SRTS US Equity☆

Item 1A. Risk Factors 11

Item 1B. Unresolved Staff Comments 21

Item 2. Properties 21

Item 3. Legal Proceedings 21

Item 4. Mine Safety Disclosure 21

Item 6. Reserved 22

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 26

Item 8. Financial Statements and Supplementary Data F-1

Item 9A. Controls and Procedures 27

Item 9B. Other Information 27

Item 9C. Disclosures Regarding Foreign Jurisdiction that Prevent Inspections 27

PART III 28

Item 10. Directors, Executive Officers and Corporate Governance 28

Item 11. Executive Compensation 28

Item 14. Principal Accountant Fees and Services 28

Item 15. Exhibits and Financial Statement Schedules 29

Signatures 32

i

INTRODUCTORY

NOTE

Forward-Looking

Statements

This

report includes statements that are, or may be deemed, “forward-looking statements.” In some cases, these statements can

be identified by the use of forward-looking terminology such as “believes,” “estimates,” “anticipates,”

“expects,” “plans,” “intends,” “may,” “could,” “might,” “will,”

“should,” “approximately,” “potential” or negative or other variations of those terms or comparable

terminology, although not all forward-looking statements contain these words.

Forward-looking

statements involve risks and uncertainties because they relate to events, developments, and circumstances relating to Sensus Healthcare,

Inc., our industry, and/or general economic or other conditions that may or may not occur in the future or may occur on longer or shorter

timelines or to a greater or lesser degree than anticipated. Although we believe that we have a reasonable basis for each forward-looking

statement contained in this report, forward-looking statements are not guarantees of future performance, and our actual results of operations,

financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward looking

statements contained in this press release, as a result of the following factors, among others: the continuation and severity of the

COVID-19 pandemic, including its impact on sales and marketing; our ability to achieve profitability; our ability to obtain and maintain

the intellectual property needed to adequately protect our products, and our ability to avoid infringing or otherwise violating the intellectual

property rights of third parties; the level and availability of government and/or third party payor reimbursement for clinical procedures

using our products, and the willingness of healthcare providers to purchase our products if the level of reimbursement declines; the

regulatory requirements applicable to us and our competitors; our ability to efficiently manage our manufacturing processes and costs;

the risks arising from our international operations; legislation, regulation, or other governmental action, that affects our products,

taxes, international trade regulation, or other aspects of our business; concentration of our customers in the U.S. and China, including

the concentration of sales to one particular customer in the U.S.; the performance of the Company’s information technology systems

and its ability to maintain data security; and other risks described from time to time in our filings with the Securities and Exchange

Commission.

In

addition, even if future events, developments, and circumstances are consistent with the forward-looking statements contained in this

report, they may not be predictive of results or developments in future periods. Any forward-looking statements that we make in this

report speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances

after the date of this report, except as may be required by applicable law.

ii

PART

I.

Item

1. BUSINESS

Overview

Sensus

Healthcare, Inc. (together, with its subsidiary, unless the context otherwise indicates, “Sensus” or the “Company”)

is a medical device company committed to providing highly effective, non-invasive, and cost-effective treatments for both oncological

and non-oncological skin conditions. The Company uses a proprietary low-energy X-ray technology known as superficial radiation therapy

(“SRT”), which is based on over a decade of dedicated research and development, and has successfully incorporated SRT into

a portfolio of treatment devices: the SRT-100TM, SRT-100+TM and SRT-100 VisionTM. To date, SRT

technology has been used to effectively and safely treat oncological and non-oncological skin conditions in hundreds of thousands of

patients around the world.

On

February 25, 2022, the Company sold the assets comprising its SculpturaTM product for $15 million in cash. Additional information

regarding this transaction can be found in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission

on March 3, 2022.

Our

business was organized in 2010 and the Company, incorporated in Delaware, completed its initial public offering in 2016. The Company

operates as one segment from its corporate headquarters located in Boca Raton, Florida. For further information see Note 1, Description

of the Business, in the notes to the consolidated financial statements in Part II, Item 8.

Our

Products and Services

SRT-100

The

SRT-100 is a photon x-ray low energy superficial radiotherapy system that provides patients an alternative to surgery for treating non-melanoma

skin cancers, including basal cell and squamous cell skin cancers and other skin conditions such as keloids. The SRT-100 is especially

effective in treating primary lesions that would otherwise be difficult to treat or require extensive surgery involving sensitive areas

of the head and neck regions, such as the fold in the nose, eyelids, lips, corner of the mouth, and the lining of the ear, that would

otherwise lead to a less than desirable cosmetic outcome. Superficial radiation therapy treatment procedures do not require the use of

anesthetics and eliminate the need for skin grafting. The Company believes that the SRT-100 provides healthcare providers and patients

with a safe, virtually painless, and substantially non-scarring treatment option for non-melanoma skin cancer and other skin conditions,

such as keloids. It allows dermatologists to retain non-melanoma skin cancer patients, rather than referring them to specialists, while

offering radiation oncologists an alternative to costly linear accelerator–based treatments with a process that is less invasive,

more time-efficient, and improves practice economics. Revenue is primarily derived from sales of our SRT-100 product line. The SRT-100

provides the following clinical and functional advantages:

