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, 2020

OR

☐FORM 10-KTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

OR

Commission File Number: 001-37714

Sensus Healthcare, Inc.

(Exact name of registrant as specified in its charter)

(561) 922-5808

(Registrant’s telephone number, including area code)

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

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 ☐o  No ☒x

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 ☐o  No ☒x

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 ☒x  No ☐o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 and post such files). Yes ☒x  No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company,” and “smaller reporting“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. ☒x

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. o

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

The aggregate market value of the common equity held by non-affiliates of the registrant on June 30, 2018,2020, the last business day of the registrant’s most recently completed second quarter, was $58,772,343$35,160,655 based on the closing price of $7.26$3.06 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, officers and certain 5% stockholders of the registrant; certain of such persons disclaim that they are affiliates of the registrant.

Indicate the numberAs of February 28, 2021 there were 16,485,780 shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our Proxy Statement for the Annual Meeting of Stockholders to be held on June 7, 2019,4, 2021, are incorporated by reference in Part III.

SENSUS HEALTHCARE, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

INTRODUCTORY NOTE

Caution Concerning Forward-Looking Statements

This Annual Report on Form 10-K containsreport includes statements that are, or may be deemed, “forward-looking statements” withinstatements.” In some cases, these statements can be identified by the meaninguse of the Private Securities Litigation Reform Actforward-looking terminology such as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should,” “approximately,” “potential” or negative or other variations of 1995. Thesethose terms or comparable terminology, although not all forward-looking statements include, among others,contain these words.

Forward-looking statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significantinvolve risks and uncertainties because they relate to events, developments, and are subjectcircumstances relating to change basedSensus Healthcare, Inc., our industry, and/or general economic or other conditions that may or may not occur in the future or may occur on various factors, many of which are beyond our control. The words “may,” “could,” “should,” “would,” “will,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identifylonger or shorter timelines than anticipated. Although we believe that we have a reasonable basis for each forward-looking statements.

Allstatement contained in this report, forward-looking statements by their nature, are subject to risksnot guarantees of future performance, and uncertainties. Ourour actual future results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those set forththe forward looking statements contained in this press release, as a result of the following factors, among others: the continuation and severity of the COVID-19 pandemic, including its impact on sales and marketing; our ability to achieve profitability; our ability to obtain and maintain the intellectual property needed to adequately protect our products, and our ability to avoid infringing or otherwise violating the intellectual property rights of third parties; the level and availability of government and/or third party payor reimbursement for clinical procedures using our products, and the willingness of healthcare providers to purchase our products if the level of reimbursement declines; the regulatory requirements applicable to us and our competitors; our ability to efficiently manage our manufacturing processes and costs; the risks arising from our international operations; legislation, regulation, or other governmental action, that affects our products, taxes, international trade regulation, or other aspects of our business; concentration of our customers in the U.S. and China, including the concentration of sales to one particular customer in the U.S., the performance of the Company’s information technology systems and its ability to maintain data security; and other risks described from time to time in our forward-looking statements.filings with the Securities and Exchange Commission.

An investment in ourSensus’ common stock contains a high degree of risk. YouAn investor should consider carefully the risks and uncertainties described below before making an investment decision. OurSensus’ business could be harmed if any of these risks, as well as other risks not currently known to us or that we currently deem immaterial, could materialize. The trading price of ourSensus’ common stock could decline due to the occurrence of any of these risks, and you may lose all or part of your investment. In assessing the risks described below, you should also refer to the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and schedules, and other filings with the SEC. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from those discussed in this Annual Report on Form 10-K.risks. These risks and uncertainties include the following:

Risks Related to our Business

We have a history of net losses. If we do not achieve profitability, our financial condition and the value of our common stock could suffer.

We have a history of net losses. Our historical losses from inception through December 31, 2018 totaled approximately $13.5 million. If our revenue grows more slowly than currently anticipated, or if operating expenses are higher than expected, we may be unable to achieve profitability, our financial condition will suffer and the value of our common stock could decline. Even if we are successful increasing our sales, we may incur losses in the foreseeable future as we continue to research and develop and seek regulatory approvals for our products. If sales revenue from any of our currently cleared products or any additional products that receive marketing clearance from the FDA or approval from other regulatory authorities in the future is insufficient, or if our product development is delayed, we may be unable to achieve profitability. Furthermore, even if we are able to achieve profitability, we may be unable to sustain or increase such profitability on a quarterly or annual basis, which would significantly reduce the value of our common stock.

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 ourSensus’ 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 our products. The existence of coverage and adequate reimbursement for our products and related procedures by government and private payors is critical to market acceptance of our existing and futurethese products. Neither hospitals nor physicians are likely to use ourSensus’ products if they do not receive adequate reimbursement payments for the procedures using ourthese products.

Some private payors in the U.S. may base their reimbursement policies on the coverage decisions determined by the Center of Medicare and Medical Services, or CMS, which administers the Medicare program and works in partnership with state governmentgovernments to administer the Medicaid program. Others may adopt different coverage or reimbursement policies for procedures performed using ourSensus’ products, while some governmental programs, such as Medicaid, have reimbursement policies that vary from state to state, some of which may not pay for our products in an amount that supports ourthe selling price of Sensus’ products, if at all. A Medicare national or local coverage decision denying coverage for any of the procedures performed with ourusing the Company’s products could result in private and other third-party payors also denying coverage. Medicare (part(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 ourthe Company’s 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. OurSensus’ 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 ourthe Company’s ability to sell our products profitably. If sufficient coverage and reimbursement are not available for our current or futureSensus’ products, in either the U.S. or internationally, the demand for ourthese products and, consequently, ourthe Company’s revenues will be adversely affected.

Our business, results of operations and financial condition could be materially adversely affected by the effects of widespread public health epidemics, including COVID-19, that are beyond our control.

Any outbreaks of contagious diseases, public health epidemics and other adverse public health developments in countries where we, our customers, or our suppliers operate could have a material and adverse effect on our business, results of operations and financial condition. The COVID-19 pandemic has impacted our sales as social distancing and related concerns forced physicians to temporarily close their practices in 2020 and is expected to continue to adversely impact our business, and the nature and extent of the impact is highly uncertain and beyond our control. Uncertain factors relating to COVID-19 include the duration, spread and severity of the virus, the effects of the COVID-19 pandemic on our customers, vendors and suppliers, and the actions or perception of actions that may be taken to contain or treat its impact, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel, commercial and/or other similar restrictions and limitations.

As a result of COVID-19 and the measures designed to contain its spread, our sales have been, and are expected to continue to be negatively impacted as a result of disruption in demand, which could have a material and adverse effect on our business, results of operations and financial condition. Similarly, our suppliers may not have the materials, capacity, or capability to manufacture our products according to our schedule and specifications. If our suppliers’ operations are impacted, we may need to seek alternate suppliers, which may be more expensive, may not be available, or may result in delays in shipments to us and subsequently to our customers, each of which would affect our results of operations. The duration of the related financial impact to us, cannot be estimated at this time. Should such disruption continue for an extended period of time, the impact could have a material adverse effect on our business, results of operations and financial condition.

If our essential employees who are unable to telework become ill or otherwise incapacitated, our operations may be adversely impacted.

