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What changed in Sensus Healthcare, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Sensus Healthcare, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+114 added−125 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-23)

Top changes in Sensus Healthcare, Inc.'s 2023 10-K

114 paragraphs added · 125 removed · 96 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Company began distributing this product, which is manufactured in Italy, in 2022. The Company distributed 23 systems during 2022. Lasers Sensus also distributes laser devices, for the aesthetic dermatology market, which includes applications for hair removal, vascular lesions, acne treatment, epidermal pigment removal (including removal of spots, freckles, and tattoos), skin toning, and skin rejuvenation.
Biggest changeLasers Sensus also distributes laser devices, for the aesthetic dermatology market, which includes applications for hair removal, vascular lesions, acne treatment, epidermal pigment removal (including removal of spots, freckles, and tattoos), skin toning, and skin rejuvenation. Other services Sensus provides Operational Healthcare Services in the form of Radiation Oncology and Physics oversight in addition Radiotherapy Technologist for dermatology clinics.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include, but is not limited to, the following sanctions: ● Issuance of Form 483 observations (also known as “minor non-conformances”) during a facilities inspection; ● Untitled letters or warning letters; ● Fines, injunctions, and civil penalties; ● Consent Decrees, which forces improvements in the quality management system through the use of the federal courts; ● Recall or seizure of products; ● Operating restrictions, partial suspension or total shutdown of production; ● Refusing 510(k) clearance or premarket approval of new products; ● Withdrawing 510(k) clearance or premarket approvals that are already granted; and ● Criminal prosecution.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include, but is not limited to, the following sanctions: ● Issuance of Form 483 observations (also known as “minor non-conformances”) during a facilities inspection; ● Untitled letters or warning letters; 6 ● Fines, injunctions, and civil penalties; ● Consent Decrees, which forces improvements in the quality management system through the use of the federal courts; ● Recall or seizure of products; ● Operating restrictions, partial suspension or total shutdown of production; ● Refusing 510(k) clearance or premarket approval of new products; ● Withdrawing 510(k) clearance or premarket approvals that are already granted; and ● Criminal prosecution.
The Company is subject to unannounced establishment inspections by the FDA, as well as other regulatory agencies overseeing the implementation of and compliance with applicable state public health regulations. These inspections may include our suppliers’ facilities. 6 International Regulations International sales of medical devices are subject to foreign government regulations, which vary substantially from country to country.
The Company is subject to unannounced establishment inspections by the FDA, as well as other regulatory agencies overseeing the implementation of and compliance with applicable state public health regulations. These inspections may include our suppliers’ facilities. International Regulations International sales of medical devices are subject to foreign government regulations, which vary substantially from country to country.
The FDA is also responsible for the overall enforcement of quality, regulatory, and statutory requirements governing medical devices. FDA classifies medical devices into one of three classes — Class I, Class II, or Class III — depending on their level of risk and the types of controls that are necessary to assure device safety and effectiveness.
The FDA is also responsible for the overall enforcement of quality, regulatory, and statutory requirements governing medical devices. 5 FDA classifies medical devices into one of three classes — Class I, Class II, or Class III — depending on their level of risk and the types of controls that are necessary to assure device safety and effectiveness.
The Stark Law often is enforced through lawsuits brought under the Federal False Claims Act, violations of which trigger significant monetary penalties and treble damages. Additionally, the civil False Claims Act prohibits knowingly presenting or causing the presentation of a false, fictitious, or fraudulent claim for payment to the U.S. government.
The Stark Law often is enforced through lawsuits brought under the Federal False Claims Act, violations of which trigger significant monetary penalties and treble damages. 8 Additionally, the civil False Claims Act prohibits knowingly presenting or causing the presentation of a false, fictitious, or fraudulent claim for payment to the U.S. government.
The information on Sensus’s website is not incorporated by reference in this Annual Report on Form 10-K. Reports, proxy statements, and other information regarding issuers that file electronically with the SEC, including Sensus’s filings, are also available to the public from the SEC’s website at http://www.sec.gov. 9
The information on Sensus’s website is not incorporated by reference in this Annual Report on Form 10-K. Reports, proxy statements, and other information regarding issuers that file electronically with the SEC, including Sensus’s filings, are also available to the public from the SEC’s website at http://www.sec.gov.
Intellectual Property The Company actively seeks to protect the intellectual property that is important to our business, including seeking and maintaining patents that cover Sensus’s products. The Company also relies on trademarks to enhance, build, and maintain the integrity of the Sensus brand. The Company possesses seven issued U.S. and Global patents.
Intellectual Property The Company actively seeks to protect the intellectual property that is important to our business, including seeking and maintaining patents that cover Sensus’s products. The Company also relies on trademarks to enhance, build, and maintain the integrity of the Sensus brand. The Company possesses eight issued U.S. and Global patents.
The Company’s SRT has been used by over 100 U.S. dermatology practices in the treatment of keloids. Since 2017, it is also being used to treat keloids in China. Radiation Oncology Market For licensed radiation oncologists in the U.S., the Company believes its SRT products offer a simpler, faster method of treatment with a better overall patient experience.
The Company’s SRT has been used by over 100 U.S. dermatology practices in the treatment of keloids. It has also been used to treat keloids in China since 2017. 3 Radiation Oncology Market For licensed radiation oncologists in the U.S., the Company believes its SRT products offer a simpler, faster method of treatment with a better overall patient experience.
The Company has implemented policies and procedures related to compliance, including in connection with sales and marketing activities. Healthcare Fraud and Abuse Healthcare fraud and abuse laws apply to Sensus’s business when a customer submits a claim for an item or service that is reimbursed under Medicare, Medicaid, or most other federally funded healthcare programs.
The Company has implemented policies and procedures related to commercial compliance including with respect to compliance in connection with sales and marketing. Healthcare Fraud and Abuse Healthcare fraud and abuse laws apply to Sensus’s business when a customer submits a claim for an item or service that is reimbursed under Medicare, Medicaid, or most other federally funded healthcare programs.
Sensus also provides, through the program, turnkey pre-and post-sale services that include the following: ● Providing a pre-install kit for the contractors to prepare the treatment room; ● Room retrofit and shielding; ● System shipping coordination and installation; ● System commissioning by a medical physicist (through a national physics network); ● System registration with the state and daily workflow documentation preparation; ● Clinical applications training with the customer’s SRT staff; and ● Treating the first scheduled patients with our customers (onsite applications training). 2 Other products Transdermal Infusion (TDI) TransDermal Infusion® is a Class II FDA cleared biophysical alternative used to infuse high weight molecule modalities into the dermis (skin) for medical and aesthetic purposes without the use of needles.
Sensus also provides, through the program, turnkey pre-and post-sale services that include the following: ● Providing a pre-install kit for the contractors to prepare the treatment room; ● Room retrofit and shielding; ● System shipping coordination and installation; ● System commissioning by a medical physicist (through a national physics network); ● System registration with the state and daily workflow documentation preparation; ● Clinical applications training with the customer’s SRT staff; and ● Treating the first scheduled patients with our customers (onsite applications training). 2 Other products Transdermal Infusion (TDI) TransDermal Infusion is a biophysical alternative to infuse high weight molecule modalities into the dermis for medical and aesthetic purposes without the use of needles.
Patent No. 7,263,170: Radiation therapy system featuring rotatable filter assembly (expires September 30, 2025) The following patents were issued to us in 2018: ● Russia Patent No. 26333322: Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method ● China Patent No. ZL201380013491.7: Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method The following patents were issued to Sensus in 2020: ● U.S.