1

SRT-100

Vision

The

SRT-100 Vision provides customers with additional options compared to the SRT-100 base model. These additional options allow for dedicated

treatment planning and full treatment progression documentation in a patient’s record. The SRT-100 Vision provides the user with

a unique superficial radiation therapy-tailored treatment planning application that integrates an embedded high frequency ultrasound

imaging module, volumetric tumor analysis, beam margins planning, and comprehensive dosimetry parameters. This allows the user to precisely

and more accurately plan and prescribe the patient-specific treatment course to maximize patient outcomes and workflow efficiency. The

SRT-100 Vision also offers a comprehensive control console and workflow management that provides full record and treatment tracing, operator-level

access and functional control, audio-visual patient and treated lesion monitoring, and advanced dosimetry setting and tracing.

SRT-100

Plus

The

SRT-100+ offers all the same features as the SRT-100, with the addition of:

● An expanded energy range for customized, more precise treatment

● Remote diagnostics, including operation tracking

● New X-ray tube with extended functionality and performance

● Advanced console and enhanced system mobility to optimize clinical practice

Sentinel

service program

The

Company offers the Sentinel service program, which provides customers comprehensive protection for their systems. The Sentinel service

program covers all parts and labor for the period of the contract and one annual preventive maintenance session that includes cooling

system maintenance, high-voltage loop maintenance, filters and system cleaning, and system touch-ups, should these be required during

the preventative maintenance session.

Sensus

also provides turnkey pre-and post-sale services that include the following:

● Providing a pre-install kit for the contractors to prepare the treatment room;

● Room retrofit and shielding;

● System shipping coordination and installation;

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Sensus

Laser Aesthetic Solutions (SLAS)

In

August 2020, the Company acquired two mobile aesthetic laser companies serving Florida: Aesthetic Mobile Laser Services, which serves

Southeast and Southwest Florida; and Aesthetic Laser Partners, which serves Central and Northern Florida. These companies, collectively

known as “Sensus Laser Aesthetic Solutions”, offer in-office laser rental services, providing an easy way for medical and

health care professionals to offer aesthetic laser procedures without the long-term financial commitment, maintenance, and obsolescence

concerns associated with equipment ownership. Sensus Laser Aesthetic Solutions delivers a complete line of aesthetic lasers to dermatologists

and clinicians around the state for a variety of treatments, both cosmetic and clinical.

Consumables

The

Company sells disposable lead shielding replacements, disposable radiation safety items, such as aprons and eye shields, ultrasound probe

film, and disposable applicator tips, which are used to treat various sized lesions and different areas of the body.

Competition

The

medical device industry is highly competitive and subject to rapid technological change and is significantly affected by new product

introductions and market activities of other participants. Current marketed products, and any future products that the Company commercializes,

will compete against healthcare providers who use other methods of treatment for the same disease or condition.

In

order to grow its business, Sensus must be able to compete effectively for market acceptance of its products. Key competitive factors

include improved outcomes for medical conditions, acceptance by doctors treating non-melanoma skin cancer and keloids, potential greater

acceptance by the patient community, potential greater ease of use and reliability, product price and qualification for reimbursement,

technical leadership and superiority, effective marketing and distribution, speed to market and quality of client service.

Sales

and Marketing

The

Company’s focus is mainly on two primary markets, private dermatology practices and radiation oncologists in both private and hospital

settings. The Company currently employs a multi-tier sales strategy to optimize geographic coverage and focus on its key markets. This

multi-tier sales model uses a direct sales force in the U.S., as well as international dealers and distributors. Sensus plans to continue

selling and marketing the Company’s products to both the dermatology and radiation oncology markets concurrently.

Dermatology

Market

Private

dermatology practices in the U.S. represent the point of entry for most non-melanoma skin cancer patients. The Company believes its SRT

products offer dermatologists a competitive advantage by allowing them to retain patients for the treatment of non-melanoma skin cancer,

rather than having to refer them to other professionals. In addition to non-melanoma skin cancers, the Company has had an FDA clearance

to treat keloid scars since 2014. The Company’s SRT has been used by over 100 U.S. dermatology practices in the treatment of keloids.

Since 2017, it is also being used to treat keloids in China.

Radiation

Oncology Market

For

licensed radiation oncologists in the U.S., the Company believes its SRT products offer a simpler, faster method of treatment with a

better overall patient experience. SRT offers oncologists the ability to free up more expensive radiation equipment, such as linear accelerators,

for more complex procedures while providing patients with effective, non-invasive treatment options for non-melanoma skin cancer.

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Other

Markets

Sensus

believes that the plastic surgery and laser aesthetic markets present growth opportunities. With FDA clearance to treat keloids through

SRT, plastic surgeons are recognizing the opportunity to be able to provide an effective treatment solution for this benign tumor. Additionally,

the Company believes that plastic surgeons view the non-melanoma skin cancer market as a growth opportunity that can supplement their

existing services.

