finance staffing needs as well as make planned enhancements to its systems and improvements to its financial reporting processes. However, there can be no assurance that the Company will be successful in remediating the material weakness in its internal control over financial reporting. If the Company is unable to successfully complete its remediation efforts or favorably assess the effectiveness of its internal control over financial reporting, the Company’s operating results, financial position, stock price, and ability to accurately report its financial results and timely file its SEC reports could be adversely affected.

The Company’s ability to make scheduled payments of the principal and interest on its indebtednessindebtedness, including under the Credit Agreements, depends on the Company’s financial condition and operating performance, which is subject to economic and competitive conditions and to certain financial, business, and other factors.factors, and may be adversely affected if the Company’s obligations under the Credit Agreements are accelerated upon an event of default. There can be no assurance that the Company will maintain a level of cash flow from operating activities sufficient to permit it to pay the principal of and any interest on its indebtedness. If the Company’s cash flow and capital resources are insufficient to fund its debt obligations, including as a result of any acceleration of indebtedness, the Company may be forced to delay investments and capital expenditures, to seek additional capital, or to restructure or refinance its indebtedness. There can be no guarantee that those alternative measures will be available, either at all or on terms that are favorable to the Company, or that they will be successful even if available in allowing the Company to meet its debt-service obligations. In the absence of such operating results and resources, the Company could experience liquidity issues, which could force the Company to take alternative measures to satisfy its debt obligations, such as selling assets, restructuring debt, or obtaining additional equity capital on potentially onerous or highly dilutive terms. The Credit Agreement and DFC LoanAgreements restrict the Company’s ability to dispose of assets and to use the proceeds from such dispositions, so the Company may be restricted from taking certain measures, such as conducting an asset sale, to meet its debt-service obligations. The ability to refinance indebtedness would also depend on the general state of capital markets and on the Company’s financial condition, neither of which can be predicted at this time.

There is constant change and innovation in the market for highly sophisticated medical equipment. New and improved medical equipment can be introduced that could make the Gamma Knife technology obsolete and that would make it uneconomical to operate. In 2006, Elekta introduced a new model of the Gamma Knife, the Perfexion, which the Company has implemented at all of its domestic sites. The Perfexion can perform procedures faster than previous Gamma Knife models and it involves less health care personnel intervention. In 2015, Elekta introduced the Leksell Gamma Knife Icon ™. The Perfexion is upgradeable to the Icon platforms which has enhanced imaging capabilities allowing for treatment without a head frame and the treatment of larger tumors. In 2022, Elekta introduced an upgrade to the Icon, called the Esprit. Existing model 4(C)s of the Gamma Knife are not upgradeable to the Perfexion model. Currently, four of the Company’s eight Gamma Knife units in the United States are Esprits and all of the Company’s eightnine Gamma Knife units are Perfexion models, onesix of which hashave the Icon upgrade. The Company’s equipment in Ecuador wasbeen upgraded to a Perfexion with Icon in November 2023. The Company is in the process of upgrading the equipment in Peru from a Model 4(C) to the Esprit (including the Company’s Gamma Knife unit in Peru in July 2025), and expectstwo of which have been upgraded to completethe thisIcon upgrade during(including the secondCompany’s quarterGamma ofKnife 2025.Unit in Ecuador in November 2023). The failure to acquire or use new technology and products could have a material adverse effect on our business and results of operations.

As of December 31, 2024, we determined that our Gamma Knife portfolio had no remaining salvage value, and certain sites experienced equipment impairment or the contracts are expired or are expected to expire in the second quarterquarters of 2025.2025 and 2026, respectively. Additionally, two sites that recently recognized their salvage value as part of the Esprit upgrade were subsequently impaired. Accordingly, we concluded that there was no salvage value remaining and the Company recognized equipment impairment as of December 31, 2024.

American Shared Hospital Services is a leading provider of turn-key technology solutions for stereotactic radiosurgery and advanced radiation therapy equipment and services. The main drivers of the Company’s revenue are numbers of sites, procedure volume, and reimbursement. The Company delivers radiation therapy through medical equipment leasing and direct patient services, its two reportable segments. The medical equipment leasing segment, which we also refer to as the Company’s leasing segment, operates by fee-per-use contracts or revenue sharing contracts where the Company shares in the revenue and operating costs of the equipment. The Company leases nineseven Gamma Knife systems and one PBRT system as of December 31, 2024,2025, where a contract exists between the hospital and the Company. The Company also owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador, one single-unit radiation therapy facility in Puebla, Mexico, and as a result of the completion of the RI Acquisition on May 7, 2024, the Company also has an interest in and operates three single-unit radiation therapy facilities in Rhode Island. These facilities constitute the direct patient services segment, which we also refer to as the Company’s retail segment, where a contract exists between the Company'sCompany’s facilities and the individual treated at the facility. A summary of the Company’s medical equipment leases and direct patient service sites is set forth in the table below:

The Company had two contracts expire in the second and third quarters of 2023, respectively, and one in November 2024. In February 2025, the Company and one of its customercustomers mutually agreed to terminate their lease agreement prior to the contract term,term. andThe theCompany had one Gamma Knife contract expire in April 2025. The Company expects a fourththird contract to expire in the second quarter of 2025. The Company has one customer contract that was upgraded to the Esprit in January 2025.2026. A summary of the Company’s procedure volumes for fiscal years 20242025 and 20232024 are set forth in the table below.

The decrease in Gamma Knife volume during 20242025 in the leasing segment was primarily due to the expiration of twothree contracts in the secondfourth quarter of 2024, and thirdthe first and second quarters of 2023 and a third contract that expired in November 2024, respectively.2025. Same center procedures decreasedincreased 15%11% in 2025 compared to 2023,2024, partiallydriven dueby toequipment downtimeupgrades forat thetwo existing customers. The upgrade of one Gamma Knife system to the Esprit duringsystem allows for treatment of more types of diagnoses. We believe the seconddecrease quarterin ofPBRT 2024volume andduring other2025 was due to normal, cyclical fluctuations. The Company’s PBRT unit was impacted by several hurricanes during 2024, which drove lower procedure volume at that location.

The increase in LINAC procedure volume during 20242025 was the result of the completion of the RI Acquisition in May 2024 and the beginning of the Company’s treatment of patients at its LINAC facility in Puebla, Mexico. On May 7, 2024, the Company acquired 60% of the interests of the RI Companies. The RI Companies operate three, existing, stand-alone radiation therapy cancer centers in Woonsocket, Warwick and Providence, Rhode Island. In July 2024, the Company began treating patients at a stand-alone LINAC facility in Puebla, Mexico. All four LINAC locations operated for the twelve-month period ended December 31, 2025, compared to a partial period during 2024.

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles and follow general practices within the industry in which it operates. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the consolidated financial statements; accordingly, as this information changes, the consolidated the financial statements could reflect different estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.