Patent No. 7,263,170: Radiation therapy system featuring rotatable filter assembly (expires September 30, 2025) The following patents were issued to us in 2017: ● Russia Patent No. 26333322: Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method ● China Patent No. ZL201380013491.7: Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method 4 The following patents were issued to Sensus in 2020: ● U.S.
Consumables The Company sells disposable lead shielding replacements, disposable radiation safety items, such as aprons and eye shields, ultrasound probe film, and disposable applicator tips, which are used to treat various sized lesions and different areas of the body. Additionally, TDI requires the purchase of disposable tips.
Consumables The Company sells disposable lead shielding replacements, disposable radiation safety items, such as aprons and eye shields, ultrasound probe film, and disposable applicator tips, which are used to treat various sized lesions and different areas of the body.
However, it is possible that governmental entities or other third parties could interpret these laws and regulations differently and assert otherwise. Discussed below are statutes and regulations that are most relevant to the Company’s business. For the two-year period ended December 31, 2022, we incurred approximately $1.3 million in expenses related to regulatory compliance and quality standards.
However, it is possible that governmental entities or other third parties could interpret these laws and regulations differently and assert otherwise. Discussed below are statutes and regulations that are most relevant to the Company’s business. For the year ended December 31, 2023, we incurred approximately $1.4 million in expenses related to regulatory compliance and quality standards.
As of December 31, 2022, the Company had installed 686 units in 18 countries, primarily in the United States. SRT-100 The SRT-100 is a photon x-ray low energy SRT system that provides patients an alternative to surgery for treating non-melanoma skin cancers, including basal cell and squamous cell skin cancers and other skin conditions such as keloids.
As of December 31, 2023, the Company had installed 752 units in 21 countries, primarily in the United States. SRT-100 The SRT-100 is a photon x-ray low energy SRT system that provides patients an alternative to surgery for treating non-melanoma skin cancers, including basal cell and squamous cell skin cancers and other skin conditions such as keloids.
Item 1. BUSINESS Overview Sensus Healthcare, Inc. (together, with its subsidiary, unless the context otherwise indicates, “Sensus,” “we,” “us,” “our,” or the “Company”) is a medical device company committed to providing highly effective, non-invasive, and cost-effective treatments for both oncological and non-oncological skin conditions.
Item 1. BUSINESS Overview Sensus Healthcare, Inc. (together, with its subsidiaries, Sensus Medical Devices Ltd. and Sensus Healthcare Services, LLC, unless the context otherwise indicates, “Sensus,” “we,” “us,” “our,” or the “Company”) is a medical device company committed to providing highly effective, non-invasive, and cost-effective treatments for both oncological and non-oncological skin conditions.
Finally, the Company may be required to incur additional costs related to ongoing HIPAA compliance as may be necessary to address evolving interpretations and enforcement of HIPAA and other health information privacy and security laws, the enactment of new laws or regulations, emerging cybersecurity threats, and other factors.
Finally, the Company may be required to incur additional costs related to ongoing HIPAA compliance as may be necessary to address evolving interpretations and enforcement of HIPAA and other health information privacy and security laws, the enactment of new laws or regulations, emerging cybersecurity threats, and other factors. 9 Research and Development Research and development costs related to development and quality and regulatory costs are expensed as incurred.
The patents relate to technology that is pertinent to the Company. The following patents were issued between August 2007 and September 2008: ● U.S. Patent No. 7,372,940: Radiation therapy system with risk mitigation (expires September 30, 2025) ● U.S.
The patents relate to technology that is pertinent to the Company. The following patents were issued between August 2007 and September 2008: ● U.S. Patent No. 7,372,940: Radiation therapy system featuring rotatable filter assembly (expires September 30, 2025) ● U.S.
To date, other available US regulatory pathways have not been appropriate for our developed products and may involve extended review periods. 5 Ongoing FDA regulation After a device is entered into commerce in the U.S., regardless of its classification or premarket pathway, numerous additional FDA requirements generally apply.
To date, other available US regulatory pathways (i.e., Self-certification (Class I), Pre-market Authorization Class III, or de novo ) have not been appropriate for our developed products and may involve extended review periods. Ongoing FDA regulation After a device is entered into commerce in the U.S., regardless of its classification or premarket pathway, numerous additional FDA requirements generally apply.
It allows dermatologists to retain non-melanoma skin cancer patients, rather than referring them to specialists, while offering radiation oncologists an alternative to costly linear accelerator–based treatments with a process that is less invasive, more time-efficient, and improves practice economics. Revenue is primarily derived from sales of our SRT-100 product line.
It allows dermatologists to retain non-melanoma skin cancer patients, rather than referring them to specialists, while offering radiation oncologists an alternative to costly linear accelerator–based treatments with a process that is less invasive, more time-efficient, and improves practice economics.
The Company has implemented policies and procedures related to compliance with applicable regulations designed to prevent healthcare fraud and abuse. 8 Health Information Privacy The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform services for them that involve individually identifiable health information.
Health Information Privacy The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform services for them that involve individually identifiable health information.
Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ and suppliers’ compliance with the healthcare reimbursement rules and fraud and abuse laws.
Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ and suppliers’ compliance with the healthcare reimbursement rules and fraud and abuse laws. The Company has implemented policies and procedures related to compliance with applicable regulations design to prevent healthcare fraud and abuse.
The Company maintains internal policies, procedures, and supplier management processes designed to ensure that RbM meets applicable quality standards, including FDA and International Organization for Standardization, or ISO, requirements.
The Company or manufacturer may terminate the agreement upon 90 days’ prior written notice. The Company maintains internal policies, procedures, and supplier management processes designed to ensure that RbM meets applicable quality standards, including FDA and International Organization for Standardization, or ISO, requirements.
Moreover, governmental authorities can ban or request the recall, repair, replacement, or refund of the cost of devices the company distributes. 7 Additionally, the commercial compliance environment is continually evolving in the healthcare industry as some states, including California, Massachusetts and Vermont, mandate implementation of corporate compliance programs, along with the tracking and reporting of gifts, compensation, and other remuneration to physicians.
Additionally, the commercial compliance environment is continually evolving in the healthcare industry as some states, including California, Massachusetts and Vermont, mandate implementation of corporate compliance programs, along with the tracking and reporting of gifts, compensation, and other remuneration to physicians.
Employees and Human Capital At December 31, 2022, the Company had 42 employees. None of the Company’s employees are represented by a labor union or covered by a collective bargaining agreement. The Company believes that its success depends on the ability to attract, develop, and retain key personnel.
None of the Company’s employees are represented by a labor union or covered by a collective bargaining agreement. The Company believes that its success depends on the ability to attract, develop, and retain key personnel. It also believes that the skills, experience, and industry knowledge of its key employees significantly benefits its operations and performance.
Research and Development Research and development costs related to development and quality and regulatory costs are expensed as incurred. For the years ended December 31, 2022 and 2021, the Company incurred research and development expenses of approximately $3.5 million and $3.4 million, respectively. The Company expects research and development expenses in 2023 to be generally consistent with 2022.
For the years ended December 31, 2023 and 2022, the Company incurred research and development expenses of approximately $3.7 million and $3.5 million, respectively. The Company expects research and development expenses in 2024 to be generally consistent with 2023. Employees and Human Capital At December 31, 2023, the Company had 35 employees.
