What changed in this filing

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Item 9A. Controls and Procedures

2021-03-09 compared with 2020-03-05 · 607 added, 1198 removed, 392 unchanged (82% of the section changed)

Controls and Procedures

Evaluation of Disclosure Controls and

In accordance with

Rules 13a-15 and 15d-15, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out

an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief

Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and

procedures were effective as of December 31, 2019, to ensure that information required to be disclosed in our reports filed or

submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities

and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive

Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on

Internal Control Over Financial Reporting

Our management’s

report on internal control over financial reporting procedures (as defined in Rule 13a-15(f) under the Exchange Act) is included

with the financial statements reflected in Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

Attestation Report of the Registered

Public Accounting Firm

WithumSmith+Brown,

PC, the independent registered public accounting firm that audited the financial statements of included in Item 8 of this Annual

Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as

of December 31, 2019.

This report is included with the financial statements included in Item 8 of this Annual Report on Form 10-K

and incorporated herein by reference.

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management’s report on internal control over financial reporting procedures (as defined in Rule 13a-15(f) under the Exchange Act) is included with the financial statements reflected in Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

Attestation Report of the Registered Public Accounting Firm

WithumSmith+Brown, PC, the independent registered public accounting firm that audited the financial statements of included in Item 8 of this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2020.

This report is included with the financial statements included in Item 8 of this Annual Report on Form 10-K and incorporated herein by reference.

Changes in Internal Control over Financial Reporting

No change in our internal

control over financial reporting occurred during the fiscal quarter ended December 31, 2019 that has materially affected, or is

reasonably likely to materially affect, our internal control over financial reporting.

No change in our internal control over financial reporting occurred during the fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Directors, Executive Officers and Control Persons.

Information required

to be disclosed by this Item with respect to our executive officers is incorporated in this Annual Report on Form 10-K by reference

from the section entitled “Officers and Key Employees”

contained in our definitive proxy statement for our 2020 annual

meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal

Information required

to be disclosed by this Item about our board of directors is incorporated in this Annual Report on Form 10-K by reference from

the section entitled “Nomination and Election of Directors”

contained in our definitive proxy statement for our 2020

annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our

Information required

to be disclosed by this Item about the Section 16(a) compliance of our directors and executive officers is incorporated in this

Annual Report on Form 10-K by reference from the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance”

contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which

we intend to file within 120 days of the end of our fiscal year.

Information required

to be disclosed by this Item about our board of directors, the audit committee of our board of directors, our audit committee financial

expert, our Code of Business Conduct and Ethics, and other corporate governance matters is incorporated in this Annual Report on

Form 10-K by reference from the section entitled “Board of Directors and Corporate Governance Matters”

our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend

to file within 120 days of the end of our fiscal year.

The text of our Code

of Business Conduct and Ethics, which applies to our directors and employees (including our principal executive officer, principal

financial officer, and principal accounting officer or controller, and persons performing similar functions), is posted in the

“Corporate Governance”

section of our website, www.cytosorbents.com.

A copy of the Code of Business Conduct and Ethics

can be obtained free of charge on our website.

We intend to disclose on our website any amendments to, or waivers from, our Code

of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission

and The Nasdaq Stock Market.

The information presented

on our website is not a part of this Annual Report on Form 10-K and the reference to our website is intended to be an inactive

textual reference only.

Information required to be disclosed by this Item with respect to our executive officers is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Officers and Key Employees” contained in our definitive proxy statement for our

2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about our board of directors is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Nomination and Election of Directors” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about the Section 16(a) compliance of our directors and executive officers is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about our board of directors, the audit committee of our board of directors, our audit committee financial expert, our Code of Business Conduct and Ethics, and other corporate governance matters is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Board of Directors and Corporate Governance Matters” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

The text of our Code of Business Conduct and Ethics, which applies to our directors and employees (including our principal executive officer, principal financial officer, and principal accounting officer or controller, and persons performing similar functions), is posted in the “Corporate Governance” section of our website, www.cytosorbents.com.

A copy of the Code of Business Conduct and Ethics can be obtained free of charge on our website.

We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission and The Nasdaq Stock Market.

The information presented on our website is not a part of this Annual Report on Form 10-K and the reference to our website is intended to be an inactive textual reference only.

Executive Compensation.

Information required

to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Executive

Compensation,”

“Director Compensation”

and “Board of Directors and Corporate Governance Matters”

contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which

we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Executive Compensation,” “Director Compensation” and “Board of Directors and Corporate Governance Matters” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information required

to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Principal

Stockholders,”

“Stock Ownership of Directors, Nominees for Director, and Executive Officers”

and “Equity

Compensation Plan Information”

contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled

to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Principal Stockholders,” “Stock Ownership of Directors, Nominees for Director, and Executive Officers” and “Equity Compensation Plan Information” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Certain Relationships and Related Transactions and Director Independence.

