Good day, everyone, and welcome to the Sensus Healthcare First Quarter 2020 Conference Call. All lines have been muted for listening only, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to introduce your host, Kim Golodetz. Kim, please take it away.

Thank you, operator. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from Sensus Healthcare are Joe Sardano, Chief Executive Officer, and Javier Rampolla, Chief Financial Officer. As a reminder, some of the matters that will be discussed during today's call are forward-looking statements within the meaning of Federal Securities Laws. All statements other than historical facts that address activities Sensus Healthcare assumes, plans, expects, believes, intends, or anticipates, and other similar expressions will, should, or may occur in the future are forward-looking statements. The forward-looking statements are management's beliefs based on currently available information. Sensus Healthcare undertakes no obligation to update or revise any forward-looking statements except as required by law. While forward-looking statements are subject to risks and uncertainties, including the continuation and severity of the COVID-19 pandemic and its impact on sales and marketing and those risk factors described in the company's Forms 10-K and 10-Q as filed with the SEC. During today's call, there will also be reference to certain non-GAAP financial measures. Sensus believes these measures provide useful information for investors; it should not be considered a substitute for GAAP nor should they be reviewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in today's financial results press release. With that said, I'd like to turn the call over to Joe Sardano. Joe?

Thank you, Kim, and good afternoon, everyone. Before we get into our Q1 results, I want to thank all of the physicians, nurses, lab technicians, everyone on the front lines of this pandemic, which has impacted all our lives. I want to thank all of our employees who worked with our customers and their patients during this time period. Our applications and service team, our manufacturers, especially those that have converted their normal line of manufacturing into manufacturing ventilators, masks, gallons, etc., for the needy at this time and supply chain teams are making it all happen. I want to thank all our customers who continue to treat skin cancer patients while most surgeries were postponed for many weeks. I sincerely hope that you and your loved ones are well as we continue to look out for one another during the COVID-19 pandemic. I am so very proud of the Sensus team and how, together, we are navigating these challenges, which significantly impacted our first quarter's financial results. Our intra-quarter sales historically have skewed towards the very end of the quarter, and that is the time period in Q1 when the pandemic began closing the US economy. As a result, our sales of $1.7 million during the quarter were lower than we had anticipated when we spoke to you in February when reporting our fourth-quarter results. At that time, we didn't yet know what was immediately ahead. While we wait for economies to reopen, we've been taking multiple actions to prepare for the resumption of post-pandemic daily life. We continue our work to expand awareness of SRT and its utility in treating non-melanoma skin cancer while supporting our physician customers and protecting cash so we emerge from this crisis ready to do business. We've used this time of social distancing as an opportunity to reach out to customers on a personal level as never before. Sensus has built an impressive network of contacts over many years, and we are leveraging our contacts to help customers as much as possible, including sourcing and providing items such as protective masks and critical medicines. We also are sponsoring a series of online programs for dermatologists, during which they share information and practice regimens with one another. The feedback from these programs has been outstanding, and they've been very helpful in keeping Sensus in front of both key opinion leaders and a broader customer base. We are planning our third Zoom presentation led by industry leaders, who will share their experience with treating patients during this time and discuss how they're preparing to fully open their practice. SRT treats non-melanoma skin cancer and all those surgical treatments were put on hold for the majority of patients. SRT treatments became a lifesaver for many practices. On that note, the market has learned that our programs are affirming the use of SRT as an alternative to most surgery, as during this time physicians are particularly reluctant to incur the risks of infection and adverse events associated with the surgical procedure. We are convinced that SRT will continue to grow as the number one non-surgical choice for skin cancer treatment as physicians and patients alike see the excellent curative results and the ease of use of SRT. We know for a fact that when it was time to shut down practices, the SRT system was the last unit in the practice to be turned off. Now, we're seeing some practices beginning to open, and we are seeing that the SRT unit is the first device to be turned on as these practices begin to re-engage their patients. We all know that skin cancer is not going away anytime soon, and during this time, the Sensus SRT technology is becoming a more valuable tool in treating skin cancer. No anesthesia, no pain, no cutting, no bleeding, no stitching, and no scarring; these are the benefits that patients will experience, especially those with pre-existing conditions. We are learning during this pandemic that elderly patients with diabetes, heart conditions, and hypertension are most vulnerable to COVID-19. These same patients are also at greater risk with surgery. SRT from Sensus is a more cost-effective and safer way to treat skin cancer. We have also stepped up what we call our Sensus University Programs where we provide application training for the SRT systems. We are finding that refresher courses are proving to be popular so that physicians and their assistants can keep their skills sharp during this time when they are not seeing patients. However, we are now beginning to receive confirmation of dermatology clinics reopening as we speak. The timing of this focus back to the fundamental features and benefits of SRT is fortuitous with our main reimbursement code expected to be revalued upward by the Centers for Medicare & Medicaid Services this summer, and most surgery reimbursement expected to be revalued downward. We believe the SRT will make significant market inroads once the expected new rates go into effect on January 2, 2021. We'll learn what those new rates are this summer, then there will be a public comment period, and then the final rates will be set in November. We believe the new rates will put SRT in a compelling competitive position. To date, we have penetrated only about 2% of the US market, so clearly there are plenty of opportunities. The American Academy of Dermatology Annual Meeting in late March was virtual this year, but we did have the opportunity to showcase our SRT-100 Vision and the SRT-100 PLUS systems remotely to more than 11,000 dermatologists. Although we were not able to follow up on the leads we generated in person, we have reached out telephonically and are assembling a list of interested customers to call upon when regional economies open up and practices are back to more normal activity. We've also been advised that this year's ASTRO meeting scheduled for October 25-October 28th in Miami is now a virtual meeting as well. We will pursue all possible activities in order to maximize our opportunities during this meeting as well. We are encouraged by the activity we are starting to see in Asia, as China and South Korea were the first countries to be impacted by COVID-19, and they are also the first to turn the corner and head back to normalcy. We have received a few inquiries from potential customers in China, and if our trade relations remain stable, we believe we will resume modest sales later on this year. Now, I'd like to talk briefly about Sculptura; our Anisotropic Radiation Therapy system with Beam Sculpting capabilities and Robotics Respiratory Tracking. This system has utility in as many as 17 different oncology indications. However, this COVID-19 pandemic is impacting research work with Sculptura at luminary hospitals, including the University of Pennsylvania, so we won't have the benefit of supportive research during the near term. Given current treatment constraints that hospitals, our Sculptura sales forecasts are guarded this year. Although recent interest has been very high, we believe sales of these systems will largely be pushed into 2021. Before I turn the call over to Javier to drill down into the financial results, I want to mention that during the fourth quarter of 2019, we reduced expenses including rightsizing our team and expenses. Given these actions along with our cash position and revolving line of credit, I am confident we are well prepared for the resumption of sales as geographies open up. Already, we are seeing a return to economic activity in much of Florida except for Dade, Broward and Palm Beach counties, which we expect to come back in the next week to 10 days. So while sales and earnings will not be what we had hoped for this year, we do think that there will be improvement later in the year. Now, I will turn the call over to Javier.

