Financial Analysis

Note 10. Rhode Island Acquisition On November 10, 2023, the Company entered into the IPA with GenesisCare and GC Holdings, pursuant to which GenesisCare sold to the Company its entire equity interest in each of the RI Companies and assigned certain payor contacts to the Company for a cash purchase price of $2,850,000 (such transaction, the RI Acquisition). The equity interests acquired by the Company under the IPA equate to a 60% interest in each RI Company. The RI Companies operate three functional radiation therapy cancer centers in Rhode Island. The Company acquired the RI Companies to expand its growing direct patient services business model in the United States and continue to diversify its cancer treatment product offerings. On April 18, 2024, the parties amended the IPA and GenesisCare agreed to sell a GE Discovery RT CT Simulator (CT Sim) to the Company for $175,000, payment for which was required 5 days following the close of the acquisition. On May 7, 2024, the parties amended the IPA and GenesisCare agreed to transfer certain assets and payor contracts to the RI Companies, rather than transferring such assets and payor contracts to the Company. The parties completed the closing conditions pursuant to the IPA and closed the RI Acquisition on May 7, 2024 ( the Closing Date). The RI Acquisition has been accounted for as a business combination under ASC 805, which requires, among other things, that purchase consideration, assets acquired, liabilities assumed and non-co …

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Note 8. Commitments As of September 30, 2025 , the Company had commitments to purchase and install two Leksell Gamma Knife Esprit Systems (Esprit) and two Linear Accelerator (LINAC) systems. The Esprit upgrades and one LINAC installation are anticipated to occur in the first or second quarter 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 September 30, 2025 were $7,884,000. There are no deposits on the condensed consolidated balance sheets related to these commitments as of September 30, 2025 , nor are there any penalties if the Company decides to not execute on these commitments. It is the Companys current intent to finance substantially all of these commitments. There can be no assurance that financing will be available for the Companys current or future projects, or at terms that are acceptable to the Company. However, the Company currently has cash on hand of $5,345,000 and capacity under its Revolving Line of $7,000,000. The Company borrowed $2,000,000 on the Revolving Line as of September 30, 2025 , which was repaid in October 2025. On September 4, 2022, the Company entered into a Maintenance and Support Agreement with Mevion Medical Systems, Inc. (Mevion), which provides for maintenance and support of the Companys PBRT unit at Orlando Health from September 2022 through April 2026. The Companys maintenance commitment for the final service period, September 2025 throug …

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Note 7. Income Taxes The Company generally calculates its effective income tax rate at the end of an interim period using an estimate of the annualized effective income tax rate expected to be applicable for the full fiscal year. However, when a reliable estimate of the annualized effective income tax rate cannot be made, the Company computes its provision for income taxes using the actual effective income tax rate for the results of operations reported within the year-to-date periods. The Companys effective income tax rate is highly influenced by relative income or losses reported and the amount of the nondeductible stock-based compensation associated with grants of its common stock options and from the results of international operations. A small change in estimated annual pretax income can produce a significant variance in the annualized effective income tax rate given the expected amount of these items. As a result, the Company has computed its provision for income taxes for the three and nine -month periods ended September 30, 2025 and 2024 by applying the actual effective tax rates to income or reported within the condensed consolidated financial statements through those periods. The provision for income taxes for the nine -month period ended September 30, 2025 , included a non-recurring adjustment for unrecognized tax benefits related to foreign taxes of $71,000. For the nine -month period ended September 30, 2024 , the Company recorded a $100,000 adjustment for unreco …

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Note 5. Leases The Company determines if a contract is a lease at inception. Under ASC 842, the Company is a lessor of equipment to various customers. Leases that commenced prior to the ASC 842 adoption date were classified as operating leases under historical guidance. As the Company has elected the package of practical expedients allowing it to not reassess lease classification, these leases are classified as operating leases under ASC 842 as well, as applicable. All of the Companys lessor arrangements entered into or modified after ASC 842 adoption are also classified as operating leases. Some of these lease terms have an option to extend the lease after the initial term, but do not contain the option to terminate early or purchase the asset at the end of the term. The Company has elected not to recognize right-of-use (ROU) assets and lease liabilities that arise from short-term ( 12 months or less) leases for any class of underlying asset. The Companys Gamma Knife and PBRT contracts with health systems are classified as operating leases under ASC 842. The related equipment is included in medical equipment and facilities on the Companys condensed consolidated balance sheets. As all income from the Companys lessor arrangements is solely based on procedure volume, all income is considered variable payments not dependent on an index or a rate. As such, the Company does not measure future operating lease receivables. The Companys corporate offices were located in San Francisco …

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Note 3. Long-Term Debt Financing On April 9, 2021, ASHS, the Borrowers and the Loan Parties entered into a five -year $22,000,000 Credit Agreement with Fifth Third Bank, N.A. Unless otherwise stated, capitalized terms that are used but not defined in this Note 3 have the meanings given to them in the Credit Agreement. 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 Companys 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 Company had outstanding borrowings of $2,000,000 on the Revolving Line as of September 30, 2025 , which was repaid in October 2025. The facilities have a five -year maturity, which mature on April 9, 2026, carry a floating interest rate based on the Secured Overnight Financing Rate (SOFR) plus 3.0% (7.36% as of September 30, 2025 ), and are secured by a lien on substantially all of the assets of the Loan Parties and guaranteed by ASHS. On January 25, 2024 ( the First Amendment Effective Date), the Company and Fifth Third entered into a First Amendment to Credit Agre …

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Accounting pronouncements issued and not yet 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 adoption of ASU 2023 - 09 will modify the Companys disclosures but will not have an impact on our financial position or results of operations. 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 amoun …

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Note 9. Related Party Transactions and Balances The Companys Gamma Knife business is operated through its GKF subsidiary in which the Company holds an indirect 81% interest. 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 nine -month periods ended September 30, 2025 and 2024 : Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Equipment purchases and de-install costs $ 1,243,000 $ 524,000 $ 4,412,000 $ 3,461,000 Costs incurred to maintain equipment 278,000 170,000 729,000 510,000 Total related party transactions $ 1,521,000 $ 694,000 $ 5,141,000 $ 3,971,000 The Company also had commitments to purchase and install two Esprit units, two LINACs, and service the related equipment of $11,045,000 as of September 30, 2025 . Related party liabilities on the condensed consolidated balance sheets consist of the following as of September 30, 2025 and December 31, 2024 : September 30, December 31, 2025 2024 Accounts payable, asset retirement obligation and other accrued liabilities $ 1,471,000 $ 2,270,000 …

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