Global

Focus

As

of December 31, 2021, the Company had an installed base of 564 units in 18 countries, primarily in the United States. Customers include

leading cancer centers, dermatology practices, hospitals and plastic surgery clinics, which further validates the targeted marketing

approach led by the Company’s direct sales teams and global distribution partners.

Manufacturing

and Supply

The

Company currently uses third parties located in the U.S. to manufacture products. In 2010, the Company entered into a manufacturing agreement

with RbM Services, LLC (“RbM”) pursuant to which RbM agreed to manufacture SRT-100 products. Under this agreement, the Company

pays a fixed price per unit, subject to annual adjustments due to changes in the cost of materials. The agreement renews for successive

one-year periods unless either party notifies the other party in writing, at least 60 days prior to the anniversary date of the agreement,

that it will not renew the agreement. The Company or manufacturer may terminate the agreement upon 90 days’ prior written notice.

The

Company maintains internal policies, procedures and supplier management processes designed to ensure that RbM meets applicable quality

standards, including FDA and International Organization for Standardization, or ISO, requirements. To date, Sensus has not experienced

any difficulty in locating and obtaining the materials necessary to meet the demand for our products, and believes manufacturing capacity

is sufficient to meet global market demand for our products for the foreseeable future.

The

Company believes this third-party manufacturing relationship allows us to work with a supplier that has well-developed specific competencies

while minimizing our capital investment, controlling costs, and shortening cycle times, all of which has allowed us to compete effectively

with our competitors. Sensus also works with other third parties that it believes could be relied upon if there were a need to change

suppliers.

The

Company has a single preferred supplier for the x-ray tubes and other major components used in its products. The Company believes this

supplier has superior products; however, products of alternate suppliers would be adequate for Sensus’s products and therefore

the Company does not anticipate any material disruptions to the supply of major components if there were a change in suppliers.

Intellectual

Property

The

Company actively seeks to protect the intellectual property that is important to our business, including seeking and maintaining patents

that cover Sensus’s products. The Company also relies on trademarks to enhance, build, and maintain the integrity of the Sensus

brand.

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The

Company is in the possession of several issued U.S. and Global patents. The patents relate to technology that is pertinent to the Company.

The

following patents were issued between August 2007 and September 2008:

The

following patents were issued to us in 2018:

The

following patent was issued to Sensus in 2019:

The

following patents were issued to Sensus in 2020:

A

total of 22 patent applications were pending at December 31, 2020 and additional patent applications are in process.

The

Company also owns seven U.S. trademark registrations (expiring from 2021 through 2031) and had two trademark applications pending as

of December 31, 2020.

The

Company also relies on trade secrets and other unpatented proprietary rights to develop and maintain a competitive position. The Company

seeks to protect unpatented proprietary rights through a variety of methods, including confidentiality agreements with employees, consultants

and others who may have access to this proprietary information. The Company requires all employees to execute invention assignment agreements

with respect to inventions arising from their employment.

The

Company can provide no assurance that any patents or trademarks will be issued or registered as a result of our pending or future applications

for such intellectual property. Even if any such patents or trademarks are ultimately issued or registered, they, or any of the Company’s

other intellectual property, may not provide any meaningful protection or competitive advantage. Intellectual property could be challenged,

invalidated, circumvented, infringed or misappropriated. In addition, third parties have claimed, and in the future may claim, that the

Company, customers, licensees or other parties indemnified by Sensus are infringing upon their intellectual property rights.

5

Government

Regulation

Sensus’s

business is subject to extensive federal, state, local, and foreign laws and regulations, including those relating to the protection

of the environment, health and safety. Some of the pertinent laws and regulations have not been definitively interpreted by the regulatory

authorities or the courts, and their provisions are open to a variety of subjective interpretations. In addition, these laws and regulations

and their interpretations are subject to change, and new laws may be enacted. Both federal and state governmental agencies continue to

subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts. The Company

believes that its business operations and relationships with customers and suppliers are structured to comply with all applicable legal

requirements. However, it is possible that governmental entities or other third parties could interpret these laws and regulations differently

and assert otherwise. Discussed below are statutes and regulations that are most relevant to the Company’s business. For the years

ended December 31, 2021 and 2020 we incurred approximately $1.3 million in expenses related to regulatory compliance and quality standards.

FDA

Regulation of Medical Devices

The

Federal Food, Drug and Cosmetic Act (“FDCA”) and FDA regulations establish a comprehensive system for the regulation of medical

devices intended for human use. Sensus’s medical device products are subject to these regulations, as well as other federal, state,

and local laws and regulations. The FDA is also responsible for the overall enforcement of quality, regulatory and statutory requirements

governing medical devices.

FDA

classifies medical devices into one of three classes — Class I, Class II, or Class III — depending on their level of risk

and the types of controls that are necessary to assure device safety and effectiveness. The class assignment determines the type of premarketing

submission or application, if any, that will be required before marketing in the U.S. The Company’s medical devices are Class II

devices under the FDA’s classification system. Class II devices are deemed to present a moderate risk and are devices for

which general controls alone are not sufficient to provide a reasonable assurance of safety and effectiveness. Medical devices in Class

II are subject to both general controls and “special controls” — e.g., special labeling, compliance with industry standards,

and post market surveillance. Unless exempted, Class II devices typically require FDA clearance before marketing, through the premarket

notification (“510(k)”) process, in accordance with 21 CFR, Part 807 requirements.