Thank you, Joe. It's a pleasure to be speaking with you all this afternoon. Revenues for the first quarter of 2020 were $1.7 million compared with $5.4 million for the first quarter of 2019. As Joe mentioned, revenues were adversely impacted by COVID-19, primarily near the end of the quarter, as social distancing prevented physicians from performing procedures. During Q1, we sold three SRT-100 Vision systems in a direct sale. Gross profit for the first quarter of 2020 was $0.7 million or 42.2% of revenues compared with $3.3 million or 61% of revenues for the first quarter of 2019. The decrease was primarily due to the lower sales previously mentioned. Selling and marketing expense for the first quarter of 2020 was $1.8 million, down from $2.5 million for the first quarter of 2019. The decrease was primarily attributable to lower trade show expenses due to cancellations related to COVID-19, decreased commission expenses due to lower sales, and lower overall spend on marketing activities. General and administrative expense for the first quarter of 2020 was $1.3 million, compared with $1.0 million for the first quarter of 2019. The increase was primarily due to a one-time severance expense and related legal fees. Our G&A expense going forward is expected to be around $1.0 million per quarter as we continue with the cost-cutting measures during 2020. Research and development expense for the first quarter of 2020 was $1.2 million, compared with $2.0 million for the first quarter of 2019. The decrease was primarily due to reductions in research and development related to the Sculptura system. Sensus reported a net loss of $3.6 million or $0.22 per share for the first quarter of this year compared with a net loss of $2.1 million or $0.13 per share for the first quarter of last year. Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation, amortization, and stock compensation expense, was negative $3.3 million for the first quarter of 2020 compared with a negative $1.9 million for the first quarter of 2019. We had an increase in our cash position of $300,000 in the quarter with cash, cash equivalents, and investments of $15.8 million as of March 31, 2020, up from $15.5 million as of December 31, 2019. The higher cash position is a result of the lower expenses and improved working capital. At quarter end, Sensus had no long-term debt and no outstanding borrowings on our revolving line of credit. I'm very pleased that subsequent to the close of the first quarter, we were able to expand our revolving credit agreement with Silicon Valley Bank to $10.0 million, up from $5.0 million previously. In addition, Sensus received a loan under the Small Business Administration Paycheck Protection Program enabled by the CARES Act of 2020 to be used for employee compensation and facilities costs. We're confident that with the cost-cutting measures in effect along with the current cash, access to the revolving credit agreement and the PPP loan; we're financially well-positioned to come through the COVID-19 pandemic intact and ready to do business. With that, I will turn the call back over to Joe.

