American Shared Hospital Services: Form 10-Q for the period ended Jun 30, 2026

This quarterly report to the SEC may be deemed to contain certain forward-looking statements. The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like we “believe”, “anticipate”, “target”, “expect”, “pro forma”, “estimate”, “intend”, “will”, “is designed to”, “plan” and words of similar meaning. Forward-looking statements describe our future plans, objectives, expectations or goals. Such statements address future events and conditions and include, but are not limited to, such things as capital expenditures, earnings, liquidity and capital resources, financing of our business, government programs and regulations, legislation affecting the health care industry, the expansion of our proton beam radiation therapy business, accounting matters, compliance with debt covenants, completed and potential acquisitions, competition, customer concentration, contractual obligations, timing of payments, technology and interest rates. These forward-looking statements involve known and unknown risks that may cause our actual results in future periods to differ materially from those expressed in any forward-looking statement. Factors that could cause or contribute to such differences include, but are not limited to, such things as our level of debt, the limited market for our capital-intensive services, the impact of lowered federal reimbursement rates, the impact of U.S. health care reform legislation, competition and alternatives to our services, technological advances and the risk of equipment obsolescence, our significant investment in the proton beam radiation therapy business, restrictions in our debt agreements that limit our flexibility to operate our business, our ability to repay our indebtedness, breaches in security of our information technology, and the small and relatively illiquid market for our stock. These lists are not all-inclusive because it is not possible to predict all factors. 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 SEC, including the Annual Report on Form 10-K for the year ended December 31, 2025. Any forward-looking statement speaks only as of the date such statement was made, and we are not obligated to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made, except as required by applicable laws or regulations.

Overview

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 June 30, 2026, where a contract exists between the hospital and the Company.

The Company acquired 60% of the equity interests of the RI Companies, which operate three single-unit radiation therapy facilities in Rhode Island. The Company, through GKF, owns and operates two single-unit Gamma Knife facilities in Lima, Peru and Guayaquil, Ecuador. The Company also owns and operates a single-unit radiation therapy center in Puebla, Mexico. The Company’s facilities in Rhode Island, Peru, Ecuador, and Mexico are considered direct patient services, where a contract exists between the Company’s facilities and the individual treated at the facility.

Based on the guidance provided in accordance with ASC 280 Segment Reporting, the Company determined it has two reportable segments, leasing and direct patient services. See Note 1 - Basis of Presentation to the condensed consolidated financial statements for additional information. The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects activity for both segments and specifically addresses a segment when appropriate to the discussion.

Reimbursement

The Centers for Medicare and Medicaid (“CMS”) 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.

Application of Critical Accounting Policies and Estimates

The Company’s condensed 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 condensed consolidated financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the condensed consolidated financial statements; accordingly, as this information changes, the condensed consolidated 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 to the consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2025. These policies along with the disclosures presented in the other condensed consolidated financial statement notes and, in this discussion, and analysis, provide information on how significant assets and liabilities are valued in the condensed consolidated financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts, and the methods, assumptions and estimates underlying those amounts, management has identified revenue recognition for revenue sharing arrangements, and the carrying value of property and equipment and useful lives, 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 condensed consolidated financial statements:

Revenue Recognition

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 June 30, 2026 and as of June 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 six-month period ended June 30, 2026, the Company recognized leasing revenue of approximately $3,545,000 and $6,565,000 compared to $3,571,000 and $6,562,000 for the same periods in the prior year, respectively. For the six-month period ended June 30, 2026, $2,346,000 and $4,302,000 of the ASC 842 revenues were for PBRT services compared to $1,921,000 and $3,563,000 for the same periods in the prior year, respectively.

Direct patient services income – The Company has stand-alone facilities in Lima, Peru, Guayaquil, Ecuador, and Puebla, Mexico 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 a Gamma Knife or radiation therapy treatment. Revenue related to these treatments is recognized on a gross basis at the time when the patient receives treatment. There is no variable consideration present in the Company’s performance obligation and the transaction price is agreed upon per the stated contractual rate. GKPeru’s payment terms are typically prepaid for self-pay patients and insurance provider payments are paid net 30 days. GKCE’s patient population is primarily covered by a government payor and payments are paid between three and six months following issuance of an invoice. The facility in Puebla currently has a contract with one local hospital to cover its eligible patient base and is also treating self-pay patients. Puebla’s payment terms are typically prepaid for self-pay patients and net 30 days for the hospital patients. The Company did not capitalize any incremental costs related to the fulfillment of its customer contracts.