Unless

it is exempt from premarket review requirements, a medical device must receive marketing authorization from the FDA prior to being commercially

distributed in the U.S. The most common pathways for obtaining marketing authorization are 510(k) clearance and PMA. With the enactment

of the Food and Drug Administration Safety and Innovation Act (“FDASIA”), the availability of a de novo pathway

was facilitated for certain low- to moderate-risk devices that do not qualify for the 510(k) pathway due to the absence of a predicate

device.

510(k)

pathway

As

of December 31, 2021, all of our products were subject to or exempt from the 510(k) requirement. We have previously received FDA 510(k)

clearances for our SRT-100, SRT-100 Vision, and SRT-100+ products. The Company has obtained all of its FDA clearances through the 510(k)

pathway; although other pathways are available, the Company believes they are less efficient and effective for the Company.

Ongoing

FDA regulation

After

a device is entered into commerce in the U.S., regardless of its classification or premarket pathway, numerous additional FDA requirements

generally apply. These include:

6

The

FDA enforces these requirements by inspection and market surveillance. Failure to comply with applicable regulatory requirements can

result in enforcement action by FDA, which may include, but is not limited to, the following sanctions:

● Issuance of Form 483 observations during a facilities inspection;

● Untitled letters or warning letters;

● Fines, injunctions and civil penalties;

● Recall or seizure of products;

● Operating restrictions, partial suspension or total shutdown of production;

● Refusing 510(k) clearance or premarket approval of new products;

● Criminal prosecution.

The

Company is subject to unannounced establishment inspections by the FDA, as well as other regulatory agencies overseeing the implementation

of and compliance with applicable state public health regulations. These inspections may include our suppliers’ facilities.

International

Regulations

International

sales of medical devices are subject to foreign government regulations, which vary substantially from country to country. In order to

market our products in other countries, the Company must obtain regulatory approvals and comply with safety and quality regulations.

The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA clearance or approval,

and the requirements may differ. The European Union/European Economic Area, or EU/EEA, requires a CE conformity mark in order to market

medical devices. The UK, due to Brexit, will also now require a separate clearance. Many other countries, such as Australia, India, New

Zealand, Pakistan and Sri Lanka, accept CE or FDA clearance or approval, although others, such as China, Brazil, Canada and Japan, require

separate regulatory filings.

In

the EU/EEA, Sensus’s devices are required to comply with the essential requirements of the EU Medical Devices Directive (93/42/EEC).

Compliance with these requirements entitles the Company to affix the CE marking of conformity to our medical devices, without which they

cannot be commercialized in the EU/EEA. To demonstrate compliance with the essential requirements and obtain the right to affix the CE

marking of conformity, the Company must undergo a conformity assessment procedure, which varies according to the type of medical device

and its classification. Except for low-risk medical devices (Class I), where the manufacturer can issue an EC Declaration of Conformity

based on a self-assessment of the conformity of its products with the essential requirements of the Medical Devices Directive, a conformity

assessment procedure requires the intervention of a Notified Body, which is an organization accredited by a Member State of the EU/EEA

to conduct conformity assessments. The Notified Body typically audits and examines the quality system for the manufacture, design and

final inspection of devices before issuing a certification demonstrating compliance with the essential requirements. Based on this certification,

we can draw up an EC Declaration of Conformity which allows us to affix the CE mark to our products.

7

Further,

the advertising and promotion of Sensus’s products in the EU/EEA is subject to the laws of individual EEA Member States implementing

the EU Medical Devices Directive, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on

unfair commercial practices, as well as other EU/EEA Member State laws governing the advertising and promotion of medical devices. These

laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional

activities with healthcare professionals.

The

Company has obtained approval to sell our products in Australia, Canada, China, Europe, India, Israel, Mexico, Russia, South Africa,

South Korea, and Taiwan, and is currently seeking approval in several other countries.

Sales

and Marketing Commercial Compliance

Federal

anti-kickback laws and regulations prohibit, among other things, persons from knowingly and willfully soliciting, receiving, offering

or paying remuneration, directly or indirectly, in exchange for, or to induce either the referral of an individual, or the purchase,

order or recommendation of, any good or service paid for under federal healthcare programs such as the Medicare and Medicaid programs.

Possible sanctions for violation of these anti-kickback laws include monetary fines, civil and criminal penalties, exclusion from Medicare

and Medicaid programs, and forfeiture of amounts collected in violation of such prohibitions.

In

addition, federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment

to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Off-label promotion

has been pursued as a violation of the federal false claims laws. Pursuant to FDA regulations, we can only market our products for cleared

or approved uses. Although surgeons are permitted to use medical devices for indications other than those cleared or approved by FDA

based on their medical judgment, we are prohibited from promoting products for such off-label uses. Additionally, the majority of states

in which we market our products have similar anti-kickback, false claims, anti-fee splitting and self-referral laws, which may apply

to items or services reimbursed by any third party payor, including commercial insurers, and violations may result in substantial civil

and criminal penalties.

