UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Forthe quarterly period ended
March 31
,
2023
OR
TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
_______
to_______
CommissionFile Number:
001-37714
SensusHealthcare, Inc.
(Exactname of registrant as specified in its charter)
Delaware 27-1647271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
851 Broken Sound Pkwy
.,
NW #215, Boca Raton
,
Florida 33487
(Address of principal executive offices) (Zip Code)
(561)
922-5808
(Registrant'stelephone number, including area code)
Securitiesregistered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which
registered
Common Stock, par value $0.01 per share SRTS NASDAQ
Stock Market, LLC
Indicateby check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2)has been subject to such
filing requirements for the past 90 days.
Yes
No
Indicateby check mark whether the registrant has submitted electronically,
every Interactive Data File required to be submitted pursuant to Rule405 of
Regulation S-T ((s)232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrantwas required to submit such files).
Yes
No
Indicateby check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reportingcompany, or an
"emerging growth company." See the definitions of "large accelerated filer,"
"acceleratedfiler," "smaller reporting company" and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
Emerging growth company
Ifan emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complyingwith any new or
revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act.
Indicateby check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes No
Asof May 4, 2023,
16,396,766
shares of the Registrant's Common Stock, $0.01 par value, were outstanding
.
SENSUSHEALTHCARE, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I - Financial Information
Item 1. Condensed Consolidated Financial Statements (unaudited) 1
Condensed Consolidated Balance Sheets (unaudited) 1
Condensed Consolidated Statements of Income (Loss) (unaudited) 2
Condensed Consolidated Statements of Stockholders' Equity (unaudited) 3
Condensed Consolidated Statements of Cash Flows (unaudited) 4
Notes to the Condensed Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
Item 4. Controls and Procedures 16
PART II - Other Information
Item 1. Legal Proceedings 17
Item 1A. Risk Factors 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Mine Safety Disclosure 17
Item 5. Other Information 17
Item 6. Exhibits 17
Signatures 18
i
INTRODUCTORYNOTE
CautionConcerning Forward-Looking Statements
Thisreport includes statements that are, or may be deemed, "forward-looking
statements." In some cases, these statements canbe identified by the use of
forward-looking terminology such as "believes," "estimates," "anticipates,""expe
cts," "plans," "intends," "may," "could," "might," "will,""should,"
"approximately," or "potential," or negative or other variations of those
terms or comparableterminology, although not all forward-looking statements
contain these words.
Forward-lookingstatements involve risks and uncertainties because they relate
to events, developments, and circumstances relating to Sensus Healthcare,Inc.,
our industry, and/or general economic or other conditions that may or may not
occur in the future or may occur on longer or shortertimelines or to a greater
or lesser degree than anticipated. In addition, even if future events,
developments and circumstances are consistentwith the forward-looking
statements contained in this report, they may not be predictive of results or
developments in future periods.Although we believe that we have a reasonable
basis for each forward-looking statement contained in this report,
forward-looking statementsare not guarantees of future performance, and our
actual results of operations, financial condition and liquidity, and the
developmentof the industry in which we operate, may differ materially from the
forward looking statements contained in this report as a result ofthe
following factors, among others: our ability to maintain profitability; our
ability to obtain and maintain the intellectual propertyneeded to adequately
protect our products, and our ability to avoid infringing or otherwise
violating the intellectual property rightsof third parties; the level and
availability of government and/or third party payor reimbursement for clinical
procedures using our products,and the willingness of healthcare providers to
purchase our products if the level of reimbursement declines; the regulatory
requirementsapplicable to us and our competitors; our ability to efficiently
manage our manufacturing processes and costs; concentration of our customersin
the U.S. and China, including the concentration of sales to one particular
customer in the U.S; the risks arising from doing businessin China and other
foreign countries; legislation, regulation, or other governmental action that
affects our products, taxes, internationaltrade regulation, or other aspects
of our business; the performance of the Company's information technology
systems and its abilityto maintain data security; and other risks described
from time to time in our filings with the Securities and Exchange Commission.
Todate, the Russian invasion of Ukraine and global geopolitical uncertainty
has not had a significant impact on our business, but we continueto monitor
developments and will address them in future disclosures, if applicable.
Anyforward-looking statements that we make in this report speak only as of the
date of such statement, and we undertake no obligation toupdate such
statements to reflect events or circumstances after the date of this report,
except as may be required by applicable law.
ii
PARTI. FINANCIAL INFORMATION
Item1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SENSUS HEALTHCARE, INC.
CONDENSEDCONSOLIDATED BALANCE SHEETS
As of As of
March 31, December 31,
(in thousands, except shares and per share data) 2023 2022
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 19,340 $ 25,520
Accounts receivable, net 12,733 17,299
Inventories 6,342 3,501
Prepaid and other current assets 10,654 6,921
Total current assets 49,069 53,241
Property and equipment, net 397 243
Intangibles, net 25 50
Deposits 24 24
Deferred tax asset 2,515 1,713
Operating lease right-of-use asset, net 949 996
Other noncurrent asset 419 468
Total assets $ 53,398 $ 56,735
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses $ 4,928 $ 5,521
Product warranties 375 403
Operating lease liabilities, current portion 192 190
Income tax payable - 890
Deferred revenue, current portion 671 693
Total current liabilities 6,166 7,697
Operating lease liabilities 782 830
Deferred revenue, net of current portion 126 139
Total liabilities 7,074 8,666
Commitments and contingencies
Stockholders' equity
Preferred stock, - -
5,000,000
shares authorized and
none
issued and outstanding
Common stock, $ 169 169
0.01
par value -
50,000,000
authorized;
16,913,595
issued and
16,396,766
outstanding at March 31, 2023;
16,902,761
issued and
16,390,419
outstanding at December 31, 2022
Additional paid-in capital 45,220 45,031
Treasury stock, ( ) ( )
516,829 3,473 3,433
and
512,342
shares at cost, at March 31, 2023 and December 31, 2022, respectively
Retained earnings 4,408 6,302
Total stockholders' equity 46,324 48,069
Total liabilities and stockholders' equity $ 53,398 $ 56,735
Seeaccompanying notes to the unaudited condensed consolidated financial
statements.
1
SENSUSHEALTHCARE, INC.
CONDENSEDCONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited)
For the Three Months Ended
March 31,
(in thousands, except shares and per share data) 2023 2022
Revenues $ 3,414 $ 10,338
Cost of sales 1,792 3,189
Gross profit 1,622 7,149
Operating expenses
Selling and marketing 2,099 1,218
General and administrative 1,364 1,273
Research and development 1,098 728
Total operating expenses 4,561 3,219
Income (loss) from operations ( ) 3,930
2,939
Other income:
Gain on sale of assets - 12,779
Interest income 243 1
Other income 243 12,780
Income (loss) before income tax ( ) 16,710
2,696
Provision for (benefit from) income taxes ( ) 648
802
Net income (loss) $ ( ) $ 16,062
1,894
Net income (loss) per share - basic $ ( ) $ 0.97
0.12
diluted $ ( ) $ 0.97
0.12
Weighted average number of shares used in computing net income (loss) per share - basic 16,245,343 16,497,801
diluted 16,245,343 16,641,654
Seeaccompanying notes to the unaudited condensed consolidated financial
statements.
2
SENSUSHEALTHCARE, INC.
CONDENSEDCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
Common Additional Treasury Retained
Stock Paid-In Stock Earnings
(Accumulated
(in thousands, Shares Amount Capital Shares Amount Deficit) Total
except shares)
December 16,694,311 $ 167 $ 44,115 ( ) $ ( ) $ ( ) $ 26,015
31, 2021 77,037 325 17,942
Stock-based - - 57 - - - 57
compensation
Exercise of 62,500 1 346 - - - 347
stock options
Surrender of shares for tax withholding - - - ( ) ( ) - ( )
on stock-based compensation 2,226 23 23
Net - - - - - 16,062 16,062
income
March 31, 2022 16,756,811 $ 168 $ 44,518 ( ) $ ( ) $ ( ) $ 42,458
(unaudited) 79,263 348 1,880
December 16,902,761 $ 169 $ 45,031 ( ) $ ( ) $ 6,302 $ 48,069
31, 2022 512,342 3,433
Stock-based 10,000 - 161 - - - 161
compensation
Exercise of 8,334 - 46 - - - 46
stock options
Forfeiture of ( ) - ( ) - - - ( )
restricted stock units 7,500 18 18
Surrender of shares for tax withholding - - - ( ) ( ) - ( )
on stock-based compensation 4,487 40 40
Net - - - - - ( ) ( )
loss 1,894 1,894
March 31, 2023 16,913,595 $ 169 $ 45,220 ( ) $ ( ) $ 4,408 $ 46,324
(unaudited) 516,829 3,473
Seeaccompanying notes to the unaudited condensed consolidated financial
statements.
3
SENSUSHEALTHCARE, INC.
CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended
March 31,
(in thousands) 2023 2022
Cash flows from
operating activities
Net income $ ( ) $ 16,062
(loss) 1,894
Adjustments to reconcile net income (loss) to net cash and
cash equivalents provided by (used in) operating activities:
Depreciation and 73 92
amortization
Gain on sale - ( )
of assets 12,779
Provision for 163 ( )
product warranties 25
Stock-based 143 57
compensation
Deferred ( ) ( )
income taxes 802 3,744
Decrease
(increase) in:
Accounts 4,566 1,590
receivable
Inventories ( ) ( )
2,855 1,969
Prepaid and other ( ) 186
current assets 3,685
Other noncurrent 49 -
asset
Increase
(decrease) in:
Accounts payable and ( ) ( )
accrued expenses 593 366
Operating lease ( ) -
liability 46
Income tax ( ) 4,392
payable 890
Deferred ( ) ( )
revenue 35 259
Product ( ) ( )
warranties 191 155
Total ( ) ( )
adjustments 4,103 12,980
Net cash provided by (used ( ) 3,082
in) operating activities 5,997
Cash flows from
investing activities
Acquisition of ( ) ( )
property and equipment 189 44
Proceeds from - 15,000
sale of assets
Net cash provided by (used ( ) 14,956
in) investing activities 189
Cash flows from
financing activities
Withholding taxes on ( ) ( )
stock-based compensation 40 23
Repayment of - ( )
loan payable 51
Exercise of 46 347
stock options
Net cash provided by 6 273
financing activities
Net increase (decrease) in ( ) 18,311
cash and cash equivalents 6,180
Cash and cash equivalents 25,520 14,519
- beginning of period
Cash and cash equivalents $ 19,340 $ 32,830
- end of period
Supplemental disclosure
of cash flow information:
Interest paid $ - $ -
Income $ 1,200 $ -
tax paid
Supplemental schedule of noncash
investing and financing transactions:
Operating lease right-of-use asset and lease $ - $ 1,045
liability increase from lease modification
Transfer of inventory to $ 14 $ -
property and equipment
Seeaccompanying notes to the unaudited condensed consolidated financial
statements.
4
SENSUSHEALTHCARE, INC.
NOTESTO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Organization and Summary of Significant Accounting Policies
Description of the Business
SensusHealthcare, Inc. (together, with its subsidiary, unless the context
otherwise indicates, "Sensus" or the "Company")is primarily a manufacturer of
radiation therapy devices sold to healthcare providers and distributors
globally through its distributionnetwork. The Company operates in one segment
from its corporate headquarters located in Boca Raton, Florida.
Basisof Presentation and Principles of Consolidation
Thesecondensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the UnitedStates
("GAAP") and include the accounts of the Company and its subsidiary. Accounts
and transactions between consolidatedentities have been eliminated.
Thesefinancial statements have been prepared in accordance with generally
accepted accounting principles for interim financial informationand with the
instructions to Form 10-Q and Article 10 of Regulation S-X. They do not
include all of the information and notes requiredby GAAP. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair statementof the results have been included.
Operating results for the three months ended March 31, 2023 are not
necessarily indicative of theresults that may be expected for the year ending
December 31, 2023 or for any other period.
Thecondensed consolidated balance sheet as of December 31, 2022 has been
derived from the audited financial statements at that date butdoes not include
all of the information and notes required by GAAP for complete financial
statements. For further information, referto the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year endedDecember 31, 2022 (the "2022 Annual Report").
RevenueRecognition
TheCompany's revenue derives primarily from sales of the Company's devices and
services related to maintaining and repairingthe devices as part of a service
contract or on an ad-hoc basis without a service contract.
TheCompany provides warranties, generally for one year, in conjunction with
the sale of its products. These warranties entitle the customerto repair,
replacement, or modification of the defective product, subject to the terms of
the relevant warranty. The Company has determinedthat these warranties do not
represent separate performance obligations, as the customer does not have the
option to purchase the warrantyseparately and the warranty does not provide
the customer with a service, only the assurance that the product complies with
agreed-uponspecifications. The Company records an estimate of future warranty
claims at the time it recognizes revenue from the sale of the devicebased upon
management's estimate of the future claims rate.