On May 7, 2024, the Company acquired 60% of the 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. 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 the three radiation therapy facilities are part of its direct patient services segment, see further discussion at Note 1 - Basis of Presentation to the condensed consolidated financial statements.

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

Impairment of Long-lived Assets

The Company assesses the recoverability of its long-lived assets when events or changes in circumstances indicate their carrying value may not be recoverable. Such events or changes in circumstances may include: a significant adverse change in the extent or manner in which a long-lived asset is being used, significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company assesses recoverability of a long-lived asset by determining whether the carrying value of the asset group can be recovered through projected undiscounted cash flows over their remaining lives. If the carrying value of the asset group exceeds the forecasted undiscounted cash flows, an impairment loss is recognized, measured as the amount by which the carrying amount exceeds estimated fair value. An impairment loss is charged to the condensed consolidated statement of operations in the period in which management determines such impairment.

Accounting Pronouncements Issued and Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 15, 2024, and interim reporting periods beginning after December 15, 2025. The Company adopted ASU 2023-09 for the year-ended December 31, 2025, prospectively, and enhanced its disclosure requirements, accordingly.

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 during the three-month period ended March 31, 2026, and concluded it did not have a material impact to its condensed consolidated financial statements.

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. 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.

Second Quarter and Six-Month Period 2026 Results

Revenues increased by $1,359,000 and $2,331,000 to $8,430,000 and $15,514,000 for the three and six-month periods ended June 30, 2026, compared to $7,071,000 and $13,183,000 for the same periods in the prior year, respectively. Revenues from the Company’s leasing segment decreased by $26,000 and increased by $3,000 to $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 June 30, 2026 was due to a lower number of Gamma Knife 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 $1,385,000 and $2,328,000 to $4,885,000 and $8,949,000 for the three and six-month periods ended June 30, 2026, compared to $3,500,000 and $6,621,000 for the same periods in the prior 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 $3,370,000 and $6,291,000 for the three and six-month periods ended June 30, 2026, compared to $2,541,000 and $4,915,000 for the same periods in the prior year, respectively. Radiation therapy procedures for the three stand-alone facilities acquired through the RI Acquisition and the radiation therapy facility in Puebla were 6,715 and 12,645 for the three and six-month periods ended June 30, 2026, compared to 6,311 and 12,291 for the same periods in the prior year, respectively.

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

The number of PBRT fractions increased by 107 and 279 to 1,221 and 2,224 for the three and six-month periods ended June 30, 2026 compared to 1,114 and 1,945 for the same periods in the prior year, respectively. The increase in PBRT volumes for the three and six-month periods ended June 30, 2026 was due to what the Company believes are normal, cyclical fluctuations.

Gamma Knife revenue increased by $105,000 and $216,000 to $2,714,000 and $4,921,000 for the three and six-month periods ended June 30, 2026 compared to $2,609,000 and $4,705,000 for the same periods in the prior year, respectively. The increase for the three and six-month periods ended June 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 31 and 52 to 295 and 524 for the three and six-month periods ended June 30, 2026, compared to 264 and 472 for the same periods in the prior year, respectively. Gamma Knife procedures from the Company’s leasing segment decreased 11.3% and 11.1% for the three and six-month periods ended June 30, 2026, 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 46.7% and 45.4% for the three and six-month periods ended June 30, 2026, compared to the same periods in the prior 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 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 and second quarters of 2025.

Total costs of revenue increased by $1,556,000 and $2,182,000 to $6,997,000 and $12,793,000 for the three and six-month periods ended June 30, 2026, compared to $5,441,000 and $10,611,000 for the same periods in the prior year, respectively.

Maintenance and supplies and other direct operating costs, related party, increased by $117,000 and $317,000 to $973,000 and $2,034,000 for the three and six-month periods ended June 30, 2026 compared to $856,000 and $1,717,000 for the same periods in the prior year, respectively. The increase in maintenance and supplies and other direct operating costs, related party, for the three and six-month periods ended June 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 $1,341,000 and $2,630,000 for the three and six-month periods ended June 30, 2026 compared to $1,497,000 and $2,942,000 for the same periods in the prior year, respectively. The decrease in depreciation and amortization for the three and six-month periods ended June 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 upgraded during the second quarter of 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 six-month periods ended June 30, 2026, was a decrease in net income of approximately $52,000 or $0.01 per diluted share, for both periods. This change in estimate will also impact future periods.

