SRTS 10-K & 10-Q changes, risk factors and insider trading

An investment in Sensus’s common stock contains a high degree of risk. Investors should carefully consider the following risks and uncertainties before making an investment decision with respect to our common stock. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. Our business, including our operating results and financial conditions, could be harmed if any of these risks, as well as other risks not currently known to us or that we currently deem immaterial, were to materialize. The trading price of Sensus’s common stock could decline due to the occurrence of any of these risks. In assessing these risks, investors should also refer to the other information included in our filings with with the SEC, including our financial statements and the related notes. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

Some private payors in the U.S. may base their reimbursement policies on the coverage decisions determined by the Center for Medicare & Medical Services, or CMS, which administers the Medicare program and works in partnership with state governments to administer the Medicaid program.CMS. Others may adopt different coverage or reimbursement policies for procedures performed using Sensus’s products, while some governmental programs, such as Medicaid, have reimbursement policies that vary from state to state, some of which may not pay an amount that supports the selling price of Sensus’s products, if at all. A Medicare national or local coverage decision denying coverage for any of the procedures performed using the Company’s products could result in private and other third-party payors also denying coverage. Medicare (Part B) and a number of private insurers in the U.S. currently cover and pay for both non-melanoma skin cancer and keloid treatments using the SRT-100. A withdrawal, or even contemplation of a withdrawal, by CMS, Medicaid or private payors of reimbursements, or any other unfavorable coverage or reimbursement decisions by government programs or private payors, could have a material adverse effect on the Company’s revenues and business.

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. has had and could have in the future a significant impact on our business and operating results.

Most of the Company’s sales have been made to customers located in the U.S. (96%92% and 91%96% in the years ended December 31, 2024 2025 and 2023,2024, respectively). Additionally, a single customer in the U.S. accounted for 73%52% and 61%73% of revenues for the years ended December 31, 2024,2025, and December 31, 2023, 2024, respectively. 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.customers, has caused, and may cause in the future, significant fluctuations in our revenue. A reduction or delay delay in orders for the Company’s products for these or other reasons has in the past, and could in the future, materially harm our business and results of operations.

We have a history of net losses prior to 2021.2021 and we reported a net loss in 2025. If we do not return to and maintain profitability, our financial condition and the value of our common stock could suffer.

The Company has a history of net losses. The historical losses from inception through December 31, 2021 totaled $17.8 million. TheWhile the Company achieved profitability in 2021 and maintained profitability on an annual basis through 2024, the Company reported a net incomeloss of $6.6$7.7 million and $0.5 million, respectively, during the years year ended December 31, 20242025. and 2023. The accumulated net loss prior to 2021 was mainly related to the research and development expenses in the early stage of the Company. The Company expects to continue to incur significant expenses as it seeks to grow its business, including costs related to research and development, sales and marketing, and general and administrative functions. The Company is continuously managing expenses.expenses and pursuing strategies to improve operational efficiency and increase revenues. However, there can be no assurances that thisthese and other actions will result in the Company’sCompany returning to profitability or, if profitability is continuedachieved, that the Company will be able to sustain profitability. The Company’s failure to achieve and maintain profitability could negatively impact our financial condition and the value of our common stock.

Any future determination to declare cash dividends will be made at the discretion of the Company’s Board of Directors (the “Board of Directors”) and will be subject to compliance with applicable laws and covenants under any credit facilities, which may restrict or limit the Company’s ability to pay dividends. 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 lender,(with providedlimited 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.exceptions). Also, the form, frequency, and amount of dividends will depend upon the Company’s future future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors factors that the Board of Directors may deem relevant. 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.

As discussed elsewhere in this Report, Sensus achieved profitability for the first time in 2021, and maintained profitability through 2024. The Company incurred a net loss in 2025, mostly related to lobbying costs to secure reimbursement codes and lower demand particularly from our historically largest customer. Sensus continues to seek to return to profitability in 2023 and 2024, and seeks to maintain and increase profitability in 20252026 by, among other things, increasing sales and managing operational 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. SRT reimbursement was just revalued and increased by CMS, effective as of January 1, 2026. Management expects that the new reimbursement codes will increase the demand for the SRT product. However, Sensus faces a number of uncertainties in 20252026 that could impact our ability ability to achieve this goal. These include inflationfurther decreased demand from its historically largest customer, increased cost due to hiring more sales representatives, continued inflation, and internationaldecreased tradedemand issues.for Eitherits ofhigher thesepriced mattersSRT could adversely affect the Company’s ability to do business in a number of countries and geographic regions, including China.device.