Thank you, Javier. Obviously, a lot changed very quickly since our Fourth Quarter Financial Results Conference Call, and it goes without saying that our plans for profitability this year are unlikely to be met. However, we are looking forward to an excellent 2021 with the expected higher reimbursement amounts for SRT and increased work with Sculptura along with commercial sales. As a reminder, our products have enormous room to grow. As I've been saying for some time, our SRT systems are well-positioned in a large market consisting of some 14,000 dermatologists, 1,000 Mohs surgeons in the US, representing more than 7,500 offices and growing; not to mention a further 6,500 plastic surgeons and 5,500 radiation oncologists. We provide a compelling alternative to surgery for millions of patients and arguably the only solution for the treatment of keloids. As a reminder, a 5-year retrospective study with SRT showed a cure rate of 98.9%, which exceeds the most cure rate for non-melanoma skin cancer. The market for keloid treatment with SRT is growing, and we have the data to back it up with the study showing only a 3% recurrence rate after treating keloids with SRT. With an installed base of 474 units, we've barely scratched the surface. With more Mohs surgeons turning to SRT during the time of COVID-19, we believe many of them will even be more convinced of the benefits. Thank you for your time and attention. And now, Operator, we're ready to take questions.

Thank you. Our first question is from Andrew D'Silva. Please go ahead, Andrew.

Good afternoon. Thanks for taking my questions, and very glad to hear everybody sounds healthy. Obviously, COVID-19 has had a dramatic impact across the industry, so this is not any fault of you, but I'm just curious when looking at maybe the second or third quarter, do you think that the change in patient volume that's taken place thus far could limit the amount of orders that could take place, or do you expect there to be some sort of a bolster at some point because patients eventually are going to have to come back and get treated? And when that is about to happen, you would expect that packages or at least need to have some equipment in place to be able to take care of that, just going to kind of curious how you weigh that?

Andrew, good to hear your voice. And thank you for being on today. I think that what we're seeing right now is that doctors who are Mohs surgeons that have had our equipment, use the equipment all the way to the very end until they have to close their practices, and they delayed and postponed most surgery for up to four to eight weeks. We've talked to some Mohs surgeons currently who are back on track with opening their offices saying that they're only going to treat with SRT because it's too early to get involved with Mohs surgery and exposing those patients during the pandemic. So from our perspective, we're seeing some very strong business people running these medical practices. You have to figure they have lost a million to $2 million during this closure. They need to recoup those funds to keep everything going, to keep their salaries, to keep their premises running. One of the things that we've identified here from all the doctors is the fact that SRT was really a game changer for them and a lifesaver, as they were able to continue to treat their skin cancer patients, continue to work on the backlog of skin cancer patients, and then also maintained their productivity and, most importantly, their cash flow using the SRT. Moving ahead, I think it's going to be even more significant. I think you're going to have a significant number of patients who are in backlog, if you will, waiting for their Mohs surgery, and if they are of an age - better than 95% of these patients with skin cancer - I think they will want to minimize the risk. I think the doctors will want to minimize the risk, and I think surgery will be questionable. More and more, we will see the use of SRT, and I think that will drive demand up. And then when you're looking at the second half of the year, at some point in July, we're going to see CMS making it clear as to what this new reimbursement is going to be, I think that's going to help us as well. So I think that we're standing in a good position. It's going to help the patients identify with SRT and it's going to help the physicians identify with SRT. We all know, for instance, what restaurants are going to have to do; they're cutting the number of customers they have in their stores by a quarter. They're going to separate the tables; they are going to operate at only 25% of their maximum capacity. Well, it's going to be the same thing with Mohs surgery because most of these Mohs patients have to come into a surgical area of the dermatologists practice and they have their own waiting rooms. You're not going to be able to have three, four, five, six patients sitting in that small waiting room as they're being treated. They're not going to be able to do the same number of Mohs surgeries as they have in the past, but if they want to maintain their productivity, if they want to maintain their cash flow, SRT is the best answer for these doctors to get back in the swing when they're coming back online post-COVID-19. So I think it's a great opportunity for us. It's going to require a lot of coaching, a lot of training, but we're prepared to do it, and I think the Zoom meetings that we've had in the last two have had in excess of 100 people on each one of the calls with the third one set up in the next few weeks has helped us tremendously with doctors talking to each other about why SRT has done so great in their practices, even though they are Mohs surgeons.