Revenueis recognized upon transfer of control of promised goods or services to
customers when the product is shipped or the service is rendered,based on the
amount the Company expects to receive in exchange for those goods or services.
The Company enters into contracts that caninclude multiple services, which are
accounted for separately if they are determined to be distinct.
Todetermine the transaction price for contracts under which a customer
promises consideration in a form other than cash, the Company measuresthe
estimated fair value of the noncash consideration at contract inception. If
the Company cannot reasonably estimate the fair valueof the noncash
consideration, it measures the consideration indirectly by reference to the
standalone selling price of the products promisedto the customer or class of
customer in exchange for the consideration.
Therevenues from service contracts are recognized over the service contract
period on a straight-line basis. In the event that a customerdoes not sign a
service contract but requests maintenance or repair services after the
warranty expires, the Company recognizes revenuewhen the service is rendered.
TheCompany has determined that in practice no significant discount is given on
the service contract when it is offered with the device purchaseas compared to
when it is sold on a stand-alone basis. The service level provided is
identical whether the service contract is purchasedon a stand-alone basis or
together with the device. There is no termination provision in the service
contract or any penalties in practicefor cancellation of the service contract.
Disaggregatedrevenue for the three months ended March 31, 2023 and 2022 was as
follows:
For the Three Months Ended
March 31,
(in thousands) 2023 2022
Product Revenue - recognized at a point in time $ 2,469 $ 9,228
Service Revenue - recognized at a point in time 341 321
Service Revenue - recognized over time 604 789
Total Revenue $ 3,414 $ 10,338
TheCompany operates in a highly regulated environment, primarily in the U.S.
dermatology market, in which state regulatory approval is sometimesrequired
before the customer is able to use the product. In cases where such regulatory
approval is pending, revenue is deferred untilsuch time as regulatory approval
is obtained.
5
Deferredrevenue as of March 31, 2023 was as follows:
(in thousands) Product Service Total
December 31, 2022 $ 45 $ 787 $ 832
Revenue recognized ( ) ( ) ( )
9 604 613
Amounts invoiced - 578 578
March 31, 2023 $ 36 $ 761 $ 797
TheCompany does not disclose information about remaining performance
obligations with original expected durations of one year or less inconnection
with deposits for products. Estimated service revenue to be recognized in the
future related to performance obligations fullyor partially unsatisfied as of
March 31, 2023 is as follows:
Year Service Revenue
2023 (April 1 - December 31, 2023) $
582
2024 131
2025 28
2026 20
Total $ 761
TheCompany pays commissions for equipment sales. Because the recovery of
commissions is expected to occur from product revenue within oneyear, the
Company charges commissions to expense as incurred.
Shippingand handling costs are expensed as incurred and are included in cost
of sales.
Concentration
Financialinstruments that potentially subject the Company to concentration of
credit risk consist primarily of cash and cash equivalents, andaccounts
receivable.
OnMarch 10, 2023, Silicon Valley Bank ("SVB") was closed by the California
Department of Financial Protection and Innovation,and the Federal Deposit
Insurance Corporation (the "FDIC") was appointed receiver. On March 13, 2023,
the FDIC transferredall deposits, both insured and uninsured, and
substantially all assets of SVB to a newly created, full-service FDIC-operated
"bridgebank", Silicon Valley Bridge Bank, N.A. ("SVBB"), chartered by the
Office of the Comptroller of the Currency as a nationalbank. Subsequently, on
March 27, 2023, the FDIC entered into a purchase and assumption agreement for
all deposits and loans, as wellas certain other assets, of SVBB, with
First-Citizens Bank & Trust Company ("FCB"), a subsidiary of First Citizens
BancShares,Inc. ("First Citizens"). As a result of this transaction, SVB
became a wholly owned subsidiary of FCB.
Basedupon information available to us, we believe that FCB assumed all
contracts SVB entered into prior to its failure, and that FCB willcontinue to
perform under those contracts.
See Note 4, Debt, for additional information.
As of March 31, 2023, at another financial institution, the Company's deposit
balance exceeded the federally insured limit. TheCompany has not incurred
losses related to the deposit and does not believe it is exposed to unusual
credit risk beyond the normal riskassociated with commercial banking
relationships.
Onecustomer in the U.S. accounted for approximately
60
% and
81
% of revenue for the three months ended March 31, 2023 and 2022, respectively,an
d
93
% and
91
% of the accounts receivable as of March 31, 2023 and December 31, 2022,
respectively.
Segmentand Geographical Information
Thefollowing table illustrates total revenue for the three months ended March
31, 2023 and 2022 by geographic region.
For the Three Months Ended
March 31,
(in thousands) 2023 2022
United States $ 3,274 96 % $ 10,147 98 %
China 130 4 % 179 2 %
Other 10 0 % 12 0 %
Total Revenue $ 3,414 100 % $ 10,338 100 %
FairValue of Financial Instruments
Carryingamounts of cash equivalents, accounts receivable and accounts payable
approximate fair value due to their relatively short maturities.
6
FairValue Measurements
TheCompany uses a fair value hierarchy that prioritizes inputs to valuation
approaches used to measure fair value. The fair value hierarchygives the
highest priority to quoted prices (unadjusted) in active markets for identical
assets or liabilities and the lowest priorityto unobservable inputs. Assets
and liabilities measured and reported at fair value are classified and
disclosed in one of the followingcategories:
Level1 Inputs:
Quotedprices (unadjusted) in active markets for identical assets or
liabilities at the reporting date.
Level1 assets may include listed mutual funds, ETFs and listed equities
Level 2 Inputs:
Quotedprices for similar assets or liabilities in active markets; quoted
prices for identical or similar assets or liabilities that are notactive;
quotes from pricing services or brokers when the Company can determine that
orderly transactions took place at the quoted priceor that the inputs used to
arrive at the price are observable; and inputs other than quoted prices that
are observable, such as modelsor other valuation methodologies.
Level2 assets may include debt securities and foreign currency exchange contracts that
have inputs to the valuations that generally can becorroborated by observable market data.
Level3 Inputs:
Unobservableinputs for the valuation of the asset or liability, which may
include nonbinding broker quotes.
Level3 assets include investments for which there is little, if any, market
activity. These inputs require significant management judgmentor estimation.
Significanceof Inputs: The Company's assessment of the significance of a
particular input to the fair value measurement in its entirety requiresjudgment
and considers factors specific to the financial instrument.
Cashand Cash Equivalents
TheCompany considers all highly liquid financial instruments with maturities
of three months or less when purchased to be cash equivalents.