Results of OperationsOperation

Gross profitRevenues of $27.5 $24.4million in 2025 decreased by $14.3 million, or 58.4%34%, offrom revenue,$41.8 million in 20242024. increasedThe by $10.3 million, or 73%, from $14.1 million, or 57.8% of revenue,decrease in 2023. The increase in gross profitrevenue was primarily driven by a higherlower number of units sold (70 in the year ended December 31, 2024 compared to the year ended December 31, 2023.2025, compared to 115 in the year ended December 31, 2024), reflecting reduced sales to our largest customer, slightly offset by revenue recognized from new placements under the Fair Deal Agreement (the “Program”).

General and administrative expenses of of$7.9 million in 2025 increased by $0.8 million, or 11%, from $7.1 million in 2024 increased by $1.9 million, or 37%, from $5.2 million in 2023.2024. The net increase in general and administrative expense was primarily due to higher compensation, professional fees and bad debt expense, which were offset by a reduction in bank fees and insurance expense.costs and compensation costs.

Selling and marketing expenses of $6.5 million in 2025 increased by $1.5 million, or 30%, from $5.0 million in 2024 decreased by $0.6 million, or 11%, from $5.6 million in 2023.2024. The decrease increase was primarily attributabledriven toby the decrease increases in marketingtradeshow agency expense, travel expense,costs and payroll cost due to lowerincrease in headcount.

Other income, net of $0.9$0.7 million and $1.0$0.9 million in the years ended December 31, 20242025 and 2023,2024, respectively, relaterelates primarily to interest income.

Cash and cash equivalents of $22.1 million at December 31, 20242025 decreasedwas byunchanged $1.0as million,compared or 4%, from $23.1 million atto December 31, 2023.2024. See Cash flows for details on the change in cash and cash equivalents during the year ended December 31, 2024.2025.

Accounts receivable, receivable, net of $6.0 million at December 31, 2025 decreased by $13.7 million, or 70%, from $19.7 million at December 31, 20242024. increasedThe by $9.1 million, or 86%, from $10.6 million at December 31,decrease 2023,was primarily due to the increasedecrease in sales and concentration of sales to the Company’s primarylargest customer that isare subject to extended payment terms.

In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. For the year ended December 31, 2024, 2025, funding was derived primarily from cash generated by the sale of equipment to our customers in the ordinary course of business. The Company believes that proceeds from maturing cash equivalents, as well as the Company’s borrowing capacity under its existing line of credit andprovide the Company with 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. Please see Note 3, Debt,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:

Sensus’s management regularly evaluates cash requirements for current operations, commitments, capital requirements,requirements and business development transactions, and may seek to raise additional funds for these purposes in the future. 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.

Net cash usedprovided inby operating activities was $0.8$0.5 million for the year ended December 31, 2024,2025, consisting of net incomeloss of $6.6$7.7 million and non-cash chargesactivities of $1.1$0.4 million, offset by an increase in net operating assets of $8.5$8.6 million. Cash flows provided by operating activities primarily include the receipt of revenues offset by the payment of operating expenses incurred in the normal course of business. Non-cash items consisted of credit loss expense, deferred income taxes, stock-based compensation expense, provision for product warranties, amortization of right-of-use asset and depreciation and amortization of property and equipment. Net cash used in operating activities was $2.1 million for the year ended December 31, 2023, consisting of net income of $0.5 million and non-cash charges of $1.0 million, offset by a decrease in net operating liabilities of $3.6 million. Non-cash charges consisted of credit loss expense, deferred income taxes, stock-based compensation expense, provision for product warranties, amortization of right-of-use asset,asset and depreciation of property and equipment. Net cash used in operating activities was $0.8 million for the year ended December 31, 2024, consisting of net income of $6.6 million and non-cash charges of $1.1 million, offset by an increase in net operating assets of $8.5 million. Cash flows provided by operating activities primarily include the receipt of revenues offset by the payment of operating expenses incurred in the normal course of business. Non-cash items consisted of credit loss expense, deferred income taxes, stock-based compensation expense, provision for product warranties, amortization of right-of-use asset and depreciation and amortization of property and equipment and gain on sale of assets.equipment.