Consistent with rapidly changing federal, state and local governmental orders and recommendations, we have implemented informal telework policies for appropriate categories of our employees. Employees that are unable to telework continue to work at our facilities, and we have implemented appropriate safety measures, including social distancing, face covering mandates, temperature checking, and increased sanitation standards in an attempt to maintain the health and safety of our workforce. We are following guidance from the Center for Disease Control (“CDC”) and the Occupational Safety and Health Administration (“OSHA”) regarding suspension of nonessential travel, self-isolation recommendations for employees returning from certain geographic areas, confirmed reports of any COVID-19 diagnosis among our employees, and the return of such employees to our workplace. Pursuant to updated guidance from the Equal Employment Opportunity Commission, we are engaging in limited and appropriate inquiries of employees regarding potential COVID-19 exposure, based on the direct threat that such exposure may present to our workforce. We continue to address other unique situations that arise among our workforce due to the COVID-19 pandemic on a case-by-case basis. While we believe that we have taken appropriate measures to ensure the health and wellbeing of our employees, there can be no assurances that our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 outside of our workplace. If a number of our essential employees become ill, incapacitated or are otherwise unable to continue working during the current or any future epidemic, our operations may be adversely impacted.

Substantially all of ourSensus’ revenue is generated from the sale of ourthe SRT-100 and related products, and any decline in the sales of these products or failure to gain market acceptance of these products will negatively impact ourthe Company’s business, financial condition and results of operations.

We haveThe Company is focused heavily on the development and commercialization of a limited number of products for the treatment of non-melanoma skin cancer and other skin conditions with superficial radiotherapy. From ourthe Company’s inception in 2010 through December 31, 2018, substantially all of our2020, revenue has primarily been derived from sales of ourthe SRT-100 product line and related services and ancillary products. Although we intend to introduceSensus has introduced new products, we expectthe Company expects most of our 2019 revenue in 2021 to be derived from or related to sales of ourthe SRT-100 product line. If we are unable to achieve and maintain significantly greater market acceptance of superficial radiotherapy for treatment of non-melanoma skin cancer and other skin conditions, or if we do not achieve sustained positive cash flow, then we will be severely constrained in our ability to fund our operations. In addition, if we are unable to market our SRT-100 product line and ancillary products as a result of a quality problem, shortage of components required for assembly, failure to maintain or obtain regulatory approvals, unexpected or serious complications or other unforeseen negative effects related to the SRT-100 product line and ancillary products, we would lose our only source of revenue, and our business, financial condition and results of operations will be adversely affected.

We may be unable to manufacture our products in quantities sufficient to meet existing demand levels, which would hinder our ability to effectively commercialize our products and increase revenues.

The manufacture of medical devices requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls, from us and our key suppliers, to scale up the production process to manufacture sufficient quantities at high volume and with satisfactory production yields. Manufacturers of medical devices often encounter difficulties in production, particularly when scaling up initial production. These problems include difficulties with production costs and yields, quality control and assurance, and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. In July 2010, we entered into a manufacturing agreement with an unrelated third party for the manufacturing and production of the SRT-100 in accordance with our specifications. We continue to do business with the manufacturer pursuant to this agreement, although we or the manufacturer may terminate the agreement upon 90 days’ written notice or upon at least 60 days’ notice prior to the end of each additional one-year renewal period. As discussed elsewhere in this Annual Report on Form 10-K, we are in the process of adding another contract manufacturer and are exploring the possibility of bringing certain manufacturing capabilities in-house. However, if eventually implemented, our plan to bring the manufacturing function in-house may not be successful and we may be unable to maintain a relationship with our current manufacturer or establish a relationship with another manufacturer on favorable terms, if at all.

Consequently, we may be able to continue to efficiently manufacture our products in sufficient quantities to meet projected demand or to establish sufficient worldwide inventory to fully support our distribution network. Any of these results could cause us to be unable to effectively commercialize our products or increase revenue, adversely affecting our business, financial condition, results of operations and the value of our common stock.

We haveSensus has a single preferred supplier for the x-ray tubes and other major components used in ourthe Company’s products and the loss of this preferred supplier could adversely affect us.the Company.

We haveSensus has a single preferred supplier for the x-ray tubes and other major components used in ourthe Company’s products. Although other suppliers exist in the market, we believethe Company believes that our preferred supplier’s products are of a superior quality. The loss of thesethe preferred suppliers,supplier, or theirthe inability to supply usthe Company or our third party manufacturer with adequate components could hinder ourthe Company’s ability to effectively produce ourthe Company’s products to meet existing demand levels, especially if weSensus were unable to timely procure them from other suppliers in the market, which could adversely affect ourthe Company’s ability to commercialize our products and increase our revenues.

We may be unable to retain and develop our U.S. sales force and non-U.S. distributors, which would adversely affect our ability to meet our revenue targets and other goals.

As we launch products, increase current sales efforts and expand into new geographic areas, we will need to retain, grow and develop our direct sales personnel, distributors and agents. There is significant competition for sales personnel experienced in relevant medical device sales. In addition, the training process is lengthy because it requires significant education for new sales representatives to achieve an acceptable level of clinical competency with our products. Upon completion of training, sales representatives typically require lead time in the field to develop or expand their network of accounts and achieve the productivity levels we expect them to reach in any individual territory. If we are unable to attract, motivate, develop, and retain a sufficient number of qualified sales personnel, or if the sales representatives do not achieve the productivity levels expected, our revenue will not grow as expected, and our financial performance will suffer.

In addition, we may not succeed in entering into and maintaining productive arrangements with an adequate number of distributors outside of the U.S. that are sufficiently committed to selling our products in international markets. The establishment and maintenance of a distribution network is expensive and time consuming. Even if we engage and maintain suitable relationships with an adequate number of distributors, they may not generate revenue as quickly as we expect them to, commit the necessary resources to effectively market and sell our products, or ultimately succeed in selling our products. Moreover, if our sales force and distributors are unable to attract and retain new customers, we may be unable to achieve our expected growth, and our business could suffer. Furthermore, some of our distributors may market or sell the products of our competitors. In these cases, the competitors may have the ability to influence the products that our distributors choose to market and sell, for example, by offering higher commission payments, or by convincing the distributors to terminate their relationships with us, carry fewer of our products or reduce their sales and marketing efforts for our products. Any of the foregoing would hinder our ability to meet our revenue targets and other goals.

The future worldwide demand for our current products and our future products is uncertain. Our current products and our future products may not be accepted by hospitals, physicians or patients, and may not become commercially successful.

Physicians and hospitals may not perceive the benefits of our products and may be reluctant or unwilling to adopt our products as a treatment option, particularly in light of existing treatment options, such as Mohs surgery or high dose rate brachytherapy. Additionally, physicians and hospitals may not be aware of the significant advances in technology associated with superficial radiation therapy compared to older technology that was previously used with orthovoltage. While we believe that our products are an efficient and less invasive alternative to other treatments of non-melanoma skin cancer and other skin conditions, physicians who are accustomed to using other modalities to treat patients with either non-melanoma skin cancer, keloids or other skin conditions may be reluctant to adopt broad use of our superficial radiotherapy products.

We must grow markets for our products through physician education and awareness programs. Publication in peer-reviewed medical journals of results from studies using our products will be an important consideration in their adoption by physicians and in reimbursement decisions of third-party payors. The process of publication in leading medical journals is subject to a peer-review process. Peer reviewers may not consider the results of studies of our products and any future products sufficiently novel or worthy of publication. Failure to have studies of our products published in peer reviewed journals may adversely affect adoption of our products.

Educating physicians and hospitals on the benefits of our products and advancements in superficial radiation technology requires a significant commitment by our marketing team and sales organization. Our products may not become widely accepted by physicians and hospitals. If we are unable to educate physicians and hospitals about the advantages of our products, do not achieve significantly greater market acceptance of our products, do not gain momentum in our sales activities, or fail to significantly grow our market share, we will be unable to grow our revenue, and our business and financial condition will be adversely affected.