To

enforce compliance with the federal laws, the U.S. Department of Justice, or DOJ, has increased its scrutiny of interactions between

healthcare companies and healthcare providers, which has led to an unprecedented level of investigations, prosecutions, convictions and

settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming. Additionally, if a healthcare

company settles an investigation with the DOJ or other law enforcement agencies, the company may be required to agree to additional compliance

and reporting requirements as part of a consent decree or corporate integrity agreement.

8

U.S. and foreign government regulators have increased regulation, enforcement,

inspections and governmental investigations of the medical device industry, including increased U.S. government oversight and enforcement

of the Foreign Corrupt Practices Act. Whenever a governmental authority concludes that a company is not in compliance with applicable

laws or regulations, that authority can impose fines, delay or suspend regulatory clearances, institute proceedings to detain or seize

the company’s products, issue a recall, impose operating restrictions, enjoin future violations and assess civil penalties against

the company, or its officers or employees and can recommend criminal prosecution. Moreover, governmental authorities can ban or request

the recall, repair, replacement or refund of the cost of devices the company distributes.

Additionally, the commercial compliance environment is continually evolving

in the healthcare industry as some states, including California, Massachusetts and Vermont, mandate implementation of corporate compliance

programs, along with the tracking and reporting of gifts, compensation and other remuneration to physicians. The Affordable Care Act also

imposes reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to prescribers

and other healthcare providers. Device manufacturers are also required to report and disclose any investment interests held by physicians

and their family members during the preceding calendar year. Failure to submit required information may result in civil monetary penalties

of up to an aggregate of $150,000 per year (and up to an aggregate of $1 million per year for “knowing failures”), for all

payments, transfers of value or ownership or investment interests not reported in an annual submission. The shifting compliance environment

and the need to build and maintain robust and expandable systems to comply in multiple jurisdictions with different compliance or reporting

requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

Healthcare Fraud and Abuse

Healthcare fraud and abuse laws apply to Sensus’s business when a

customer submits a claim for an item or service that is reimbursed under Medicare, Medicaid or most other federally funded healthcare

programs. The federal Anti-Kickback Statute prohibits unlawful inducements for the referral of business reimbursable under federally funded

healthcare programs, such as remuneration provided to physicians to induce them to use certain tissue products or medical devices reimbursable

by Medicare or Medicaid. The Anti-Kickback Statute is subject to evolving interpretations. For example, the government has enforced the

Anti-Kickback Statute to reach large settlements with healthcare companies based on sham consultant arrangements with physicians. The

majority of states also have anti-kickback laws which establish similar prohibitions that may apply to items or services reimbursed by

any third party payor, including commercial insurers. Further, recently enacted amendments to the Affordable Care Act, among other things,

amend the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to

have actual knowledge of this statute or specific intent to violate it. In addition, the Affordable Care Act provides that the government

may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false

or fraudulent claim for purposes of false claims statutes. If a governmental authority were to conclude that we are not in compliance

with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and civil penalties including,

for example, exclusion from participation as a supplier of product to beneficiaries covered by Medicare or Medicaid. In addition to the

Anti-Kickback Statute, the federal physician self-referral statute, commonly known as the Stark Law, prohibits physicians who have a financial

relationship with an entity, including an investment, ownership or compensation relationship, from referring Medicare patients for designated

health services, which include clinical pathology services, unless an exception applies. Similarly, entities may not bill Medicare or

any other party for services furnished pursuant to a prohibited referral. Many states have their own self-referral laws as well, which

in some cases apply to all third party payors, not just Medicare and Medicaid. If a governmental authority were to conclude that we are

not in compliance with the Stark Law or state self-referral laws and regulations, our business could be subject to severe financial consequences,

including the obligation to refund amounts billed to third party payors in violation of such laws, civil penalties and potentially also

exclusion from participation in government healthcare programs like Medicare and Medicaid. The Stark Law often is enforced through lawsuits

brought under the Federal False Claims Act, violations of which trigger significant monetary penalties and treble damages.

Additionally, the civil False Claims Act prohibits knowingly presenting

or causing the presentation of a false, fictitious or fraudulent claim for payment to the U.S. government. Actions under the False Claims

Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Violations of

the False Claims Act can result in very significant monetary penalties and treble damages. The federal government is using the False Claims

Act, and the accompanying threat of significant liability, in its investigations of healthcare providers and suppliers throughout the

country for a wide variety of Medicare billing practices, and has obtained multi-million and multi-billion dollar settlements in addition

to individual criminal convictions. Given the significant size of actual and potential settlements, it is expected that the government

will continue to devote substantial resources to investigating healthcare providers’ and suppliers’ compliance with the healthcare

reimbursement rules and fraud and abuse laws.

