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,
2025
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, 2025, the last business day of the registrant’s most recently
completed second quarter, was $70,888,700 based on the closing price of $4.74 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 24, 2026, there were 16,462,059
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 29, 2026, 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 28
Item 8. Financial Statements and Supplementary Data 28
Item 9A. Controls and Procedures 29
Item 9B. Other Information 30
Item 9C. Disclosures Regarding Foreign Jurisdiction that Prevent Inspections 30
PART III 31
Item 10. Directors, Executive Officers and Corporate Governance 31
Item 11. Executive Compensation 31
Item 14. Principal Accountant Fees and Services 31
Item 15. Exhibits and Financial Statement Schedules 32
Signatures 37
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 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, including ongoing geopolitical
tensions between the U.S. and China; legislation, regulation, or other governmental action that affects our products, taxes, international
trade regulation (including the possibility of tariffs and fluctuations in 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; the possibility that inflationary pressures continue to impact our sales; 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, geopolitical uncertainties other
than those relating to China 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 this report is filed, 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 treatments for non-melanoma skin cancer (NMSC) and post-surgical keloid scar prevention. The Company
uses a proprietary low-energy X-ray technology known as superficial radiation therapy (“SRT”), which is based on decades
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 of close to one-million 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 offerings to dermatology clinics in the form of equipment, radiation
oncology and physicist oversight, and on-site device operation by radiotherapy technologists. The term the Company uses for this
service model is the “Fair Deal Agreement.” 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, 2025, the Company had installed 955 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
Fair Deal Agreement
The Company offers the Fair Deal Agreement,
a recurring revenue program that provides customers with a revenue-share turn-key solution to gain access to the Company’s
image-guided superficial radiotherapy technology to treat non-melanoma skin cancer and keloids. Under this service model, the Company
provides the customer with a SRT system, a radiotherapy technologist, radiation oncology and physicist oversight. The Company receives
in exchange a contractual percentage of all SRT related reimbursement collected from all payors; an economic value proposition
as an alternative to a direct purchase.
Sensus Healthcare Financial Services
In February 2026, the Company launched
Sensus Healthcare Financial Services, a financing program through third party banks, to support the acquisition of the Company’s
full line of systems through a streamlined process and flexible financing structures, including outright purchase or several leasing
alternatives. The Company believes this program will improve conversion of purchase-oriented prospects by reducing administrative
and financing barriers. The Company also believes that the program will complement the Company’s broader commercial strategy
across independent medical practices and corporate accounts, as well as support a scalable go-to-market strategy as customer demand
accelerates under the new reimbursement environment.
Sensus Link
In February 2026, the Company launched Sensus Link, a cloud-based
software and connectivity solution intended to expand advanced operating capabilities across the Company’s SRT-100 system
installed base. Through the combination of a new point-of-care software solution with cloud-based connectivity features, Sensus
Link enables users of SRT-100 systems to access enhanced workflow, treatment documentation and operating intelligence. These capabilities
historically were associated solely with more advanced image-guided and workstation platforms. The Company expect this solution
to strengthen the commercial offering across both direct purchase and Fair Deal Agreement customers.
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. The Company is not currently offering TDI.
Lasers
Sensus, from time to
time, 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.
The Company did not sell any lasers in 2024 or 2025.
Other services
Sensus provides operational healthcare services for dermatology clinics in the form of radiation oncology
and physicist oversight and on-site device operation by radiotherapy technologists.
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.
3
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 a Food and Drug Administration (“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.
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.
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 also began contracting with another third-party supplier, Koplak, LLC, in 2025 for special
projects and assistance with regard to SRT products. Having multiple supplier relationships is intended to assist the Company in
ramping up inventory more quickly in the event of significantly increased demand.
4
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:
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).
5
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, 2025, we incurred $3.4 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. 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.
6
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:
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.
7
Centers for Medicare and Medicaid
Services (CMS) CPT Codes and Local Coverage Determinations (LCDs)
CMS is the federal agency within the U.S.
Department of Health and Human Services responsible for administering the Medicare program, Medicaid, the Children’s Health
Insurance Program, and the Health Insurance Marketplace. CMS sets health and safety standards for facilities, manages beneficiary
enrollment, and pays claims. Sensus relies on its SRT technology and SRT is reimbursed through CPT codes that CMS establishes and
sets the value for. CMS released brand new CPT codes for SRT beginning on January 1, 2026, however, the announcement of the new
CPT codes, which were proposed in July, significantly impacted 2025 sales numbers for the Company, as customers anticipated use
of the new codes in 2026.
In addition, an LCD is a regional policy
created by Medicare Administrative Contractors that determines whether a specific medical item or service is considered reasonable,
necessary, and covered under Medicare Part A or Part B within a particular geographic area. LCD’s define covered diagnosis
codes, service frequency, and documentation requirements, and are stored in the Medicare Coverage Database.
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.
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. The Company has also received
its Medical Device Single Audit Program (MDSAP) certification which allows medical device manufactures to satisfy certain regulatory
requirements in USA, Canada, Japan, Australia, and Brazil through a single audit, reducing costs, minimizing operational disruptions,
expediting market access, and providing more consistent and transparent regulatory oversight.
8
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.
9
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.
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.
10
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, 2025 and 2024, the Company
incurred research and development expenses of $7.8 million and $4.2 million, respectively. The Company expects research and development
expenses incurred in 2026 to be substantially lower than those incurred in 2025.
Employees and Human Capital
At December 31, 2025, the Company had 60
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. Our corporate governance guidelines, code of business
conduct and ethics, board committee charters, and certain other corporate governance policies are also posted on the Investor Relations
section of our website. 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.
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. These disclosures reflect the Company’s beliefs and opinions as to
factors that could materially and adversely affect the Company and its securities in the future. 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. References to past events are provided by way of example only
and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or
their likelihood of occurring in the future.
11
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 CMS. 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
revenues and business.
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 and business, will be
adversely affected.
Substantially all of the Company’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
SRT. From the Company’s inception in 2010 through December 31, 2025, revenue has primarily been derived from sales of the