The most significant accounting policies followed by the Company are presented in Note 2 – Accounting Policies to the consolidated financial statements. These policies along with the disclosures presented in the other consolidated financial statement notes and, in this discussion, and analysis, provide information on how significant assets and liabilities are valued in the consolidated financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of the consolidated financial statement amounts,amounts and the methods, assumptions and estimates underlying those amounts, management has identified estimated useful lives of property and equipment and its salvage values,equipment, impairment of property and equipment, business combinations, and revenue recognition for revenue sharing customers, and as such the aforementioned could be most subject to revision as new information becomes available. The following are our critical accounting policies in which management’s estimates, assumptions and judgments most directly and materially affect the consolidated financial statements:

The Company recognizes revenues under Accounting Standards Codification (“ASC”) 842 Leases (“ASC 842”) and ASC 606 Revenue from Contracts with Customers (“ASC 606”). The Company delivers radiation therapy through medical equipment leasing (“leasing”) and direct patient services (“retail”).services. The Company leased nineseven Gamma Knife systems and one PBRT system as of December 31, 2024.2025. The leasing business operates by fee-per-use contracts or revenue sharing, where the Company shares in the revenue and operating costs of the equipment. The Company also owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador, one single-unit radiation therapy facility in Puebla, Mexico, and following the RI Acquisition on May 7, 2024, the Company also owns a 60% interest in and operates three single-unit radiation therapy facilities in Rhode Island, collectively, the retaildirect patient service segment.

The Company recognizes revenues under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee per use or revenue sharing basis. The terms of the contracts do not contain any guaranteed minimum payments. The Company’s lease contracts typically have a ten-year term and are classified as either fee per use or revenue sharing. Fee per use revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed. Under revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by the hospital. The amount the Company expects to receive is recorded as revenue and estimated based on historical experience. Revenue estimates are reviewed periodically and adjusted as necessary. Some of the Company’s revenue sharing arrangements also have a cost sharing component and net profit share for the operating costs of the center. The Company records an estimate of operating costs which are reviewed on a regular basis and adjusted as necessary to more accurately reflect the actual operating costs and profit. The operating costs and estimated net operating profit are recorded as other direct operating costs in the consolidated statements of income.operations. For the years ended, December 31, 20242025 and 2023,2024, the Company recognized leasing revenue of approximately $15,629,000$12,553,000 and $17,772,000$15,629,000 under ASC 842, respectively, of which approximately $9,952,000$7,369,000 and $10,133,000$9,952,000 were for PBRT services, respectively.

Direct Patient Services Revenue (“Retail”)

On May 7, 2024, the Company acquired 60% of the interests of the RI Companies. The RI Companies operate three, existing, stand-alone radiation therapy cancer centers in Woonsocket, Warwick and Providence, Rhode Island, where contracts exist between the Company’s facilities and the individual patients treated at the facility. Under ASC 606, the Company acts as the principal in these transactions and provides, at a point in time, a single performance obligation, in the form of radiation therapy treatment. The Company’s stand alone radiation therapy facility in Puebla, Mexico is also accounted for under ASC 606. Revenue related to radiation therapy is recognized at the expected amount to be received, based on insurance contracts and payor mix, when the patient receives treatment. There is no variable consideration present in the Company’s performance obligation and the transaction price is agreed upon per the stated contractual rate. Payment terms at these facilities are typically prepaid for self-pay patients and insurance providers are paid net 30 to 60 days. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts. The Company also concluded these facilities are part of its retaildirect patient service segment, see further discussion below.

Accounts receivable under ASC 606 at December 31, 2025 and January 1, 2025 were $8,138,000 and $6,073,000. Accounts receivable under ASC 606 at December 31, 2024 and January 1, 2024 were $11,229,000$6,073,000 and $1,626,000. Accounts receivable under ASC 606 at December 31, 2023 and January 1, 2023 were $1,626,000 and $1,119,000. For the years ended December 31, 20242025 and 2023,2024, the Company recognized retaildirect patient service revenues of approximately $12,556,000$15,529,000 and $3,553,000$12,556,000 under ASC 606, respectively.

During the year-endedyear ended December 31, 2024, the Company sold one of its Gamma Knife Perfexion units with an Icon upgrade to the customer it was leased to and recorded a net gain on equipment sale. During the year-ended December 31, 2023, the Company completed a sale of equipment to a new customer. The Company assessed this transaction under ASC 606 and concluded the Company acted as the agent in this transaction and provided, at a point in time, twoa single performance obligations,obligation, in the form of an equipment sale of an Icon and Cobalt-60 reload.Icon. The performance obligation to sell, assign, transfer and deliver the equipment to the customer was carried out via Elekta. Revenue related to the equipment sale is recognized on a net basis when the sale is complete. The Company recognized net revenues of $155,000 and $200,000 on the sale of equipment for the yearsyear ended December 31, 2024 and 2023.2024.

Accounting pronouncements issued and not yet adopted - In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures (“ASU 2023-09”) which requires entities, on an annual basis, to disclose: specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold, the amount of income taxes paid, net of refunds, disaggregated by jurisdiction, income or loss from continuing operations before income tax, income tax expense from continuing operations disaggregated between foreign and domestic, and income tax expense from continuing operations disaggregated by federal, state and foreign. ASU 2023-09 is effective for annual periods beginning after December 31, 2024. The Company is currently evaluatingadopted ASU 2023-09 to determinefor the impactyear itended mayDecember have31, on2025 and enhanced its consolidateddisclosure financialrequirements, statements.accordingly. See Note 7 - Income Taxes for further discussion.

Accounting pronouncements issued and not yet adopted - In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”) which requires entities to (1)1. disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, (2)2. include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, (3)3. disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and (4)4. disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03 to determine the impact it may have on its consolidated financial statements.

For each of the years ended December 31, 20242025 and 2023,2024, 56%45% and 83%56% of the Company’s revenue was derived from the leasing segment, respectively, and 44%55% and 17%44% from the Company’s retaildirect patient service segment, respectively. For the year ended December 31, 2024,2025, 35%41% of the Company’s revenue was derived from its LINAC business, 33% was derived from its Gamma Knife business, and 26% was derived from its PBRT business. For the year ended December 31, 2024, 35% was derived from its PBRT business, 34% of the Company’s revenue was derived from its Gamma Knife business, 30% was derived from its LINAC business, and 1% was derived from equipment sales. For the year ended December 31, 2023, 51% of the Company’s revenue was derived from its Gamma Knife business, 48% was derived from its PBRT business and 1% was derived from equipment sales.

Total revenue in 20242025 increased 32.9%0.9% compared to 20232024 primarily due to revenue generated from the Company’s single-unit radiation therapy facility in Puebla, Mexico, which began treating patients in July 2024, and revenue generated by the three single-unit radiation therapy facilities owned by the RI Companies, which the Company acquired a 60% interest in on May 7, 2024. Revenues from the Company’s leasing segment decreased $1,988,000$3,076,000 in 20242025 compared to 20232024 due to a decrease in PBRT volumes and due to the expiration of twothree Gamma Knife contracts in the secondfourth quarter of 2024, first quarter of 2025, and thirdsecond quartersquarter of 2023, and a third contract that expired in November 2024.2025. Revenues from the Company’s retaildirect patient service segment increased by $9,003,000$2,973,000 in 20242025 compared to 20232024 due to higher volumes at the Company’s international Gamma Knife facilities, the Company’s single-unit facility in Puebla, Mexico and the three, recently acquired, radiation therapy facilities in Rhode Island.