With FDA clearance to treat keloids through SRT, plastic surgeons are recognizing the opportunity to be able to provide an effective treatment solution for this benign tumor.
With FDA clearance to treat keloids through SRT, plastic surgeons are recognizing the opportunity to be able to provide an effective treatment solution for this benign tumor. Additionally, the Company believes that plastic surgeons view the non-melanoma skin cancer market as a growth opportunity that can supplement their existing services.
The agreement renews for successive one-year periods unless either party notifies the other party in writing, at least 60 days prior to the anniversary date of the agreement, that it will not renew the agreement. The Company or manufacturer may terminate the agreement upon 90 days’ prior written notice.
Under this agreement, the Company pays a fixed price per unit, subject to annual adjustments due to changes in the cost of materials. The agreement renews for successive one-year periods unless either party notifies the other party in writing, at least 60 days prior to the anniversary date of the agreement, that it will not renew the agreement.
Patent No. 10,596,392: Dermatology Radiotherapy System with hybrid Imager (expires July 28, 2038) ● China Patent No. ZL201710929838.2 Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method (expires August 14, 2038) 4 One patent application was pending at December 31, 2022. The Company also owns six U.S. trademark registrations (expiring from 2025 through 2031).
Patent No. 10,596,392: Dermatology Radiotherapy System with hybrid Imager (expires July 28, 2038) ● China Patent No. ZL201710929838.2 Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method (expires August 14, 2038) The following patent was issued to Sensus in 2021: ● U.S.
The Company operates as one segment from its corporate headquarters located in Boca Raton, Florida. For further information see Note 1, Description of the Business , in the notes to the consolidated financial statements in Part II, Item 8. Our Products and Services SRT is the Company’s core technology.
In February 2024, the Company formed Sensus Healthcare Services, LLC, a wholly-owned subsidiary that provides operational healthcare services to dermatology clinics. For further information see Note 1, Description of the Business , in the notes to the consolidated financial statements in Part II, Item 8. Our Products and Services SRT is the Company’s core technology.
Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully. Available Information Sensus files annual, quarterly, and current reports, proxy statements, and all amendments to these reports and other information with the SEC.
Available Information Sensus files annual, quarterly, and current reports, proxy statements, and all amendments to these reports and other information with the SEC.
In 2010, the Company entered into a manufacturing agreement with RbM Services, LLC (“RbM”) pursuant to which RbM agreed to manufacture SRT-100 products. Under this agreement, the Company pays a fixed price per unit, subject to annual adjustments due to changes in the cost of materials.
Manufacturing and Supply The Company currently uses third parties located in the U.S. to manufacture products. In 2010, the Company entered into a manufacturing agreement with RbM Services, LLC (“RbM”) pursuant to which RbM agreed to manufacture SRT-100 products.
The Company has obtained approval to sell our products in Australia, Canada, China, Europe, India, Israel, Mexico, Russia, South Africa, South Korea, and Taiwan, and is currently seeking approval in several other countries.
These laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. 7 The Company has obtained approval to sell our products in Australia, Canada, China, Hong Kong, European Union, United Kingdom, Israel, Mexico, Russia, South Africa, South Korea, Vietnam, Taiwan, and Guatemala, and is currently seeking approval in several other countries.
To date, SRT technology has been used to effectively and safely treat oncological and non-oncological skin conditions in hundreds of thousands of patients around the world. On February 25, 2022, the Company sold the assets comprising its Sculptura TM product for $15 million in cash.
To date, SRT technology has been used to effectively and safely treat oncological and non-oncological skin conditions in hundreds of thousands of patients around the world. Our business was organized in 2010 and the Company, incorporated in Delaware, completed its initial public offering in 2016. The Company operates as one segment from its corporate headquarters located in Boca Raton, Florida.
It also believes that the skills, experience, and industry knowledge of its key employees significantly benefits its operations and performance. The Company believes that it offers competitive compensation and other means of attracting and retaining key personnel.
The Company believes that it offers competitive compensation and other means of attracting and retaining key personnel. Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully.
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Additional information regarding this transaction can be found in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2022. Our business was organized in 2010 and the Company, incorporated in Delaware, completed its initial public offering in 2016.
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In 2022, the Company sourced the product from a manufacturer in Italy. The Company started developing its own TDI system in 2023, which is pending approval from the FDA. The Company is not currently offering TDI.
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Additionally, the Company believes that plastic surgeons view the non-melanoma skin cancer market as a growth opportunity that can supplement their existing services. 3 Manufacturing and Supply The Company currently uses third parties located in the U.S. to manufacture products.
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Patent No. 11,027,149: Hybrid Ultrasound-Guided Superficial Radiotherapy System and Method (expires July 7, 2034) The following patent was issued to Sensus in 2024: ● U.S. Patent No. 11,894,123: Radiotherapy Mobile and Wireless Device Workflow Management System (expires June 20, 2039) The Company also owns eight U.S. trademark registrations (expiring from 2025 through 2031).
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These laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals.
Added
Moreover, governmental authorities can ban or request the recall, repair, replacement, or refund of the cost of devices the company distributes.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to borrow funds on favorable terms, or at all, we may not be able to support commercialization efforts, increase research and development activities, compete effectively, or meet debt and other contractual obligations, and the growth of our business may be negatively impacted. 11 The Company’s cash requirements in the future may be significantly different from current estimates and depend on many factors, including: ● the results of commercialization efforts for products; ● the need for additional capital to fund development programs; ● the costs involved in obtaining and enforcing patents or any litigation by third parties regarding intellectual property; ● the establishment of high-volume manufacturing and increased sales, marketing, and distribution capabilities; ● success in entering into collaborative relationships with other parties; and ● financial market instability or disruptions to the banking system due to bank failures, particularly in light of the recent events that have occurred with respect to SVB.
Biggest changeThe Company’s cash requirements in the future may be significantly different from current estimates and depend on many factors, including: ● the results of commercialization efforts for products; ● the need for additional capital to fund development programs; ● the costs involved in obtaining and enforcing patents or any litigation by third parties regarding intellectual property; ● the establishment of high-volume manufacturing and increased sales, marketing, and distribution capabilities; and ● success in entering into collaborative relationships with other parties. 12 To the extent that Sensus raises additional capital through the sale of equity or convertible debt securities, the ownership interests of the existing stockholders will be diluted.
The Company’s customers are concentrated in the U.S. (including one U.S. customer accounting for a significant portion of our sales), and economic difficulties or changes in the purchasing policies or patterns of the Company’s customers in the U.S. could have a significant impact on our business and operating results.
The Company’s customers, including one U.S. customer accounting for a significant portion of our sales, are concentrated in the U.S., and economic difficulties or changes in the purchasing policies or patterns of the Company’s customers in the U.S. could have a significant impact on our business and operating results.
Sensus’s 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. ● The Anti-Kickback Statute, which prohibits any person or entity from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, in cash or in kind, in return for or to induce the referring, ordering, leasing, purchasing, or arranging for or recommending the referring, ordering, purchasing, or leasing of any good, facility, item, or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs. 12 ● The Federal “Sunshine” law, which requires us to track and report annually to CMS information related to certain payments and other “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals and to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
Sensus’s 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. ● The Anti-Kickback Statute, which prohibits any person or entity from knowingly and willfully offering, paying, soliciting, or receiving any remuneration, directly or indirectly, in cash or in kind, in return for or to induce the referring, ordering, leasing, purchasing, or arranging for or recommending the referring, ordering, purchasing, or leasing of any good, facility, item, or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs. ● The Federal “Sunshine” law, which requires us to track and report annually to CMS information related to certain payments and other “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals and to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
As a result, we may be subject to the False Claims Act if we knowingly cause the filing of false claims. ● HIPAA, which, among other things, created federal criminal laws that prohibit knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of or payment for healthcare benefits, items or services.