That's interesting and actually makes a lot of sense. From a mobile standpoint, could you share how your turnkey initiatives in Florida are impacting the industry from a cash and working capital perspective, as well as its ability to fund operations going forward? Additionally, is there a possibility to transition physicians from an in-office model to an at-home or mobile model?

Listen, I wish that we had a drive-through capability where we can just have a patient stick their head out the window and we can treat something on their face by putting the arm out the drive-through window, but I don't think that that's going to be a solution. I think in any case, when these patients are told that they have skin cancer, to them they remember the word cancer, it doesn't matter where it is, it doesn't matter if it's breast or lung; cancer is cancer and they're worried about it, and have to wait for treatment is a problem for them. If they are able to get into a treatment where they don't have to get cut literally when you're looking at SRT, there is nobody that even has to place a hand on the patient. The people that are setting up the SRT don't even touch a patient. And so this is a great opportunity versus having to provide anesthesia to a patient and then put the gloves on with two or three people surrounding that patient and with a surgical instrument that cuts that patient open and then how many more times that they have to go back for wound care or for taking care of the stitching, whatever that is. This is a much safer, easier way to do it even though there are multiple trips, it's safer for the patient. I think that everybody is going to acclimate themselves to that. Now when you mentioned mobile, I think of, you know, we have several doctors that have our machine in a truck and they bring that sprinter van with the machine in it, and they can bring patients out of an assisted living facility, treating those patients in the truck or in the van because it's all set up and shielded. All the specs are available for them. That could be an opportunity for us in the future because a lot of these patients who exist in assisted-living facilities, I don't think they are going to want to go anywhere fast, and I don't think that anybody wants to go into those facilities to treat them. So this is a way of bringing those patients to a van where they can be treated for their skin cancer. I know that the two groups that we have running those mobile vans are doing very, very well economically and they probably are processing and treating more patients than the stationary units. So I think there are going to be several doctors that are going to look into this a little further as we speak.

Okay, great. And then moving over to Sculptura, just broadly in radiation oncology, it seems like physicians were making a move towards using SBRT as a treatment of choice because of the limited amount of fractions that it required versus traditional external beam radiation therapy. It seems like IORT has kind of a similar benefit although there is surgery involved. I'd be just interested in your take, if there is any sort of tailwind from social distancing or limited interaction due to communicable diseases that can tie into Sculptura as well.

Again, I think there is an opportunity there, Andrew. The opportunity is the fact that you have one treatment instead of multiple treatments. If you think of somebody with lung cancer post-surgically having to go into a cancer center or into a chemotherapy area depending on the protocols, they have to do that almost every day of the week for 5 to 10 weeks, and you're in a room with a group of people waiting to be treated, and again the social distancing is not going to be that great, it's going to be a tough process. When you look at a surgical procedure that can be done and having the Sculptura product alongside, that surgical procedure where it's just one time, you know, anything and everything in that surgical suite is very well taken care of post-operatively. The people in the hospital know how to secure those products and keep them from bacteria and things. Our system will be no different. It will be a great opportunity to have a patient exposed only one time to a treatment versus having to have surgery and then having a follow-up of 5 to 10 weeks on the other side. I think that this could be real important for the near future, plus the fact that it's a lot cheaper than going through the 5 to 10 weeks, a lot more cost-effective overall. So I think that continues to grow, and I think this pandemic is only going to provide more realization that this is the right way to treat their patients whenever they can.

Hey, great, thank you very much for the color and best of luck in 2020. Please Joe, stay healthy and my best wishes to your family as well.