Other direct operating costs increased by $1,595,000 and $2,177,000 to $4,683,000 and $8,129,000 for the three and six-month periods ended June 30, 2026 compared to $3,088,000 and $5,952,000 for the same periods in the prior year, respectively. The increase in other direct operating costs for the three and six-month periods ended June 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 $296,000 and $398,000 to $2,042,000 and $3,952,000 for the three and six-month periods ended June 30, 2026 compared to $1,746,000 and $3,554,000 for the same periods in the prior year, respectively. The increase in selling and administrative expense for the three and six-month periods ended June 30, 2026 was primarily due to legal fees incurred to negotiate the Third Amendment to the Credit Agreement. See Note 10 - Subsequent Event for further information.

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

Interest and other income, net, increased by $2,000 and decreased by $8,000 to $47,000 and $101,000 for the three and six-month periods ended June 30, 2026 compared to $45,000 and $109,000 for the same periods in the prior year, respectively. Interest and other income, net, for the three-month period ended June 30, 2026 was comparable to the same period of the prior year. Interest and other income, net, decreased for the six-month period ended June 30, 2026 due to lower interest income received on the Company’s cash, driven primarily by lower average cash balances compared to the same period in the prior year.

Income tax expense increased by $156,000 and $571,000 to expense of $135,000 and $227,000 for the three and six-month periods ended June 30, 2026, compared to an income tax benefit of $21,000 and $344,000 for the same periods in the prior year, respectively. Income tax expense for the six-month period ended June 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 six-month period ended June 30, 2025. Excluding this adjustment, income tax expense for the six-month period ended June 30, 2026 increased $531,000 compared to the prior period. The increase in income tax expense for the three and six-month periods ended June 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 $286,000 and $349,000 to a loss of $484,000 and $834,000 for the three and six-month periods ended June 30, 2026, compared to $198,000 and $485,000 for the same periods in the prior 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 increased by $234,000 and $221,000 to a net loss of $514,000, or $0.07 per diluted share and a net loss of $1,126,000, or $0.17 for the three and six-month periods ended June 30, 2026 compared to a net loss of $280,000, or $0.04 per diluted share and a net loss of $905,000 or $0.14 per diluted share for the same periods in the prior year, respectively. Net loss for the three and six-month periods ended June 30, 2026 increased primarily due to legal fees incurred to negotiate the Third Amendment to the Credit Agreement and the increase for credit allowances for the RI Facilities of $909,000.

Liquidity and Capital Resources

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 $6,761,000 at June 30, 2026 compared to $3,712,000 at December 31, 2025. The Company’s cash position increased by $3,049,000 during the first six months of 2026 driven by cash provided by operating activities of $4,385,000. This increase was offset by payment for the purchase of property and equipment of $99,000, payments on long-term debt of $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 $10,907,000 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 (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.

Working Capital

The Company had a working capital deficit at June 30, 2026 of $5,056,000 compared to a working capital deficit of $5,724,000 at December 31, 2025. The $668,000 decrease in working capital deficit was primarily due to an increase in cash offset in part by an increase in other accrued liabilities and related party payables. If the Company is unable to negotiate an extension to the Credit 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 were to be accelerated due to any 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.

Long-Term Debt

Fifth Third Credit Agreement

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% (6.74% as of June 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.

On January 25, 2024 (the “First Amendment Effective Date”), the Company and Fifth Third entered into a First Amendment to Credit Agreement (the “First Amendment”), which amended the Credit Agreement to add a new term loan in the aggregate principal amount of $2,700,000 (the “Supplemental Term Loan”). The proceeds of the Supplemental Term Loan were advanced in a single borrowing on January 25, 2024, and were used for capital expenditures related to the Company’s operations in Puebla, Mexico and other related transaction costs. The Supplemental Term Loan will mature on January 25, 2030 (the “Maturity Date”). Interest on the Supplemental Term Loan was payable monthly during the initial twelve month period following the First Amendment Effective Date. Following that twelve month period, the Company is required to make equal monthly payments of principal and interest to fully amortize the amount outstanding under the Supplemental Term Loan by the Maturity Date. The Supplemental Term Loan is secured by a lien on substantially all of the assets of the Company and certain of its domestic subsidiaries. Pursuant to the First Amendment, advances under the Credit Agreement bear interest at a floating rate per annum equal to SOFR plus 3.00%, subject to a SOFR floor of 0.00%.

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

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 $15,427,000 and $16,197,000 as of June 30, 2026 and December 31, 2025, respectively. The Company did not capitalize any debt issuance as of June 30, 2026 and December 31, 2025, related to the issuance of the Supplemental Term Loan and Second Supplemental Term Loan.