As a result, we may be subject to the False Claims Act if we knowingly cause the filing of false claims. 13 ● HIPAA, which, among other things, created federal criminal laws that prohibit knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of or payment for healthcare benefits, items or services.
These provisions include: ● authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; 16 ● requiring supermajority stockholder voting to effect any merger or sale of all or substantially all of the Company’s stock and assets; ● eliminating the ability of stockholders to call and bring business before special meetings of stockholders; ● prohibiting stockholder action by written consent; ● establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; ● dividing the Board of Directors into three classes so that only one third of the directors will be up for election in any given year; and ● providing that the Company’s directors may be removed only by the affirmative vote of at least 75% of the Company’s then-outstanding common stock and only for cause.
These provisions include: ● authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; ● requiring supermajority stockholder voting to effect any merger or sale of all or substantially all of the Company’s stock and assets; ● eliminating the ability of stockholders to call and bring business before special meetings of stockholders; 17 ● prohibiting stockholder action by written consent; ● establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; ● dividing the Board of Directors into three classes so that only one third of the directors will be up for election in any given year; and ● providing that the Company’s directors may be removed only by the affirmative vote of at least 75% of the Company’s then-outstanding common stock and only for cause.
Any of the foregoing would negatively impact Sensus’s business, operations, and financial results. 14 If Sensus’s trademarks or trade names are not adequately protected, then Sensus may be unable to build name recognition in markets of interest and its business may be adversely affected.
Any of the foregoing would negatively impact Sensus’s business, operations, and financial results. If Sensus’s trademarks or trade names are not adequately protected, then Sensus may be unable to build name recognition in markets of interest and its business may be adversely affected.
If the Company is unable to comply with the requirements of Section 404 in a timely manner, or the Company and the independent registered public accounting firm identify deficiencies in the internal control over financial reporting that are deemed to be material weaknesses, the market price of the Company’s common stock could decline and the Company could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities, which would require additional financial and management resources. 17
If the Company is unable to comply with the requirements of Section 404 in a timely manner, or the Company and the independent registered public accounting firm identify deficiencies in the internal control over financial reporting that are deemed to be material weaknesses, the market price of the Company’s common stock could decline and the Company could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities, which would require additional financial and management resources. 18
Sensus may not pay dividends as a result of any of the foregoing, and in these cases, an investor would need to rely on price appreciation of the Company’s common stock for a return on investment. 15 Sensus is a “smaller reporting company,” and the reduced reporting requirements applicable to smaller reporting companies may make Sensus’s common stock less attractive to investors.
Sensus may not pay dividends as a result of any of the foregoing, and in these cases, an investor would need to rely on price appreciation of the Company’s common stock for a return on investment. 16 Sensus is a “smaller reporting company,” and the reduced reporting requirements applicable to smaller reporting companies may make Sensus’s common stock less attractive to investors.
The Company is focused heavily on the development and commercialization of a limited number of products for the treatment of non-melanoma skin cancer and other skin conditions with SRT. From the Company’s inception in 2010 through December 31, 2022, revenue has primarily been derived from sales of the SRT-100 product line and related services and ancillary products.
The Company is focused heavily on the development and commercialization of a limited number of products for the treatment of non-melanoma skin cancer and other skin conditions with SRT. From the Company’s inception in 2010 through December 31, 2023, revenue has primarily been derived from sales of the SRT-100 product line and related services and ancillary products.
Sensus’s executive officers and directors may exert control over the Company and may exercise influence over matters subject to stockholder approval. Sensus’s executive officers and directors, together with their respective affiliates, beneficially owned approximately 11% of our outstanding common stock as of February 21, 2023.
Sensus’s executive officers and directors may exert control over the Company and may exercise influence over matters subject to stockholder approval. Sensus’s executive officers and directors, together with their respective affiliates, beneficially owned approximately 11% of our outstanding common stock as of February 21, 2024.
If new products, treatments, and/or technologies were developed that gain wide acceptance among doctors and patients, it could take market share away from the Company, which could adversely affect the Company’s ability to maintain or increase revenue and/or render the Company’s products obsolete.
If new products, treatments, and/or technologies were developed that gain wide acceptance among doctors and patients, including products or treatments developed by our significant customers, it could take market share away from the Company, which could adversely affect the Company’s ability to maintain or increase revenue and/or render the Company’s products obsolete.
However, these legal means afford only limited protection and may not adequately protect its rights or permit Sensus to gain or keep any competitive advantage. For example, some or all of the pending patent applications or any future pending applications may be unsuccessful. The U.S.
Sensus also has patent applications currently pending and in the process of being submitted. However, these legal means afford only limited protection and may not adequately protect its rights or permit Sensus to gain or keep any competitive advantage. For example, some or all of the pending patent applications or any future pending applications may be unsuccessful. The U.S.
Most of the Company’s sales have been made to customers located in the U.S. (94% and 95% in the years ended December 31, 2022 and 2021, respectively). Additionally, a single customer in the U.S. accounted for approximately 73% and 57% of revenues for the years ended December 31, 2022, and December 31, 2021, respectively.
Most of the Company’s sales have been made to customers located in the U.S. (91% and 94% in the years ended December 31, 2023 and 2022, respectively). Additionally, a single customer in the U.S. accounted for approximately 61% and 73% of revenues for the years ended December 31, 2023, and December 31, 2022, respectively.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, included, among other things, comparative effectiveness research, an independent payment advisory board, payment system reforms (including shared savings pilots), and other provisions, one or more of which 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.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, included, among other things, comparative effectiveness research, an independent payment advisory board, payment system reforms (including shared savings pilots), and other provisions, one or more of which 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. 14 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.
The Company has a history of net losses. The historical losses from inception through December 31, 2020 totaled approximately $21.9 million. The Company reported net income of $24.2 million and $4.1 million, respectively, during the years ended December 31, 2022 and 2021.
The Company has a history of net losses. The historical losses from inception through December 31, 2021 totaled approximately $17.8 million. The Company reported net income of $0.5 million and $24.2 million, respectively, during the years ended December 31, 2023 and 2022.
The loss of the preferred supplier, or its inability to supply the Company with an adequate supply of these components, could hinder the Company’s ability to effectively produce the Company’s products to meet existing demand levels, especially if the Company were unable to timely procure them from other suppliers in the market, which could adversely affect the Company’s ability to commercialize products and to maintain or increase revenues.
The loss of the preferred supplier, or its inability to supply the Company with an adequate supply of these components, could hinder the Company’s ability to effectively produce the Company’s products to meet existing demand levels, especially if the Company were unable to timely procure them from other suppliers in the market, which could adversely affect the Company’s ability to commercialize products and to maintain or increase revenues. 11 The Company’s operations may be impaired if our information technology systems fail to perform adequately or are the subject of a data breach or cyberattack.
