SRTS US Equity☆

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON,

D.C. 20549

FORM

10-K

☒ANNUAL

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR

THE FISCAL YEAR ENDED DECEMBER 31, 2024

OR

☐TRANSITION

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR

THE TRANSITION PERIOD FROM ____________ TO ____________

Commission

File Number: 001-37714

Sensus

Healthcare, Inc.

(Exact

name of registrant as specified in its charter)

851 Broken Sound Pkwy., NW #215, Boca Raton, Florida 33487

(Address of principal executive office) (Zip Code)

(561)922-5808

(Registrant’s

telephone number, including area code)

Securities

registered pursuant to Section 12(b) of the Act:

Title of each class Trading symbol(s) Name of each exchange on which registered

Securities

registered pursuant to Section 12(g) of the Act: None

Indicate

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No

☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐

No ☒

Indicate

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit such files). Yes ☒ No ☐

Indicate

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the

registered public accounting firm that prepared or issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the

registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The

aggregate market value of the common equity held by non-affiliates of the registrant on June 30, 2024, the last business day of

the registrant’s most recently completed second quarter, was $79,995,039, based on the closing price of $5.33 per share

of common stock on the Nasdaq Capital Market on that date. For this purpose, all outstanding shares of common stock have been

considered held by non-affiliates, other than the shares beneficially owned by directors and officers of the registrant.

As

of February 12, 2025, there were 16,495,396 shares of the registrant’s common stock outstanding.

DOCUMENTS

INCORPORATED BY REFERENCE

Portions

of our Proxy Statement for the Annual Meeting of Stockholders to be held on May 30, 2025, are incorporated by reference in Part

III.

SENSUS

HEALTHCARE, INC.

ANNUAL

REPORT ON FORM 10-K

TABLE

OF CONTENTS

PAGE

PART I 1

Item 1. Business 1

Item 1A. Risk Factors 11

Item 1B. Unresolved Staff Comments 21

Item 1C. Cybersecurity 21

Item 2. Properties 22

Item 3. Legal Proceedings 22

Item 4. Mine Safety Disclosure 22

Item 6. Reserved 23

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 27

Item 8. Financial Statements and Supplementary Data F-1

Item 9A. Controls and Procedures 28

Item 9B. Other Information 29

Item 9C. Disclosures Regarding Foreign Jurisdiction that Prevent Inspections 29

PART III 30

Item 10. Directors, Executive Officers and Corporate Governance 30

Item 11. Executive Compensation 30

Item 14. Principal Accountant Fees and Services 30

Item 15. Exhibits and Financial Statement Schedules 31

Signatures 35

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,” or “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. 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. 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 report as a result of the following factors, among others: the possibility that inflationary pressures continue

to impact our sales; 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; concentration

of our customers in the U.S. and China, including the concentration of sales to one particular customer in the U.S.; the development

by others of new products, treatments, or technologies that render our technology partially or wholly obsolete; the regulatory

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

risks arising from doing business in China and other foreign countries; legislation, regulation, or other governmental action

that affects our products, taxes, international trade regulation (including the possibility of tariffs on equipment we export

or materials we import), or other aspects of our business; the performance of the Company’s information technology systems

and its ability to maintain data security; 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; and

other risks described from time to time in our filings with the Securities and Exchange Commission.

To

date, the Middle East conflict, the Russian invasion of Ukraine, and other geopolitical uncertainties have not had any significant

impact on our business, but we continue to monitor developments and will address them in future disclosures, if applicable.

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 subsidiaries, Sensus Medical Devices Ltd. and Sensus Healthcare Services, LLC, unless the

context otherwise indicates, “Sensus,” “we,” “us,” “our,” 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.

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. In February 2024, the Company formed Sensus

Healthcare Services, LLC, a wholly-owned subsidiary that provides operational healthcare services to dermatology clinics. For

further information see Note 1, Organization and Summary of Significant Accounting Policies - Description of the Business,

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

Our

Products and Services

SRT

is the Company’s core technology. As of December 31, 2024, the Company had installed 867 units in 21 countries, primarily

in the United States.

SRT-100

The

SRT-100 is a photon x-ray low energy SRT 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. SRT 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. 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 SRT-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+

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, through the program, 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;

● Clinical applications training with the customer’s SRT staff; and

2

Other

products

Transdermal

Infusion (TDI)

TransDermal

Infusion is a biophysical alternative to infuse high weight molecule modalities into the dermis for medical and aesthetic purposes

without the use of needles. In 2022, the Company sourced the product from a manufacturer in Italy. The Company started developing

its own TDI system in 2023, which is pending approval from the FDA. The Company is not currently offering TDI.

Lasers

Sensus

also distributes laser devices, for the aesthetic dermatology market, which includes applications for hair removal, vascular lesions,

acne treatment, epidermal pigment removal (including removal of spots, freckles, and tattoos), skin toning, and skin rejuvenation.

Other

services

Sensus

provides Operational Healthcare Services in the form of Radiation Oncology and Physics oversight in addition Radiotherapy Technologist

for dermatology clinics.

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,

acceptance by the patient community, 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. It has also been used to treat keloids in China since 2017.

3

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.

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.

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 we needed 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.

The

Company possesses eight 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:

4

The

following patents were issued to us in 2017:

The

following patents were issued to Sensus in 2020:

The following

patent was issued to Sensus in 2021:

The

following patent was issued to Sensus in 2024:

The

Company also owns eight U.S. trademark registrations (expiring from 2025 through 2031).

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 upon, or misappropriated. In addition, third parties

have claimed, and in the future may claim, that the Company or customers, licensees, or other parties indemnified by the Company

are infringing upon their intellectual property rights.

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 year ended December 31, 2024, we incurred $0.9 million in expenses related to regulatory

compliance and quality standards.

5

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. For Class II devices, 510(k) is the most common pathway to obtain market authorization in

the US.

510(k)

pathway

We

have previously received FDA 510(k) clearances for our SRT-100, SRT-100 Vision, and SRT-100+ (Class II) products through the 510(k)

pathway due to the requirement for special controls. To date, other available US regulatory pathways (i.e., Self-certification

(Class I), Pre-market Authorization Class III, or de novo) have not been appropriate for our developed products and may

involve extended review periods.

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 the FDA, which may include, but is not limited to, the following sanctions:

● 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, also requires 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, existing Sensus devices are required to comply with the essential requirements of the EU Medical Devices Directive

(93/42/EEC), while any new products placed in the EU/EEA must comply with the EU Medical Device Regulation (2017/745). 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 (existing products) or Medical Device Regulation (new products), 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 EU 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, Hong Kong, European Union, United Kingdom, Israel,

Mexico, Russia, South Africa, South Korea, Vietnam, Taiwan, and Guatemala, 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 the 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.

Violations of these laws 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.

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, assess civil penalties against the company, or its officers

or employees, and 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.

The Company has implemented policies and procedures related to commercial compliance including with respect to compliance in connection

with sales and marketing.

8

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 (the “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 Anti-Kickback Statute and criminal healthcare fraud statute. 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 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 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, obtaining 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. The Company has implemented policies and procedures related to compliance with applicable regulations

design to prevent healthcare fraud and abuse.

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.

9

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, 2024 and 2023, the Company incurred research and development expenses of $4.2 million and $3.7 million, respectively. The

Company expects research and development expenses in 2025 to be generally consistent with 2024.

Employees

and Human Capital

At

December 31, 2024, the Company had 54 employees. None of the Company’s employees are represented by a labor union or covered

by a collective bargaining agreement.

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

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, Sensus’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 Sensus’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.

10

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 the related notes.

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