AccountsReceivable
TheCompany does business and extends credit based on an evaluation of each
customer's financial condition, generally without requiringcollateral.
Exposure to losses on receivables varies by customer, primarily due to the
customer's financial condition. The Companyestimates future credit losses
based on the age of customer receivable balances, collection history and
forecasted economic trends. Futurecollections can be significantly different
from historical collection trends or current estimates. The allowance for
expected creditlosses was $
107
thousand as of March 31, 2023 and December 31, 2022. No bad debt expense was
incurred for the three months ended March31, 2023 or 2022.
Inventories
Inventoriesconsist of finished product and components and are stated at the
lower of cost or net realizable value, determined using the first-in-first-outme
thod. The Company periodically reviews the value of items in inventory for
obsolescence based on its assessment of market conditionsand writes down any
obsolete inventory to its net realizable value through a charge to costs of
goods sold. The provision for inventoryobsolescence was $
18
thousand as of both March 31, 2023 and December 31, 2022.
EarningsPer Share
Basicnet income (loss) per share is calculated by dividing net income (loss)
by the weighted average number of common shares outstanding forthe period.
Diluted net income per share is computed by giving effect to all potential
dilutive common share equivalents outstandingfor the period, using the
treasury stock method for options and unvested restricted shares. In periods
when the Company has incurreda net loss, options and unvested shares are
considered common share equivalents but have been excluded from the
calculation of dilutednet loss per share as their effect is antidilutive.
Shares excluded were as follows:
For the Three Months Ended
March 31,
2023 2022
Stock Options 20,933 -
Restricted Stock 54,122 -
Total 75,055 -
7
Thefactors used in the earnings per share computation are as follows:
For the Three Months Ended
March 31,
(in thousands) 2023 2022
Basic
Net income (loss) $ ( ) $ 16,062
1,894
Weighted average common shares outstanding 16,245 16,498
Basic earnings per share $ ( ) $ 0.97
0.12
Diluted
Net income (loss) $ ( ) $ 16,062
1,894
Weighted average common shares outstanding 16,245 16,498
Dilutive effects of:
Assumed exercise of stock options - 66
Restricted stock awards - 78
Dilutive shares 16,245 16,642
Diluted earnings per share $ ( ) $ 0.97
0.12
Leases
TheCompany evaluates arrangements at inception to determine if an arrangement
is or contains a lease. The operating lease right-of-use asset(the "ROU
asset") represent the Company's right to use an underlying asset for the lease
term, and operating leaseliabilities represent the Company's obligation to
make lease payments arising from the lease. The ROU asset and operating
leaseliability are recognized at the commencement date of the lease based upon
the present value of lease payments over the lease term. Whendetermining the
lease term, the Company includes options to extend or terminate the lease when
it is reasonably certain that the Companywill exercise the options. To
determine the present value of the lease payment, the Company uses an
incremental borrowing rate that theCompany would expect to incur for a fully
collateralized loan over a similar term under similar economic conditions. In
addition, theCompany has elected available practical expedients to not
separate lease and non-lease components for all leased assets and to
excludeleases with initial terms of 12 months or less.
Thelease payments used to determine the Company's operating lease asset may
include lease incentives, and stated rent increases arerecognized in the ROU
asset in the Company's consolidated balance sheets. The ROU asset is amortized
to rent expense over the leaseterm and included in operating expenses in the
consolidated statements of income (loss).
IncomeTaxes
TheCompany recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized inthe Company's
financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined basedon differences between the financial
statement carrying amounts and the tax bases of the assets and liabilities
using the enacted taxrates in effect in the years in which the differences are
expected to reverse. A valuation allowance against deferred tax assets is
recordedif, based on the weight of the available evidence, it is more likely
than not that some or all of the deferred tax assets will not berealized.
Uncertaintax positions are recognized in the financial statements only if that
position is more likely than not to be sustained upon examinationby taxing
authorities, based on the technical merits of the position. The Company's
practice is to recognize interest and/or penaltiesrelated to income tax
matters in income tax expense.
RecentAccounting Pronouncements
InJune 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses onFinancial Instruments. The
amendments in this ASU replace the incurred loss model for recognition of
credit losses with a methodologythat reflects expected credit losses over the
life of the loan and requires consideration of a broader range of reasonable
and supportableinformation to calculate credit loss estimates. In November
2019, the FASB issued ASU 2019-10, which provides a one-year deferral ofthe
effective dates of ASU No. 2016-13. Accordingly, the guidance is effective for
fiscal years beginning after December 15, 2022. TheCompany adopted this update
in January 2023. This update did not have a significant impact on the
Company's consolidated financialstatements.
Managementdoes not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effecton the
Company's consolidated financial statements.
8
Note2 - Property and Equipment
As of As of
March 31, December 31, Estimated
(in thousands) 2023 2022 Useful Lives
Operations equipment $ 1,217 $ 1,222 3
years
Tradeshow and demo equipment 1,181 990 3
years
Computer equipment 170 162 3
years
Subtotal 2,568 2,374
Less accumulated depreciation ( ) ( )
2,171 2,131
Property and Equipment, Net $ 397 $ 243
Depreciationexpense was $
48
thousand and $
68
thousand for the three months ended March 31, 2023 and 2022, respectively.
Note3 - Intangibles
Patent Customer
(in thousands) Rights Relationships Total
December 31, 2022 $ 49 $ $ 50
1
Amortization expense ( ) - ( )
25 25
March 31, 2023 $ 24 $ 1 $ 25
Accumulatedamortization was $
1,249
thousand and $
1,224
thousand as of March 31, 2023 and December 31, 2022, respectively.
Note4 - Debt
Asof December 31, 2022,
the Company had a revolving credit facility with SVB that provided for maximum
borrowings equal to the lesser of(a) the $15 million commitment amount or (b)
the borrowing base plus a $7.5 million non-formula sublimit.
OnMarch 10, 2023, SVB was closed by the California Department of Financial
Protection and Innovation, and the Federal Deposit InsuranceCorporation (the
"FDIC") was appointed receiver. On March 13, 2023, the FDIC transferred all
deposits, both insured and uninsured,and substantially all assets of SVB to a
newly created, full-service FDIC-operated "bridge bank", Silicon Valley Bridge
Bank,N.A. ("SVBB"), chartered by the Office of the Comptroller of the Currency
as a national bank. Subsequently, on March 27,2023, the FDIC entered into a
purchase and assumption agreement for all deposits and loans, as well as
certain other assets, of SVBB,with First-Citizens Bank & Trust Company
("FCB"), a subsidiary of First Citizens BancShares, Inc. ("First Citizens").As
a result of this transaction, SVB became a wholly owned subsidiary of FCB.