The Company acquired the RI Companies on May 7, 2024 and included the financial results from their operations from May 7, 2024, the Closingclosing Datedate of the transaction, through December 31, 2024. The Company’s stand-alone radiation therapy facility in Puebla, Mexico also began treating patients in July 2024. RadiationThese therapyfacilities revenueswere generatedconsolidated fromwith the threeCompany’s stand-aloneoperations facilitiesor acquiredotherwise throughoperated for the RItwelve-month Acquisitionperiod andended December, 31, 2025, versus operating under the Company for a partial period in the prior year, driving the increase in radiation therapy facility in Puebla were $8,517,000 for the year ended December 31, 2024. Radiation therapy procedures for the three stand-alone facilities acquired through the RI Acquisitionrevenue and theLINAC radiation therapy facility in Puebla were 14,507 for the year ended December 31, 2024.sessions.

PBRT revenue for 20242025 was $9,952,000$7,369,000 compared to $10,133,000$9,952,000 in 2023.2024. The number of PBRT fractions performed in 20242025 was 5,1394,056 compared to 5,3695,139 in 2023.2024. Revenue per fraction in 20242025 was $1,937$1,817 compared to $1,887$1,937 in 2023.2024. TheLower Company’s PBRT unit in Orlando, Florida, was impacted by several hurricanesvolumes during 2024,2025 whichdrove resultedlower inrevenues. We believe the lower procedure volume.volume Theduring average2025 reimbursement increasedwas due to anormal, shiftcyclical in payor mix from Medicare to commercial or other payors, which are reimbursed at a higher amount.fluctuations.

Gamma Knife revenue for 20242025 was $9,716,000$9,185,000 compared to $10,992,000$9,716,000 in 2023.2024. Gamma Knife revenue for 20242025 decreased $1,276,000$531,000 compared to 20232024 due to the expiration of twoa total of three contracts in the secondfourth quarter of 2024, first quarter of 2025, and thirdsecond quartersquarter of 2023,2025, and a third contract that expired in November 2024.respectively.

The number of Gamma Knife procedures performed in 20242025 decreased by 111147 compared to 20232024 primarily due to the expiration of twoa total of three contracts in the secondfourth quarter of 2024, first quarter of 2025, and thirdsecond quartersquarter of 2023,2025, and a third contract that expired in November 2024.respectively. Excluding the three Gamma Knife contracts that expired during 20232024 and 2024,2025, Gamma Knife procedures for existing sites wereincreased consistent2% withcompared to the prior year. Overall, Gamma Knife procedures for existing customer sites, retaildirect patient service segment, increaseddecreased by 24%,6%, offset by aan 15%11% decreaseincrease in the Company’s Gamma Knife leasing segment in 20242025 compared to 2023,2024, respectively. The increasedecrease in Gamma Knife volumes from retaildirect patient service sites was due to improveddowntime marketingto and physician outreach atupgrade the Company’s international locations. In addition, the Company’s Gamma Knife unit in EcuadorPeru wasfrom upgradeda Model 4(C) to the EspritEsprit, and receivedto arelocate Cobalt-60the reloadfacility inlocation Novemberas 2023,part providingof forthe faster procedure time.upgrade.

Revenue per procedure decreasedincreased by $235$840 in 20242025 compared to 2023.2024. This decreaseincrease was due to changes in reimbursement at the Company’s revenue share sites, which can fluctuate depending on payor mix and volume of procedures by site.

Maintenance and supplies and other direct operating costs, related party, as a percentage of total revenue were 10.7%13.4% and 13.5%10.7% in 20242025 and 2023,2024, respectively. Maintenance and supplies and other direct operating costs, related party increased by $138,000$740,000 in 20242025 compared to 2023.2024. The increase in 20242025 compared to 2023was2024 was primarily due to maintenance at the Company’s radiation therapy facilities in Rhode Island, that were acquired during 2024, offset by lowerand maintenance expense for the Company’s GammaLINAC Knifeequipment portfolio.in Puebla, Mexico which was under warranty through May 2025.

Depreciation and amortization costs as a percentage of total revenue were 21.4%20.3% and 23.8%21.4% in 20242025 and 2023.2024. Depreciation and amortization costs increaseddecreased $996,000by $376,000 in 20242025 compared to 2023.2024. The increasedecrease in 20242025 compared to 2023was2024 was due to five upgrades performed between 2023 and 2024 where the Companyexpiration upgradedof anthree existing Gamma Knife to the Esprit, installed a new Esprit, or replaced the Cobalt-60contracts in the relatedfourth machines,quarter of 2024, first quarter of 2025, and second quarter of 2025, respectively, offset by higher depreciation expense driven by an upgrade at one of the Company’s existing locations, the RI Acquisition where the Company acquired three, existing, single-unit radiation therapy facilities.facilities, and the Company’s radiation therapy in Puebla, Mexico which began treating patients July 2024.

Other direct operating costs as a percentage of total revenue were 35.5%48.3% and 18.9%35.5% in 20242025 and 2023,2024, respectively. Other direct operating costs increased by $6,040,000$3,499,000 in 20242025 compared to 2023.2024. The increase in 20242025 was primarily due to the Company’s single-unit radiation therapy facility in Puebla, Mexico, which began treating patients in July 2024, and the three single-unit radiation therapy facilities the Company acquired in Rhode Island on May 7, 2024. These facilities are part of the Company’s retaildirect patient service segment where the Company owns and operates the facilities, therefore, there are higher operating costs associated with them.

The Company’s selling and administrative costs increaseddecreased $385,000by $329,000 in 20242025 compared to 2023.2024. The increasedecrease in 20242025 was due to increased staffing in the sales, finance and customer retention areas and approximately $560,000 in fees associated with new business opportunities, including those resulting from the RI Acquisition.Acquisition, incurred in the prior year only, offset by increased staffing in the sales, finance and customer retention areas that continued into 2025.

The Company’s interest expense increased $387,000$75,000 in 20242025 compared to 2023.2024. The increase for the year ended December 31, 20242025 was due to an increase in borrowings, includingprimarily the Second Supplemental Term Loan received in JanuaryDecember 2024, and the second tranche of the DFC loan received in November 2023.2024.

(LOSS) ON WRITE DOWN OF IMPAIRED ASSETS AND ASSOCIATED REMOVAL COSTS

As of December 31, 20242025 and 2023,2024, the Company recognized a loss on the write down of impaired assets of $3,084,000$0 and $940,000,$3,084,000, respectively. During the year ended December 31, 2024, the Company recognized impairment on six of its domestic Gamma Knife units. The Company also increased and impaired its ARO liability for one of the impaired units where the Company does not plan to renew the contract in early 20252026 and will remove this unit at its contract term. The six sites that were impaired and ARO for one of the impaired units were recorded as write down of impaired assets foras theof December 31, 2024. The Company also reviewed its long-lived assets during the fourth quarter of 2025 and concluded no events or circumstances existed that indicated additional impairment existed at December 31, 2025.