Furthermore, reimbursement may not be available or, if available, third-party payors’ reimbursement policies may adversely affect the Company’s ability to sell products profitably. If sufficient coverage and reimbursement are not available for Sensus’s products, in either the U.S. or internationally, the demand for these products and, consequently, the Company’s revenues and business, will be adversely affected.
If sufficient coverage and reimbursement are not available for Sensus’s products, in either the U.S. or internationally, the demand for these products and, consequently, the Company’s revenues and business, will be adversely affected.
The Company has a single preferred supplier for the x-ray tubes and other major components used in the Company’s products and the loss of this preferred supplier could adversely affect the Company. The Company has a single preferred supplier for the x-ray tubes and other major components used in the Company’s products.
A reduction or delay in orders for the Company’s products for these or other reasons could materially harm business and results of operations. The Company has a single preferred supplier for the x-ray tubes and other major components used in the Company’s products and the loss of this preferred supplier could adversely affect the Company.
Because of these concentrations, revenue could fluctuate significantly due to changes in economic conditions, competitive products, or the loss of, reduction of business with, or less favorable terms with, our significant customer or other U.S. customers. A reduction or delay in orders for the Company’s products for these or other reasons could materially harm business and results of operations.
Because of these concentrations, revenue could fluctuate significantly due to changes in economic conditions, competitive products (including any developed by our significant customers), or the loss of, reduction of business with, or less favorable terms with, our significant customer or other U.S. customers.
The Company has significantly reduced its research and development expenses and is planning to continue to control these expenses. However, there can be no assurances that this and other actions will result in the Company’s continued profitability. Limited trading activity for shares of Sensus’s common stock may contribute to price volatility.
The accumulated net loss was mainly related to the research and development expenses in the early stage of the Company. The Company is continuously managing expenses. However, there can be no assurances that this and other actions will result in the Company’s continued profitability. Limited trading activity for shares of Sensus’s common stock may contribute to price volatility.
A withdrawal, or even contemplation of a withdrawal, by CMS, Medicaid or private payors of reimbursements, or any other unfavorable coverage or reimbursement decisions by government programs or private payors, could have a material adverse effect on the Company’s revenues and business.
A withdrawal, or even contemplation of a withdrawal, by CMS, Medicaid or private payors of reimbursements, or any other unfavorable coverage or reimbursement decisions by government programs or private payors, could have a material adverse effect on the Company’s revenues and business. 10 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.
The Company outsources certain business process functions to third-party providers and similarly relies on these third parties to maintain and store confidential information on their systems.
The Company’s information technology systems are critically important to operating business efficiently. The Company relies on information technology systems to manage business data, communications, employee information, and other business processes. The Company outsources certain business process functions to third-party providers and similarly relies on these third parties to maintain and store confidential information on their systems.
The 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 the Company’s future revenues and operating income.
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 the Company’s future revenues and operating income. Pandemics, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business and operations.
For example, the Company’s revolving line of credit with SVB (now with the Bridge Bank) has restricted the 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 the Company may pay dividends solely in common stock.
For example, the Company’s current revolving line of credit restricts the 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 the Company may pay dividends solely in common stock and, so long as no default has occurred under the line of credit, the Company may make certain redemptions of its common stock and pay certain tax distributions to its shareholders.
Sensus relies on two U.S. patents and two foreign patents, as well as a combination of copyright, trade secret, and trademark laws, and nondisclosure, confidentiality, and other contractual restrictions, to protect its proprietary technology. Sensus also has patent applications currently pending and in the process of being submitted.
Sensus’s success significantly depends on its ability to protect proprietary rights to the technologies used in its products. Sensus relies on three U.S. patents and two foreign patents, as well as a combination of copyright, trade secret, and trademark laws, and nondisclosure, confidentiality, and other contractual restrictions, to protect its proprietary technology.
Although other suppliers exist in the market, the Company believes that our preferred supplier’s products are of a superior quality.
The Company has a single preferred supplier for the x-ray tubes and other major components used in the Company’s products. Although other suppliers exist in the market, the Company believes that our preferred supplier’s products are of a superior quality.
Debt financing, if available, may involve covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring distributions or dividends.
Moreover, the terms of newly issued securities may include liquidation or other preferences that adversely affect common stockholders’ rights. Debt financing, if available, may involve covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring distributions or dividends.
The medical device industry is characterized by extensive patent litigation, and if Sensus becomes subject to litigation, it could be costly, result in the diversion of management’s attention, require us to pay significant damages or royalty payments, or prevent us from marketing and selling existing or future products.
If these trademarks are challenged, infringed upon, circumvented, or declared generic or infringing, or if Sensus is unable to establish name recognition based on these trademarks and trade names, then it may be unable to compete effectively and Sensus’s business may be adversely affected. 15 The medical device industry is characterized by extensive patent litigation, and if Sensus becomes subject to litigation, it could be costly, result in the diversion of management’s attention, require us to pay significant damages or royalty payments, or prevent us from marketing and selling existing or future products.
Risks Related to our Intellectual Property If Sensus’s patents and other intellectual property rights do not adequately protect its products, it may lose market share to competitors and be unable to operate business profitably. Sensus’s success significantly depends on its ability to protect proprietary rights to the technologies used in its products.
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 Sensus’s patents and other intellectual property rights do not adequately protect its products, it may lose market share to competitors and be unable to operate business profitably.
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. 13 If an event subject to medical device reporting requirements occurs, Sensus will need to comply with the reporting requirements, which would adversely affect its reputation and subject Sensus to actions by regulatory authorities, such as ordering recalls, imposing fines, or seizing the affected products.
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.
However, a successful breach or attack could have a material negative impact on operations and subject the Company to consequences such as direct costs associated with incident response. 10 Substantially all of the Company’s revenue is generated from the sale of the SRT-100 and related products, and any decline in the sales of these products will negatively impact the Company’s business, financial condition, and results of operations.
Substantially all of the Company’s revenue is generated from the sale of the SRT-100 and related products, and any decline in the sales of these products will negatively impact the Company’s business, financial condition, and results of operations.
Further, many international markets have government-managed healthcare systems that control reimbursement for new devices and procedures. In most markets there are private insurance systems as well as government-managed systems. Sensus’s products may not be considered cost-effective by international third-party payors or governments managing healthcare systems.
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.
Changes to existing laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on Sensus’s business and financial operations. Any reduction in reimbursement from Medicare or other government programs may result in a reduction in payments from private payors.
In addition, other legislative changes have been proposed and adopted since the law discussed above was enacted that may adversely affect Sensus’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 Sensus’s business and financial operations.
The implementation of cost containment measures or other healthcare reforms may prevent Sensus from being able to increase revenue, attain profitability, or commercialize its 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.
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 Sensus from being able to increase revenue, attain profitability, or commercialize its devices.
Sensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all. Sensus’s operations have consumed substantial amounts of cash since its inception, and Sensus may need to seek additional capital in the future.
However, a successful breach or attack could have a material negative impact on operations and subject the Company to consequences such as direct costs associated with incident response. Sensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.
Removed
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.
Added
Sensus’s products may not be considered cost-effective by international third-party payors or governments managing healthcare systems. Furthermore, reimbursement may not be available or, if available, third-party payors’ reimbursement policies may adversely affect the Company’s ability to sell products profitably.
Removed
The Company’s operations may be impaired if our information technology systems fail to perform adequately or are the subject of a data breach or cyberattack. The Company’s information technology systems are critically important to operating business efficiently. The Company relies on information technology systems to manage business data, communications, employee information, and other business processes.