We are in a highly competitive market segment, which is subject to rapid technological change. If our competitors are able to develop and market products that are more effective, less costly, easier to use or otherwise more attractive than any of our products, our business will be adversely impacted.

The medical device industry is highly competitive and subject to technological change. In the arena for technology and products for use in the treatment of non-melanoma skin cancer and other skin conditions, we have three primary competitors, one of which operates in the superficial radiotherapy space largely in the European market, and the other two of which operate in the brachytherapy space in both the U.S. and internationally. While we believe our SRT-100 and related products currently have certain competitive advantages over the products offered by these competitors, our success depends, in part, upon our ability to maintain this competitive position. If these competitors improve their existing products, develop new products, or expand their operations, we may be unable to maintain our competitive advantages over these competitors.

Furthermore, new competitors, including companies larger than us, may enter the market in the future and may offer products with similar or alternative functionalities. These companies may enjoy several advantages relative to us, including:

Hospitals, physicians and investors may not view our products as competitive with other products that are marketed and sold by new competitors, including much larger and more established companies. Our competitors may develop and patent processes or products earlier than we do, obtain regulatory clearance or approvals for competing products more rapidly than us or develop more effective, more convenient or less expensive products or technologies that render our technology or products obsolete or less competitive. If our existing or new competitors are more successful than us in any of these matters, our business may be harmed.

OurCompany’s customers are concentrated in the U.S. and China (including one U.S. customer accounting for a significant portion of our sales), and economic difficulties or changes in the purchasing policies or patterns of ourthe Company’s customers in these countries could have a significant impact on ourfuture business and operating results.

Substantially allMost of our 2018 and 2017the Company’s sales werehave been made to customers located in the U.S., however (91% and 93% in previousthe years significant sales were made to customers located in China.ended December 31, 2020 and 2019, respectively). For the years ended December 31, 20182020 and 2017,2019, approximately 1%9% and 2%3%, respectively, of our product sales were to Chinese customers with substantially the remainder of our salesand approximately 0% and 4%, respectively, were to customers in the U.S.Israeli customers. Additionally, a single customer in the U.S. accounted for approximately 71%39% and 59%68% of revenues for the years ended December 31, 20182020 and 2017,2019, respectively. Because of ourthese geographic and customer concentrations, our revenue could fluctuate significantly due to changes in economic conditions, the use of competitive products, or the loss of, reduction of business with, or less favorable terms within,with, these countries or this customer. A reduction or delay in orders for ourthe Company’s products from these countries and this customer could materially harm our business and results of operations.operations, including any adverse impact of the coronavirus epidemic

Our future success depends on our ability to develop, receive regulatory approval for, and introduce new products or product enhancements that will be accepted by the market in a timely manner, and if we do not do so, our results of operations will suffer.

It is important to our business that we continue to build a pipeline of product offerings for the treatment of non-melanoma skin cancer and other skin conditions to remain competitive. Consequently, our success will depend in part on our ability to develop and introduce new products. However, we may be unable to successfully maintain our regulatory clearance for existing products, or develop, obtain and maintain regulatory clearance or approval for product enhancements, or new products, or these products may not be accepted by physicians or the payors who financially support many of the procedures performed with our products.

The success of any new product offering or enhancement to an existing product will depend on several factors, including our ability to:

If we do not develop new products or product enhancements and obtain regulatory approval in time to meet market demand, if there is insufficient demand for these products or enhancements, or if competitors introduce new products with enhanced functionalities that are superior to those of ours, then our results of operations will suffer.

Our products may become obsolete prior to the end of their anticipated useful lives, and we may be required to dispose of existing inventory or write off the value or accelerate the depreciation of these assets, each which would materially and adversely impact our results of operations.

We focus on continual product innovation and product improvement. While we believe this provides a competitive edge, it also creates a risk that our products will become obsolete prior to the end of their anticipated useful lives. If we introduce new products or next-generation products prior to the end of the useful life of a prior generation, we may be required to dispose of existing inventory, or write off the value of these assets, each of which would materially and adversely impact our results of operations.

Our success is dependent in large part on our being an early re-entrant into the market for our proprietary superficial radiotherapy systems, and if one or more competitors join us in the market, our marketing efforts and ability to compete would be materially and adversely affected.

Our success is dependent in large part on our being an early re-entrant into the market for our proprietary superficial radiotherapy systems. If one or more competitors join us in the market, the increased competition would require us to devote substantial additional resources to our marketing efforts, and our ability to compete may be severely impaired.

Our international operations subject us to certain operating risks, which could adversely impact our results of operations and financial condition.

The sale and shipment of our products across international borders, as well as the purchase of components from international sources, subjects us to U.S. and foreign governmental trade, import and export, and customs regulations and laws. Compliance with these regulations and laws is costly and exposes us to penalties for non-compliance. Other laws and regulations that can significantly impact us include various anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, and anti-boycott laws, as well as export control laws. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments, restrictions on certain business activities and exclusion or debarment from government contracting. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our shipping and sales activities. Any of the foregoing would adversely impact our results of operations and financial condition.

Our international operations and our international distributors expose us to risks inherent in operating in foreign jurisdictions. These risks include, without limitation:

If any of these events or circumstances were to occur, our sales in foreign countries would be harmed and our results of operations would suffer.

Our U.S. business could be adversely affected by changes in international trade regulation.

Both the Trump Administration and certain members of the U.S. Congress have indicated that they may seek to impose importation tariffs on products from certain countries such as China and Mexico or to impose additional taxes on imported goods generally. Certain countries have publicly stated that they would respond in-kind to any such action by the U.S. The Trump Administration recently imposed tariffs on solar panels and washing machines. Any future escalation of protectionist trade measures could increase the prices of products, components and supplies that we source internationally, as well as adversely affect our ability to sell our products in foreign markets. In addition, the Trump Administration has appointed and employed many new public officials into positions of authority in the U.S. Federal government dealing with the healthcare industries that may potentially have a negative impact on the prices and the regulatory pathways for certain healthcare products such as those developed, marketed and sold by us. Such changes in the regulatory pathways could adversely affect and or delay our ability to market and sell our products in the U.S. and internationally.

OurCompany’s operating results may vary significantly from quarter to quarter, which may negatively impact the value of ourits securities.

Our quarterlyQuarterly revenues and results of operations may fluctuate due to the following reasons, among others:

Because of these and other related or similar factors, it is likely that in some future period ourthe Company’s operating results will not meet expectations. Failure to meet or exceed analyst expectations could cause a decrease in the trading price of ourthe Sensus’ securities.

We may be unable to attract and retain highly qualified personnel, which could adversely and materially affect our competitive position.

Our future success depends on our ability to attract and retain our executive officers and other key employees. We may be unable to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among companies in the medical device business and related industries, particularly in the South Florida area where we are headquartered. The medical device industry has experienced a high rate of turnover of management personnel in recent years. Consequently, we could have difficulty attracting or retaining experienced personnel and may be required to spend significant time and expend significant financial resources in our employee recruitment and retention efforts. Many of the other medical device companies with which we compete for qualified personnel have greater financial and other resources and risk profiles different from ours. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than that which we may offer. If we are unable to attract and retain the necessary personnel to accomplish our business objectives, we may have difficulty implementing our business strategy and achieving our business objectives.

Product liability claims could damage our reputation and adversely affect our business.