I appreciate it very much, Andy, and I can't wait for a box of your fruit to send my way. Those avocados for sure.

Our next question is from Scott Henry. Please go ahead, Scott.

Thank you. Good afternoon. Unfortunately, I don't have any fruit for you, Joe, but I do have a couple of questions.

Fruit for thought.

Thanks. For starters, I think Q1, the business really ground to a halt when you think about the way it was only the last half of March or maybe I don't recall exactly when this all took effect. But my question is when we think about Q2, would you expect Q2 to look worse than Q1?

Scott, I'll tell you that probably within a week of our call, which I think was around February 4; for the fourth quarter. It was about a week after that the medical community started realizing what was going on and what had to be done. They were probably the first to shut down things, and of course that impacted our Q1. With regard to Q2, it could very well hurt us even more in Q2 because I think when you're looking at these doctors reopening their centers, the hospitals are going to take a long time before they refocus on what we want, just like anybody who is selling MRIs or CT scanners, it's going to be the same impact for them. But on the dermatology side, we're seeing them coming into focus with skin cancer and immediately going to SRT. As I mentioned earlier, it's the first unit being turned on. That's going to clear up a lot of the backlog. It doesn't help us particularly with the prospects that we're looking at to react as quickly as possible because they might have to reassess where they're going to spend their dollars; keep in mind they probably lost a million bucks during this time period, if not more. It can go either way; we just don't know yet where it can go. We have to get in touch with our customers. We think that those intent on buying prior to this will buy hopefully in the second quarter. We think that it can be in the second quarter, especially when they start hearing from the other doctors who had SRT, they were able to continue even though there were Mohs surgeries. It will be a long time before people will get back to being comfortable with doing Mohs surgeries. The Mohs surgeons who don't have our SRT system will get right back into it. I don't think that that's right. They need to hold off and patients need to be aware of the fact that they need to go to a doctor who is perhaps a Mohs surgeon but also provides them with the alternative SRT. I think those doctors are the ones who are going to say, I'm not going to do surgery on you, but we need to get rid of the skin cancer using SRT. That's the best way to go. We need to get that word out there and we'll do our best to do that.

Okay. And then another question, I mean when we think about 2021, do you think it will be normal versus expectations prior to this happening or do you think you have to kind of build momentum up again? I mean, obviously 2020 is heavily impacted, but then do you snap all the way back to where you were, or do you just start growing again? I'm just trying to get how you think of 2021 and in the rebound what that looks like.

If you recall, I think most of you will remember that during the call in the fourth quarter, I said to everybody that we're planning on being profitable for the year and we're looking forward to just getting 2020 out of the way. We wanted to get 2020 out of the way because of what was happening with announcements that we were expecting from CMS. I think that is even more important today based on the consequences of what we're facing with the virus. For me, I believe that there is going to be a lot of buildup between now and the end of the year. I think that there are going to be a lot of positive things that come out of patients being treated with SRT and not as many patients being treated with Mohs, and I think practices realizing that this is the time to get into SRT because it's probably the only device that can pay for existing patients that have skin cancer. Skin cancer is not going to go down in volume; it’s going to continue to rise. There will be a tremendous backlog as we come out of this year going into 2021, and I think that once it's known what CMS is going to do and where our reimbursement is that our base is going to get very, very excited. I believe it's going to accelerate demand for SRT. I really believe that. We believed that before the pandemic, and that's why we said back then that we just can't wait to get 2020 out of the way.

Okay. And then just reading in the press release, it sounds like Sculptura is going to be more of a 2021 event now. Do you think you place any machines in 2020?

We have possibilities because we have prospects that are still looking at the machine very seriously and we've come very close with negotiations with some of the facilities. But there is such a distraction with a lot of these hospitals, and you can only imagine the losses that are being incurred by so many hospitals, including the teaching facilities. They have to redirect and refocus where they want those funds to go, and I just have a tough time seeing a CEO thinking of how much money he's going to spend on various things when they have to recoup what's going on with the pandemic. I think this pandemic is going to affect the hospital market for a longer period than it will impact the dermatology market. Do I see us with an opportunity here and there? Yes, I see opportunities because we're that close to some of those customers. Would I be disappointed or perturbed if this goes into 2021? Yes, but I don't expect to lose those orders. Eventually, they will come in. We just want them to come in now, but if they don't, I expect those orders to be in 2021.