Added
Sensus’s operations have consumed substantial amounts of cash since its inception.
Removed
We have maintained a revolving line of credit with Silicon Valley Bank (“SVB”) since 2013. Although we have never borrowed any funds under this line of credit, we have maintained it as our sole source of borrowings, should they be needed. On March 10, 2023, SVB was closed by California and federal regulatory agencies.
Added
Sensus may need to seek additional capital, as our existing financial resources including our revolving line of credit (which restricts the ability to incur certain indebtedness or permit certain encumbrances on assets without the prior written consent of the lender), may not allow us to conduct all of the activities that would be beneficial for future growth.
Removed
As a result of these actions, the Federal Deposit Insurance Corporation (FDIC) established Silicon Valley Bridge Bank, N.A. (the “Bridge Bank”) as successor to SVB.
Added
If Sensus is unable to raise funds on favorable terms, or at all, it may not be able to support commercialization efforts, increase research and development activities, compete effectively, or meet debt and other contractual obligations, and the growth of our business may be negatively impacted.
Removed
Based upon information available to us, we believe that the Bridge Bank has assumed all contracts of SVB in effect at the time of its failure (including our line of credit) and, that the Bridge Bank is expected to continue to perform under those contracts.
Added
Pandemics (such as the COVID-19 pandemic), natural disasters, global climate change, acts of terrorism, global conflicts or other similar events have in the past, and may in the future have, a negative impact on our business and operations.
Removed
Accordingly, we have not yet determined whether we will seek to replace the current line of credit with the Bridge Bank.
Added
These events impact us negatively to the extent that they result in disruptions in the global and national economies and certain industries and geographies in which we operate.
Removed
Should we do so, we may not be able to enter into new credit facilities, and if we are able to enter into new credit facilities, the maximum borrowings permitted under, or other terms of, any such facilities may limit the amounts we are able to borrow or may impose greater restrictions on such borrowings or other aspects of our operations.
Added
In addition, these or similar events may impact economic growth negatively, which could have an adverse effect on our business and operations and may have other adverse effects on us in ways that we are unable to predict.
Removed
Please see Note 5, Debt , to the consolidated financial statements for additional information regarding current line of credit with the Bridge Bank.
Added
If an event subject to medical device reporting requirements occurs, Sensus will need to comply with the reporting requirements, which would adversely affect its reputation and subject Sensus to actions by regulatory authorities, such as ordering recalls, imposing fines, or seizing the affected products.
Removed
To the extent that Sensus raises additional capital through the sale of equity or convertible debt securities, the ownership interests of the existing stockholders will be diluted. Moreover, the terms of newly issued securities may include liquidation or other preferences that adversely affect common stockholders’ rights.
Removed
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.
Removed
Outbreaks of contagious diseases, public health epidemics, and other adverse public health developments in countries where we, our customers, or our suppliers operate have had and could have a material and adverse effect on our business, results of operations and financial condition.
Removed
The COVID-19 pandemic has adversely impacted the global and national economies and certain industries and geographies in which we operate. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business, customers, vendors, and suppliers. The extent of such impact will depend on future developments, which are highly uncertain.
Removed
Additionally, the responses of various governmental and nongovernmental authorities and consumers to the pandemic may have material long-term effects on us and our customers which are difficult to quantify in the near-term or long-term.
Removed
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 Sensus’s revenues.
Removed
If these trademarks are challenged, infringed upon, circumvented, or declared generic or infringing, or if Sensus is unable to establish name recognition based on these trademarks and trade names, then it may be unable to compete effectively and Sensus’s business may be adversely affected.
Removed
Should the Company enter into a new credit facility or facilities following the closing of SVB, any such facility may contain similar or additional restrictions on the payment of dividends or may prohibit the payment of dividends altogether (see “Risk Factors -- Sensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all” for additional information).

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeThe Company’s main manufacturing function is physically located at our third-party manufacturer’s facility in Oak Ridge, Tennessee. Additional disclosures have been included within Note 8, Commitments and Contingencies , of the consolidated financial statements.
Biggest changeThe Company’s main manufacturing function is physically located at our third-party manufacturer’s facility in Oak Ridge, Tennessee. Additional disclosures have been included within Note 7, Commitments and Contingencies , of the consolidated financial statements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed1 unchanged
Biggest changeAdditional disclosures have been included within Note 8, Commitments and Contingencies of the consolidated financial statements. Item 4. MINE SAFETY DISCLOSURE Not applicable. 18 PART II.
Biggest changeAdditional disclosures have been included within Note 7, Commitments and Contingencies of the consolidated financial statements. Item 4. MINE SAFETY DISCLOSURE Not applicable. 20 PART II.
Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of certain legal proceedings will have a material effect on Sensus’s results of operations, financial position, or cash flows and have assessed that there is no need to record a liability for these legal proceedings and related contingencies.
Management, after consultation with legal counsel, currently does not anticipate that the aggregate liability arising out of these legal proceedings will have a material effect on Sensus’s results of operations, financial position, or cash flows and have assessed that there is no need to record a liability for these legal proceedings and related contingencies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−2 removed6 unchanged
Biggest changeUnregistered Sales of Securities There were no unregistered sales of securities during the year ended December 31, 2022. Purchases of Equity Securities by the Registrant and Affiliated Purchasers In March 2022, the Company announced that its Board of Directors had authorized a program to purchase up to $3,000,000 of shares of its common stock.
Biggest changeUnregistered Sales of Securities There were no unregistered sales of securities during the year ended December 31, 2023. Purchases of Equity Securities by the Registrant and Affiliated Purchasers In August 2023, the Company announced that its Board of Directors had authorized a program to purchase up to $3,000,000 of shares of its common stock.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Class A common stock is publicly traded on the NASDAQ Capital Market under the symbol “SRTS.” Holders At the close of business on March 1, 2023, there were 20 common stockholders of record.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Class A common stock is publicly traded on the NASDAQ Capital Market under the symbol “SRTS.” Holders At the close of business on March 7, 2024, there were 20 common stockholders of record.
Removed
Should the Company enter into a new credit facility or facilities, any such facility may contain similar or additional restrictions on the payment of dividends or may prohibit the payment of dividends altogether (see “Risk Factors -- Sensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all” for additional information).
Removed
During the three months ended December 31, 2022, the following repurchases were made: Total number of shares repurchased Average price paid per share Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs October 1, 2022 to October 31, 2022 - $ - - $ 2,002,346 November 1, 2022 to November 30, 2022 130,630 $ 7.52 130,630 $ 1,020,623 December 1, 2022 to December 31, 2022 168,056 $ 5.92 168,056 $ 25,953 Total 298,686 $ - 298,686 Item 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

22 edited+7 added−8 removed2 unchanged
Biggest changeHowever, in light of various factors, including the actions taken by the FDIC following the closing of SVB, the amount deposited in the new bank account is not, and any amounts deposited in or invested through other banks in the future are not expected to be, significant compared to the amounts deposited with and invested through SVB (now the Bridge Bank). 21 Cash flows The following table provides a summary of the Company’s cash flows for the periods indicated: For the Years Ended December 31 (in thousands) 2022 2021 Net cash provided by (used in): Operating activities $ (1,412 ) $ (286 ) Investing activities 14,841 129 Financing activities (2,428 ) (231 ) Total $ 11,001 $ (388 ) Cash flows from operating activities Net cash used in operating activities was $1.4 million for the year ended December 31, 2022, consisting of net income of $24.2 million partially offset by an increase in net operating assets of $12.7 million, gain on sale of assets of $12.8 million and deferred income taxes of $1.7 million, and non-cash charges of $1.6 million.