9

Health Information Privacy

The federal Health Insurance Portability and Accountability Act of 1996,

or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective

implementing regulations, impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses, known

as covered entities, as well as their business associates that perform services for them that involve individually identifiable health

information. The HIPAA privacy and security regulations, including the expanded requirements under HITECH, establish comprehensive federal

standards with respect to the use and disclosure of protected health information by covered entities and their business associates, in

addition to setting standards to protect the confidentiality, integrity and security of protected health information.

The Company has implemented policies and procedures related to compliance

with the HIPAA privacy and security regulations, as required by law. The privacy and security regulations establish a “floor”

and do not supersede state laws that are more stringent. Therefore, we are required to comply with both federal privacy and security regulations

and varying state privacy and security laws. In addition, for healthcare data transfers from other countries relating to citizens of those

countries, the Company must comply with the laws of those other countries. The federal privacy regulations restrict the ability to use

or disclose patient identifiable laboratory data, without patient authorization, for purposes other than payment, treatment or healthcare

operations (as defined by HIPAA), except for disclosures for various public policy purposes and other permitted purposes outlined in the

privacy regulations. HIPAA, as amended by HITECH, provides for significant fines and other penalties for wrongful use or disclosure of

protected health information in violation of the privacy and security regulations, including potential civil and criminal fines and penalties.

If the Company does not comply with existing or new laws and regulations related to protecting the privacy and security of health information,

it could be subject to monetary fines, civil penalties or criminal sanctions. In addition, other federal and state laws that protect the

privacy and security of patient information may be subject to enforcement and interpretations by various governmental authorities and

courts resulting in complex compliance issues. The Company could incur damages under state laws pursuant to an action brought by a private

party for the wrongful use or disclosure of confidential health information or other private personal information. If the Company were

to experience a breach of protected health information, it could be subject to significant adverse publicity in addition to possible enforcement

sanctions and civil damages lawsuits. Finally, the Company may be required to incur additional costs related to ongoing HIPAA compliance

as may be necessary to address evolving interpretations and enforcement of HIPAA and other health information privacy and security laws,

the enactment of new laws or regulations, emerging cybersecurity threats and other factors.

Research and Development

Research and development costs related to development and quality and regulatory

costs are expensed as incurred. For the years ended December 31, 2021 and 2020, the Company incurred research and development expense

of approximately $3.4 million and $4.2 million, respectively. Most of the decrease in R&D spending in 2021 was related to the final

development and production ramp-up of SculpturaTM.

Employees and Human Capital

At December 31, 2021, Sensus had 37 employees, including 33 in the U.S.

and four in Israel. None of the Company’s employees are represented by a labor union or covered by a collective bargaining agreement.

10

The Company believes that its success depends on the ability to attract,

develop, and retain key personnel. It also believes that the skills, experience, and industry knowledge of its key employees significantly

benefits its operations and performance. The Company believes that it offers competitive compensation and other means of attracting and

retaining key personnel.

Employee health and safety in the workplace is one of the Company’s

core values. The COVID-19 pandemic has underscored for the Company the importance of keeping employees safe and healthy. In response to

the COVID-19 pandemic, the Company has taken actions aligned with the World Health Organization and the Centers for Disease Control and

Prevention in an effort to protect the Company’s employees so they can more safely and effectively perform their work. These actions

include shutting down its headquarters for some months during 2020, providing facemasks to all employees, and allowing employees to work

from home.

Employee levels are managed to align with the pace of business and management

believes it has sufficient human capital to operate its business successfully.

Available Information

Sensus files annual, quarterly and current reports, proxy statements and

all amendments to these reports and other information with the SEC. Sensus makes available free-of-charge, on or through its website at

http://www.sensushealthcare.com, the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form

8-K, proxy statements and all amendments to those filings, as soon as reasonably practicable after such material is electronically filed

with or furnished to the SEC . The information on the Company’s website is not incorporated by reference in this Annual Report on

Form 10-K. Reports, proxy statements and other information regarding issuers that file electronically with the SEC, including Sensus’s

filings, are also available to the public from the SEC’s website at http://www.sec.gov.

Item 1A.RISK FACTORS

An investment in Sensus’s common stock contains a high degree of

risk. Investors should carefully consider the following risks and uncertainties before making an investment decision with respect to our

common stock. Our business, including our operating results and financial conditions, could be harmed if any of these risks, as well as

other risks not currently known to us or that we currently deem immaterial, were to materialize. The trading price of Sensus’s common

stock could decline due to the occurrence of any of these risks. In assessing these risks, investors should also refer to the other information

included in our filings with the SEC, including our financial statements and related note.

Risks Related to our Business

If third-party payors do not provide coverage and adequate reimbursement

for the use of our products, it is unlikely that our products will be widely used, and our revenue will be negatively impacted.

In the U.S., the commercial success of Sensus’s existing products

and any future products will depend, in part, on the extent to which governmental payors at the federal and state levels, including Medicare

and Medicaid, private health insurers, and other third-party payors provide coverage for and establish adequate reimbursement levels for

procedures using these products. Neither hospitals nor physicians are likely to use Sensus’s products if they do not receive adequate

reimbursement payments for the procedures using these products.