The design, manufacture and marketing of medical devices each carry an inherent risk of product liability claims and other damage claims. In addition to the exposure we may have for defective products, physicians may misuse our products or use improper techniques, regardless of how well trained, potentially leading to injury and an increased risk of product liability. A product liability or other damages claim, product recall or product misuse could require us to spend significant time and money in litigation, regardless of the ultimate outcome, or to pay significant damages and could seriously harm our business.

We maintain liability insurance coverage that management believes to be reasonable based on our business and operations; however, our insurance may not be sufficient to cover all claims made against us. Our insurance policies generally must be renewed on an annual basis. We may be unable to maintain or increase insurance on acceptable terms or at reasonable costs. A successful claim brought against us in excess, or outside of, our insurance coverage could seriously harm our financial condition or results of operations.

WeSensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.

OurSensus’ operations have consumed substantial amounts of cash since inception, and we anticipate that our expenses will increase as we continue to grow our business. Weinception. Sensus may need to seek additional capital, inas the future. Our growth will depend, in part, on our ability to develop variations of the SRT-100 and other products, and related technology complementary to our products. Our existing financial resources including our existing revolving line of credit, may not allow usthe Company to conduct all of the activities that we believe would be beneficial for our future growth.

WeThe Company may need to seek funds in the future. OurThe Company’s existing revolving line of credit restricts ourthe ability to incur certain indebtedness or permit certain encumbrances on our assets without the prior written consent of the lender. If we areSensus is unable to raise funds on favorable terms, or at all, wethe Company may not be able to support our commercialization efforts, or increase our research and development activities, or meet our debt and other contractual obligations, and the growth of our business may be negatively impacted. As a result, weSensus may be unable to compete effectively.

OurThe Company’s cash requirements in the future may be significantly different from our current estimates and depend on many factors, including:

We may be unable to raise funds on favorable terms, or at all, and either case would materially and adversely affect our ability to implement our strategy and meet our goals.

To the extent that we raiseSensus raises additional capital through the sale of equity or convertible debt securities, stockholders’the ownership interestinterests of the existing stockholders will be diluted. Moreover, the terms of newly issued securities may include liquidation or other preferences that adversely affect common stockholders’ rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring distributions or dividends. If we raiseSensus raises additional funds through collaboration and licensing arrangements with third parties, wethe Company may have to relinquish valuable rights to our technologies, or products or grant licenses on terms that are not favorable to us.favorable. Any of these events could adversely affect ourthe ability to declare dividends on ourthe Company’s common stock and to achieve ourfuture product development and commercialization goals and have a material adverse effect on our business, financial condition and results of operations.

Our revolving credit facility imposes substantial restrictions on us, some of which could hinder our ability to conduct our operations effectively or otherwise in accordance with our business plan.

Our revolving credit facility contains a number of negative covenants that require us to seek the lender’s prior written consent in order to conduct certain activities. For example, we may not, without the prior written consent of the lender:

In the event we wish to conduct any of the foregoing activities and the lender refuses to provide its prior written consent, our ability to conduct our operations effectively and in accordance with our business plan could be materially and adversely affected.

If we fail to properly manage our anticipated growth, our business could suffer.

Our strategy involves substantial growth. If we experience periods of rapid growth and expansion, our limited personnel, operational infrastructure and other resources could be significantly strained. In particular, the possible internalization of manufacturing, and continued expansion of our direct sales force in the U.S. will require significant management, financial and other supporting resources. In addition, in order to manage expanding operations, we will need to continue to improve our operational and management controls, reporting and information technology systems and financial internal control procedures. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our operating results and business could suffer. Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our goals. To achieve our revenue goals, we must successfully increase production output to meet projected customer demand. We may be unable to increase output on the timeline anticipated, if at all. Also, we may in the future experience difficulties with production yields and quality control, component supply, and shortages of qualified personnel, among other problems. These problems could result in delays in product availability and increases in expenses. Any delay or increased expense could adversely affect our ability to increase revenues.

Cost-containment efforts of our customers, purchasing groups and governmental organizations could have a material adverse effect on our sales and profitability.

In an effort to reduce costs, many hospitals or physicians within the U.S. and abroad are members of group purchasing organizations and integrated delivery networks. Group purchasing organizations and integrated delivery networks negotiate pricing arrangements with medical device companies and distributors and offer the negotiated prices to affiliated hospitals, physicians and other members. Group purchasing organizations and integrated delivery networks typically award contracts on a category-by-category basis through a competitive bidding process. Bids are generally solicited from multiple providers with the intention of driving down pricing or reducing the number of vendors. Due to the highly competitive nature of the group purchasing organizations and integrated delivery networks contracting processes, we may be unable to obtain or maintain contract positions with major group purchasing organizations and integrated delivery networks. Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products, thereby reducing our profitability.

While having a contract with a group purchasing organizations or integrated delivery networks for a given product category can facilitate sales to members of that group purchasing organizations or integrated delivery networks, expected sales levels may not be achieved, as sales are typically made pursuant to purchase orders. Even when a provider is the sole contracted supplier of a group purchasing organization or integrated delivery network for a certain product category, members of the group purchasing organization or integrated delivery network generally are free to purchase from other suppliers. Furthermore, group purchasing organizations and integrated delivery networks contracts typically are terminable without cause by the group purchasing organizations or integrated delivery networks upon 60 to 90 days’ notice. Accordingly, even if we obtain contracts with any group purchasing organizations or integrated delivery networks, the members of these groups may choose to purchase from our competitors due to the price or quality offered by competitors, which could result in a decline in our sales and profitability.

We depend on information technology systems to operate our business and a cyber-attack or other breach of these systems could have a material adverse effect on our business.

We rely on information technology systems to process, transmit and store electronic information in our day-to-day operations. Our information technology systems could be vulnerable to a cyber-attack, malicious intrusion, breakdown, destruction, loss of data privacy or other significant disruption. Any successful attacks could result in the theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information or disrupt our operations. Cyber-attacks are becoming more sophisticated and frequent, and our systems could be the target of malware and other cyber-attacks. We have invested in our systems and the protection of our data to reduce the risk of an intrusion or interruption, and we monitor our systems on an ongoing basis for any current or potential threats.

However, these measures and efforts may not prevent interruptions or breakdowns, and we may otherwise fail to maintain or protect our information technology systems and data integrity effectively. Furthermore, we may fail to anticipate, plan for or manage significant disruptions to our systems. If any of the foregoing were to occur, our competitive position could be harmed, we could lose existing customers, have difficulty preventing, detecting and controlling fraud, have disputes with customers, specialist physicians and other healthcare professionals, have regulatory sanctions or penalties imposed, incur expenses or lose revenues as a result of a data breach or theft of intellectual property or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition or cash flows.

Consolidation in the healthcare industry could adversely affect ourthe Company’s future revenues and operating income.

The medical technology industry has experienced a significant amount of consolidation, resulting in companies with greater market presence. Health care systems and other health care companies are also consolidating, resulting in greater purchasing power for thesethe combined companies. As a result, the disruption in the healthcare industry caused by consolidation may lead to further competition among medical device suppliers to provide goods and services, which could adversely affect ourthe Company’s future revenues and operating income.

We may engage in acquisitions, mergers, strategic alliances, and joint ventures that could result in final results that are different than expected.

In the normal course of business, we engage in discussions relating to possible acquisitions, equity investments, mergers, strategic alliances, and joint ventures. Such transactions are accompanied by a number of risks, including the use of significant amounts of cash, potentially dilutive issuances of equity securities, incurrence of debt on potentially unfavorable terms as well as impairment expenses related to goodwill and amortization expenses related to other intangible assets, the possibility that we may pay too much cash or issue too many of our shares as the purchase price for an acquisition relative to the economic benefits that we ultimately derive from such acquisition, and various potential difficulties involved in integrating acquired businesses into our operations.