AtMarch 31, 2023, the available borrowing was $
15
million.
Interest on any borrowings, at Prime plus 0.75% (8.75% at March 31, 2023)
andPrime plus 1.50% on non-formula borrowings (9.5% at March 31, 2023), is
payable monthly, and the outstanding principal and interest aredue on the
maturity date
. The revolving credit facility is secured by all of the Company's assets.
TheCompany was in compliance with its financial covenants under the revolving
credit facility as of March 31, 2023 and December 31, 2022.There were no
borrowings outstanding under the revolving credit facility at March 31, 2023
or December 31, 2022.
Note5 - Product Warranties
Changesin product warranty liability were as follows for the three months
ended March 31, 2023:
(in thousands)
Balance, December 31, 2022 $ 403
Warranties accrued during the period 163
Payments on warranty claims ( )
191
Balance, March 31, 2023 $ 375
Note6 - Leases
OperatingLease Agreements
TheCompany leases its headquarters office from an unrelated third party. In
April 2022, the Company renewed the lease through September2027. The
amortization of the ROU asset was $
48
thousand and $
52
thousand for the three months ended March 31, 2023 and 2022, respectively.
9
Thefollowing table presents information about the amount, timing and
uncertainty of cash flows arising from the Company's operatingleases as of
March 31, 2023.
Maturity of Operating Lease Liabilities Amount
2023 (April 1 - December 31, 2023) $ 162
2024 238
2025 245
2026 253
2027 194
Total undiscounted operating leases payments $ 1,092
Less: Imputed interest ( )
118
Present Value of Operating Lease Liabilities $ 974
Other Information
Weighted-average remaining lease term 4.5
years
Weighted-average discount rate 5 %
Cashpaid for amounts included in the measurement of operating lease
liabilities was $
46
thousand and $
66
thousand for the three months endedMarch 31, 2023 and 2022, respectively, and
is included in cash flows from operating activities in the accompanying
consolidated statementof cash flows.
Operatinglease cost recognized as expense was $
60
thousand and $
63
thousand for the three months ended March 31, 2023 and 2022, respectively.The
financing component for operating lease obligations represents the effect of
discounting the operating lease payments to their presentvalue.
Note7 - Commitments and Contingencies
ManufacturingAgreement
In2010, the Company entered into a three-year contract manufacturing agreement
with an unrelated third party for the production and manufactureof the SRT-100
(and subsequently the SRT-100 Vision and the SRT-100 Plus), in accordance with
the Company's product specifications.The agreement renews for successive
one-year periods unless either party notifies the other party in writing, at
least 60 days priorto the anniversary date of the agreement, that it will not
renew the agreement. The Company or the manufacturer may also terminate
theagreement upon 90 days' prior written notice.
Purchasesfrom this manufacturer totaled approximately $
6.6
million and $
3.3
million for the three months ended March 31, 2023 and 2022, respectively.As of
March 31, 2023 and December 31, 2022, approximately $
1.4
million and $
1.5
million, respectively, was due to this manufacturer,which is presented in
accounts payable and accrued expenses in the accompanying condensed
consolidated balance sheets.
LegalContingencies
TheCompany is a party to certain legal proceedings in the ordinary course of
business. The Company assesses, in conjunction with its legalcounsel, the need
to record a liability for litigation and related contingencies.
In2015, the Company learned that the Department of Justice (the "Department")
had commenced an investigation of the billingto Medicare by a physician who
had treated patients with the Company's SRT-100. The Department subsequently
advised the Companythat it was considering expanding the investigation to
determine whether the Company had any involvements in physician's use
ofcertain reimbursements codes. The Company has received two Civil
Investigative Demands from the Department seeking documents and writtenresponses
in connection with its investigation. The Company has fully cooperated with
the Department. The Company disputes that it hasengaged in any wrongdoing with
respect to such reimbursement claims; among other considerations, the Company
does not submit claims forreimbursement or provide coding or billing advice to
physicians. To the Company's knowledge, the Department has made no
determinationas to whether the Company engaged in any wrongdoing, or whether
to pursue any legal action against the Company. Should the Departmentdecide to
pursue legal action, the Company believes it has strong and meritorious
defenses and will vigorously defend itself. As of March31, 2023, the Company
is unable to estimate the cost associated with this matter.
Note8 - Stockholders' Equity
PreferredStock
TheCompany has authorized
5
million shares of preferred stock. No shares of preferred stock were issued or
outstanding at March 31, 2023or December 31, 2022.
Treasurystock
Treasurystock includes shares surrendered by employees for tax withholding on
the vesting of restricted stock awards and shares repurchased inopen market
transactions. During the three months ended March 31, 2023,
4,487
shares were surrendered by employees for tax withholding,and the Company did
not repurchase any shares in open market transactions.
10
Note9 - Stock-Based Compensation
2016and 2017 Equity Incentive Plans
The2016 Equity Incentive Plan and the 2017 Incentive Plan (collectively, the
"Plans") provide for the issuance of up to
397,473
shares and
500,000
shares, respectively. In addition, unless the Compensation Committee
specifically determines otherwise, the maximumnumber of shares available under
the Plans and the awards granted under them are subject to appropriate
adjustment in the case of anystock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, exchanges or other changes in
capitalizationaffecting the Company's common stock. The awards may be made in
the form of restricted stock awards or stock options, among otherforms. As of
March 31, 2023,
48,973
shares are available for grant under the Plans.
OnFebruary 1, 2020, a total of
35,000
shares of restricted stock were issued to employees. The restricted shares vest
25
% per year overa four-year period. The grant date fair value of $
4.11
per share is being recognized as expense on a straight-line basis over the
vestingperiod. During the three months ended March 31, 2023,
7,500
shares of unvested common stock were forfeited due to the termination
ofemployment for two employees with the Company.
OnJuly 21, 2021, a total of
130,000
shares of restricted stock were issued to employees and board members. The
restricted shares vest
25
%at grant date and
25
% per year over a three-year period. The grant date fair value of $
3.84
per share is being recognized as expenseon a straight-line basis over the
vesting period.
OnDecember 19, 2022, a total of
77,000
shares of restricted stock were issued to employees. The restricted shares vest
25
% per year overa four-year period. The fair value of $
6.40
per share, the stock price on grant date, is being recognized as expense on a
straight-linebasis over the vesting period.