Some private payors in the U.S. may base their reimbursement policies on

the coverage decisions determined by the Center for Medicare & Medical Services, or CMS, which administers the Medicare program and

works in partnership with state governments to administer the Medicaid program. Others may adopt different coverage or reimbursement policies

for procedures performed using Sensus’s products, while some governmental programs, such as Medicaid, have reimbursement policies

that vary from state to state, some of which may not pay an amount that supports the selling price of Sensus’s products, if at all.

A Medicare national or local coverage decision denying coverage for any of the procedures performed using the Company’s products

could result in private and other third-party payors also denying coverage. Medicare (Part B) and a number of private insurers in the

U.S. currently cover and pay for both non-melanoma skin cancer and keloid treatments using the SRT-100. A withdrawal, or even contemplation

of a withdrawal, by CMS, Medicaid or private payors of reimbursements, or any other unfavorable coverage or reimbursement decisions by

government programs or private payors, could have a material adverse effect on the Company’s business.

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Reimbursement systems in international markets vary significantly by country

and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis. In many international

markets, a product must be approved for reimbursement before it can be cleared for sale in that country. Further, many international markets

have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets there are private

insurance systems as well as government-managed systems. Sensus’s products may not be considered cost-effective by international

third-party payors or governments managing healthcare systems. Furthermore, reimbursement may not be available or, if available, third-party

payors’ reimbursement policies may adversely affect the Company’s ability to sell products profitably. If sufficient coverage

and reimbursement are not available for Sensus’s products, in either the U.S. or internationally, the demand for these products

and, consequently, the Company’s revenues, will be adversely affected.

Our business, results of operations, and

financial condition could be materially adversely affected by the effects of widespread public health epidemics, including COVID-19, that

are beyond our control.

Outbreaks of contagious diseases, public health

epidemics, and other adverse public health developments in countries where we, our customers, or our suppliers operate have had and could

have a material and adverse effect on our business, results of operations and financial condition. The COVID-19 pandemic has impacted

our sales as social distancing and related concerns forced physicians to temporarily close their practices in 2020. The pandemic is expected

to continue to adversely impact our business, and the nature and extent of the impact is highly uncertain and beyond our control. Uncertain

factors relating to COVID-19 include the duration, spread and severity of the virus, including the emergence of new variants, the effects

of the COVID-19 pandemic on our customers, vendors and suppliers, and the actions or perception of actions that may be taken to contain

or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and prolonged restrictions

on travel, commercial and other activities.

In addition, as a result of COVID-19 and the measures

designed to contain its spread, our suppliers may not have the materials, capacity, or capability to manufacture our products according

to our schedule and specifications. If our suppliers’ operations are impacted, we may need to seek alternate suppliers, which may

be more expensive, may not be available, or may result in delays in shipments to us and subsequently to our customers, each of which would

affect our results of operations. The duration of the related financial impact to us, cannot be estimated at this time. Should such disruption

continue for an extended period of time, the impact could have a material adverse effect on our business, results of operations and financial

condition.

The Company’s operations may be impaired if information technology

systems fail to perform adequately or if are the subject of a data breach or cyberattack.

The Company’s information technology systems are critically important

to operating business efficiently. Sensus relies on information technology systems to manage business data, communications, employee information,

and other business processes. The Company outsources certain business process functions to third-party providers and similarly relies

on these third parties to maintain and store confidential information on their systems. The failure of these information technology systems

to perform as the Company anticipates could disrupt business and could result in transaction errors, processing inefficiencies, and the

loss of sales and customers, causing business and results of operations to suffer.

The Company has experienced, and expect to continue to experience, cyber

security threats and incidents, none of which has been material to Sensus to date. Although Sensus protects our information technology

systems, Sensus has experienced varying degrees of cyber-incidents in the normal conduct of business, including viruses, worms, phishing

and other malicious activities. Although there have been no serious consequences to date, such breaches could result in unauthorized access

to information, including customer, supplier, employee, or other company confidential data. Sensus carries insurance against these risks,

perform penetration tests from time to time, and designs business processes to attempt to mitigate the risk of such breaches. However,

the Company’s efforts to mitigate these risks may be unsuccessful, and security breaches may occur. Moreover, the development and

maintenance of these measures requires continuous monitoring as technologies change and efforts to overcome security measures evolve.

However, a successful breach or attack could have a material negative impact on operations and subject the Company to consequences such

as direct costs associated with incident response.

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If our essential employees who are unable to “telework”

become ill or otherwise incapacitated, our operations may be adversely impacted.

Consistent with rapidly changing federal, state and local governmental

orders and recommendations, we have implemented informal telework policies for appropriate categories of our employees. Employees that

are unable to telework continue to work at our facilities, and we have implemented appropriate safety measures, including social distancing,

face covering mandates, temperature checking, and increased sanitation standards in an attempt to maintain the health and safety of our

workforce. We are following guidance from the Centers for Disease Control and Prevention (“CDC”) and the Occupational Safety

and Health Administration (“OSHA”) regarding suspension of nonessential travel, self-isolation recommendations for employees

returning from certain geographic areas, confirmed reports of any COVID-19 diagnosis among our employees, and the return of such employees

to our workplace. Pursuant to updated guidance from the Equal Employment Opportunity Commission, we are engaging in limited and appropriate

inquiries of employees regarding potential COVID-19 exposure, based on the direct threat that such exposure may present to our workforce.