Biggest changeCash flows The following table provides a summary of the Company’s cash flows for the periods indicated: For the Years Ended December 31 (in thousands) 2023 2022 Net cash provided by (used in): Operating activities $ (2,145 ) $ (1,412 ) Investing activities (187 ) 14,841 Financing activities (40 ) (2,428 ) Total $ (2,372 ) $ 11,001 Cash flows from operating activities Net cash used in operating activities was $2.1 million for the year ended December 31, 2023, consisting of net income of $485 thousand partially offset by a decrease in net operating liabilities of $2.7 million and non-cash charges of $0.1 million.
Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting periods.
Critical Accounting Policies and Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting periods.
The Company’s primary short-term capital needs, which are subject to change, include expenditures related to: ● expansion of sales and marketing activities; and ● expansion of research and development activities. Sensus’s management regularly evaluates cash requirements for current operations, commitments, capital requirements, and business development transactions, and may seek to raise additional funds for these purposes in the future.
The Company’s primary short-term capital needs, which are subject to change, include expenditures related to: ● expansion of sales and marketing activities; and ● continuation of research and development activities. Sensus’s management regularly evaluates cash requirements for current operations, commitments, capital requirements, and business development transactions, and may seek to raise additional funds for these purposes in the future.
Cash flows from financing activities Net cash used in financing activities was $2.4 million during the year ended December 31, 2022, primarily due to purchases of common stock and principal payments on our PPP loan, partially offset by proceeds from exercises of stock options.
Net cash used in financing activities was $2.4 million during the year ended December 31, 2022, primarily due to purchases of common stock and principal payments on our PPP loan, partially offset by proceeds from exercises of stock options.
However, Sensus faces a number of uncertainties in 2023 that could impact our ability to achieve this goal. These include inflation and international trade issues. Either of these matters could adversely affect the Company’s ability to do business in a number of countries and geographic regions, including China.
However, Sensus faces a number of uncertainties in 2024 that could impact our ability to achieve this goal. These include inflation and international trade issues. Either of these matters could adversely affect the Company’s ability to do business in a number of countries and geographic regions, including China.
Overview As discussed elsewhere in this Report, Sensus achieved profitability for the first time in 2021 and increased profitability in 2022, and seeks to maintain and increase profitability by, among other things, increasing sales and managing operational expenses where necessary in order to continue to invest in research and development of new products and marketing initiatives to promote the Company’s products.
Overview As discussed elsewhere in this Report, Sensus achieved profitability for the first time in 2021, maintained profitability in 2022 and 2023, and seeks to maintain and increase profitability in 2024 by, among other things, increasing sales and managing operational expenses where necessary in order to continue to invest in research and development of new products and marketing initiatives to promote the Company’s products.
Non-cash charges consisted of depreciation and amortization, stock base compensation and product warranty charges.
Non-cash charges consisted of depreciation and amortization, stock-based compensation, and product warranty charges.
Other income (expense), net of $13.2 million in 2022 increased by $13.3 million from $0.1 million in 2021 and is primarily attributable to the gain on sale of assets of $12.8 million (See Note 2, Disposition , to the consolidated financial statements) and an interest income of $0.4 million.
Other income, net of $1.0 million in 2023 decreased by $12.2 million from $13.2 million in 2022 and is primarily attributable to the gain on sale of assets of $12.8 million in 2022 (See Note 2, Disposition , to the consolidated financial statements) and offset by an increase in interest income of $0.6 million in 2023.
Management has identified certain accounting policies as critical to understanding the financial condition and results of operations. For a detailed discussion on the application of these and other accounting policies, see the notes to the financial statements included in this Annual Report on Form 10-K. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not applicable.
Management has identified certain accounting policies as critical to understanding the financial condition and results of operations. For a detailed discussion on the application of these and other accounting policies, see the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
The Company believes that cash generated by operations and proceeds from maturing investments, as well as borrowing capacity and access to capital resources are sufficient to meet operating capital and funding requirements for the next 12 months from the date of this annual report.
The Company believes that proceeds from maturing cash equivalents, as well as the Company’s borrowing capacity under its existing line of credit and access to capital resources are sufficient to meet operating capital and funding requirements for the next 12 months from the date of this annual report.
We continue to monitor the impact of inflation in order to minimize its effects on our product cost and sales. Indebtedness Please see Note 5, Debt , to the consolidated financial statements. Contractual Obligations and Commitments Please see Note 8, Commitments and Contingencies , to the consolidated financial statements.
We continue to monitor the impact of inflation and we are taking actions, such as ordering inventory in advance, to minimize its effects on our product cost and sales. Indebtedness Please see Note 4, Debt , to the consolidated financial statements. Contractual Obligations and Commitments Please see Note 7, Commitments and Contingencies , to the consolidated financial statements.
Results of Operations For the Years Ended December 31, (in thousands, except shares and per share data) 2022 2021 Revenues $ 44,532 $ 27,042 Cost of sales 14,904 10,054 Gross profit 29,628 16,988 Operating expenses Selling and marketing 6,329 4,838 General and administrative 5,008 4,594 Research and development 3,460 3,436 Total operating expenses 14,797 12,868 Income from operations 14,831 4,120 Other income (expense): Gain (loss) on sale of assets 12,779 (1 ) Interest income 382 2 Interest expense (2 ) (2 ) Other income (expense), net 13,159 (1 ) Income before income tax 27,990 4,119 Provision for income taxes 3,746 - Net income $ 24,244 $ 4,119 Net income per share – basic $ 1.47 $ 0.25 diluted $ 1.46 $ 0.25 Weighted average number of shares used in computing net income per share – basic 16,480,991 16,476,122 diluted 16,618,214 16,503,134 20 2022 Compared with 2021 Revenues of $44.5 million in 2022 increased $17.5 million, or 65%, from $27.0 million in 2021.
Results of Operations For the Years Ended December 31, (in thousands, except shares and per share data) 2023 2022 Revenues $ 24,405 $ 44,532 Cost of sales 10,345 14,904 Gross profit 14,060 29,628 Operating expenses Selling and marketing 5,608 6,329 General and administrative 5,156 5,008 Research and development 3,678 3,460 Total operating expenses 14,442 14,797 Income (loss) from operations (382 ) 14,831 Other income: Gain on sale of assets 42 12,779 Interest income 992 380 Other income, net 1,034 13,159 Income before income tax 652 27,990 Provision for income taxes 167 3,746 Net income $ 485 $ 24,244 Net income per share – basic $ 0.03 $ 1.47 diluted $ 0.03 $ 1.46 Weighted average number of shares used in computing net income per share – basic 16,259,254 16,480,991 diluted 16,266,139 16,618,214 22 2023 Compared with 2022 Revenues of $24.4 million in 2023 decreased by $20.1 million, or 45%, from $44.5 million in 2022.
Cash flows from investing activities Net cash provided by investing activities was $14.8 million during the year ended December 31, 2022, primarily due to proceeds from sale of assets, particularly the sale of the Sculptura assets for $15 million in cash, partially offset by acquisition of property and equipment.