Information required

to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section(s) entitled “Certain

Relationships and Related Party Transactions”

and “Board of Directors and Corporate Governance Matters,”

“Compensation

for Executive Officers and Directors, “Compensation Committee Interlocks and Insider Participation”

and “Compensation

Committee Report”

contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be

held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section(s) entitled “Certain Relationships and Related Party Transactions” and “Board of Directors and Corporate Governance Matters,” “Compensation for Executive Officers and Directors, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Principal Accounting Fees and Services.

This information required

to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Audit

and Other Fees”

contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held

on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

This information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Audit and Other Fees” contained in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on June 1, 2021, which we intend to file within 120 days of the end of our fiscal year.

Exhibits, Financial Statement Schedules.

Financial Statements and Schedules:

(a) Financial Statements and Schedules:

Financial Statements

The following consolidated financial statements and reports

of independent registered public accounting firm are included herein:

of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations and Comprehensive Income

Statements of Stockholders’

Statements of Cash Flows

to Consolidated Financial Statements

The following consolidated financial statements and reports of independent registered public accounting firm are included herein:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Financial Statement Schedules

1 unchanged sentence

List of Exhibits

Second Amended and Restated Certificate of Incorporation, dated June 12, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 13, 2019).

Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 2, 2020).

Description of Capital Stock of CytoSorbents Corporation.

Second Amended and Restated Certificate of Incorporation, dated June 12, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 13, 2019).

Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 2, 2020).

Description of Capital Stock of CytoSorbents Corporation(incorporated by reference to Exhibit 4.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 5, 2020.

Amended and Restated Employment Agreement, dated as of July 30, 2019, by and between CytoSorbents Medical, Inc.

and Phillip P.

Chan (incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

Amended and Restated Employment Agreement, dated as of July 30 2019, by and between CytoSorbents Medical, Inc.

and Vincent Capponi (incorporated by reference to Exhibit 10.2 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

Amended and Restated Employment Agreement, dated as of July 30, 2019, by and between CytoSorbents Medical, Inc.

and Kathleen P.

Bloch (incorporated by reference to Exhibit 10.3 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

Consulting Agreement with Dr.

Robert Bartlett Effective as of January 1, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 9, 2016).

Separation Agreement and Release, dated December 9, 2019, by and between CytoSorbents Corporation and Dr.

Eric Mortensen (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 12, 2019).

Lease Agreement between Princeton Corporate Plaza LLC and the Registrant dated as of March 9, 2000 (incorporated by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

Third Amendment to Lease Agreement between Princeton Corporate Plaza LLC and the Registrant dated as of December 12, 2014 (incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

Fourteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza, LLC, dated April 1, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2016).

Amended and Restated Fourteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza LLC, dated August 5, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2016).

Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza, LLC, dated January 4, 2019

(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 6,

Royalty Agreement between Guillermina Vega Montiel and the Registrant dated as of August 11, 2003 (incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

Eric Mortensen incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 12, 2019).

Eighteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza, LLC, dated January 4, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 6, 2019).

Stipulated Order and Settlement Agreement between Bro-Tech Corporation, Purolite International Ltd.

And the Registrant, dated August 7, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed on September 8, 2006).

10.13&dagger;

Distribution Agreement between Biocon Limited and the Registrant dated as of September 20, 2013 (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.14&dagger;

First Amendment to the Distribution Agreement between Biocon Limited and the Registrant, dated October 30, 2014 (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on July 6, 2006).

And the Registrant, dated August 7, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed on September 8, 2006).

Distribution Agreement between Biocon Biologics Limited and the Registrant dated as of September 20, 2013 (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

First Amendment to the Distribution Agreement between Biocon Biologics Limited and the Registrant, dated October 30, 2014 (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on July 6, 2006).

Amendment No.

1 to the CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s registration statement on Form S-8, filed on November 4, 2014).

Amendment No.

1 to the CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s registration statement on Form S-8, filed on November 4, 2014).

Amended and Restated CytoSorbents Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-8, filed with the SEC on August 26, 2019).

Amended and Restated Loan and Security Agreement, dated as of March 29, 2018, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on April 4, 2018).

First Amendment to Amended and Restated Loan and Security Agreement, dated as of July 30, 2019, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

and Western Alliance Bank (incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

Third Amendment to Amended and Restated Loan and Security Agreement, dated as of December 4, 2020, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on December 10, 2020).

Success Fee Letter, dated as of March 29, 2018, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

and Western Alliance Bank (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 2, 2018).

10.21*&dagger;

Exclusive Distribution Agreement, dated as of September 26, 2014, by and between CytoSorbents

Europe GmbH and Aferetica s.r.l (incorporated by reference to Exhibit 10.23 of the Registrant’s Annual Report of Form

10-K filed on March 7, 2019).

10.22*&dagger;

Amendment to Exclusive Distribution Agreement, dated December 15, 2014, by and between

CytoSorbents Europe GmbH and Aferetica s.r.l (incorporated by reference to Exhibit 10.24 of the Registrant’s Annual Report of Form

10-K filed on March 7, 2019).

and Western Alliance Bank (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 2, 2018).

Exclusive Distribution Agreement, dated as of September 26, 2014, by and between CytoSorbents Europe GmbH and Aferetica s.r.l.