The Credit Agreement contains customary covenants and representations, including without limitation, a minimum fixed charge coverage ratio of 1.25 and maximum funded debt to EBITDA ratio of 3.0 to 1.0 (tested on a trailing twelve-month basis at the end of each fiscal quarter), an obligation that the Company maintain $5,000,000 of unrestricted cash, reporting obligations, limitations on dispositions, changes in ownership, mergers and acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and capital expenditures.

On September 30, 2025, the Company received a limited waiver from Fifth Third with respect to 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.

On December 16, 2025 and May 29, 2026, the Loan Parties received a notice from the Lender (the “Notice”) asserting that certain Events of Default had occurred under the Credit Agreement, including that the Company was not in compliance with the minimum fixed-charge coverage ratio, the maximum funded debt-to-EBITDA ratio, and the Minimum Cash Covenant as of December 31, 2025 and as of March 31, 2026 and that the Company failed to pay outstanding obligations under the Credit Agreement when the Term Loan and DDTL matured on April 9, 2026 (such alleged defaults being collectively referred to as the “Specified Events of Default”). In December 2025, Fifth Third notified the Company that, among other things, it had suspended the Revolving Loan Commitment with respect to additional Revolving Loan Advances. In the notice delivered to the Loan Parties on May 29, 2026, Fifth Third exercised its right to increase interest on advances to the default rate effective from and after the earliest to occur of the Specified Events of Default. The default rate added two percent per annum to the existing interest rate in effect for amounts outstanding under the Credit Agreement. These Specified Events of Default were uncured as of June 30, 2026. Additionally, as of June 30, 2026, the Company was not in compliance with minimum fixed-charge coverage ratio, the maximum funded debt-to-EBITDA ratio, and the Minimum Cash Covenant under the Credit Agreement. As a result, the Loan Parties were not in compliance with the Credit Agreement as of such date.

On July 22, 2026 (the “Third Amendment Effective Date”), the Loan Parties and Fifth Third entered into a Third Amendment to Credit Agreement and Forbearance Agreement (the “Third Amendment”). In the Third Amendment, Fifth Third agreed to forbear from exercising certain rights and remedies in respect of certain events of default under the Credit Agreement (the “Designated Events of Default”), including the Specified Events of Default identified in a notice delivered to the Loan Parties on May 29, 2026, beginning on the Third Amendment Effective Date until June 30, 2027 (the “Standstill Period”), subject to certain forbearance termination events. Fifth Third also agreed that the minimum fixed-charge coverage ratio, the maximum funded debt-to-EBITDA ratio, and the Minimum Cash Covenant covenants are not applicable during the Standstill Period. The Third Amendment imposes a variety of obligations and restrictions on the Loan Parties, including a prohibition from requesting any revolving loan advances, requires the Loan Parties to make defined payments in accordance with the terms of the Third Amendment, including to make monthly payments of interest on the Term Loan beginning on the Third Amendment Effective Date until the maturity date and quarterly payments of $125,000 of principal on the Term Loan beginning on October 10, 2026, and to make monthly payments of interest only on the Delayed Draw Term Loan beginning on the Third Amendment Effective Date until the maturity date, and quarterly payments of $75,000 of principal on the Delayed Draw Term Loan beginning on October 10, 2026. The Third Amendment imposes other covenants and obligations on the Loan Parties, including that the Company pursue a sale of all or a portion of the assets of the Company and its subsidiaries, achieve certain milestones with respect to a prospective sale, and pay certain fees to the Lender if such milestones are not achieved. The Third Amendment provides that all obligations under the Credit Agreement are due and payable at the end of the Standstill Period.

DFC Loan Agreement

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 $821,000 and $1,149,000 as of 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 that 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.

As a result of the Loan Parties’ Financial Covenant Defaults under the Credit Agreement with Fifth Third discussed above, ASHS determined that the non-compliance with the Credit Agreement could be deemed to have resulted in an Event of Default (as defined in the DFC Loan) under the DFC Loan. However, as of the date of this Quarterly Report, DFC has not delivered any notice to HoldCo or ASHS asserting the occurrence of an Event of Default resulting from the Financial Covenant Defaults or sought to exercise any remedies it may have under the DFC Loan as a result thereof.