TheFor the year ended December 31, 2024, the Company recorded a $3,794,000 net bargain purchase gain related to the RI Acquisition that closed on May 7, 2024. The Company acquired 60% of the equity interests of the RI Companies, which operate three radiation therapy facilities, for $2,850,000. The assets acquired exceeded the total purchase price by the bargain purchase amount and the Company recorded this difference as a gain for the year ended December 31, 2024. See Note 12 - RI Acquisition to the consolidated financial statements for further discussion on bargain purchase.

Interest and other income decreasedincreased $174,000$120,000 in 20242025 compared to 2023.2024. The decreaseincrease is primarily due to thefavorable interestexchange receivedrates onfor the Company’sUS cash, driven by lower average cash balances,dollar compared to the priorMexican year.peso during the year ended December 31, 2025. The Company maintains most of its cash in Mexico in the local currency.

INCOME TAX EXPENSEBENEFIT

Income tax expensebenefit decreasedincreased $726,000$198,000 in 20242025 compared to 2023.2024. The decreaseincrease in the income tax expensebenefit in 20242025 was primarily due to losses incurred by both the Company’s leasing segment,and direct patient services segments, driven by equipmentlower impairment,PBRT and lower Gamma Knife procedure volumes during 2024.2025.

The Company anticipates that it will continue to record income tax expense if it operates profitably in the future. Currently there are state income tax payments required for most states in which the Company operates.

Net loss attributable to non-controlling interests increased $309,000$520,000 in 20242025 compared to 2023.2024. Net income or loss attributable to non-controlling interests represents the pre-tax income earned by the 19% non-controlling interest in GKF, and the pre-tax income or losses of the non-controlling interests in various subsidiaries controlled by GKF, and the 40% non-controlling interests in the RI facilities and their pre-tax income or losses.losses, and the 15% non-controlling interest in the Company’s joint venture in Puebla, Mexico and its net income or loss. The decrease or increase in net income or loss attributable to non-controlling interests reflects the relative profitability of GKF andGKF, the RI Companies.Companies, and Puebla. The increase in net loss attributable to non-controlling interests in 20242025 compared to 20232024 was due to higher pre-tax loss for GKF stand-alone operations.operations and the RI facilities.

NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN SHARED HOSPITAL SERVICES

NetThe incomeCompany incurred a net loss attributable to American Shared Hospital Services increasedof $1,576,000$1,553,000 in 20242025 compared to 2023.net income of $2,186,000 in 2024. The Company’s direct patient segment incurred a net loss of $1,167,000 in 2025 compared to net income of $5,566,000 in 2024. Net income for the Company’s retail segment increased $5,474,000 in 2024 compared to 2023. The increase in 2024 compared to 2023 was primarily due to the bargain purchase gain from the RI Acquisition and profitability of the three stand-alone facilities acquired, in which the Company acquired an interest. The Company’s direct patient segment incurred a net loss in 2025, primarily due to physician turnover at the RI facilities, which impacted volumes during the year. Also, the Company experienced equipment downtime in Peru to upgrade its equipment in July 2025. Net incomeloss for the Company’s leasing segment decreased $3,898,000$2,994,000 in 20242025 to a loss of $386,000 compared to 2023.a loss of $3,380,000 in 2024. The decrease in 20242025 compared to 20232024 was primarily due to the impairment recognized in the prior year on the Gamma Knife portfolio and related removal costs, along with operating losses at the domestic Gamma Knife leasing segment level.

The Company’s primary liquidity needs are to fund capital expenditures as well as support working capital requirements. In general, the Company’s principal sources of liquidity are cash and cash equivalents on hand and a $7,000,000 revolving line of credit (as defined above, the “Revolving Line”).hand. The Company had cash and cash equivalents, including restricted cash, of $3,712,000 at December 31, 2025 compared to $11,275,000 at December 31, 2024 compared to $13,808,000 at December 31, 2023,2024, a decrease of $2,533,000.$7,563,000. The Company’s expected primary cash needs on both a short and long-term basis are for capital expenditures, business expansion, working capital, and other general corporate purposes. The Company believes that its revenue from operations, together with borrowing capacity under the Revolving Line and its access to capital resources are sufficient to continue funding its present operations, to meet its commitments on its existing debt, and to meet its operating capital and funding requirements for the next 12 months from the date of this Annual Report.

Operating activities provided $167,000$3,098,000 of cash in 2024,2025, which was driven by net income of $1,532,000, non-cash charges for depreciation and amortization of $6,174,000, a loss on the write down of impaired assets of $3,084,000, gain on sale of equipment of $155,000,$5,714,000, stock-based compensation expense of $373,000,$404,000, accretion of deferred issuance costs of $95,000,$126,000, net changes in lease liabilities of $285,000, changes in related party liabilities of $324,000,$207,000, and changes in payables and other accrued liabilities of $2,227,000. These increases were offset by the gain on bargain purchase of $3,794,000, deferred income taxes of $359,000, accretion of unfavorable lease position of $65,000, changes in receivables of $6,939,000, changes in prepaids and other assets of $513,000,$1,677,000. These increases were offset by a net loss of $2,727,000, accretion of unfavorable lease position of $26,000, changes in AROreceivables of $588,000,$559,000, and incomechanges taxesin accounts payable and accrued liabilities of $1,229,000.$955,000.

The Company’s trade accounts receivable increaseddecreased by $7,267,000$1,089,000 to $10,521,000 at December 31, 2025 from $11,610,000 at December 31, 2024 from $4,343,000 at December 31, 2023.2024. The number of days revenue (sales) outstanding (“DSO”) in accounts receivable as of December 31, 20242025 was 150137 days compared to 74150 days at December 31, 2023.2024. DSO fluctuates depending on timing of customer payments received and the mix of fee per use versus revenue sharing andor retaildirect patient service customers. The revenue sharing and retaildirect patient service sites generally have longer collection periods than fee per use sites. The Company added four retaildirect patient service sites during 2024, driving the increase in DSO.

Investing activities used $7,105,000$7,634,000 of cash in 2024, primarily2025, due to payments made towards the purchase of property and equipment of $7,938,000, offset by cash received in excess of cash paid for the RI Acquisition of $538,000, and proceeds from equipment sales of $140,000.equipment. During 2024,2025, the Company completed two Esprit upgrades at existing customer sites, began installation at a third site, and completed a Cobalt-60 reload and software upgrade at a fourth site.sites.