(incorporated by reference to Exhibit 10.23 of Registrant’s Annual Report on Form 10-K filed on March 7, 2019).

Amendment to Exclusive Distribution Agreement, dated December 15, 2014, by and between CytoSorbents Europe GmbH and Aferetica s.r.l (incorporated by reference to Exhibit 10.24 of Registrant’s Annual Report on Form 10-K filed on March 7, 2019).

Open Market Sale Agreement SM , dated as of July 9, 2019, by and among CytoSorbents Corporation, Jefferies LLC and B.

Riley FBR, Inc.

(incorporated by reference from Exhibit 1.1 to the Company's Current Report on Form 8-K, filed with the SEC on July 9, 2019).

Amendment No.

1 to Open Market Sale Agreement SM , dated as of April 20, 2020, by and among CytoSorbents Corporation, Jefferies LLC and B.

Riley FBR, Inc.

(incorporated by reference from Exhibit 1.1 to the Company's Current Report on Form 8-K, filed with the SEC on April 20, 2020).

List of Subsidiaries.

5 unchanged sentences

The following materials from CytoSorbents Form 10-K for the fiscal year ended December 31, 2020, formatted in Extensible Business Reporting Language (XBRL):

(1) Consolidated Balance Sheets at December 31, 2019 and December 31, 2018, (iii) Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017, (iii) Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’

Equity/(Deficit) for the years ended December 31, 2019, 2018 and 2017, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, and (v) Notes to the Consolidated Financial Statements.

(1) Consolidated Balance Sheets at December 31, 2020 and December 31, 2019, (iii) Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018, (iii) Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity/(Deficit) for the years ended December 31, 2020, 2019 and 2018, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018, and (v) Notes to the Consolidated Financial Statements.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed or furnished herewith.

2 unchanged sentences

The confidential portions of this exhibit have been omitted and filed separately with Securities and Exchange Commission.

In accordance with SEC Release 33-8238,

Exhibits 32.1 and 32.2 are being furnished and not filed.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

Form 10-K Summary.

In accordance with Section 13 or 15(d)

of the Exchange Act, CytoSorbents Corporation has caused this report to be signed on its behalf by the undersigned, thereunto duly

authorized, on this 5 th day of March, 2020.

In accordance with Section 13 or 15(d) of the Exchange Act, CytoSorbents Corporation has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 9 th day of March, 2021.

CYTOSORBENTS CORPORATION

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act

of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the

dates indicated.

President and Chief Executive Officer (Principal

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer (Principal

March 9, 2021

12 unchanged sentences

FINANCIAL STATEMENTS

Management’s

Report on Internal Control Over Financial Reporting

of Independent Registered Public Accounting Firm

Balance Sheets at December 31, 2019 and 2018

Statements of Operations and Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017

Statements of Changes in Stockholders' Equity for the years ended December 31, 2019, 2018 and 2017

Statements of Cash Flows for the for the years ended December 31, 2019, 2018 and 2017

to Consolidated Financial Statements

Management’s Report on Internal

Control over Financial Reporting

Management is responsible

for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f)

and 15d-15(f) under the Exchange Act.

The Company’s internal control over financial reporting is designed to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles in the United States of America.

A company’s internal control over

financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations

of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial

Because of its inherent

limitations, internal control over financial reporting may not prevent or detect misstatements.

Further, because of changes in

conditions, effectiveness of internal control over financial reporting may vary over time.

Management, with the participation of

the Chief Executive Officer and the Chief Financial Officer, working with an external consultant, conducted an evaluation of the

effectiveness of internal control over financial reporting based on the framework in Internal-Control –Integrated Framework

issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded

that internal control over financial reporting was effective as of December 31, 2019.

WithumSmith+Brown,

PC, the independent registered public accounting firm that audited the Company’s financial statements included in this Annual

Report on Form 10-K, was engaged to audit our Internal Control.

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018

Notes to Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Further, because of changes in conditions, effectiveness of internal control over financial reporting may vary over time.

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, working with an external consultant, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal-Control –Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that internal control over financial reporting was effective as of December 31, 2020.

WithumSmith+Brown, PC, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K, was engaged to audit our Internal Controls.

Their report appears on page F-3.

/s/ Kathleen P.

President and Chief Executive Officer

Chief Executive Officer

Chief Financial Officer

2 unchanged sentences

March 9, 2021

Report of Independent Registered Public

Accounting Firm

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Cytosorbents Corporation:

Opinion on the Consolidated Financial

Statements and Internal Control Over Financial Reporting

We have audited the

accompanying consolidated balance sheets of CytoSorbents Corporation (the "Company") as of December 31, 2019 and 2018,

and the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows,

for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "consolidated

financial statements").

We also have audited the Company’s internal control over financial reporting as of December

31, 2019, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the

consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company

as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period

ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,

2019, based on criteria established in Internal Control-Integrated Framework (2013) issued by the COSO.

Adoption of New Accounting Standard

As discussed in Note

8 to the Consolidated Financial Statements, the Company changed its method of accounting for leases in 2019 due to the adoption

of ASU 2016-02, Leases (Topic 842).