Net cash provided by investing activities was $14.8 million during the year ended December 31, 2022, primarily due to proceeds from sale of assets, particularly the sale of the Sculptura assets for $15 million in cash, partially offset by the cash used in acquisition of property and equipment of $0.2 million. 24 Cash flows from financing activities Net cash used in financing activities was $40 thousand during the year ended December 31, 2023, primarily due to repurchases of common stock and withholding taxes on stock-based compensation, partially offset by proceeds from exercises of stock options.
However, there can be no assurance that it will be able to raise such funds or the terms on which such funds may be raised, if at all. As of December 31, 2022, a substantial portion of our cash was deposited with or invested through SVB.
However, there can be no assurance that it will be able to raise such funds or the terms on which such funds may be raised, if at all.
General and administrative expenses of $5 million in 2022 increased by $0.4 million, or 9%, from $4.6 million in 2021, due primarily to higher compensation and bad debt expense. Research and development expenses of $3.5 million in 2022 increased by $0.1 million, or 3%, from $3.4 million in 2021.
General and administrative expenses of $5.2 million in 2023 increased by $0.2 million, or 4%, from $5.0 million in 2022, due primarily to an increase in professional fees and offset by a decrease in compensation expenses. Research and development expenses of $3.7 million in 2023 increased by $0.2 million, or 6%, from $3.5 million in 2022.
Non-cash charges consisted of depreciation and amortization, stock base compensation and product warranty charges. Net cash used in operating activities was $0.3 million for the year ended December 31, 2021, consisting of net income of $4.1 million partially offset by an increase in net operating assets of $6.1 million and non-cash charges of $1.7 million.
Net cash used in operating activities was $1.4 million for the year ended December 31, 2022, consisting of net income of $24.2 million partially offset by an increase in net operating assets of $12.9 million, gain on sale of assets of $12.8 million, deferred income taxes of $1.7 million, and non-cash charges of $1.8 million.
The Company’s liquidity position and capital requirements may also be impacted by a number of factors, including the following: ● ability to generate and increase revenue; ● fluctuations in gross margins, operating expenses, and net results; and ● financial market instability or disruptions to the banking system due to bank failures, particularly in light of the recent events that have occurred with respect to SVB.
Please see Note 4, Debt , to the consolidated financial statements for a discussion regarding the Company’s revolving credit facility with Comerica Bank. The Company’s liquidity position and capital requirements may be impacted by a number of factors, including the following: ● ability to generate and increase revenue; and ● fluctuations in gross margins, operating expenses, and net results.
For the year ended December 31, 2022, funding was derived primarily from the sale of the Sculptura assets for $15 million in cash .
For the year ended December 31, 2023, funding was derived primarily from cash generated by the sale of equipment to our customers in the ordinary course of business.
Net cash provided by investing activities was $0.1 million during the year ended December 31, 2021, primarily due to proceeds from sale of equipment, partially offset by acquisition of property and equipment.
Non-cash charges consisted of depreciation and amortization, stock-based compensation and product warranty charges. Cash flows from investing activities Net cash used in investing activities was $0.2 million during the year ended December 31, 2023, primarily consisting of cash used in the acquisition of property and equipment of $0.2 million.
Net cash used in financing activities was $0.2 million during the year ended December 31, 2021, primarily due to principal payments on our PPP loan. Inflation Increases in commodity and shipping prices and energy and labor costs have resulted in inflationary pressures across various parts of our business and operations, including our partners and supply chain.
Inflation During 2023, increased commodity and shipping prices and energy and labor costs resulted in inflationary pressures across various parts of our business and operations, including on our customers, partners, and suppliers.
Selling and marketing expenses of $6.3 million in 2022 increased by $1.5 million, or 31%, from $4.8 million in 2021. The increase was primarily attributable to higher spending on marketing activities, and an increase in headcount.
The decrease in gross profit was primarily driven by the lower number of units sold and higher costs charged by vendors in 2023. Selling and marketing expenses of $5.6 million in 2023 decreased by $0.7 million, or 11%, from $6.3 million in 2022. The decrease was primarily attributable to lower compensation expense offset by an increase in tradeshow expenses.
The 65% increase was driven by a higher number of units sold in 2022 in response to increased demand. Cost of sales of $14.9 million in 2022 increased by $4.8 million, or 48%, from $10.1 million in 2021, reflecting the higher number of units sold.
The decrease was primarily driven by the lower number of SRT units sold, as our customers continued to defer purchases of our product due to the inflationary pressures impacting the healthcare market. Cost of sales of $10.3 million in 2023 decreased by $4.6 million, or 31%, from $14.9 million in 2022.
Removed
Gross profit of $29.6 million, or 66.5% of revenue, in 2022 increased by $12.6 million, or 74%, from $17.0 million, or 62.8% of revenue, in 2021. The increases were driven by a higher number of units sold in 2022 and service revenue on installed units.
Added
The decrease in cost of sales was primarily related to the decrease in sales in 2023. Gross profit of $14.1 million, or 57.6% of revenue, in 2023 decreased by $15.5 million, or 52%, from $29.6 million, or 66.5% of revenue, in 2022.
Removed
The Company expects research and development expenses in 2023 to be generally consistent with 2022.
Added
The increase was primarily due to expenses related to a project to develop a drug delivery system for an aesthetic project during 2023.
Removed
Financial Condition The Company’s cash, cash equivalent, and investment balance increased to $25.5 million at December 31, 2022 from $14.5 million at December 31, 2021, primarily due to cash received in investing activities. There were no borrowings under the revolving line of credit at December 31, 2022 and December 31, 2021.
Added
Cash and cash equivalents at December 31, 2023 decreased $2.4 million from December 31, 2022. See Cash flows for details on the change in cash and cash equivalents during the year ended December 31, 2023.
Removed
The Company continued to take proactive steps during 2022 to manage costs and preserve liquidity. These steps included maintaining borrowing availability as a precautionary measure to preserve financial flexibility in view of the uncertainty in global markets.
Added
Accounts receivable , net at December 31, 2023 decreased $6.7 million from December 31, 2022, primarily due to collections of receivables and the decrease in sales during the year ended December 31, 2023.
Removed
In 2022, the Company paid the outstanding balance ($51,021) of its 2020 loan under the Small Business Administration Paycheck Protection Program (“PPP”) enabled by the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”). Liquidity and Capital Resources Overview In general terms, the liquidity is a measurement of the Company’s ability to meet its cash needs.
Added
Inventories at December 31, 2023 increased $8.4 million from December 31, 2022, primarily due to an increase in completion of finished goods offset by shipments of units sold during the year ended December 31, 2023.
Removed
Based upon information available to us, we believe that the Bridge Bank has assumed all contracts of SVB in effect at the time of its failure (including our line of credit) and that the Bridge Bank is expected to continue to perform under those contracts.
Added
Prepaid inventory at December 31, 2023 decreased $3.3 million from December 31, 2022, primarily due to the completion of finished goods from inventory deposits paid to a manufacturer during the year ended December 31, 2023. Liabilities There were no borrowings under our revolving lines of credit at December 31, 2023 or December 31, 2022.
Removed
Accordingly, we have not yet determined whether to seek to replace the current line of credit with the Bridge Bank. (For additional information, see “Risk Factors -- Sensus may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all” ).
Added
See Note 4, Debt , to the consolidated financial statements for further discussion. 23 Liquidity and Capital Resources Overview In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs.
Removed
Subsequent to the closing of SVB in March 2023, we opened a new operating account with a different bank, and we may open additional accounts from time to time in the future.

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