Okay. And then on Q1, did you give us the service contracts revenue, how much was that?

I'll leave it up to Javier.

Service was 600,000.

Okay. And since I got Javier, question that the PPP money that you've got, do you think you're going to have to pay that back? I mean that's kind of blurry these days for public companies.

Yes. Listen, the rules regarding that are you have to maintain your staff. We cherish the people that we have working for this company. They're great people. They do a lot of work. And so this is able to cover all of the expenses for maintaining our people for the next eight weeks as well as all the facilities expenses. We're very, very comfortable with that. By the time this expires, without having to lay anybody off, worst-case is you've got 10 years at 4% to pay it off. It's not a whole lot of money; we can pay it off right away, but the big opportunity is that it could go away entirely as long as we don't lay anybody off, and that's what we expect.

Fair enough. And then, Joe, the reimbursement changes on the horizon this summer, what's your confidence level in those? Is that 100%? or do you just want to revisit that?

Yes, I would say this; nothing that pertains to the government is a 100%. When you don't have it in your control, you're always worried, and that's what keeps me awake at night. All I can tell you is that the process is going through its paces, and it's going according to what we feel it should do and how it should be. We've been exposed to numbers that have been presented by the AMA to CMS, and we have confidence in the fact that we've got a relationship and have been working with CMS over the last five or six years to try to achieve those goals. We don't anticipate that there would be any problem with CMS whatsoever, and I think it would make it an extremely favorable reimbursement for all of our doctors compared to where we've been. As long as we continue to broaden the process, as long as we continue to see that progress, we're monitoring it on a daily basis. We're happy with the way things are going. Can anything happen? Of course, it can.

Okay, fair enough. Final question, I know I've asked a lot. When I do the math, it seems like pricing has to be a little higher in the quarter to reach that number. Was pricing higher or am I calculating incorrectly?

No.

In the product mix.

Yes, the product mix showed that we had a higher average selling price in the first quarter. Javier?

Okay. All right, great. Thank you for taking the questions.

Appreciate it, Scott. Stay healthy.

Our next question is from Anthony Vendetti. Please go ahead, Anthony.

Hey, Joe. How are you doing?

Good, Anthony. How are you?

All right. On Sculptura, I know you mentioned at the beginning of the call that you're pretty much expecting this to be a 2021 event in terms of the actual systems, and I think that's probably the right approach. But if we do start reopening and even if hospitals take a while to get back, do you expect the pipeline to build so that even if you don't take deliveries or if the hospitals don't accept deliveries before the end of the year that you should build a pretty healthy pipeline if you still have all of the sales force in place for this particular product?

Yes. I don't think, Anthony, that we're seeing any less interest in the pipeline that we have and we continue to grow that. The exposure, as little or as great as we can access during the virtual ASTRO meeting, will continue to grow for us. I don't see anybody backing off of their interest. They all seem to want more and more data and information regarding Sculptura. I'm just seeing it being delayed into 2021 versus what we were trying to achieve in 2020 because of the distractions that the hospitals have faced. But I don't see a slowing down in the prospect base at all.

Okay, that's good. And then just remind me how many sales people you have, and it sounds like you're doing Zoom calls with prospects for not just Sculptura, but obviously for the SRT, SRT-100 Vision and so forth. How does that pipeline look for the Vision? Then if you could just talk a little bit about assuming you do get a higher reimbursement, assuming Mohs does come down, are you expecting a significant acceleration for the SRT systems as we move towards the back half of this year? Obviously, the fourth quarter is generally the strongest quarter. If the COVID-19 situation is somewhat under control, and we don't see a resurgence in the fall, is it possible you could see a nice bounce back here in the fourth quarter?

We're anticipating a bounce back in the fourth quarter understanding that COVID is on its way down. Doctors in the dermatology space are business people, and they've got to find a way to recoup lost revenues from the time that they were shut down. This is one of the fastest ways to do it, whether you're an aesthetic physician or a Mohs surgeon. There are plenty of patients out there to fill that backlog, and they're going to be in a hurry to want to get treated one way or another. Being in that age bracket of skin cancer as well as COVID vulnerability, they don't want to have surgery if they can avoid it. I think this is going to bode well for existing customers, and I think their volumes are going to go up. But I think the doctors that don't have it are going to adapt to it very quickly because it's really the best way to get their practice back in shape.

