|
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
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)
|
|
(unaudited)
|
(audited)
|
|||||||
|
ASSETS
|
March 31, 2010
|
December 31, 2009
|
||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 552,000 | $ | 833,000 | ||||
|
Restricted
cash
|
50,000 | 50,000 | ||||||
|
Certificate
of deposit
|
9,000,000 | 9,000,000 | ||||||
|
Accounts
receivable, net of allowance for doubtful accounts of $100,000 in 2010and
$100,000 in 2009
|
3,984,000 | 3,817,000 | ||||||
|
Other
receivables
|
89,000 | 60,000 | ||||||
|
Prepaid
expenses and other current assets
|
548,000 | 495,000 | ||||||
|
Current
deferred tax assets
|
219,000 | 219,000 | ||||||
|
Total
current assets
|
14,442,000 | 14,474,000 | ||||||
|
Property
and equipment:
|
||||||||
|
Medical
equipment and facilities
|
73,643,000 | 73,643,000 | ||||||
|
Office
equipment
|
692,000 | 692,000 | ||||||
|
Deposits
and construction in progress
|
9,006,000 | 5,852,000 | ||||||
| 83,341,000 | 80,187,000 | |||||||
|
Accumulated
depreciation and amortization
|
(38,398,000 | ) | (36,898,000 | ) | ||||
|
Net
property and equipment
|
44,943,000 | 43,289,000 | ||||||
|
Investment
in preferred stock
|
2,617,000 | 2,617,000 | ||||||
|
Other
assets
|
225,000 | 241,000 | ||||||
|
Total
assets
|
$ | 62,227,000 | $ | 60,621,000 | ||||
|
LIABILITIES AND
|
(unaudited)
|
(audited)
|
||||||
|
SHAREHOLDERS' EQUITY
|
March 31, 2010
|
December 31, 2009
|
||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 238,000 | $ | 318,000 | ||||
|
Employee
compensation and benefits
|
131,000 | 199,000 | ||||||
|
Other
accrued liabilities
|
667,000 | 755,000 | ||||||
|
Current
portion of long-term debt
|
4,419,000 | 4,894,000 | ||||||
|
Current
portion of obligations under capital leases
|
1,846,000 | 1,811,000 | ||||||
|
Total
current liabilities
|
7,301,000 | 7,977,000 | ||||||
|
Long-term
debt, less current portion
|
11,039,000 | 11,836,000 | ||||||
|
Long-term
capital leases, less current portion
|
9,802,000 | 7,233,000 | ||||||
|
Advances
on line of credit
|
8,300,000 | 7,900,000 | ||||||
|
Deferred
income taxes
|
2,920,000 | 2,920,000 | ||||||
|
Shareholders'
equity:
|
||||||||
|
Common
stock (4,595,000 shares at March 31, 2010 and 4,595,000 shares at December
31, 2009)
|
8,606,000 | 8,606,000 | ||||||
|
Additional
paid-in capital
|
4,621,000 | 4,593,000 | ||||||
|
Retained
earnings
|
6,213,000 | 6,205,000 | ||||||
|
Total
equity-American Shared Hospital Services
|
19,440,000 | 19,404,000 | ||||||
|
Non-controlling
interest in subsidiary
|
3,425,000 | 3,351,000 | ||||||
|
Total
shareholders' equity
|
22,865,000 | 22,755,000 | ||||||
|
Total
liabilities and shareholders' equity
|
$ | 62,227,000 | $ | 60,621,000 | ||||
|
Three
Months ended March 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Medical
services revenue
|
$ | 4,088,000 | $ | 4,167,000 | ||||
|
Costs
of revenue:
|
||||||||
|
Maintenance
and supplies
|
369,000 | 395,000 | ||||||
|
Depreciation
and amortization
|
1,484,000 | 1,624,000 | ||||||
|
Other
direct operating costs
|
536,000 | 551,000 | ||||||
| 2,389,000 | 2,570,000 | |||||||
|
Gross
Margin
|