Substantial Doubt Regarding Going Concern

As disclosed in Note

1 to the consolidated financial statements, the Company sustained net losses for the years ended December 31, 2019, 2018 and 2017

of approximately $19.3 million, $17.2 million and $8.5 million, respectively.

Further, the Company believes it will have to raise

additional capital to fund its planned operations for the twelve month period through March 2021.

These matters raise substantial

doubt regarding the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters

are also described in Note 1 to the consolidated financial statements.

The consolidated financial statements do not include any

adjustments related to the outcome of this uncertainty.

Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Cytosorbents Corporation (the "Company") as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework (2013) issued by the COSO.

Basis for Opinion

The Company's management

is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,

and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s

report on internal control over financial reporting.

Our responsibility is to express an opinion on the Company's consolidated

financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits

in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud,

and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated

financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining,

on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding

of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the

design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other

procedures as we considered necessary in the circumstances.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal

Control Over Financial Reporting

A company's internal

control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in

the United States of America.

A company's internal control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions

of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation

of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts

and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the company's assets that could have a material effect on the financial statements.

Because of its inherent

limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation

of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

/s/ WithumSmith+Brown,

WithumSmith+Brown, PC

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Stock Based Compensation

Description of the Matter

As discussed in Notes 2 and 11 of the consolidated financial statements, the Company grants stock-based awards including stock options, restricted stock units and performance-based stock awards to their employees as compensation for their service.

The Company recorded approximately $3,500,000 of stock-based compensation expense during the year ended December 31, 2020.

Certain awards include performance conditions that only vest if those conditions are met, and the quantity of awards received can range based on the level performance achieved.

In 2020, the Company had 1,114,325 of such awards outstanding, and recorded stock-based compensation expense related to these performance awards of approximately $914,000.

Auditing the Company's accounting for stock-based compensation required complex auditor judgment due to the number and the variety of the types of equity awards, the subjectivity of assumptions used to value stock-based awards and the frequent use of performance-based vesting conditions.

In particular, judgment was required to evaluate the nature of the annual performance conditions, as well as to assess the satisfaction of the performance targets.

How we Addressed the Matter in our Audit

Addressing the matter involved obtaining an understanding, evaluating the design and testing the operating effectiveness of controls over the Company’s process for determining stock-based compensation expense, including testing management’s review controls over the underlying calculations, the significant assumptions used in valuing certain awards, identification of the terms of the performance conditions and the key inputs used in determining the outcome of each performance condition.

We assessed the appropriateness of judgments made by management in determining key assumptions related to the awards, such as service inception date based on the annual performance conditions.

We tested the accuracy of the data used in measuring the awards by agreeing the underlying inputs, such as grant date, grant price, performance targets and vesting terms, among others, back to source documents, such as compensation meeting minutes or award letters.

Additionally we tested the related valuation report on volatility prepared by its specialists by involving our internal valuation specialists to assess the valuation methodologies and assumptions used.

We determined whether performance targets were satisfied in accordance with the contractual conditions, and recalculated grant date fair value by multiplying the awarded quantity of awards by the grant price.

We also evaluated the adequacy of the Company’s stock-based compensation disclosures included in Notes 2 and 11 in relation to these matters.

/s/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2004.

8 unchanged sentences

Total current assets

Property and equipment –

Property and equipment - net

Right of use asset

4 unchanged sentences

Current maturities of long-term debt

Lease liability –

current portion

Lease liability – current portion

Total current liabilities

3 unchanged sentences

Commitments and contingencies (Note 10)

Stockholders’

Stockholders’ Equity:

Preferred Stock, Par Value $ 0.001 , 5,000,000 shares authorized;

- 0 - shares issued and outstanding at December 31, 2020 and 2019

Common Stock, Par Value $ 0.001 , 100,000,000 shares authorized;

1 unchanged sentence

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

( 1,734,078 )

Accumulated deficit

1 unchanged sentence

( 188,789,459 )

Total stockholders’

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

CYTOSORBENTS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CytoSorb sales

10 unchanged sentences

( 18,974,064 )

( 15,584,928 )

Other income (expense):

Interest expense, net

( 1,201,067 )

( 1,033,661 )

( 1,461,045 )

Gain/(loss) on foreign currency transactions

Total other income (expense), net

Loss before benefit from income taxes

( 1,384,026 )

( 2,245,797 )

Benefit from income taxes

Loss before benefit from income taxes

( 8,964,262 )

( 20,358,090 )

Dividend, warrant exercise price adjustment

( 17,830,725 )

Benefit from income taxes

Net loss attributable to common shareholders

10 unchanged sentences

Currency translation adjustment

( 2,260,056 )

Comprehensive loss

2 unchanged sentences

( 16,562,019 )

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

CYTOSORBENTS CORPORATION

1 unchanged sentence

STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2019,

2018 and 2017

Stockholders’

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 and 2018

Stockholders’

Comprehensive

Income (Loss)

Balance at December 31, 2017

( 152,312,636 )

$ (143,516,106 )