During 2024, 2025, increased commodity and shipping prices and energy and labor costs resulted in minor inflationary pressures across various parts of our business and operations, including on our customers, partners, and suppliers. 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.

Sensus Healthcare, Inc. (together,together with its subsidiaries, Sensus Medical Devices Ltd. and Sensus Healthcare Services, LLC, unless the context otherwise indicates, “Sensus,” “we,” “us,” “our,” or the “Company”) is a medical device company committed to providing highly effective, non-invasive treatments for non-melanoma skin cancer and post-surgical keloid scar prevention. The Company uses a proprietary low-energy X-ray technology known as superficial radiation therapy (“SRT”), which is based on decades of dedicated research and development, and has successfully incorporated SRT into a portfolio of treatment devices: the SRT-100TM, SRT-100+TM and SRT-100 VisionTM. To date, SRT technology has been used to effectively and safely treat oncological and non-oncological skin conditions of close to one-millionone million patients around the world.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

Revenues. Revenues were $3.4$2.3 million for the three months ended MarchJune 31,30, 2026 compared to $8.3$7.3 million for the three months ended MarchJune 31,30, 2025, a decrease of $4.9$5.0 million, or 59.0%.68.5%. The decrease in revenue was primarily driven by a lower number of units sold (106 in the three months ended MarchJune 31,30, 2026, compared to 2119 in the three months ended MarchJune 31,30, 2025), reflecting no units soldsales in the current period to a historically large customer. In addition, some systems placed during the quarter were under the Fair Deal Agreement program and rental arrangements, for which revenue is recognized over the term of the agreement rather than at the time of shipment.

Cost of sales. Cost of sales was $2.4 $1.5 million for the three months ended MarchJune 31,30, 2026 compared to $4.0$4.4 million for the three months ended MarchJune 31,30, 2025, a decrease of $1.6$2.9 million, or 40%.65.9%. The decrease in cost of sales was primarily related to a lower number of units sold.

Gross profit. Gross profit was $1.0$0.8 million for the three months ended MarchJune 31,30, 2026 compared to $4.4$2.9 million for the three months ended MarchJune 31,30, 2025, a decrease of $3.4$2.1 million, or 77.3%.72.4%. Our overall gross profit percentage was 29.4%34.8% in the three months ended MarchJune 31,30, 2026 compared to 53.0%39.7% in the corresponding period in 2025. The decrease in gross profit and margin was primarily driven by product mix, including a higher proportion of international shipments, which carry lower average selling prices, and costs associated with new system placements pursuant to the Fair Deal Agreement program,Agreements, which are recognized upfront while related revenue is recognized over the term of the applicable agreement.

General and administrative. General and administrative expense was $2.0$1.8 million for the three months ended MarchJune 31,30, 2026 compared to $2.2$2.0 million for the three months ended MarchJune 31,30, 2025, a decrease of $0.2 million, or 9.1%.10.0%. The net decrease in general and administrative expense was primarily due to lower compensation costs, slightly offset by increases in professional fees.

Selling and marketing. Selling and marketing expense was $1.7$1.1 million for the three months ended MarchJune 31,30, 2026 compared to $2.2$1.4 million for the three months ended June March 31,30, 2025, a decrease of $0.5$0.3 million, or 22.7%.21.4%. The decrease was primarily driven by ana decrease in tradeshow expenses.expenses, commission expenses, and clinical research costs.

Research and development. Research and development expense was $1.6$1.1 million for the three months ended MarchJune 31,30, 2026 compared to $2.6 $1.5 million for the three months ended MarchJune 31,30, 2025, a decrease of $1.0$0.4 million, or 42%.26.7%. The decrease was primarily due to thea decrease in lobbying costs related to billing code reimbursement, decreased headcount, and decrease in product development costs related to nextnext-generation generationsystems, systems.and reduced headcount.

Other income. Other income of $0.1 million and $0.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, relates primarily to interest income.