If we do not realize the expected benefits of such transactions, our financial position, results of operations, cash flows and stock price could be negatively impacted.

Risks Related to our Regulatory Environment

We areSensus is subject to various federal, state and foreign healthcare laws and regulations, and a finding of failure to comply with these laws and regulations could have a material adverse effect on ourits business.

OurSensus’ operations are, and will continue to be, directly and indirectly affected by various federal, state and foreign healthcare laws, including, but not limited to, those described below.

Additionally, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and applicable implementing regulations, impose certain requirements relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization on entities subject to the law, such as health plans, clearinghouses, and healthcare providers and their business associates. Internationally, substantially every jurisdiction in which we operate has established its own data security and privacy legal framework with which we must comply, including the Data Protection Directive 95/46/EC and national implementation of the Directive in the member states of the European Union.

Many states have also adopted laws similar to each of the above federal laws, such as anti-kickback and false claims laws, which may be broader in scope and apply to items or services reimbursed by any third-party payor, including commercial insurers, as well as laws that restrict our marketing activities with healthcare professionals and entities, and require usthe Company to track and report payments and other transfers of value, including consulting fees, provided to healthcare professionals and entities. Some states mandate implementation of compliance programs to ensure compliance with these laws. Additionally, certain states require a certificate of need prior to the installation of a radiation device, such as the SRT-100. We areSensus is also subject to foreign fraud and abuse laws, which vary by country.

If ourthe Company’s operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, weSensus may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, individual imprisonment, contractual damages, reputational harm, exclusion from governmental healthcare programs, and the curtailment or restructuring of ourits operations. Any of the foregoing could adversely affect ourthe Company’s ability to operate our business and our financial results.

Our products are subject to extensive governmental regulation that could make it more expensive and time consuming for us to introduce new or improved products.

Our products must comply with regulatory requirements imposed by the U.S. Food and Drug Administration, the U.S. Department of Health and Human Services and other governmental agencies in the U.S., and similar agencies in foreign jurisdictions. These requirements involve lengthy and detailed laboratory and clinical testing procedures, sampling activities, an extensive agency review process, and other costly and time-consuming procedures. It often takes several years to satisfy these requirements, depending on the complexity and novelty of the product. If we execute on our plans to move our manufacturing function in-house, we will also be subject to additional licensing and regulatory requirements relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potential hazardous substances. Some of the most important requirements applicable or potentially applicable to us include:

Additionally, due to the nature of our products as radiation producing medical devices, we are also subject to certain state laws and regulations related to the sale of our products. Although we have taken steps to ensure our compliance with such state laws and regulations, our failure to fully comply with these requirements could result in fines or penalties and could also adversely affect our ability to sell our products.

Government regulation may impede our ability to the manufacture our existing and future products. Government regulation also could delay the marketing of new products for a considerable period of time and impose costly procedures on activities. The U.S. Food and Drug Administration and other regulatory agencies may not clear or approve any future products on a timely basis, if at all. Any delay in obtaining, or failure to obtain, these approvals could negatively impact the marketing of any future products and reduce our product revenues. Regulatory bodies may review products once they are on the market and determine that they do not satisfy applicable regulatory requirements. Failure to comply with requisite requirements may lead to European Economic Area regulatory bodies ordering the suspension or withdrawal of products from the European Economic Area market or, as discussed below, notified bodies withdrawing certificates of conformity for devices or the underlying quality systems.

Further, regulations may change, and any additional regulation could limit or restrict our ability to use any of our technologies, which could harm our business. We could also be subject to new international, federal, state or local regulations that could affect our research and development programs and harm our business in unforeseen ways.

Product deficiencies could result in field actions, recalls, substantial costs or write-downs; which could lead to the delay or termination of ongoing trials, if any, and harm our reputation, business or financial results.

Our products are subject to various regulatory guidelines and involve complex technologies. The U.S. Food and Drug Administration and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture that could affect patient safety. Manufacturers may, under their own initiative, conduct a product notification or recall to inform physicians of changes to instructions for use or if a deficiency in a device is found or suspected.

Identified quality problems, such as failure of critical components, or the failure of third parties to supply us with sufficient conforming quantities of these products or components, could impact the availability of our products in the marketplace or lead to adverse clinical events. In addition, product improvements or product redundancies could result in scrapping or expensive rework of products, and our business, financial condition or results of operations could suffer as a result. Product complaints, quality issues and necessary corrective and preventative actions could result in communications to customers or patients, field actions, require the scrapping, rework, recall or replacement of products, result in substantial costs or write-offs, or harm our business reputation and financial results. Further, these events could adversely affect our relationships with our customers or affect our reputation, which could materially adversely affect our earnings, results and financial viability.

A future field action or recall announcement could harm our reputation with customers, negatively affect our sales, and subject us to U.S. Food and Drug Administration (or similar governmental authority) enforcement actions. Moreover, depending on the corrective action we take to redress a product’s deficiencies or defects, the U.S. Food and Drug Administration (or similar governmental authority) may require, or we may decide, that we will need to obtain new approvals or clearances for the product before we market or distribute the corrected product. Seeking these approvals or clearances may delay our ability to replace the recalled products in a timely manner. If we do not adequately address problems associated with our products, we may face additional regulatory enforcement action, including U.S. Food and Drug Administration (or similar governmental authority) warning letters, product seizures, injunctions, administrative penalties, or civil or criminal fines.

Any identified quality issue can both harm our business reputation and result in substantial costs and write-offs, which in either case could materially harm ourits business and financial results.

The off-label use or misuse of our products may harm our reputation in the marketplace, result in injuries that lead to costly product liability suits, or result in costly investigations and regulatory agency sanctions under certain circumstances.

The products we currently market in the U.S. have been cleared by the U.S. Food and Drug Administration for specific indications. Our clinical support staff and marketing and sales force have been trained not to promote our products for uses outside of the cleared indications for use, known as “off-label uses.” However, if a physician uses our products outside the scope of the cleared indications, there may be increased risk of injury to patients. Furthermore, the use of our products for indications other than those cleared by the U.S. Food and Drug Administration may not effectively treat the conditions associated with the off-label use, which could harm our reputation in the marketplace among physicians and patients, adversely affecting our operations.

If the U.S. Food and Drug Administration determines that our promotional materials or training constitute promotion of an off-label or other improper use, it could request that we modify our training or promotional materials, or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. ItSensus is also possible that other federal, state or foreign enforcement authorities might take action if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, and the curtailment of our operations. Any of these events could significantly harm our business and results of operations.

The advertising and promotion of our products is subject to European Economic Area Member States governing the advertising and promotion of medical devices. In addition, voluntary European Union and national Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on promotional activities with healthcare professionals. These regulations or codes may limit our ability to affectively market our products, or we could run afoul of the requirements imposed by these regulations, causing reputational harm, imposing potentially substantial costs, and adversely affecting our operations as a result.

We are required to comply with medical device reporting requirements and must report certain malfunctions, deaths, and serious injuries associated with ourits products, which can result in voluntary corrective actions or agency enforcement actions.

Under the U.S. Food and Drug Administration medical device reporting regulations (21 CFR 803), medical device manufacturers are required to submit information to the U.S. Food and Drug Administration when they receive a report or become aware that a device has or may have caused or contributed to a death or serious injury or has or may have a malfunction that would likely cause or contribute to death or serious injury if the malfunction were to recur. All manufacturers placing medical devices on the market in the European Economic Area are legally bound to report any serious or potentially serious incidents involving devices they produce or sell (MEDDEV 2.12-1) to the Competent Authority in whose jurisdiction the incident occurred through the European Vigilance process.