Sure, sure. I know we've talked about the reimbursement, and I know it was brought up on some of the prior questions. But as best you can tell at this point, and obviously nothing is a 100%, but based on all the conversations you've had with the regulators, your team has had, would you say that the likelihood is at least greater than 50% that reimbursement for SRT goes up and reimbursement for Mohs goes down? If that's the case, even if it does, obviously it doesn't get implemented until January 2 of 2021, that could also contribute to an acceleration of sales at the end of the year.

I'm not going to speculate on the percentages, but I think that they're very, very good. I think that everybody will be happy. I know that the physicians were involved in the revaluation process, which took place in January, in a meeting in Arizona, were very satisfied with the outcomes of that process in evaluating or re-evaluating that code. It also impacts some other codes that we've seen and we've been told that are increasing that are applicable to treating skin cancer with SRT. The combination of the two will provide physicians with a very, very strong economic model to wanting to have SRT in their practice. Can it accelerate in the third quarter? Anytime CMS has to announce things, and anytime you go into a market, I always look at a period of time where we have to personally get involved in the training, educating, and then you have to work with your KOLs to be on the podiums to talk about it. We don't know where those podiums are going to go because all of our meetings this year for dermatology have been canceled. We are re-upping those types of meetings through the Zoom presentations as well as doctors who are doing their own Zoom presentations. We are getting a lot of notoriety based on that, and I think that that information today’s internet can be spread very, very quickly, especially when the government says so. Once they do, everybody will know right away because we will tell you, and we will tell our customers, so they can start thinking what they are going to do to buy it. We just want to get them to buy it as soon as possible. The big opportunity that we have, as you know, is that we're not even quite at 2% of the total market capabilities or opportunities. The best is ahead of us even as we've grown in the past 10 years. We can capture a lot of market share post announcement from CMS. We just need to get 2020 behind us.

Okay. And then just last question on all the Zoom calls the salespeople have been doing. Would you say that at this point, all of your salespeople are doing the Zoom calls? And through the Zoom calls, would you say about the same number of touchpoints or is it more touchpoints because obviously, a Zoom call can be set up once you figure out how to do it? Zoom calls can be set up much faster.

Yes. A couple of things. First, when this started, we sent out a message to the sales organization and everybody, including application service, everybody in touch with customers on a daily basis, including the management team, that this was the time to develop relationships and partnerships. It wasn't a time for selling and other stuff. Of course, we stay close to our prospects and our customers, but it was more important to develop relationships and be available when they needed us. The sales team and everybody in touch with the customer within the organization has done a great job in doing that. We've stayed very, very close. Now, the Zoom, just to give you an idea, when we first set up the Zoom, as anybody would expect, we don't know what to expect. So we set it up for 100 people to join Zoom and the number of people that you have allowed to join. We set it up for the first one for 100 people, and we were oversubscribed by about 35 people. There was plenty of interest and people wanted to get on, but we were locked in at 100. For the next Zoom meeting that we had, we said, well, that's up, and so we upped it to 500. There is a cost involved in that, but we had about 140 customers involved in that. It all depends on availability and knowledge. The next two physicians that we had were also Mohs surgeons. They talked about SRT and how it meant for them in their practices and told everybody why SRT was so valuable because they cut off Mohs surgery and they did everything with SRT. We think that there are going to be several doctors that are going to look into this a little further as we speak.

Sure. Thanks for the color, Joe. I appreciate it.

Thank you, Anthony.

Our next question is from Alex Nowak. Please go ahead, Alex.

Good afternoon, everyone. This is actually Will dialing in for Alex. Thanks for taking my questions and hope everyone is well. Just to start, Joe, could you talk more on what a typical quarter looks like in the first two months versus the final third month, if you could just briefly speak of the dynamics of why systems are typically placed at quarter ends; that would be helpful. Thanks.