Cash Flows ProvidedUsed byin Financing Activities

On April 9, 2021, theASHS, CompanyOrlando, along with certain of its domestic subsidiariesGKF (collectively, the “Borrowers), and ASRS (together with the Borrowers, collectively, the Loan Parties”) entered into a five yearfive-year $22,000,000 creditCredit agreementAgreement with Fifth Third Bank, N.A. (Unless otherwise stated, capitalized terms that are used in this “Long-Term Debt” section but not defined here or elsewhere in this Annual Report have the meanings given to them in the Credit Agreement”).Agreement, as amended. The Credit Agreement includes three loan facilities.Facilities. The first loan facility is a $9,500,000 term loan (the “Term Loan”)Loan, which was used to refinance the domestic Gamma Knife debt and finance leases,leases and for associated closing costs. The second loan facility is a $5,500,000 delayed draw term loan (the “DDTL”)DDTL, which was used to refinance the Company’s PBRT finance leases and associated closing costs, as well as to provide additional working capital. The third loan facility provides for a $7,000,000 revolvingRevolving lineLine of credit (the “Revolving Line”) available for future projects and general corporate purposes. The facilitiesFacilities have a five-year maturity, which mature on April 9, 2026, carry a floating interest of SOFR plus 3.0% (6.99% as of December 31, 2025), and are secured by a lien on substantially all of the assets of the Loan Parties and are guaranteed by ASHS. ASHS is currently in discussions with Fifth Third regarding a potential extension of the maturity of the Facilities. However, there can be no assurance that Fifth Third will agree to such an extension or, if obtained, as to the terms or duration of any such extension. If ASHS is unable to obtain an extension of the maturity of the Facilities, the Company will not have sufficient cash on hand to repay the Facilities at maturity.

On January 25, 2024 (the “First Amendment Effective Date”),2024, the CompanyLoan Parties and Fifth Third entered into athe First Amendment to the Credit Agreement (the “First Amendment”),Agreement, which amended the Credit Agreement to add a newSupplemental termTerm loanLoan in the aggregate principal amount of $2,700,000 (the “Supplemental Term Loan”).$2,700,000. The proceeds of the Supplemental Term Loan were advanced in a single borrowing on January 25, 2024, and were used for capital expenditures related to the Company’s operations in Puebla, Mexico and other related transaction costs. The Supplemental Term Loan willhas maturea onMaturity Date of January 25, 2030 (the “Maturity Date”).2030. Interest on the Supplemental Term Loan iswas payable monthly during the initial twelve monthtwelve-month period following the First Amendment Effective Date. Following such twelve monthtwelve-month period, the Company is required to make equal monthly payments of principal and interest to fully amortize the amount outstanding under the Supplemental Term Loan by the Maturity Date. The Supplemental Term Loan is secured by a lien on substantially all of the assets of the CompanyASHS and certain of its domestic subsidiaries. The First Amendment also replaces the LIBOR-based rates in the Credit Agreement with SOFR-based rates. Pursuant to the First Amendment, advances under the Credit Agreement bear interest at a floating rate per annum equal to SOFR plus 3.00%, subject to a SOFR floor of 0.00%.

On December 18, 2024 (the “Second Amendment Effective Date”),2024, the Company and Fifth Third entered into athe Second Amendment to the Credit Agreement (the “Second Amendment”),Agreement, which amended the Credit Agreement to add a newSecond termSupplemental loanTerm Loan in the aggregate principal amount of $7,000,000 (the “Second Supplemental Term Loan”).$7,000,000. The proceeds of the Second Supplemental Term Loan were advanced in a single borrowing on December 18, 2024, and were used for capital expenditures related to the Company’s domestic Gamma Knife leasing operations and the RI Acquisition and related transaction costs. The Second Supplemental Term Loan will mature on December 18, 2029 (the “Second Maturity Date”). Interest on the Second Supplemental Term Loan is payable monthly during the initial twelve monthtwelve-month period following the Second Amendment Effective Date. Following such twelve monthtwelve-month period, the Company is required to make equal monthly payments of principal and interest to fully amortize the amount outstanding under the Second Supplemental Term Loan over a period of seven years. All unpaid principal of the Second Supplemental Term Loan and accrued and unpaid interest thereon is due and payable in full on the Second Maturity Date. The Second Supplemental Term Loan is secured by a lien on substantially all of the assets of the CompanyASHS and certain of its domestic subsidiaries.

The long-term debt on the consolidated balance sheets related to the Term Loan, DDTL, Supplemental Term Loan and Second Supplemental Term Loan was $18,462,000 $16,197,000 and $10,825,000 $18,462,000 as of December 31, 20242025 and December 31, 2023,2024, respectively. The Company capitalized debt issuance costs of $164,000 asduring of the year ended December 31, 2024 related to issuance of the Supplemental Term Loan and Second Supplemental Term Loan.

American Shared Hospital Services is a leading provider of turn-key technology solutions for stereotactic radiosurgery and advanced radiation therapy equipment and services. The main drivers of the Company’s revenue are numbers of sites, procedure volume, and reimbursement. The Company delivers radiation therapy through medical equipment leasing and direct patient services, its two reportable segments. The medical equipment leasing segment, which we also refer to as the Company’s leasing segment, operates by fee-per-use contracts or revenue sharing contracts where the Company shares in the revenue and operating costs of the equipment. The Company leases seven Gamma Knife systems and one PBRT system as of MarchJune 31,30, 2026, where a contract exists between the hospital and the Company.

The Centers for Medicare and Medicaid (“CMS”) has established a 2026 delivery code reimbursement rate of approximately $7,525 ($7,645 in 2025) for a Medicare Gamma Knife treatment. The approximate CMS reimbursement rates for delivery of PBRT for a simple treatment without compensation for 2026 is $565 ($578 in 2025) and $1,277 ($1,276 in 2025) for simple with compensation, intermediate and complex treatments, respectively.

The Company recognizes revenues under ASC 842 and ASC 606. The Company had seven domestic Gamma Knife units, two international Gamma Knife units, three domestic LINAC units, one international LINAC unit, and one PBRT system in operation in the United States as of MarchJune 31,30, 2026,2026 and ten domestic Gamma Knife units, two international Gamma Knife units, three domestic LINAC units, and one PBRT system in operation in the United States as of MarchJune 31,30, 2025. Five of the Company’s seven domestic Gamma Knife customers are under fee-per-use contracts, and two customers are under revenue sharing arrangements. The seven domestic Gamma Knife contracts operate under the Company’s leasing segment. The Company’s PBRT system at Orlando Health is considered a revenue share contract operating under the leasing segment. On March 13, 2026, the Company and Orlando Health, Inc. entered into an amendment to their PBRT lease agreement to, among other things, extend the term through April 5, 2033. The Company’s interest in three single-unit radiation therapy facilities, acquired in Rhode Island in May 2024, and the Company’s single-unit LINAC facility in Puebla, Mexico operate under the Company’s direct patient services segment. The Company, through GKF, also owns and operates two single-unit, international Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador. These two units economically operate under the Company’s direct patient services segment.