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, prior to the parties entering into the Third Amendment, Fifth Third did not deliver any notice to the Loan Parties asserting that an Event of Default has occurred nor sought to exercise any remedies under the Credit 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 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

During 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 a result of the defaults thereunder, the Company would likely not have sufficient cash on hand to satisfy such accelerated payment obligations. As a result, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

RCS/TIG Holdings LLC Promissory Note

On July 22, 2026, the Company entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) and a Promissory Note and Security Agreement (the “Note”), with RCS/TIG Holdings LLC, a Delaware limited liability company (the “Subordinated Lender”). The Subordinated Lender is controlled by the Executive Chairman of the Board of the Company. The principal amount of the Note is $2,000,000 and bears interest at an annual rate of 10%. All interest accrued and payable is capitalized and added to the outstanding principal amount of the Note. All unpaid principal and any unpaid and accrued interest is due and payable on July 21, 2027 (the “Maturity Date”). There are no prepayment fees associated with the Note. The Note is secured by a lien on substantially all of the assets of the Company, which lien is subordinated to the lien of the Lender. The Subordinated Lender’s ability to exercise its rights under the Note are limited by an Intercreditor and Subordination Agreement between the Lender and the Subordinated Lender.

GKCE Loans

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 $39,000 and $53,000 as of June 30, 2026 and December 31, 2025, respectively.

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

Commitments

As of June 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 June 30, 2026 were $7,884,000. There are no deposits on the condensed consolidated balance sheets related to these commitments as of June 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 $6,761,000 and is actively engaged with financing resources to fund these projects.

As of June 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 June 30, 2026 were $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.

Related Party Transactions

The Company’s Gamma Knife business is operated through its 81% indirect interest in its GKF subsidiary. The remaining 19% of GKF is owned by a wholly owned U.S. subsidiary of Elekta, which is the manufacturer of the Gamma Knife. Since the Company purchases its Gamma Knife units from Elekta, there are significant related party transactions with Elekta, such as equipment purchases, commitments to purchase and service equipment, and costs to maintain the equipment.

The following table summarizes related party activity for the three and six-month periods ended June 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 $10,174,000 as of June 30, 2026.

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

22

As described in Item 2 of Part I of this Quarterly Report under the subheading “Long-Term Debt”, ASHS and certain of its subsidiaries are not in compliance with certain covenants under the Credit Agreements as of June 30, 2026. Additionally, the Loan Parties did not satisfy all outstanding obligations under the Credit Agreement with Fifth Third when it matured on April 9, 2026. To date, neither Fifth Third nor DFC have accelerated the obligations under the Credit Agreements, and subsequent to June 30, 2026, the Company entered into the Third Amendment with Fifth Third to, among other things, extend the maturity date of obligations under the Credit Agreement with Fifth Third to June 30, 2027.

Under the supervision and with the participation of our management, including our principal executive officer and our principal 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 principal executive officer and our principal financial officer. Based on that evaluation, our principal executive officer and our principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective due to the material weakness in our internal controls over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2025, with respect to the Company having an insufficient number of personnel and resources with experience to create a proper control environment.

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 Securities Exchange Act of 1934 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.

The Company’s remediation plans related to the material weakness in our internal controls identified, which remains in process, are to hire sufficient personnel with accounting and financial reporting and direct patient billing experience to augment its current staff and to improve the timeliness of our overall effectiveness of the Company’s closing and financial reporting processes, including as described in this paragraph. As previously disclosed, on December 19, 2024, the Company appointed a new Chief Financial Officer, Scott Frech, who also served as the Company’s principal financial officer and principal accounting officer and had extensive experience and expertise in billing and collections for radiation therapy facilities. Mr. Frech resigned in July 2026 for personal reasons and was replaced as CFO on an interim basis by Alexis Tirrito, the Company’s Chief Accounting Officer. In addition, the Executive Chairman and Interim CEO, both with extensive finance and accounting experience are taking a more active role in the Rhode Island billing and collection process. In recognition of the Company’s identified material weakness, the Company brought Rhode Island’s revenue cycle management function in-house to better control the process, hired an experienced revenue cycle director along with two staff, and an accounting manager. The Company has also developed and implemented processes to better integrate the accounting and revenue cycle function to enhance the quality of information provided to Executive Management and to better execute its financial reporting responsibilities. The Company will continue to assess the need for additional resources, in the finance, accounting, and revenue cycle areas, as the Company’s business continues to grow and expand.

The primary element of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. As management continues to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address the material weakness.

Except for the continued implementation of the remediation plan described above, there were no other changes in our internal control over financial reporting during the three-month period ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no material changes during the period covered in this report to the risk factors previously disclosed in Part 1, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.