If an event subject to medical device reporting requirements occurs, weSensus will need to comply with the reporting requirements, which would adversely affect ourits reputation and subject usthe Company to actions by regulatory authorities, such as ordering recalls, imposing fines, or seizing the affected products. Furthermore, any corrective action, whether voluntary or involuntary, will require the dedication of time and capital and will distract management from operating our business.business operations. Any of the foregoing would further harm ourthe Company’s reputation and financial results.

Healthcare policy changes may have a material adverse effect on ourSensus’ business.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, included, among other things, a deductible 2.3% excise tax on any entity that manufactures or imports medical devices offered for sale in the U.S., with limited exceptions, effective January 1, 2013. This excise tax imposed a significant increase in the tax burden on the medical device industry. This excise tax was repealed in 2018. Other elements of this law, including comparative effectiveness research, an independent payment advisory board, payment system reforms including shared savings pilots and other provisions, may significantly affect the payment for, and the availability of, healthcare services and may result in fundamental changes to federal healthcare reimbursement programs, any of which may materially affect numerous aspects of our business.

Other healthcare reform measures may result in more rigorous coverage criteria and in additional downward pressure on the reimbursement received for procedures utilizing our products. In addition, other legislative changes have been proposed and adopted since the law discussed above was enacted that may adversely affect ourthe Company’s revenues. Changes to existing laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on ourSensus’ business and financial operations. Any reduction in reimbursement from Medicare or other government programs may result in a reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent usthe Company from being able to increase revenue, attain profitability, or commercialize ourits devices. In addition, other legislative changes may be enacted or existing regulations, guidance or interpretations may be changed, each of which may adversely affect our operations.

Risks Related to our Intellectual Property

If ourthe Company’s patents and other intellectual property rights do not adequately protect ourits products, we may lose market share to competitors and be unable to operate our business profitably.

OurSensus’ success significantly depends on ourits ability to protect our proprietary rights to the technologies used in ourits products. We relyThe Company relies on the patent protection of two U.S. patents and two foreign patents, which we have acquired, as well as a combination of copyright, trade secret and trademark laws, and nondisclosure, confidentiality and other contractual restrictions, to protect our proprietary technology. WeThe Company also havehas patent applications currently pending and in the process of being submitted. However, these legal means afford only limited protection and may not adequately protect ourits rights or permit usSensus to gain or keep any competitive advantage. For example, some or all of ourthe pending patent applications or any future pending applications may be unsuccessful. The U.S. Patent and Trademark Office may deny or require significant narrowing of claims in ourthe pending patent applications or future patent applications, and patents issued as a result of these patent applications, if any, may not provide usSensus with significant commercial protection or be issued in a form that is advantageous to us. Weadvantageous. Sensus could also incur substantial costs in proceedings before the U.S. Patent and Trademark Office. These proceedings could result in adverse decisions as to the priority of ourits inventions and the narrowing or invalidation of claims in ourits issued patents. Third parties may successfully challenge our issued patents and those that may be issued in the future, which would render these patents invalidatedinvalid or unenforceable, and which could limit ourthe Company’s ability to stop competitors from marketing and selling related products. In addition, our pending patent applications include claims to aspects of ourthe Company’s products and procedures that are not currently protected by issued patents, and third parties may successfully patent those aspects before us or otherwise challenge ourSensus’ rights to these aspects.

Both the patent application process and the process of managing patent disputes can be time consuming and expensive. Competitors may be able to design around ourSensus’ patents or develop products that provide outcomes that are comparable to ourthe Company’s products. Although we haveSensus has entered into confidentiality agreements and intellectual property assignment agreements with certain of ourits employees, consultants and advisors in order to protect our intellectual property and other proprietary technology, these agreements may not be enforceable or may not provide meaningful protection for trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. In addition, we haveSensus has not sought patent protection in all countries where we sell ourit sells products. If we failSensus fails to timely file a patent application in any such country or major market, weSensus may be precluded from doing so at a later date. Competitors may use ourthe Company’s technologies in jurisdictions where we haveSensus has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories in which we haveSensus has patent protection that may not be sufficient to terminate infringing activities. Furthermore, the laws of some foreign countries may not protect intellectual property rights to the same extent as the laws of the U.S., if at all.

In the event a competitor infringes upon one of ourthe Company’s patents or other intellectual property rights, enforcing those patents and rights may be difficult and time consuming. Even if successful, litigation to defend ourthese patents against challenges or to enforce ourSensus’ intellectual property rights could be expensive and time consuming and could divert management’s attention from managing our business.attention. Moreover, wethe Company may not have sufficient resources to defend our patents against challenges or to enforce our intellectual property rights, any of which would adversely affect ourits ability to compete and our business operations as a result.compete.

If ourSensus’ trademarks or trade names are not adequately protected, then wethe Company may be unable to build name recognition in our markets of interest and our business may be adversely affected.

OurSensus’ registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to infringe other marks. WeSensus may be unable to protect ourthe rights to these trademarks and trade names, which we needthe Company needs to build name recognition by potential partners or customers in markets of interest. If ourthese trademarks are challenged, infringed upon, circumvented, or declared generic or infringing, or if we arethe Company is unable to establish name recognition based on ourthese trademarks and trade names, then weit may be unable to compete effectively and ourthe Company’s business may be adversely affected.

The medical device industry is characterized by extensive patent litigation, and if we becomeSensus becomes subject to litigation, it could be costly, result in the diversion of management’s attention, require usthe Company to pay significant damages or royalty payments, or prevent usthe Company from marketing and selling our existing or future products.

The medical device industry is characterized by extensive litigation and administrative proceedings over patent and other intellectual property rights. Determining whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. Our competitors may assert that their products, the components of those products, the methods of using those products, or the methods we employ in processing those products are covered by U.S. or foreign patents held by them. In addition, they may claim that their patents have priority over us because their patents were issued first. Because patent applications can take many years to issue, our products that currently do not infringe on existing issued patents may later infringe on patents that are pending now or in the future. Our products might also inadvertently infringe on currently issued patents. As the number of participants in the market for skin cancer and general oncology devices and treatments increases, the possibility of patent infringement claims against usSensus increases. Any infringement claims, litigation or other proceedings would place a significant strain on ourthe Company’s financial resources, divert the attention of management from the core business and harm ourSensus’ reputation.

A larger more established company could allege that we infringed its patent, and that we owe royalty payments on sales of certain products as a result. Any claim against us, even without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from the core business and harm our reputation. If the appropriate authority upholds the company’s patent as valid and enforceable and finds that we infringed on the patent, we could be required to pay substantial damages, including treble, or triple, damages and royalties if an infringement is found to be willful, and we could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement. A license may not be available on reasonable terms, if at all, and we may be unable to redesign products in a way that would not infringe those patents. If we fail to obtain any required licenses or make any necessary changes to our products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, either of which could have a significant adverse effect on our business, financial condition and results of operations.

Any potential intellectual property litigation also could force us to do one or more of the following:

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

We may indemnify our customers and international distributors with respect to infringement by our products of the proprietary rights of third parties. Third parties may assert infringement claims against customers or distributors. These claims may require us to initiate or defend protracted and costly litigation on behalf of customers or distributors, regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of customers or distributors or may be required to obtain licenses for the products they use, each which would adversely affect our operations. If we cannot obtain all necessary licenses on commercially reasonable terms, customers may be forced to stop using our products, which would materially and adversely affect our business.