Rental revenue from medical equipment leasing (“leasing”) – The Company recognizes revenues under ASC 842 when services have been rendered and collectability is reasonably assured, on either a fee-per-use or revenue sharing basis. The terms of the contracts do not contain any guaranteed minimum payments. The Company’s lease contracts typically have a ten-year term and are classified as either fee-per-use or revenue sharing. Fee-per-use revenues are recognized at the time the procedures are performed, based on each hospital’s contracted rate and the number of procedures performed. Under revenue sharing arrangements, the Company receives a contracted percentage of the reimbursement received by the hospital. The amount the Company expects to receive is recorded as revenue and estimated based on historical experience. Revenue estimates are reviewed periodically and adjusted as necessary. Some of the Company’s revenue sharing arrangements also have a cost sharing component. 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. The operating costs are recorded as other direct operating costs in the condensed consolidated statements of operations. For the three-monthsix-month period ended MarchJune 31,30, 2026, the Company recognized leasing revenue of approximately $3,020,000$3,545,000 and $6,565,000 compared to $2,991,000$3,571,000 and $6,562,000 for the same periodperiods in the prior year.year, respectively. For the three-monthsix-month period ended MarchJune 31,30, 2026, $1,956,000$2,346,000 and $4,302,000 of the ASC 842 revenues were for PBRT services compared to $1,642,000,$1,921,000 and $3,563,000 for the same periodperiods in the prior year.year, respectively.

Accounts receivable balances under ASC 606 at MarchJune 31,30, 2026 and January 1, 2026 were $8,484,000$7,466,000 and $8,138,000, respectively. Accounts receivable balances under ASC 606 at MarchJune 31,30, 2025 and January 1, 2025 were $6,120,000$6,657,000 and $6,073,000, respectively. For the three-monththree and six-month periods ended MarchJune 31,30, 2026, the Company recognized direct patient services revenues of approximately $4,064,000$4,885,000 and $8,949,000 compared to $3,121,000$3,500,000 and $6,621,000 for the same periodperiods in the prior year.year, respectively.

In July 2025, the FASB issued ASU 2025-05 Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”) which provides (1) all entities with a practical expedient and (2) entities other than public business entities, with an accounting policy election when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company adopted ASU 2025-05 forduring the period-endedthree-month period ended March 31, 20262026, and concluded it did not have a material impact to its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“ASU 2024-03”) which requires entities to 1. disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, 2. include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, 3. disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and 4. disclose the total amount of selling expenses, in annual reporting periods, including an entity’s definition of selling expense. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ASU 2024-03 to determine the impact it may have on its consolidated financial statements.

FirstSecond Quarter and Six-Month Period 2026 Results

Revenues increased by $972,000$1,359,000 and $2,331,000 to $7,084,000$8,430,000 and $15,514,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to $6,112,000$7,071,000 and $13,183,000 for the same periodperiods in the prior year.year, respectively. Revenues from the Company’s leasing segment decreased by $26,000 and increased by $29,000$3,000 to $3,020,000$3,545,000 and $6,565,000 for the three and six-month periods ended June 30, 2026, compared to $3,571,000 and $6,562,000 for the same periods in the prior year, respectively. The decrease in leasing revenue for the three-month period ended MarchJune 31,30, 2026 compared to $2,991,000 for the same period in the prior year. The increase in leasing revenue was due to a higherlower number of Gamma Knife and PBRT procedures compared to the same period in the prior year. Leasing revenue for the six-month period ended June 30, 2026, was consistent with the comparable period. Revenues from the Company’s direct patient services segment increased by $943,000$1,385,000 and $2,328,000 to $4,064,000$4,885,000 and $8,949,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to $3,121,000$3,500,000 and $6,621,000 for the same periodperiods in the prior year.year, respectively. The increase in direct patient services revenue was due to a higher number of procedures at the RI facilities and the Company’s radiation therapy facility in Puebla.

Radiation therapy revenues generated from the three stand-alone facilities acquired through the RI Acquisition and the radiation therapy facility in Puebla were $2,920,000$3,370,000 and $6,291,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, compared to $2,374,000$2,541,000 and $4,915,000 for the same periodperiods in the prior year.year, respectively. Radiation therapy procedures for the three stand-alone facilities acquired through the RI Acquisition and the radiation therapy facility in Puebla were 6,3116,715 and 12,645 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, compared to 6,7266,311 and 12,291 for the same periodperiods in the prior year.year, respectively.

Revenues generated from the Company’s PBRT system increased by $314,000$425,000 and $739,000 to $1,956,000$2,346,000 and $4,302,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, compared to $1,642,000$1,921,000 and $3,563,000 for the same periodperiods in the prior year, respectively. The increase for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, was driven by higher procedure volumes.volumes and higher average reimbursement.

The number of PBRT fractions increased by 172107 and 279 to 1,0031,221 and 2,224 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to 8311,114 and 1,945 for the same periodperiods in the prior year.year, respectively. The increase in PBRT volumes for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was due to what the Company believes are normal, cyclical fluctuations.

Gamma Knife revenue increased by $112,000$105,000 and $216,000 to $2,208,000$2,714,000 and $4,921,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to $2,096,000$2,609,000 and $4,705,000 for the same periodperiods in the prior year.year, respectively. The increase for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was due to increased procedure volume from the direct patient services segment, offset by lower procedure volume from the leasing segment.

The number of Gamma Knife procedures increased by 2131 and 52 to 229295 and 524 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to 208264 and 472 for the same periodperiods in the prior year.year, respectively. Gamma Knife procedures from the Company’s leasing segment decreased 10.1%11.3% and 11.1% for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, primarily due to the expiration of one customer contract in April 2025. Gamma Knife procedures from the Company’s direct patient services segment, which are the two international Gamma Knife locations, increased 44%46.7% and 45.4% for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, compared to the same periodperiods in the prior year.year, respectively. The Company completed the equipment upgrade in Peru to a Gamma Knife Esprit in June 2025. Following the upgrade, there was an increase in volume driven by shorter treatment times. The Company’s facility in Ecuador also experienced a 49% increase in volumes for the three-month period ended March 31, 2026 compared to same period in the prior year. The patient populations in Peru and Ecuador are primarily insured by local government therefore volumes can be impacted by local legislation changes or social and economic factors. Both facilities were impacted by local factors during the first quarterand second quarters of 2025.

Total costs of revenue increased by $626,000$1,556,000 and $2,182,000 to $5,796,000$6,997,000 and $12,793,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to $5,170,000$5,441,000 and $10,611,000 for the same periodperiods in the prior year.year, respectively.

Maintenance and supplies and other direct operating costs, related party, increased by $200,000$117,000 and $317,000 to $1,061,000$973,000 and $2,034,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to $861,000$856,000 and $1,717,000 for the same periodperiods in the prior year.year, respectively. The increase in maintenance and supplies and other direct operating costs, related party, for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026, was due to maintenance for the LINAC in Puebla, Mexico that was previously under warranty, maintenance for the LINAC equipment in Rhode Island, and the PBRT maintenance contract, which increases on an annual basis.