Stock based compensation -

employees, consultants and directors

Stock based compensation - employees, consultants and directors

Issuance of common stock - offerings, net of fees incurred

4 unchanged sentences

Cashless exercise of stock options

Dividend, warrant exercise price adjustment

Success fee – Bridge Bank

Other comprehensive income, foreign translation adjustment

( 17,211,179 )

Balance at December 31, 2018

( 169,523,815 )

Stock based compensation -

employees, consultants and directors

Stock based compensation - employees, consultants and directors

Issuance of common stock - offerings, net of fees incurred

4 unchanged sentences

Cashless exercise of stock options

Success fee –

Other comprehensive income,

foreign translation adjustment

Other comprehensive income, foreign translation adjustment

( 19,265,644 )

5 unchanged sentences

Issuance of restricted stock options

Proceeds from exercise of warrants

Cashless exercise of warrants

Proceeds from exercise of stock options

Cashless exercise of stock options

Other comprehensive income, foreign translation adjustment

Other comprehensive loss, foreign translation adjustment

( 2,260,056 )

( 7,837,188 )

Balance at December 31, 2020

1 unchanged sentence

( 196,626,647 )

The Notes to Consolidated Financial Statements

are an integral part of these statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

CYTOSORBENTS CORPORATION

8 unchanged sentences

Depreciation and amortization

Bad debt expense

Bad debt expense (recovery)

Foreign currency transaction (gains) losses

( 2,607,139 )

Stock-based compensation

2 unchanged sentences

Grants and accounts receivable

( 1,847,848 )

( 1,284,848 )

Prepaid expenses and other current assets

( 1,076,849 )

Accounts payable and accrued expenses

2 unchanged sentences

( 16,758,782 )

( 10,839,684 )

Cash flows from investing activities:

1 unchanged sentence

Net cash used by investing activities

( 1,676,218 )

( 1,520,117 )

( 1,520,264 )

Cash flows from financing activities:

1 unchanged sentence

Repayment of long-term debt

( 16,410,900 )

Final fee on long-term debt

Payment of loan acquisition costs

12 unchanged sentences

Settlement of accrued bonuses with restricted stock units

Dividend, warrant exercise price adjustment

The Notes to Consolidated Financial Statements

are an integral part of these statements

The Notes to Consolidated Financial Statements are an integral part of these statements

CYTOSORBENTS CORPORATION

1 unchanged sentence

BASIS OF PRESENTATION

The accompanying consolidated

financial statements include the results of CytoSorbents Corporation (the “Parent”), CytoSorbents Medical Inc., its

wholly-owned operating subsidiary (the “Subsidiary”), and CytoSorbents Europe GmbH, its wholly-owned European subsidiary

(the “European Subsidiary”).

In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH

and CytoSorbents Poland Sp.

z.o.o., wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly-owned

subsidiary of CytoSorbents Medical, Inc.

These entities are collectively referred to as “the Company”.

The accompanying consolidated

financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction

of liabilities in the normal course of business.

Based on its projections, the Company believes it will have to raise additional

capital to fund its planned operations over the next twelve-month period.

As of December 31,

2019, the Company had an accumulated deficit of $188,789,459, which included net losses of $19,265,644 for the year ended December

31, 2019, $17,211,179 for the year ended December 31, 2018 and $8,460,799 for the year ended December 31, 2017.

The Company’s

losses have resulted principally from costs incurred in the research and development of the Company’s polymer technology

and selling, general and administrative expenses.

The Company intends to continue to conduct significant additional research, development,

and clinical study activities which, together with expenses incurred for the establishment of manufacturing arrangements and a

marketing and distribution presence and other selling, general and administrative expenses, are expected to result in continuing

operating losses for the foreseeable future.

The amount of future losses and when, if ever, the Company will achieve profitability

are uncertain.

The Company’s ability to achieve profitability will depend, among other things, on successfully completing

the development of its technology and commercial products, obtaining additional requisite regulatory approvals in markets not covered

by the CE Mark previously received for the Company’s CytoSorb product and for potential label extensions of the Company’s

current CE Mark, establishing manufacturing and sales and marketing arrangements with third parties, and raising sufficient funds

to finance the Company’s activities.

No assurance can be given that the Company’s product development efforts will

be successful, that the Company’s current CE Mark will enable it to achieve profitability, that additional regulatory approvals

in other countries will be obtained, that any of the Company’s products will be manufactured at a competitive cost and will

be of acceptable quality, or that the Company will be able to achieve profitability or that profitability, if achieved, can be

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

These consolidated

financial statements do not include any adjustments related to the outcome of this uncertainty.

PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES:

The accompanying consolidated financial statements include the results of CytoSorbents Corporation (the “Parent”), CytoSorbents Medical Inc., its wholly-owned operating subsidiary (the “Subsidiary”), and CytoSorbents Europe GmbH, its wholly-owned European subsidiary (the “European Subsidiary”).

In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH and CytoSorbents Poland Sp.

z.o.o., wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc.

These entities are collectively referred to as “the Company”.

In years prior to December 31, 2020, the Company’s consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

On July 24, 2020, the Company closed an underwritten public offering of 6,052,631 shares of its common stock at a public offering price of $ 9.50 per share (the “Offering”).