1,699,000 | 1,597,000 | ||||||
|
Selling
and administrative expense
|
1,061,000 | 993,000 | ||||||
|
Transaction
costs
|
- | 197,000 | ||||||
|
Interest
expense
|
481,000 | 483,000 | ||||||
|
Operating
income (loss)
|
157,000 | (76,000 | ) | |||||
|
Interest
and other income
|
31,000 | 34,000 | ||||||
|
Income
(loss) before income taxes
|
188,000 | (42,000 | ) | |||||
|
Income
tax expense (benefit)
|
11,000 | (93,000 | ) | |||||
|
Net
income
|
177,000 | 51,000 | ||||||
|
Less:
Net income attributable to non-controlling interest
|
(169,000 | ) | (145,000 | ) | ||||
|
Net
income (loss) attributable to American Shared Hospital
Services
|
$ | 8,000 | $ | (94,000 | ) | |||
|
Net
income (loss) per share:
|
||||||||
|
Earnings
per common share - basic
|
$ | - | $ | (0.02 | ) | |||
|
Earnings
per common share - assuming dilution
|
$ | - | $ | (0.02 | ) | |||
|
PERIODS
ENDED DECEMBER 31, 2008 AND 2009 AND MARCH 31,
2010
|
||||||||||||||||||||||||||||
|
Additional
|
Non-controlling
|
|||||||||||||||||||||||||||
|
Common
|
Common
|
Paid-in
|
Retained
|
Sub-Total
|
Interest
in
|
|||||||||||||||||||||||
|
Shares
|
Stock
|
Capital
|
Earnings
|
ASHS
|
Subsidiary
|
Total
|
||||||||||||||||||||||
|
Balances
at January 1, 2008 (audited)
|
5,026,000 | $ | 9,320,000 | $ | 4,304,000 | $ | 5,916,000 | $ | 19,540,000 | $ | 3,153,000 | $ | 22,693,000 | |||||||||||||||
|
Repurchase
of common stock
|
(316,000 | ) | (443,000 | ) | - | - | (443,000 | ) | - | (443,000 | ) | |||||||||||||||||
|
Stock
based compensation expense
|
2,000 | - | 137,000 | - | 137,000 | - | 137,000 | |||||||||||||||||||||
|
True-up
tax benefit from share-based payment arrangements
|
- | - | 17,000 | - | 17,000 | - | 17,000 | |||||||||||||||||||||
|
Cash
distributions to non-controlling interest
|
- | - | - | - | - | (798,000 | ) | (798,000 | ) | |||||||||||||||||||
|
Net
income
|
- | - | - | 477,000 | 477,000 | 855,000 | 1,332,000 | |||||||||||||||||||||
|
Balances
at December 31, 2008 (audited)
|
4,712,000 | 8,877,000 | 4,458,000 | 6,393,000 | 19,728,000 | 3,210,000 | 22,938,000 | |||||||||||||||||||||
|
Repurchase
of common stock
|
(119,000 | ) | (271,000 | ) | - | - | (271,000 | ) | - | (271,000 | ) | |||||||||||||||||
|
Stock
based compensation expense
|
2,000 | - | 135,000 | - | 135,000 | - | 135,000 | |||||||||||||||||||||
|
Cash
distributions to non-controlling interest
|
- | - | - | - | - | (513,000 | ) | (513,000 | ) | |||||||||||||||||||
|
Net
income (loss)
|
- | - | - | (188,000 | ) | (188,000 | ) | 654,000 | 466,000 | |||||||||||||||||||
|
Balances
at December 31, 2009 (audited)
|
4,595,000 | 8,606,000 | 4,593,000 | 6,205,000 | 19,404,000 | 3,351,000 | 22,755,000 | |||||||||||||||||||||
|
Stock
based compensation expense
|
- | - | 28,000 | - | 28,000 | - | 28,000 | |||||||||||||||||||||
|
Cash
distributions to non-controlling interest
|
- | - | - | - | - | (95,000 | ) | (95,000 | ) | |||||||||||||||||||
|
Net
income
|
- | - | - | 8,000 | 8,000 | 169,000 | 177,000 | |||||||||||||||||||||
|
Balances
at March 31, 2010 (unaudited)
|
4,595,000 | $ | 8,606,000 | $ | 4,621,000 | $ | 6,213,000 | $ | 19,440,000 | $ | 3,425,000 | $ | 22,865,000 | |||||||||||||||