Depreciation and amortization decreased by $156,000 and $312,000 to $1,289,000$1,341,000 and $2,630,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to $1,445,000$1,497,000 and $2,942,000 for the same periodperiods in the prior year.year, respectively. The decrease in depreciation and amortization for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was due to the expiration of one Gamma Knife customer contract in April 2025, a change in estimate for the useful life of the PBRT equipment, and assets in Rhode Island that became fully depreciated. These decreases were partially offset by higher depreciation on the Gamma Knife equipment in Peru that was replacedupgraded during the second quarter of 2025,2025. During the first quarter of 2026, the Company amended its lease for the PBRT equipment with Orlando Health. The amendment extended the lease an additional seven years, beginning April 6, 2026. Following the amendment, the Company changed its remaining estimate for the useful life for the PBRT equipment. The net effect of this change in estimate for the three and assetssix-month periods ended June 30, 2026, was a decrease in Rhodenet Islandincome thatof becameapproximately fully$52,000 depreciated.or $0.01 per diluted share, for both periods. This change in estimate will also impact future periods.

Other direct operating costs increased by $582,000$1,595,000 and $2,177,000 to $3,446,000$4,683,000 and $8,129,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to $2,864,000$3,088,000 and $5,952,000 for the same periodperiods in the prior year.year, respectively. The increase in other direct operating costs for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was primarily due to operating costs at the RI facilities, which are part of the Company’s direct patient services segment and have higher operating costs compared to facilities in the Company’s leasing segment. The Company also increased the estimate for allowance for credit losses for the RI Facilities by $909,000 for the three and six-month periods ended June 30, 2026,which contributed to the increase compared to the same periods of the prior year, respectively.

Selling and administrative expense increased by $102,000$296,000 and $398,000 to $1,910,000$2,042,000 and $3,952,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to $1,808,000$1,746,000 and $3,554,000 for the same periodperiods in the prior year.year, respectively. The increase in selling and administrative expense for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was primarily due to audit, tax and consulting fees, offset by lower legal fees.fees incurred to negotiate the Third Amendment to the Credit Agreement. See Note 10 - Subsequent Event for further information.

Interest expense decreased by $131,000$127,000 and $258,000 to $302,000$301,000 and $603,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to $433,000$428,000 and $861,000 for the same periodperiods in the prior year.year, respectively. The decrease in interest expense for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was due to a lower average principal balance on the Company’s debt compared to the same periodperiods in the prior year.year, respectively.

Income tax expense increased by $415,000$156,000 and $571,000 to an expense of $92,000$135,000 and $227,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to an income tax benefit of $323,000$21,000 and $344,000 for the same periodperiods in the prior year.year, respectively. Income tax expense for the three-monthsix-month period ended MarchJune 31,30, 2026, included a non-recurring adjustment for unrecognized tax benefits related to foreign taxes of $31,000, which offset income tax expense for the same period, compared to $71,000 for the three-monthsix-month period ended MarchJune 31,30, 2025. Excluding this adjustment, income tax expense for the three-monthsix-month period ended MarchJune 31,30, 2026 increased $375,000.$531,000 compared to the prior period. The increase in income tax expense for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 was due to profits generated at the Company’s direct patient services segment in foreign jurisdictions. The Company’s direct patient services segment conducts operations in the United States and certain foreign jurisdictions.

Net loss attributable to non-controlling interests increased by $63,000$286,000 and $349,000 to a loss of $350,000$484,000 and $834,000 for the three-monththree periodand six-month periods ended MarchJune 31,30, 20262026, compared to $287,000$198,000 and $485,000 for the same periodperiods in the prior year.year, respectively. Net income or loss attributable to non-controlling interests represents net income or loss earned by the 40% non-controlling interest in the Rhode Island facilities, the 19% non-controlling interest in GKF, and net income or loss of the non-controlling interests in various subsidiaries controlled by GKF. The change in net income or loss attributable to non-controlling interests reflects the relative profitability or loss of the three Rhode Island facilities and GKF and its subsidiaries.

Net loss attributable to American Shared Hospital Services decreasedincreased by $13,000$234,000 and $221,000 to a net loss of $612,000,$514,000, or $0.09$0.07 per diluted share and a net loss of $1,126,000, or $0.17 for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 compared to a net loss of $625,000,$280,000, or $0.10$0.04 per diluted share and a net loss of $905,000 or $0.14 per diluted share for the same periodperiods in the prior year.year, respectively. Net loss for the three-monththree periodand six-month periods ended MarchJune 31,30, 2026 decreasedincreased primarily due to increasedlegal revenuesfees comparedincurred to negotiate the Third Amendment to the sameCredit periodAgreement inand the prior year. The Company incurred a net lossincrease for three-monthcredit periodallowances ended March 31, 2026, due to losses incurred byfor the directRI patientFacilities servicesof segments, driven by higher operating costs for these facilities.$909,000.

The Company’s primary liquidity needs are to fund capital expenditures as well as support working capital requirements. In general, the Company’s principal sources of liquidity are cash and cash equivalents on hand. The Company had cash, cash equivalents and restricted cash of $5,223,000$6,761,000 at MarchJune 31,30, 2026 compared to $3,712,000 at December 31, 2025. The Company’s cash position increased by $1,511,000$3,049,000 during the first threesix months of 2026 driven by cash provided by operating activities of $2,149,000.$4,385,000. This increase was offset by payment for the purchase of property and equipment of $41,000,$99,000, payments on long-term debt of $472,000,$1,112,000, and distributions to non-controlling interests of $125,000. The Company’s expected primary cash needs on both a short and long-term basis are for capital expenditures, business expansion, working capital, and other general corporate purposes. The Company has scheduled interest and principal payments under its debt obligations of approximately $10,407,000$10,907,000 during the next 12 months. Of this amount, there was an aggregate of $7,605,000 due on April 9, 2026 for the Term Loan and DDTL.DDTL (although subsequent to June 30, 2026, the maturity date was extended to June 30, 2027). For a further discussion of these obligations, see “Long-Term Debt” below.

The Company had a working capital deficit at MarchJune 31,30, 2026 of $5,446,000$5,056,000 compared to a working capital deficit of $5,724,000 at December 31, 2025. The $278,000$668,000 decrease in working capital deficit was primarily due to increasingan cash and a decreaseincrease in the current portion of long-term debt, net,cash offset in part by an increase in accountsother payableaccrued liabilities and related party payables. If the Company is unable to negotiate an extension to the Credit Agreement,Agreement beyond June 30, 2027, the Company’s liquidity will be adversely impacted and the Company’s ability to satisfy all of its commitments over the next twelve months in accordance with their current terms would be jeopardized. See additional discussion in the “Long-Term Debt” and “Commitments” sections below. The Company, in the past, has secured financing for its Gamma Knife and radiation therapy units. The Company has secured financing for its projects from several lenders and anticipates that it will be able to secure financing on future projects from these or other lending sources, but there can be no assurance that financing will continue to be available on acceptable terms. Furthermore, if the Company’s payment obligations under the Credit Agreements becomewere to be accelerated due to theany new or uncured events of default under such agreements, the Company would not have sufficient cash on hand, cash flow from operations, and other cash resources to satisfy such accelerated payment obligations, which raises substantial doubt about the Company’s ability to continue as a going concern. See additional discussion in the “Long-Term Debt” and “Going-Concern Consideration” sections below.