OnJanuary 26, 2023,
10,000
shares of common stock were issued to an employee and were recorded at the
fair value of $
8.96
per share, thestock price on the grant date. The shares vested at grant date.
RestrictedStock
Restrictedstock activity for the three months ended March 31, 2023 is
summarized below:
Weighted-
Average
Grant
Restricted Date Fair
Outstanding at Stock Value
December 31, 2022 159,500 $ 5.11
Granted 10,000 8.96
Vested ( ) 7.34
15,000
Forfeited ( ) $ 4.11
7,500
March 31, 2023 147,000 $ 5.19
TheCompany recognizes forfeitures as they occur rather than estimating a
forfeiture rate. The reduction of stock compensation expense relatedto the
forfeitures was $
18
thousand and $
0
for the three months ended March 31, 2023 and 2022, respectively.
Unrecognizedstock compensation expense was $
631
thousand as of March 31, 2023, which will be recognized over a weighted
average period of
3
years.
StockOptions
Stockoptions expire
10
years after the grant date. Options that have been granted are exercisable and
vest based on the terms on the relatedagreements.
11
The following table summarizes the Company's stock option activity:
Weighted-
Average
Weighted- Remaining
Average Contractual
Number of Exercise Term
Options Price (In Years)
Outstanding - December 31, 2022 97,884 $ 5.55 5.08
Granted - - -
Exercised ( ) 5.55 -
8,334
Expired - - -
Outstanding - March 31, 2023 89,550 $ 5.55 4.83
Exercisable - March 31, 2023 89,550 $ 5.55 4.83
Thestock options outstanding had an intrinsic value of $
0
and $
183
thousand as of March 31, 2023 and December 31, 2022, respectively.
Stockcompensation expense related to restricted stock and stock options was $
161
thousand and $
60
thousand for the three months ended March31, 2023 and 2022, respectively.
Duringthe three months ended March 31, 2023, the Company issued
8,334
shares of common stock upon the exercise of stock options with an
exerciseprice of $
5.55
per share.
Note10 - Income Taxes
TheCompany accounts for income taxes in accordance with ASC 740, Income Taxes,
("ASC 740"), which prescribes a recognition thresholdand measurement process
for financial statement recognition and measurement of a tax position taken or
expected to be taken in a taxreturn. ASC 740 also provides guidance on
de-recognition, classification, interest and penalties, accounting in interim
periods, disclosureand transition.
Effectiveincome tax rates for interim periods are based upon the Company's
current estimated annual rate, which varies based upon the Company'sestimate
of taxable earnings or loss and the mix of taxable earnings or loss in the
various states in which the Company operates. Inaddition, the Company
recognizes taxes related to unusual or infrequent items or resulting from a
change in judgment regarding a positiontaken in a prior period as discrete
items in the interim period in which the event occurs.
Asof December 31, 2022, deferred tax assets were primarily the result of state
and foreign net operating loss, state tax credit carryforwardsand accrued
expenses. A valuation allowance of
$185
thousand was recorded against the deferred tax asset balance attributed to
foreignnet operation losses as of December 31, 2022.
Forthe quarter ended March 31, 2022, the Company recorded a net valuation
allowance release of
$3.7
million on the basis of management'sreassessment of the amount of its deferred
tax assets that are more likely than not to be realized. As of each reporting
date, managementconsiders new evidence, both positive and negative, that could
affect its view of the future realization of deferred tax assets. As ofMarch
31, 2023, management determined there continues to be sufficient positive
evidence that it is more likely than not that the netdeferred tax asset (other
than foreign net operation losses) is realizable.
Incometax (benefit) expense was ($
802
) thousand and $
648
thousand for the three months ended March 31, 2023 and 2022, respectively.
Theeffective tax rates for the three months ended March 31, 2023 and 2022 were
29.7
% and
3.9
%, respectively. The tax rate is affected byrecurring items, such as tax rates
in foreign jurisdictions and the relative amounts of income the Company earns
in those jurisdictions,which are expected to be fairly consistent in the near
term. It is also affected by discrete items that may occur in any given year
butare not consistent from year to year. The item that had the most
significant impact on the difference between the statutory U.S. federalincome
tax rate of
21
% and the effective tax rate for the three months ended March 31, 2023 was
state income taxes. The items that hadthe most significant impact on the
difference between the statutory U.S. federal income tax rate of
21
% and the effective tax rate forthe three months ended March 31, 2022 were
state income taxes, exercises of stock options, the favorable impact of
credits, the releaseof the valuation allowance during the first quarter of
2022, and the difference in statutory rates in foreign jurisdictions.
Asof March 31, 2023, the Company's U.S. federal and certain state tax returns
remain subject to examination, beginning with thosefiled for the year ended
December 31, 2017.
Note11 - Subsequent Events
TheCompany evaluates subsequent events and transactions that occur after the
balance sheet date up to the date that the financial statementswere issued for
potential recognition or disclosure. The Company did not identify any
subsequent events that would have required adjustmentor disclosure in the
financial statements.
12
Item2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Youshould read the following discussion and analysis in conjunction with the
information set forth within the financial statements and thenotes thereto
included elsewhere in this Quarterly Report on Form 10-Q, and with our
Management's Discussion and Analysis of FinancialCondition and Results of
Operations in the 2022 Annual Report.
Overview
Sensusis a medical device company committed to providing highly effective,
non-invasive and cost-effective treatments for both oncologicaland
non-oncological skin conditions.
SegmentInformation
TheCompany manages its business globally within one reportable segment, which
is consistent with how our management reviews the business,prioritizes
investment and resource allocation decisions and assesses operating
performance.
13
Resultsof Operations
For the Three
Months Ended
March 31,
(in thousands, except shares and per share data) 2023 2022
Revenues $ 3,414 $ 10,338
Cost of sales 1,792 3,189
Gross profit 1,622 7,149
Operating expenses
Selling and marketing 2,099 1,218
General and administrative 1,364 1,273
Research and development 1,098 728
Total operating expenses 4,561 3,219
Income (loss) from operations (2,939 ) 3,930
Other income:
Gain on sale of assets - 12,779
Interest income 243 1
Other income 243 12,780
Income (loss) before income tax (2,696 ) 16,710
Provision for (benefit from) income taxes (802 ) 648
Net income (loss) $ (1,894 ) $ 16,062
Threemonths ended March 31, 2023 compared to the three months ended March 31,
2022
Revenues.