We continue to address other unique situations that arise among our workforce due to the COVID-19 pandemic on a case-by-case basis. While

we believe that we have taken appropriate measures to ensure the health and wellbeing of our employees, there can be no assurances that

our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 outside

of our workplace. If a number of our essential employees become ill, incapacitated or are otherwise unable to continue working during

the current or any future epidemic, our operations may be adversely impacted.

Substantially all of Sensus’s revenue is generated from the

sale of the SRT-100 and related products, and any decline in the sales of these products will negatively impact the Company’s business,

financial condition and results of operations.

The Company is focused heavily on the development and commercialization

of a limited number of products for the treatment of non-melanoma skin cancer and other skin conditions with superficial radiotherapy.

From the Company’s inception in 2010 through December 31, 2021, revenue has primarily been derived from sales of the SRT-100 product

line and related services and ancillary products. Although Sensus has introduced new products, the Company expects most of revenue in

the near to medium term to be derived from or related to sales of the SRT-100 product line.

The Company’s technology could be superseded by new products,

treatments, or technologies that gain wider acceptance among doctors and patients, which could adversely affect the Company.

The medical device industry is highly competitive and subject to rapid

technological change, and is significantly affected by new product and treatment introductions. The Company’s products, some of

which use technologies that have been available for many years, compete for market acceptance against those of healthcare providers who

use other methods of treatment for similar diseases and conditions. If new products, treatments, and/or technologies were developed that

gain wide acceptance among doctors and patients, it could take market share away from the Company, which could adversely affect the Company’s

ability to maintain or increase revenue and/or render the Company’s products obsolete.

Sensus has a single preferred supplier for the x-ray tubes and other

major components used in the Company’s products and the loss of this preferred supplier could adversely affect the Company.

Sensus has a single preferred supplier for the x-ray tubes and other major

components used in the Company’s products. Although other suppliers exist in the market, the Company believes that our preferred

supplier’s products are of a superior quality. The loss of the preferred supplier, or its inability to supply the Company with an

adequate supply of these components, could hinder the Company’s ability to effectively produce the Company’s products to meet

existing demand levels, especially if Sensus were unable to timely procure them from other suppliers in the market, which could adversely

affect the Company’s ability to commercialize products and to maintain or increase revenues.

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The Company’s customers are concentrated in the U.S. (including

one U.S. customer accounting for a significant portion of our sales), and economic difficulties or changes in the purchasing policies

or patterns of the Company’s customers in these countries could have a significant impact on future business and operating results.

Most of the Company’s sales have been made to customers located in

the U.S. (95% and 97% in the years ended December 31, 2021 and 2020, respectively). Additionally, a single customer in the U.S. accounted

for approximately 57% and 40% of revenues for the years ended December 31, 2021, and 2020, respectively. Because of these concentrations,

revenue could fluctuate significantly due to changes in economic conditions, competitive products, or the loss of, reduction of business

with, or less favorable terms with, our significant customer or other U.S. customers. A reduction or delay in orders for the Company’s

products for these or other reasons could materially harm business and results of operations, including any adverse impact of the coronavirus

epidemic.

Sensus may be required to obtain additional funds in the future,

and these funds may not be available on acceptable terms or at all.

Sensus’s operations have consumed substantial amounts of cash since

inception. Sensus may need to seek additional capital, as our existing financial resources including our revolving line of credit, may

not allow the Company to conduct all of the activities that would be beneficial for future growth.

The Company may need to seek funds in the future. The Company’s existing

revolving line of credit restricts the ability to incur certain indebtedness or permit certain encumbrances on assets without the prior

written consent of the lender. If Sensus is unable to raise funds on favorable terms, or at all, the Company may not be able to support

commercialization efforts, increase research and development activities, meet debt and other contractual obligations, and the growth of

business may be negatively impacted. As a result, Sensus may be unable to compete effectively.

The Company’s cash requirements in the future may be significantly

different from current estimates and depend on many factors, including:

● the results of commercialization efforts for products;

● the need for additional capital to fund development programs;

● success in entering into collaborative relationships with other parties.

To the extent that Sensus raises additional capital through the sale of

equity or convertible debt securities, the ownership interests of the existing stockholders will be diluted. Moreover, the terms of newly

issued securities may include liquidation or other preferences that adversely affect common stockholders’ rights. Debt financing,

if available, may involve covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making

capital expenditures or declaring distributions or dividends. If Sensus raises additional funds through collaboration and licensing arrangements

with third parties, the Company may have to relinquish valuable rights to technologies or products or to grant licenses on terms that

are not favorable. Any of these events could adversely affect the ability to declare dividends on the Company’s common stock and

to achieve future product development and commercialization goals and could have a material adverse effect on our business, financial