Gross proceeds from the Offering amounted to approximately $ 57.5 million and, after deducting the underwriting discounts and commissions and expenses related to the Offering, the Company received total net proceeds of approximately $ 53.8 million.

As of December 31, 2020, the Company’s cash balance was approximately $ 71.4 million, which the Company expects will fund the Company’s operations well beyond the next twelve months.

As a result, the Company has determined that the going concern risk has been substantially mitigated.

PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Business

The Company is a critical

care immunotherapy leader commercializing its CytoSorb blood purification technology to treat deadly inflammation in critically-ill

and cardiac surgery patients around the world.

The Company is a leader in critical care immunotherapy using blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world.

The Company, through its subsidiary CytoSorbents Medical, Inc.

(formerly known as

CytoSorbents, Inc.), is engaged in the research, development and commercialization of medical devices with its blood purification

technology platform which incorporates a proprietary adsorbent, porous polymer technology.

The Company, through its wholly owned

European subsidiary, CytoSorbents Europe GmbH, conducts sales and marketing related operations for the Company’s flagship

product, CytoSorb.

In March 2016, the Company formed CytoSorbents Switzerland GmbH, a wholly-owned subsidiary of CytoSorbents Europe

This subsidiary, which began operations during the second quarter of 2016, provides marketing and direct sales services in

(formerly known as CytoSorbents, Inc.), is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology.

The Company, through its wholly owned European subsidiary, CytoSorbents Europe GmbH, conducts sales and marketing related operations for the CytoSorb device.

In March 2016, the Company formed CytoSorbents Switzerland GmbH, a wholly-owned subsidiary of CytoSorbents Europe GmbH.

This subsidiary, which began operations during the second quarter of 2016, provides marketing and direct sales services in Switzerland.

In November 2018, the Company formed CytoSorbents Poland Sp.

z.o.o., a wholly-owned subsidiary of CytoSorbents Europe

This subsidiary, which began operations during the first quarter of 2019, provides marketing and direct sales services in

In the third quarter of 2019, the Company formed CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical,

z.o.o., a wholly-owned subsidiary of CytoSorbents Europe GmbH.

This subsidiary, which began operations during the first quarter of 2019, provides marketing and direct sales services in Poland.

In the third quarter of 2019, the Company formed CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc.

which is responsible for the management of our clinical trial activities in the United Kingdom.

CytoSorb was approved

in the European Union (“EU”) in March 2011, and is currently being distributed in fifty-eight countries around the

world, as a safe and effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm”

otherwise cause massive inflammation, organ failure and death in common critical illnesses such as sepsis, burn injury, trauma,

lung injury, and pancreatitis.

In May 2018, the Company received a label extension for CytoSorb covering use of the device for

the removal of bilirubin and myoglobin which allows for the use of the device in the treatment of liver failure and trauma, respectively.

In January 2020, the Company received a label extension for CytoSorb covering the use of the device for the removal the anti-platelet

agent, ticagrelor, in cardiac patients during surgery requiring cardiopulmonary bypass.

CytoSorb is also being used during and

after cardiac surgery to remove inflammatory mediators, such as cytokines and free hemoglobin, which can lead to post-operative

complications, including multiple organ failure.

The Company’s

technology is based upon biocompatible, highly porous polymer sorbent beads that can actively remove toxic substances from blood

and other bodily fluids by pore capture and surface absorption.

The Company has numerous products under development based upon

this unique blood purification technology, which is protected by 21 issued U.S.

patents and multiple international patents, with

applications pending both in the U.S.

CytoSorb, the Company's flagship product, was approved in the European Union (“EU”) in March 2011, and is currently being marketed and distributed in sixty-seven countries around the world, as a safe and effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” that could otherwise cause massive inflammation, organ failure and death in common critical illnesses such as sepsis, burn injury, trauma, lung injury, and pancreatitis.

In May 2018, the Company received a label extension for CytoSorb covering use of the device for the removal of bilirubin and myoglobin which allows for the use of the device in the treatment of liver failure and trauma, respectively.

CytoSorb is also being used during and after cardiac surgery to remove inflammatory mediators, such as cytokines and free hemoglobin, which can lead to post-operative complications, including multiple organ failure.

In January 2020, CytoSorb received European Union CE Mark label expansion to include the removal of ticagrelor during cardiopulmonary bypass in patients undergoing cardiothoracic surgery.

In May 2020, CytoSorb also received European Union CE Mark label expansion to include rivaroxaban removal for the same indication.

In April 2020, the Company announced that the United States Food and Drug Administration (the “FDA”) granted Emergency Use Authorization (“EUA”) of CytoSorb for use in critically-ill patients infected with COVID-19.

Under the EUA, the Company can make CytoSorb available, through commercial sales, to all hospitals in the United States for use in patients, 18 years of age or older, with confirmed COVID-19 infection who are admitted to the intensive care unit (ICU) with confirmed or imminent respiratory failure who have early acute lung injury or acute respiratory distress syndrome (ARDS), severe disease, or life-threatening illness resulting in respiratory failure, septic shock, and/or multiple organ dysfunction or failure.