Revenues were $3.4 million for the three months ended March 31, 2023 compared
to $10.3 million for the three months ended March 31,2022, a decrease of $6.9
million, or 67.0%. The decrease was primarily driven by the lower number of
units sold due to inflation impactingmedical practices that have caused them
to defer purchases of our product and lower sales to a large customer in the
three months endedMarch 31, 2023.
Costof sales.
Cost of sales was $1.8 million for the three months ended March 31, 2023
compared to $3.2 million for the three monthsended March 31, 2022, a decrease
of $1.4 million, or 43.8%. The decrease in cost of sales was primarily related
to the decrease in salesin the three months ended March 31, 2023.
Grossprofit.
Gross profit was $1.6 million for the three months ended March 31, 2023
compared to $7.1 million for the three months endedMarch 31, 2022, a decrease
of $5.5 million, or 77.5%. Our overall gross profit percentage was 47.1% in
the three months ended March 31,2023 compared to 68.9% in the corresponding
period in 2022. The decrease in gross profit was primarily driven by the lower
number ofunits sold and higher costs charged by vendors in the three months
ended March 31, 2023.
Sellingand marketing.
Selling and marketing expense was $2.1 million for the three months ended
March 31, 2023 compared to $1.2 millionfor the three months ended March 31,
2022, an increase of $0.9 million, or 75.0%. The increase was primarily
attributable to the increasein tradeshow and advertising expenses.
Generaland administrative.
General and administrative expense was $1.4 million for the March 31, 2023
compared to $1.3 million for the threemonths ended March 31, 2022, an increase
of $0.1 million, or 7.7%. The net increase in general and administrative
expense was primarilydue to higher professional fees and travel expense offset
by a reduction in insurance expense.
Researchand development.
Research and development expense was $1.1 million for the March 31, 2023
compared to $0.7 million for the threemonths ended March 31, 2022, an increase
of $0.4 million, or 57.1%. The increase was primarily due to expenses related
to a project todevelop a drug delivery system for an aesthetic project. The
Company expects the completion of this project by the end of 2023.
Otherincome.
Other income of $0.2 million for the three months ended March 31, 2023 was
related to the interest income. Other incomeof $12.8 million for the three
months ended March 31, 2022 was related to the gain on the sale of our
Sculptura assets.
14
FinancialCondition
Thefollowing discussion summarizes significant changes in assets and
liabilities. Please see the condensed consolidated balance sheets asof March
31, 2023 and December 31, 2022 contained in Part I, Item 1 of this filing.
Assets
Cashand cash equivalents at March 31, 2023 decreased $6.2 million from
December 31, 2022. See
Cash Flows
for details on the changein cash and cash equivalents during the three months
ended March 31, 2023.
Accountsreceivable at March 31, 2023 decreased $4.6 million from December 31,
2022, primarily due to collection of receivables and the decreasein sales in
the three months ended March 31, 2023.
Inventoriesat March 31, 2023 increased $2.8 million from December 31, 2022,
primarily due to increase in completion of finished goods offset byshipments
of units sold in the three months ended March 31, 2023.
Prepaidand other assets at March 31, 2023 increased $3.7 million from December
31, 2022, primarily due to an increase in the deposit paid toa manufacturer in
the three months ended March 31, 2023.
Liabilities
Therewere no borrowings under our revolving line of credit at March 31, 2023
or December 31, 2022.
Liquidityand Capital Resources
TheCompany's liquidity position and capital requirements may 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
TheCompany'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'smanagement 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. However, there can be no assurance that it will be able to raisesuch
funds or the terms on which such funds may be raised, if at all.
Cashflows
Thefollowing table provides a summary of cash flows for the periods indicated:
For the Years Ended
December 31
(in thousands) 2022 2021
Net cash provided by (used in):
Operating activities $ (1,409 ) $ (286 )
Investing activities 14,838 129
Financing activities (2,428 ) (231 )
Total $ 11,001 $ (388 )
Netcash used in operating activities was approximately $6.0 million for the
three months ended March 31, 2023, consisting of net loss ofapproximately $1.9
million, an increase in net operating liabilities of approximately $3.7
million, and non-cash charges of approximately$0.4 million. Cash flows
provided by operating activities primarily include the receipt of revenues
offset by the payment of operatingexpenses incurred in the normal course of
business. Non-cash items consisted of deferred income taxes, stock
compensation expense, provisionfor product warranties and depreciation and
amortization. Net cash provided by operating activities was $3.0 million for
the three monthsended March 31, 2022, consisting of a net income of $16.1
million, an increase in net operating assets of $0.4 million and non-cash
chargesof $12.7 million. Cash flows provided by operating activities primarily
include the receipt of revenues offset by the payment of operatingexpenses
incurred in the normal course of business.
Netcash used in investing activities for the three months ended March 31, 2023
reflected $0.2 million of purchases of property and equipment.Net cash
provided by investing activities for the three months ended March 31, 2022
reflected $15 million of proceeds from the sale ofour Sculptura assets,
partially offset by purchases of property and equipment.
15
Netcash used in financing activities for the three months ended March 31, 2023
primarily reflected $46 thousand of exercised stock options,offset by $40
thousand of withholding taxes on stock-based compensation . Net cash provided
by financing activities for the three monthsended March 31, 2022 primarily
reflected $0.4 million of exercised stock options offset by the repayment of
our PPP loan and withholdingtaxes on stock compensation.
Indebtedness
Pleasesee Note 4,
Debt
, to the financial statements.
ContractualObligations and Commitments
Pleasesee Note 7,
Commitments and Contingencies
, to the financial statements.
CriticalAccounting Policies and Estimates
Thepreparation of condensed consolidated financial statements in conformity
with GAAP requires management to make estimates and assumptionsthat affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensedconsolidated financial statements
and the reported amounts of revenue and expense during the reporting periods.
Actual results coulddiffer significantly from those estimates. For a summary
of these and additional accounting policies see Note 1,
Organization andSummary of Significant Accounting Policies,
to the financial statements. In addition, see
Critical Accounting
Policies inManagement's Discussion and Analysis of Financial Condition and
Results of Operations and Note 1,
Organization and Summary ofSignificant Accounting Policies
, in the 2022 Annual Report for further information.
Item3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Notapplicable.
Item4. CONTROLS AND PROCEDURES
Evaluationof Disclosure Control and Procedures
Asof March 31, 2023, the end of the period covered by this Form 10-Q, our
management, including our Chief Executive Officer and Chief FinancialOfficer,
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of
1934). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer each concludedthat, as of March 31, 2023, the end of the
period covered by this Form 10-Q, we maintained effective disclosure controls
and procedures.