On April 9, 2021, the Company along with certain of its domestic subsidiaries (collectively, the “Loan Parties”) entered into a five year $22,000,000 credit agreement (the “Credit Agreement”) with Fifth Third Bank, N.A. (“Fifth Third”). The Credit Agreement includes three loan facilities. The first loan facility is a $9,500,000 term loan (the “Term Loan”) which was used to refinance the domestic Gamma Knife debt and finance leases, and associated closing costs. The second loan facility of $5,500,000 is a delayed draw term loan (the “DDTL”) which was used to refinance the Company’s PBRT finance leases and associated closing costs, as well as to provide additional working capital. The third loan facility provides for a $7,000,000 revolving line of credit (the “Revolving Line”) available for future projects and general corporate purposes. The facilities have a five-year maturity, which matured on April 9, 2026, and carry a floating interest rate based on the Secured Overnight Financing Rate (“SOFR”) plus 3.0% (6.86%6.74% as of MarchJune 31,30, 2026) and are secured by a lien on substantially all of the assets of the Loan Parties and guaranteed by ASHS, Orlando and ASRS. There was $7,075,000 due on April 9, 2026 for the Term Loan and DDTL.

The long-term debt on the condensed consolidated balance sheets related to the Term Loan, DDTL, Revolving Line, Supplemental Term Loan and Second Supplemental Term Loan was $15,895,000$15,427,000 and $16,197,000 as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The Company did not capitalize any debt issuance as of MarchJune 31,30, 2026 and December 31, 2025, related to the issuance of the Supplemental Term Loan and Second Supplemental Term Loan.

On September 30, 2025, the Company received a limited waiver from Fifth Third with respect to its failure to be in compliance with the maximum funded debt to EBITDA ratio covenant in the Credit Agreement as of June 30, 2025 and with respect to the delivery of items following the closing of the Second Amendment.

The loan entered into with United States International Development Finance Corporation (“DFC”) in connection with the acquisition of GKCE in June 2020 (the “DFC Loan”) was obtained through the Company’s wholly-owned subsidiary, HoldCo and is guaranteed by GKF. The DFC Loan is secured by a lien on GKCE’s assets. The first tranche of the DFC Loan was funded in June 2020. During the fourth quarter of 2023, the second tranche of the DFC loan was funded to finance the equipment upgrade in Ecuador. The amount outstanding under the first tranche of the DFC Loan is payable in 29 quarterly installments with a fixed interest rate of 3.67%. The amount outstanding under the second tranche of the DFC Loan is payable in 16 quarterly installments with a fixed interest rate of 7.49%. The long-term debt on the condensed consolidated balance sheets related to the DFC Loan was $985,000 $821,000 and $1,149,000 as of March 31,June 30, 2026 and December 31, 2025, respectively.

The DFC Loan contains customary covenants including without limitation, requirements that HoldCo maintain certain financial ratios related to liquidity and cash flow as well as depository requirements. On March 28, 2024, HoldCo received a waiver and amendment from DFC forthat waived certain covenants as of December 31, 2023 and through December 31, 2024 and amended other covenants and definitions permanently. On March 3, 2025, the Company received an additional waiver from DFC for certain covenants as of December 31, 2024 and through December 31, 2025. HoldCo was not in compliance with the cash to debt covenant at March 31, 2026 and at June 30, 2026. The Company notified DFC of this non-compliance and is in discussions for an extended waiver or amendment to the DFC Loan. However, there can be no assurances regarding the outcome of such discussions.

Furthermore, ASHS has determined that HoldCo’s non-compliance with the DFC Loan could be deemed to have resulted in an Event of Default (as defined in the Credit Agreement) under the Credit Agreement with Fifth Third. However, asprior ofto the dateparties ofentering thisinto Quarterlythe Report,Third Amendment, Fifth Third hasdid not delivereddeliver any notice to the Loan Parties asserting that such an Event of Default has occurred ornor sought to exercise any remedies it may have under the Credit Agreement as a result thereof.Agreement.

The Company’s failure to comply with the covenants under the Credit Agreements could result in the Company’s credit commitments being terminated and the principal of any outstanding borrowings, together with any accrued but unpaid interest, under the Credit Agreements could be declared immediately due and payable. Furthermore, upon declaring an Event of Default, the lenders under the Credit Agreements could also exercise their rights to take possession of, and to dispose of, the collateral securing the credit facilities and loans and could pursue additional default remedies uponDuring a period in which the Company is in default under the Credit Agreements, Fifth Third and DFC could accelerate all payment obligations under the Credit Agreements. If Fifth Third or DFC were to accelerate all payment obligations under the Credit Agreements as seta forthresult inof eachthe defaults thereunder, the Company would likely not have sufficient cash on hand to satisfy such agreement.accelerated payment obligations. As a result, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In November and December 2024, GKCE obtained two loans with banks locally in Ecuador (the “GKCE Loans”). The GKCE Loans carry interest rates of 12.60% and 12.78% and are payable in twelve and thirty-six equal monthly installments of principal and interest, respectively. The Company did not capitalize any debt issuance costs related to the GKCE Loans. Total long-term debt on the condensed consolidated balance sheets related to the GKCE Loans was $47,000$39,000 and $53,000 as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

As of MarchJune 31,30, 2026, long-term debtdebt, net, on the condensed consolidated balance sheets was $16,843,000.$16,216,000. See Note 3 - Long Term Debt to the condensed consolidated financial statements for additional information.

As of MarchJune 31,30, 2026, the Company had commitments to purchase and install two Esprit and two LINAC systems. The Esprit upgrades and one LINAC installation are anticipated to occur in the second half of 2026 or later at existing customer sites. The remaining LINAC is reserved for a future customer site. Total Gamma Knife and LINAC commitments as of MarchJune 31,30, 2026 were $7,884,000. There are no deposits on the condensed consolidated balance sheets related to these commitments as of MarchJune 31,30, 2026, nor are there any penalties if the Company decides to not execute these commitments. The Company’s current intent is to finance substantially all of these commitments. There can be no assurance that financing will be available for the Company’s initiatives or future projects, or at terms that are acceptable to the Company. However, the Company currently has cash on hand of $5,223,000$6,761,000 and is actively engaged with financing resources to fund these projects.

As of MarchJune 31,30, 2026, the Company had commitments to service and maintain its Gamma Knife, LINAC, and PBRT equipment. The service commitments are carried out via contracts with Mevion, Elekta, Solutech and Mobius Imaging, LLC. The Company’s commitment to purchase one LINAC system also includes a 5-year agreement to service the equipment, respectively. Total service commitments as of MarchJune 31,30, 2026 were $5,705,000.$5,764,000. 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 following table summarizes related party activity for the three-monththree and six-month periods ended MarchJune 31,30, 2026 and 2025:

The Company also had commitments to purchase and install two Esprit units and two LINACs, and service the related equipment totaling $10,464,000$10,174,000 as of MarchJune 31,30, 2026.

Related party liabilities on the condensed consolidated balance sheets consist of the following as of MarchJune 31,30, 2026 and December 31, 2025