We may be subject to damages resulting from claims that we, our employees or independent distributors have wrongfully used or disclosed alleged trade secrets of competitors or are in breach of non-competition or non-solicitation agreements with our competitors.

Many of our employees were previously employed at other medical device companies, including our competitors or potential competitors. Many of our independent distributors sell, or in the past have sold, products of competitors. We may be subject to claims that we, our employees or independent distributors have inadvertently or otherwise used or disclosed the trade secrets or other proprietary information of our competitors. In addition, we have been and may in the future be subject to claims that we caused an employee or independent distributor to break the terms of his or her non-competition agreement or non-solicitation agreement. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending these claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize products, which could have an adverse effect on our business, financial condition and results of operations.

Adverse outcomes in litigation or similar proceedings could adversely impact our business.

WeSensus may in the future be, named as a party to litigation or other similar legal proceedings. Adverse outcomes in any or all of these proceedings could result in monetary damages or injunctive relief that could adversely affect ourits ability to continue conducting our business. If an unfavorable final outcome in any such matter becomes probable and reasonably estimable, ourthe Company’s financial condition could be materially and adversely affected.

Risks Related to the Ownership of ourSensus’ Securities

We have a history of net losses. If we do not achieve profitability, our financial condition and the value of our common stock could suffer.

Sensus has a history of net losses. The historical losses from inception through December 31, 2020 totaled approximately $21.9 million. The Company has significantly reduced its research and development expenses and is planning to continue to control these expenses as it competes the research and development of the final stages for the Sculptura. However, there can be no assurances that this and other actions will result in the Company’s profitability.

Limited trading activity for shares of ourSensus’ common stock and warrants may contribute to price volatility.

While ourSensus’ common stock and warrants are listed and traded on the Nasdaq Capital Market, there has been limited trading activity in our securities.the Company’s shares. Due to the limited trading activity of our securities,Sensus’ common stock, relativity small trades may have a significant impact on the price of ourthese securities.

With two exceptions, we have never declared or paid cash dividends on our common stock and doThe Company does not anticipate paying dividends in the foreseeable future. As a result, youinvestors must rely on price appreciation of ourSensus’ common stock for a return on yourits investment in the foreseeable future. 

Except for a required tax distribution in 2014 in the aggregate amount of $45,421, and a one-time payment in the aggregate amount of approximately $2.6 million paid to former holders of our LLC units with a preferred return in 2016 (prior to our conversion to a corporation), we have never declared or paid cash dividends on our common stock. We currently expectThe Company expects to retain ourany funds and future earnings to support the operation, growth and development of our business. We doits business and does not anticipate paying any cash dividends on ourits common stock in the foreseeable future. As a result, a return on youran investor’s investment in the near future will occur only if ourthe Company’s share price appreciates. Our securities pricesSensus’ common stock price may not appreciate in value or maintain the pricesprice at which youan investor purchased ourthese securities, and in either case, you may not realize a return on investment or could lose all or part of youran investment in ourSensus’ securities.

Furthermore, anyAny future determination to declare cash dividends will be made at the discretion of our boardSensus’ Board of directorsDirectors and will be subject to compliance with applicable laws and covenants under any future credit facilities, which may restrict or limit ourthe Company’s ability to pay dividends. For example, ourthe Company’s current revolving line of credit restricts ourthe ability to pay dividends or make any distributions or payments or redeem, retire or purchase any capital stock without the prior written consent of the lender, provided that weSensus may pay dividends solely in common stock. Also, the form, frequency and amount of dividends will depend upon ourthe Company’s future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. WeSensus may not pay dividends as a result of any of the foregoing, and in these cases, you willan investor would need to rely on price appreciation of ourSensus’ common stock for a return on your investment.

General stock market volatility could result in significant declines in the trading price of our securities, and youan investor could lose all or a substantial part of youran investment. 

Stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our securities. In addition, limited trading volume of ourSensus’ securities may contribute to its future volatility. Price declines in ourSensus’ securities could result from general market and economic conditions, some of which are beyond ourthe Company’s control, and a variety of other factors, including any of the risk factors described in this Annual Report on Form 10-K. These broad market and industry factors may harm the market price of ourSensus’ securities, regardless of ourthe Company’s operating performance, and could cause youan investor to lose all or part of youran investment in ourSensus’ securities since youan investor might be unable to sell yourthese securities at or above the price you paid. Factors that could cause fluctuations in the market price of ourSensus’ securities include the following:

In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us,Sensus, could result in substantial costs and a diversion of our management’s attention and resources.

We areSensus is both an “emerging growth company” and a “smaller reporting company”company,” and the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies may make ourthe Company’s common stock less attractive to investors. 

We areSensus is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act. For as long as we continue to be an emerging growth company, we mayAs such,the Company can take advantage of exemptions from various reporting requirements that are applicable to other public companies but not to “emerging growth companies,” including, but not limited to:

We willSensus is expected to remain an emerging growth company until the earlier of (1) December 31, 2021, (2) the last day of the year infollowing which (a) we have total annual gross revenue of at least $1 billion, or (b) in which we are deemedit would continue to be a large accelerated filer,“smaller reporting company,” which means the market valuewill enable it to continue to take advantage of our common stock that is held by non-affiliates exceeds $700 millionmany of these exemptions, as of the prior June 30^th, and (3) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.discussed below. Investors may find ourSensus’ common stock less attractive if we choosethe Company chooses to rely on these exemptions. If some investors find ourSensus’ common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for ourthe Company’s common stock and the price of ourits common stock may be more volatile.

Under the Jumpstart Our Business Startups Act, emerging growth companies canSensus is also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We are a “smaller reporting company,” meaning that ourits “public float” – the outstanding common stock held by nonaffiliates - had a value of less than $250 million at the end of our most recently completed second fiscal quarter. Thus, even if we arethe Company is no longer an emerging growth company, as a smaller reporting company, wethe Company could take advantage of certain reduced governance and disclosure requirements, including not being required to comply with the auditor attestation requirements in the assessment of ourthe Company’s internal control over financial reporting. As a result, investors and others may be less comfortable with the effectiveness of ourSensus’ internal controls and the risk that material weaknesses or other deficiencies in internal controls go undetected may increase. In addition, as a smaller reporting company, we takeSensus takes advantage of ourthe ability to provide certain other less comprehensive disclosures in our SEC filings, including, among other things, providing only two years of audited financial statements in annual reports and simplified executive compensation disclosures. Consequently, it may be more challenging for investors to analyze ourthe Company’s results of operations and financial prospects, as the information we provideprovided to stockholders may be different from what one might receive from other public companies in which one holds shares.

OurSensus’ executive officers directors and principal stockholdersdirectors may exert control over usthe Company and may exercise influence over matters subject to stockholder approval. 

OurSensus’ executive officers and directors, together with their respective affiliates, beneficially owned approximately 33%19% of our outstanding common stock as of MarchFebruary 8, 2019.2021. Accordingly, these stockholders, if they act together, may exercise substantial influence over matters requiring stockholder approval, including the election of directors and approval of corporate transactions, such as a merger. This concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discourage a potential acquirer from attempting to obtain control over us,the Company, which in turn could have a material adverse effect on the market value of ourSensus’ common stock.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about ourSensus’ business, the price of ourthe Company’s securities and trading volume could decline. 