Changesin Internal Control over Financial Reporting
Therehave been no significant changes in our internal control over financial
reporting during our most recently completed fiscal quarter thathave
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
16
PARTII. OTHER INFORMATION
Item1. Legal Proceedings
TheCompany is party to certain legal proceedings in the ordinary course of
business. The Company assesses, in conjunction with its legalcounsel, the need
to record a liability for litigation and related contingencies. See Note 7,
Commitments and Contingencies
.
Item1A. Risk Factors
Inaddition to the other information set forth in this Quarterly Report on Form
10-Q, you should carefully consider the factors discussedin Part I, Item 1A.
"Risk Factors" in our 2022 Annual Report, as updated in our subsequent
quarterly reports. The risks describedin our 2022 Annual Report and our
subsequent quarterly reports are not the only risks facing us. Additional
risks and uncertainties notcurrently known to us or that we currently deem to
be immaterial also may materially adversely affect our business, financial
conditionor operating results.
Item2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Sales of Unregistered Securities
Therewere no unregistered sales of securities during the three months ended
March 31, 2023.
(b)Use of Proceeds from the Sale of Registered Securities
None.
(c)Purchases of Equity Securities by the Registrant and Affiliated Purchases.
None
Item3. Defaults Upon Senior Securities
None.
Item4. Mine Safety Disclosure
Notapplicable.
Item5. Other Information
None.
Item6. Exhibits
Exhibit No. Description
31.1 Certification of Joseph C. Sardano, Chairman and Chief Executive Officer of Sensus
Healthcare, Inc., Pursuant to Rule 13a- 14(a) of the Securities Exchange Act of 1934.
31.2 Certification of Javier Rampolla, Chief Financial Officer of Sensus Healthcare,
Inc., Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
32.1 Certification of Joseph C. Sardano, Chairman and Chief
Executive Officer of Sensus Healthcare, Inc., Pursuant to
18 U.S.C. Section 1350.
32.2 Certification of Javier Rampolla, Chief Financial Officer of
Sensus Healthcare, Inc., Pursuant to 18 U.S.C. Section 1350.
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy
Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension
Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension
Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension
Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension
Presentation Linkbase Document.
104 Cover Page Interactive Data File (formattedas
Inline XBRL and contained in Exhibit 101).
17
SIGNATURES
Pursuantto the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf bythe
undersigned thereunto duly authorized.
SENSUS HEALTHCARE, INC.
Date: May 12, 2023 /s/ Joseph C. Sardano
Joseph C. Sardano
Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 2023 /s/ Javier Rampolla
Javier Rampolla
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
18
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Exhibit 31.1
Certification of CEO Pursuant to SecuritiesExchange Act
Rule 13a-14(a)/15d-14(a) as Adopted Pursuantto
Section 302 of the Sarbanes-Oxley Act of 2002
I, Joseph C. Sardano, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SensusHealthcare, Inc.;
2. Based on my knowledge, this report does not contain any untruestatement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances underwhich such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financialinformation included in this report, fairly present in all material
respects the financial condition, results of operations and cashflows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsiblefor establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internalcontrol over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or causedsuch disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant,including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in whichthis report is being prepared;
b. Designed such internal control over financial reporting,or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regardingthe reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generallyaccepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosurecontrols and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures,as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant'sinternal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant'sfourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, theregistrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committeeof the registrant's
board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in thedesign
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant'sability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves managementor other employees who
have a significant role in the registrant's internal control over financial reporting.
/s/ Joseph C. Sardano
Joseph C. Sardano
Chairman and Chief Executive Officer
Exhibit 31.2
Certification of CFO Pursuant to SecuritiesExchange Act
Rule 13a-14(a)/15d-14(a) as Adopted Pursuantto
Section 302 of the Sarbanes-Oxley Act of 2002
I, Javier Rampolla, certify that:
1. I have reviewed this quarterly report on Form 10-Q of SensusHealthcare, Inc.;
2. Based on my knowledge, this report does not contain any untruestatement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances underwhich such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financialinformation included in this report, fairly present in all material
respects the financial condition, results of operations and cashflows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsiblefor establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internalcontrol over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or causedsuch disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant,including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in whichthis report is being prepared;
b. Designed such internal control over financial reporting,or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regardingthe reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generallyaccepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosurecontrols and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures,as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant'sinternal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant'sfourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, theregistrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committeeof the registrant's
board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in thedesign
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant'sability to
record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves managementor other employees who
have a significant role in the registrant's internal control over financial reporting.
Date: May 12, 2023 /s/ Javier Rampolla
Javier Rampolla
Chief Financial Officer
Exhibit 32.1
Certification of CEO Pursuant to 18 U.S.C. Section 1350
Pursuant to 18 U.S.C. (s) 1350, as adopted pursuant to Section 906of the
Sarbanes-Oxley Act of 2002, the undersigned certifies that:
(1) the Quarterly Report for Sensus Healthcare, Inc. (the "Company")on Form 10-Q
for the period ended March 31, 2023, as filed with the Securities and Exchange
Commission on the date hereof (this "Report"),fully complies with the requirements
of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, inall material respects, the financial
condition and results of operations of the Company as of and for the periods covered therein.
A signed original of this written statement required by Section 906,or other
document authenticating, acknowledging or otherwise adopting the signature
that appears in typed form within the electronic versionof this written
statement, has been provided to the Company and will be retained by the
Company and furnished to the Securities and ExchangeCommission or its staff
upon request.
/s/ Joseph C. Sardano
Joseph C. Sardano
Chairman and Chief Executive Officer
May 12, 2023
Exhibit 32.2
Certification of CFO Pursuant to 18 U.S.C. Section 1350
Pursuant to 18 U.S.C. (s) 1350, as adopted pursuant to Section 906of the
Sarbanes-Oxley Act of 2002, the undersigned certifies that:
(1) the Quarterly Report for Sensus Healthcare, Inc. (the "Company")on Form 10-Q
for the period ended March 31, 2023, as filed with the Securities and Exchange
Commission on the date hereof (this "Report"),fully complies with the requirements
of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, inall material respects, the financial
condition and results of operations of the Company as of and for the periods covered therein.
A signed original of this written statement required by Section 906,or other
document authenticating, acknowledging or otherwise adopting the signature
that appears in typed form within the electronic versionof this written
statement, has been provided to the Company and will be retained by the
Company and furnished to the Securities and ExchangeCommission or its staff
upon request.
/s/ Javier Rampolla
Javier Rampolla
Chief Financial Officer
May 12, 2023
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