The CytoSorb device has neither been cleared nor approved for the indication to treat patients with COVID-19 infection.

The EUA will be effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA.

In April 2020, the Company also announced that the FDA had granted Breakthrough Designation to CytoSorb for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery.

The Breakthrough Devices Program provides for more effective treatment of life-threatening or irreversibly debilitating disease or conditions, in this case the need to reverse the effects of ticagrelor in emergent or urgent cardiac surgery that can otherwise cause a high risk of serious or life-threatening bleeding.

Through Breakthrough Designation, the FDA intends to work with CytoSorbents to expedite the development, assessment, and regulatory review of CytoSorb for the removal of ticagrelor, while maintaining statutory standards of regulatory approval (e.g., 510(k), de novo 510(k) or premarket approval) consistent with the FDA’s mission to protect and promote public health.

The technology is based upon biocompatible, highly porous polymer sorbent beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption.

The Company has numerous products under development based upon this unique blood purification technology, which is protected by 16 issued U.S.

patents and multiple international patents, with applications pending both in the U.S.

and internationally, including HemoDefend, ContrastSorb, DrugSorb, and others.

These patents

and patent applications are directed to various compositions and methods of use related to our blood purification technologies.

The existing patents are scheduled to expire between 2020 and 2035, absent any patent term extensions.

Management believes that

any near term expiring patents will not have a significant impact on our ongoing business.

These patents and patent applications are directed to various compositions and methods of use related to our blood purification technologies and are expected to expire between 2021 and 2035, absent any patent term extensions.

Management believes that any near-term expiring patents will not have a significant impact on our ongoing business.

Stock Market Listing

On December 17, 2014

the Company’s common stock was approved for listing on The Nasdaq Capital Market (“Nasdaq”), and it began trading

on Nasdaq on December 23, 2014 under the symbol “CTSO”.

Previously, the Company’s common stock traded in the

over-the-counter-market on the OTC Bulletin Board.

On December 17, 2014 the Company’s common stock was approved for listing on The Nasdaq Capital Market (“Nasdaq”), and it began trading on Nasdaq on December 23, 2014 under the symbol “CTSO”.

Previously, the Company’s common stock traded in the over-the-counter-market on the OTC Bulletin Board.

Basis of Consolidation and Foreign Currency Translation

The consolidated financial

statements include the accounts of CytoSorbents Corporation and its wholly-owned subsidiaries, CytoSorbents Medical, Inc.

and CytoSorbents

The consolidated financial statements include the accounts of CytoSorbents Corporation and its wholly-owned subsidiaries, CytoSorbents Medical, Inc.

and CytoSorbents Europe GmbH.

In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH and CytoSorbents Poland Sp.

z.o.o., wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents

Medical, Inc.

z.o.o., wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc.

All significant intercompany transactions and balances have been eliminated in consolidation.

Translation gains and

losses resulting from the process of remeasuring into the United States of America dollar, the foreign currency financial statements

of the European subsidiary, for which the United States of America dollar is the functional currency, are included in operations.

Foreign currency transaction gain (loss) included in net loss amounted to approximately $(350,000), $(785,000) and $1,454,000 for

the years ended December 31, 2019, 2018 and 2017, respectively.

The Company translates assets and liabilities of the European subsidiary,

whose functional currency is their local currency, at the exchange rate in effect at the balance sheet date.

The Company translates

revenue and expenses at the daily average exchange rates.

The Company includes accumulated net translation adjustments in accumulated

other comprehensive income (loss) as a component of stockholder’s equity.

Translation gains and losses resulting from the process of remeasuring into the United States of America dollar, the foreign currency financial statements of the European subsidiary, for which the United States of America dollar is the functional currency, are included in operations.

Foreign currency transaction gain (loss) included in net loss amounted to approximately $ 2,607,000 , $( 350,000 ) and $( 785,000 ) for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company translates assets and liabilities of the European subsidiary, whose functional currency is their local currency, at the exchange rate in effect at the balance sheet date.

The Company translates revenue and expenses at the daily average exchange rates.

The Company includes accumulated net translation adjustments in accumulated other comprehensive income (loss) as a component of stockholder’s equity.

Cash and Cash Equivalents

The Company considers all highly liquid

instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

Grants and Accounts Receivable

Grants receivable represent amounts due

Grants receivable represent amounts due from U.S.

government agencies and are included in Grants and Accounts Receivable.

Accounts receivable

are unsecured, non-interest bearing customer obligations due under normal trade terms.

The Company sells its devices to various

hospitals and distributors.

The Company performs ongoing credit evaluations of customers’

financial condition.

reviews accounts receivable periodically to determine collectability.

Balances that are determined to be uncollectible are written

off to the allowance for doubtful accounts.

Inventories are valued

at the lower of cost or net realizable value.

Cost is determined using a first-in first-out (“FIFO”) basis.

31, 2019 and 2018, the Company’s inventory was comprised of finished goods, which amounted to $305,452 and $213,839, respectively,

work in process which amounted to $1,523,923 and $415,265, respectively and raw materials which amounted to $284,522 and $204,029,

respectively.