|
Three
Months ended March 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Operating
activities:
|
||||||||
|
Net
income
|
$ | 177,000 | $ | 51,000 | ||||
|
Adjustments
to reconcile net income to net cash from operating
activities:
|
||||||||
|
Depreciation
and amortization
|
1,516,000 | 1,647,000 | ||||||
|
Stock
based compensation expense
|
28,000 | 33,000 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(196,000 | ) | (53,000 | ) | ||||
|
Prepaid
expenses and other assets
|
(53,000 | ) | (154,000 | ) | ||||
|
Accounts
payable and accrued liabilities
|
(236,000 | ) | (62,000 | ) | ||||
|
Net
cash from operating activities
|
1,236,000 | 1,462,000 | ||||||
|
Investing
activities:
|
||||||||
|
Payment
for purchase of property and equipment
|
(110,000 | ) | (539,000 | ) | ||||
|
Net
cash from investing activities
|
(110,000 | ) | (539,000 | ) | ||||
|
Financing
activities:
|
||||||||
|
Cash
distribution to non-controlling interest
|
(95,000 | ) | (114,000 | ) | ||||
|
Advances
on line of credit
|
400,000 | 400,000 | ||||||
|
Stock
repurchase
|
- | (46,000 | ) | |||||
|
Principal
payments on capital leases
|
(440,000 | ) | (395,000 | ) | ||||
|
Principal
payments on long-term debt
|
(1,272,000 | ) | (1,508,000 | ) | ||||
|
Net
cash from financing activities
|
(1,407,000 | ) | (1,663,000 | ) | ||||
|
Net
change in cash and cash equivalents
|
(281,000 | ) | (740,000 | ) | ||||
|
Cash
and cash equivalents at beginning of period
|
833,000 | 10,286,000 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 552,000 | $ | 9,546,000 | ||||
|
Supplemental
cash flow disclosure:
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | 572,000 | $ | 579,000 | ||||
|
Income
taxes
|
$ | 29,000 | $ | 38,000 | ||||
|
Schedule
of non-cash investing and financing activities
|
||||||||
|
Acquisition
of equipment with capital lease financing
|
$ | 3,044,000 | $ | - | ||||
|
Note
1.
|
Basis
of Presentation
|
|
Note
2.
|
Per
Share Amounts
|
|
Note
3.
|
Stock-based
Compensation
|
|
Note
4.
|
Convertible
Preferred Stock Investment
|
|
Note
5.
|
Line
of Credit
|
|
Note
6.
|
Fair
Value of Financial Instruments
|
|
Note
7.
|
Repurchase
of Common Stock
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
|
·
|
Still
River’s single room PBRT concept and design, although a departure from the
large scale three and four room PBRT systems on the market, is based on
the existing principle of generating protons from a cyclotron. Still
River, through design innovations and advances in magnet technology, has
made the cyclotron more compact such that it can be mounted on the
gantry.
|
|
|
·
|
A
gantry mounted cyclotron, although appearing to be revolutionary, has in
fact been done previously. A neutron generating gantry mounted
cyclotron has successfully treated patients for over ten years at one
medical center in the United
States.
|
|
|
·
|
Still
River’s development approach for the Monarch250 has been to integrate as
many commercially existing components as possible into the
Monarch250. The patient couch, CT imaging and treatment
planning software are all commercially available and will be integrated
into the Monarch250.