The trading market for ourSensus’ securities will depend,depends, in part, on the research and reports that securities or industry analysts publish about usthe Company or our business. WeSensus may be unable to attract or sustain coverage by well-regarded securities and industry analysts. If either none or only a limited number of securities or industry analysts cover us or our business,the Company, or if these securities or industry analysts are not widely respected within the general investment community, the trading price for ourSensus’ securities would be materially and negatively impacted. In the event we obtainthe Company obtains securities or industry analyst coverage, if one or more of the analysts who cover us or our business downgrade ourSensus downgrades the securities or publish inaccurate or unfavorable research about us or our business,the Company, the price of ourSensus’ securities would likely decline. If one or more of these analysts cease coverage of us or our business,Sensus, or fail to publish reports on us or our businessthe Company regularly, demand for ourthe Company’s securities could decrease, which might cause the price of ourits securities and trading volume to decline.

OurSensus’ certificate of incorporation, our bylaws and Delaware law contain provisions that could discourage another company from acquiring usthe Company and may prevent attempts by ourthe Company’s stockholders to replace or remove ourthe current directors and management. 

Provisions of the General Corporation Law of Delaware law (where we arethe Company is incorporated), ourand the Company’s certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which youan investor might otherwise receive a premium for yourits stock. In addition, these provisions may frustrate or prevent any attempts by ourthe Company’s stockholders to replace or remove ourthe current management by making it more difficult for stockholders to replace or remove ourthe Company’s board of directors. These provisions include:

In addition, we areSensus is subject to Section 203 of the Delaware General Corporation Law, which may have an anti-takeover effect with respect to transactions not approved in advance by our boardthe Board of directors,Directors, including discouraging takeover attempts that could have resultedresult in a premium over the market price for shares of ourthe Company’s common stock.

These provisions will apply even if a takeover offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our boardthe Company’s Board of directorsDirectors determines is not in ourthe best interests of Sensus and our stockholders’ best interestsits stockholders and could also affect the price that some investors are willing to pay for ourSensus’ common stock.

OurSensus’ certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between usthe Company and ourits stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with usthe Company or ourits directors, officers or employees. 

OurSensus’ certificate of incorporation provides that, unless wethe Company consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf;behalf of the Company; any action asserting a breach of fiduciary duty; any action asserting a claim against usthe Company arising pursuant to the Delaware General Corporation Law, ourthe Company’s certificate of incorporation or our bylaws; or any action asserting a claim against usthe Company that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with usthe Company or ourits directors, officers or other employees, which may discourage these lawsuits against usthe Company and ourits directors, officers and other employees. If a court were to find the choice of forum provision contained in ourthe Company’s certificate of incorporation to be inapplicable or unenforceable in an action, weSensus may incur additional costs associated with resolving the action in other jurisdictions, which could harm our business and financial condition.

If we failSensus fails to maintain proper and effective internal controls, ourthe Company’s ability to produce accurate and timely financial statements could be impaired and investors’ views of usthe Company or ourits business could be harmed, resulting in a decrease in value of ourthe Company’s common stock. 

As a public company, we areSensus is required to maintain internal control over financial reporting and to report any material weaknesses in ourthe Company’s internal controls. In addition, we arethe Company is required to furnish a report by management on the effectiveness of ourthe internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. In addition, ourthe Company’s independent registered public accounting firm will be required to attest to the effectiveness of ourthe internal control over financial reporting beginning with ourthe Company’s annual report on Form 10-K following the date on which we areSensus is no longer an emerging growth company which may be up to five full years following the date of our IPO, or the date weSensus no longer qualifyqualifies as a smaller reporting company. Our complianceCompliance with Section 404 of the Sarbanes-Oxley Act will require usthe Company to incur substantial accounting expense and expend significant management efforts. If we areSensus is unable to comply with the requirements of Section 404 in a timely manner, or we or ourthe Company and the independent registered public accounting firm identify deficiencies in ourthe internal control over financial reporting that are deemed to be material weaknesses, the market price of ourSensus’ common stock could decline and wethe Company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

Our ability to implement our business plan successfully and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors when required under Section 404 of the Sarbanes-Oxley Act. Moreover, we may not implement and maintain adequate controls over our financial processes and reporting in the future. Even if we were to conclude, and, when required, our auditors were to concur, that our internal control over financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of our inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements or omissions.

OurThe Company’s operations may be impaired if our information technology systems fail to perform adequately or if we are the subject of a data breach or cyberattack.

OurThe Company’s information technology systems are critically important to operating our business efficiently. We relySensus’ relies on our information technology systems to manage our business data, communications, employee information, and other business processes. We outsourceThe Company outsources certain business process functions to third-party providers and similarly relyrelies on these third parties to maintain and store confidential information on their systems. The failure of these information technology systems to perform as we anticipatethe Company anticipates could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer.

Although we protectSensus protects our information technology systems, we haveSensus has experienced varying degrees of cyber-incidents in the normal conduct of our business, including viruses, worms, phishing and other malicious activities. Although there have been no serious consequences to date, such breaches could result in unauthorized access to information including customer, supplier, employee, or other company confidential data. We do carrySensus carries insurance against these risks, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such breaches. However, ourthe Company’s efforts to mitigate these risks may be unsuccessful for security breaches not to occur. Moreover, the development and maintenance of these measures requires continuous monitoring as technologies change and efforts to overcome security measures evolve. We haveThe Company has experienced, and expect to continue to experience, cyber security threats and incidents, none of which has been material to usSensus to date. However, a successful breach or attack could have a material negative impact on our operations and subject usthe Company to consequences such as direct costs associated with incident response.

None.Item 1B.UNRESOLVED STAFF COMMENTS

The Company has no unresolved comments from the SEC staff relating to Sensus’ periodic or current reports filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended.

OurItem 2.PROPERTIES

Sensus’ corporate headquarters and principal office is located in Boca Raton, Florida. Our corporate headquartersFlorida and principal office occupies approximately 8,926 square feet of leased space. The lease was last extended in January 2018 and will expireexpires in September 2022. Our Israeli subsidiary entered into a two-year lease for office space in September 2018. Both of our leases contain escalating rent clauses. Our rental expense in 2018 was approximately $229,000. We believe2022 with an option to extend upon terms to be negotiated. The Company believes that ourthe current facilities are suitable and adequate to meet ourthe Company’s current needs and that suitable additional space will be available as and when needed on acceptable terms. OurSensus’ main manufacturing function is physically located at our third partythird-party manufacturer’s facility in Oak Ridge, Tennessee. Additional disclosures have been included within Note 7, Commitments and Contingencies, of the consolidated financial statements.

We areItem 3.LEGAL PROCEEDINGS

From time to time, Sensus is party to certain legal proceedings in the ordinary course of business. We assess, in conjunctionManagement, after consultation with our legal counsel, currently does not anticipate that the aggregate liability arising out of certain legal proceedings will have a material effect on Sensus’ results of operations, financial position, or cash flows and have assessed that there is no need to record a liability for litigationthese legal proceedings and related contingencies. Additional disclosures have been included within Note 7, Commitments and Contingencies of the consolidated financial statements.

Item 4.MINE SAFETY DISCLOSURE

Not applicable. 

PART II.

Common Stock Market Prices

OurMarket Information

The Company’s Class A common stock tradesis publicly traded on the NasdaqNASDAQ Capital Market under the symbol “SRTS.” We had a total

Holders

At the close of 44business on March 2, 2021, there were 24 common stockholders of record. This does not include “street name” or beneficial owners, whose shares are held of record as of March 8, 2019. The following table presents the range of highby banks, brokers, and low closing sales prices reported on the Nasdaq Capital Market.