Sure. I'll relate to how we transition from Q4 into Q1. If you look at Q4, we had about 20 some systems that were delivered and installed. So everybody spent their money and took advantage of various coding that helped them with the IRS, and they were able to save dollars. They took advantage of that and accelerated the reason why they bought early versus late. That was good for us. Now we transition into the first quarter where we had a large number of sales that went into the fourth quarter and now you are trying to revamp your prospect base so you can get it to more operating numbers that you're trying to look for in the second quarter. Keep in mind that we're preparing for major trade shows like the South Beach Symposium, which took place in early February. We were able to get that done. There were about 1,000 doctors there. You're lining up to get everything going at the AED in early March, where many of the doctors were looking to make their decisions, and we had doctors lined up coming to our booth trying to close deals. With that got canceled and of course offices shut down, you can see where from the time of the first meeting towards the end of February to where we came in at the end of March, a lot of that business did not happen. It didn't go away; it just didn't happen. People put their decisions on hold. So if I look at what happened after the fourth quarter and to have four systems already sold by the time we had our earnings call, then to get abruptly turned off; you could see the impact. So now you go through that same cycle each and every quarter. It's more impactful in the fourth quarter because of all of the other ramifications surrounding it, but as you close out one quarter, you sit back, take a breath of fresh air, and you start all over. That's pretty much how the sales cycle goes.

Great. Now understood, thanks for all the color there. I appreciate it. And then just a second question, could you just talk at a higher level, what you're seeing with your existing accounts? And just if you can comment on the appetite that dermatology clinics have right now for looking at new technology like SRT? Thanks.

I appreciate it. The existing customers that we have are related to the fact that they have SRT. I want to tell you the story of the unit that we sold in early March in Tennessee to an aesthetic dermatologist who was surrounded by Mohs surgeons whose patients have been told that they're not going to be treated for the next 6 to 10 weeks until they come out of this. He looked at it as an opportunity for himself to install the SRT as quickly as possible. May is Skin Cancer Awareness Month. He wanted to take advantage of that and start advertising to his community that he can start treating patients with skin cancer, don't have to wait, and they can get treated now non-surgically. He has been installed for a few weeks, and he is very, very busy as we speak. I think he is only going to get busier as time goes on. There is an opportunity for a lot of dermatologists looking at this. They’re not going to be able to clear out their backlog of skin cancer patients using surgery only. They will have to maintain their revenues using SRT. They don't have to sit back and lose those patients; they can use SRT. I think the appetite is going to be there. Plus, they have to make up for the money they lost during this closure. The sooner they make that up, the better off they are. You can't wait 6 months to 12 months to make that up.

Now understood, thanks for all the color there. That's it from us. Best of luck moving forward.

Thanks, Will, and give my best to Alex.

Our next question is from Yi Chen. Please go ahead.

This is Bo Palin dialing in for Yi Chen, and thanks for taking my question. A feeling that the COVID-19 persists throughout the year, how many systems would you expect to ship in 2020?

Say that again, if COVID existed or continued for the balance of the year?

Yes. Assuming the COVID-19 continues throughout the year. How many systems would you expect to ship in 2020?

Not much. How will you manage to ship systems and who will decide if they need to close their offices? We should probably assume that they are opening their offices, right? So regarding your question, are the offices opening or are they remaining closed as we have been observing?

Some states are open while others are not. For example, in New Jersey, there aren't many clinics that are operating. Given the current situation, I'm curious if you have any predictions about the economy being partially open.

It's challenging to forecast those numbers when a significant number of areas are closed. The major regions that have been hit hard include New York, Chicago, and California. On the other hand, Florida is currently opening up, making it a vibrant market, and Texas and Arizona remain strong markets for us. It's difficult to determine how many units we will sell while a substantial portion of the country might still be closed. I don’t believe we can accurately answer that question.

Okay, understood. So moving forward, have you shipped any system to China in 1Q 2020? Considering the escalating tension between the two governments, do you think the trade dispute and tariff war would resume in the coming months?

Based under that scenario, I don't expect to send anything to China. But if China and Korea are both opening up as we speak as well. They were way ahead of the curve because it hit them first. Now we've had interest from China for our products for a long time. We have about 40 systems installed in China. I think that volume can be increased significantly, but there's a lot of things that have to happen over the next several months. We feel that there are opportunities in Asia; we have sold equipment in Vietnam and Korea, we have opportunities in Thailand. We continue to work that market because of the large opportunities that we have. I don't know how many units, but if we sold one unit, it's one more than we sold last quarter in China.

Okay, thank you. Understood. That's it from me.

Thank you.

There are no more questions.

In closing, I want to thank you all for your time this afternoon and for your interest in Sensus. Like so many companies in every industry sector, our business was hit hard by COVID-19, but we're using this time as productively as we can and are optimistic about our prospects when we return to a more typical business pattern. Thanks again, and may you and your family, friends, and associates remain safe and healthy during this time; and look forward to talking to you all after the next quarter. Thank you so much.

Thank you. This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.