|
|
|
·
|
Still
River has hired engineers and staff with many years of accelerator and
proton beam experience, including personnel with prior experience at MIT’s
Plasma Fusion Lab and one of Still River’s proton beam
competitors.
|
|
|
·
|
Still
River has built the first three units of the magnet and other cyclotron
subsystems, has completed the manufacture/assembly of the gantry system,
and demonstrated integrated software control of all cyclotron operations
on the prototype unit, with installation of the prototype unit projected
to be finalized in early 2011.
|
|
|
·
|
Still
River completed and passed the cold mass test on the prototype unit, which
is considered a major milestone and an integral part of the process
towards gaining FDA approval.
|
|
|
·
|
Still
River is currently in the beam extraction test phase, and projects that
the beam extraction test will be completed in second quarter
2010.
|
|
|
·
|
A
respected physicist was hired by the Company as a third party consultant
to perform a technical review of this project. His discussions
with Still River’s chief technology officer indicated that the delays
encountered have at times resulted in modifications being required, but
the modifications were not significant, and he believes that development
of the PBRT machine will be completed in 2010. The consultant
was not engaged to analyze Still River’s financial
condition.
|
|
|
·
|
There
were some minor problems during some of the tests that were quickly
rectified, but have caused delays in the scheduled delivery of the first
unit. As a result, the Company’s expected delivery of its two
units has also been delayed. However, minor problems such as
these are expected in a new technology, and do not affect the Company’s
position on the viability of Still River
technology.
|
|
|
·
|
In
spite of the uncertain economic climate and a limited number of potential
investors, with the Series D offering, Still River was still able to raise
the cash required to continue its operations, and were able to add two new
major investors.
|
|
|
·
|
Based
on ongoing discussions with Still River management and regular review of
their financial statements and cash flow projections, the Company believes
that Still River will have adequate cash flow to continue development of
the system. Still River, as a development stage company
manufacturing its first product, continuously analyzes its cash
requirements. Due to the high level of interest in more compact
and lower cost proton beam radiation therapy devices, Still River has been
able to attract funding from financially significant and highly
sophisticated investors, such as Caxton Health and Life Sciences, Venrock
Associates and CHL Medical Partners. Still River is prepared,
as required, to raise additional funds as its needs
dictates.
|
|
|
·
|
Still
River recently added a new CEO, strengthening its management depth, and
with the new investors, increased its board strength as
well. Independent board members consist of the
following: Robert Wilson, Former Vice Chairman of Johnson and
Johnson; Peter P. D’Angelo, President, Caxton Associates; Dr. Anders Hove,
MD, Partner, Venrock Associates; Dr. Myles D. Greenberg, MD, General
Partner, CHL Medical Partners; Dr. Jay Rao, MD, JD, Portfolio Manager,
Green Arrow Capital Management; and Mr. Paul Volcker, Former Chairman,
United States Federal Reserve.
|
|
|
·
|
Still
River currently has 15 sites under contract to install the Monarch250
system.
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
Item
1.
|
Legal
Proceedings.
|
|
Item
1A.
|
Risk
Factors
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
|
Item
3.
|
Defaults
Upon Senior Securities.
|
|
Item
4.
|
Submission
of Matters to a Vote of Securities
Holders.
|
|
Item
5.
|
Other
Information.
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K.
|
|
(a)
|
Exhibits
|
|
|
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.
|
|
Date:
May 17, 2010
|
/s/ Ernest A. Bates, M.D.
|
||
|
Ernest
A. Bates, M.D.
|
|||
|
Chairman
of the Board and Chief Executive Officer
|
|||
|
Date:
May 17, 2010
|
/s/ Craig K. Tagawa
|
||
|
Craig
K. Tagawa
|
|||
|
Senior
Vice President
|
|||
|
Chief
Operating and Financial Officer
|