Income taxes. The effective tax rates for the three months ended MarchJune 31,30, 2026 and 2025 were 37.9%(185.6%) and (4.5%),41.1%, respectively. The increase decrease in the effective tax rate for the three months ended MarchJune 31,30, 2026 compared to the prior period was primarily dueattributable to projected full year income and a decrease in the estimated tax credits that are expected to be generated and utilized in proportion to the amountvaluation allowance recorded against the Company’s deferred tax assets during the second quarter of pretax profit.2026.

The following discussion summarizes significant changes in assets and liabilities. Please see the condensed consolidated balance sheets as of MarchJune 31,30, 2026 and December 31, 2025 contained in Part I, Item 1 of this filing.

Cash Cash, restricted cash, and cash equivalents were $18.3$15.2 million at MarchJune 31,30, 2026 compared to $22.1 million at December 31, 2025, a decrease of $3.8$6.9 million. The decrease was primarily attributable to cash used to purchase inventory. See Cash Flows for details on the change in cashcash, restricted cash, and cash equivalents during the threesix months ended MarchJune 31,30, 2026.

Accounts receivable was $3.6$1.7 million at MarchJune 31,30, 2026 compared to $6.0 million at December 31, 2025, a decrease of $2.4$4.3 million. The decrease was primarily due to the decrease in sales and concentration of sales to the Company’s historically large customer, which have historically been subject to extended payment terms.

Inventories were $16.5$18.5 million at March 31,June 30, 2026 compared to $14.6 million at December 31, 2025, an increase of $1.9$3.9 million. The increase was primarily due to the anticipation of increasing future sales.

There were no borrowings outstanding under our the revolving line of credit with ComericaCity National Bank of Florida at MarchJune 31,30, 2026 andor under the Company’s former revolving line of credit with Fifth Third at December 31, 2025.

In general terms, liquidity is a measurement of the Company’s ability to meet its cash needs. For the threesix months ended MarchJune 31,30, 2026, funding was derived primarily from from cash generated by the sale of equipment to our customers in the ordinary course of business and existing cash reserves. The Company Company believes that proceeds from maturing cash equivalents, as well as cash on hand are sufficient to meet operating capital and funding requirements for the next 12 months from the date this Quarterly Report was issued. The Company’s liquidity position and and capital requirements may be impacted by a number of factors, including the following:

Net cash used in operating activities was $3.8$6.9 million for the threesix months ended MarchJune 31,30, 2026, consisting of net loss of $2.6$11.4 million and non-cash activity of $1.3 million, offset by a decrease in net operating liabilities of $0.2 million, offset by non-cash activity of $0.1$4.7 million. Cash flows used in operating activities primarily include the receipt receipt of revenues offset by the payment of operating expenses incurred in the normal course of business. Non-cash items consisted of of stock-based compensation expense, deferred income taxes, provision for product warranties, amortization of right-of-use asset, and depreciation of property and equipment. Net cash usedprovided inby operating activities was $2.7$0.4 million for the threesix months ended June March 31,30, 2025, consisting of net loss of $2.6$3.6 million and annon-cash increase in net operating assetscharges of $0.5$0.1 million, offset by non-casha chargesdecrease in net operating assets of $0.4$4.1 million.million, primarily driven by a $7.1 million decrease in accounts receivable and a $3.2 million increase in inventories. Cash flows usedprovided inby operating activities primarily include the receipt of revenues offset by the payment of operating expenses expenses incurred in the normal course of business. Non-cash items consisted of stock-based compensation expense, deferred income taxes, provision for product warranties, amortization of right-of-use assetasset, and depreciation and amortization of property and equipment.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 reflected $3$11 thousand of purchases of property and equipment. Net cash used in investing activities activities for the threesix months ended MarchJune 31,30, 2025 reflected $7$34 thousand of purchases of property and equipment.

No cash was used in financing activities for the threesix months ended MarchJune 31,30, 2026.2026 . Net cash used in financing activities for the three six months ended MarchJune 31,30, 2025 reflected $0.3 million of repurchases of common stock.

During the firstsecond quarter of 2026, we continued to experience some increase in commodity and shipping prices and energy and labor costs which resulted in minor inflationary pressures across various parts of our business and operations, including on our customers, partners, and suppliers. 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.