Devices used in clinical trials or for research and development purposes are removed from inventory and charged to

research and development expenses at the time of their use.

Property and Equipment

Accounts receivable are unsecured, non-interest bearing customer obligations due under normal trade terms.

The Company sells its devices to various hospitals and distributors.

The Company performs ongoing credit evaluations of customers’ financial condition.

Management reviews accounts receivable periodically to determine collectability.

Balances that are determined to be uncollectible are reserved for to the allowance for doubtful accounts.

Inventories are valued at the lower of cost or net realizable value.

Cost is determined using a first-in first-out (“FIFO”) basis.

At December 31, 2020 and 2019, the Company’s inventory was comprised of finished goods, which amounted to $ 1,164,635 and $ 305,452 , respectively, work in process which amounted to $ 1,222,062 and $ 1,523,923 , respectively and raw materials which amounted to $ 287,102 and $ 284,522 , respectively.

Devices used in clinical trials or for research and development purposes are removed from inventory and charged to research and development expenses at the time of their use.

Property and Equipment

are recorded at cost less accumulated depreciation.

Depreciation of property and equipment is provided for by the straight-line

method over the estimated useful lives of the related assets.

Leasehold improvements are amortized over the lesser of their economic

useful lives or the term of the related leases.

Gains and losses on depreciable assets retired or sold are recognized in the statements

of operations in the year of disposal.

Property and equipment are recorded at cost less accumulated depreciation.

Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets.

Leasehold improvements are amortized over the lesser of their economic useful lives or the term of the related leases.

Gains and losses on depreciable assets retired or sold are recognized in the statements of operations in the year of disposal.

Repairs and maintenance expenditures are expensed as incurred.

Legal costs incurred

to establish patents are capitalized.

When patents are issued, capitalized costs are amortized on the straight-line method over

the related patent term.

Legal costs incurred to establish patents are capitalized.

When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term.

In the event a patent is abandoned, the net book value of the patent is written off.

Impairment or Disposal of Long-Lived

The Company assesses

the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived assets

whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

For long-lived assets to be

held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted

cash flows and measures the impairment loss based on the difference between the carrying amount and fair value.

Impairment or Disposal of Long-Lived Assets

The Company assesses the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value.

Revenue Recognition

Product Sales:

Revenues from sales of products to both direct and distributor/strategic partner customers are recognized at the time when control

passes to the customer, in accordance with the terms of their respective contracts.

Recognition of revenue occurs as each performance

obligation is completed.

Revenues from sales of products to both direct and distributor/strategic partner customers are recognized at the time when control passes to the customer, in accordance with the terms of their respective contracts.

Recognition of revenue occurs as each performance obligation is completed.

Grant Revenue :

Revenue from grant income is based on contractual agreements.

Certain agreements provide for reimbursement

of costs, other agreements provide for reimbursement of costs and an overhead margin and certain agreements are performance based,

where revenue is earned based upon the achievement of milestones outlined in the contract.

Revenues are recognized when the associated

performance obligation is fulfilled.

Certain agreements provide for reimbursement of costs, other agreements provide for reimbursement of costs and an overhead margin and certain agreements are performance based, where revenue is earned based upon the achievement of milestones outlined in the contract.

Revenues are recognized when the associated performance obligation is fulfilled.

Costs are recorded as incurred.

Costs subject to reimbursement by these grants have been reflected

as costs of revenue.

Amounts invoiced in excess of costs actually incurred on fixed price contracts are classified as deferred revenue.

Costs subject to reimbursement by these grants have been reflected as costs of revenue.

Research and Development

All research and development

costs, payments to laboratories, research consultants and costs related to clinical trials and studies are expensed when incurred.

All research and development costs, payments to laboratories, research consultants and costs related to clinical trials and studies are expensed when incurred.

Advertising Expenses

Advertising costs are

charged to activities when incurred.

Advertising expense amounted to approximately $314,000, $212,000 and $162,000 in 2019, 2018

and 2017, respectively, and is included in selling, general, and administrative expenses on the consolidated statements of operations.

Income taxes are accounted

for under the asset and liability method prescribed by accounting standards for accounting for income taxes.

Deferred income taxes

are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities.

Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected

A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not

Under Section 382 of the Internal Revenue Code the net operating losses generated prior to the previously completed

reverse merger may be limited due to the change in ownership.

Additionally, net operating losses generated subsequent to the reverse

merger may be limited in the event of changes in ownership.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December

The Act reduces the U.S.

Advertising costs are charged to activities when incurred.

Advertising expense amounted to approximately $ 285,000 , $ 314,000 and $ 212,000 in 2020, 2019 and 2018, respectively, and is included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes.

Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities.

Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse.

A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.

Under Section 382 of the Internal Revenue Code the net operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership.

Additionally, net operating losses generated subsequent to the reverse merger may be limited in the event of changes in ownership.

The Tax Cuts and Jobs Act reduced the U.S.

federal corporate tax rate from 35 % to 21 %.

See Note 9 for the impact of the tax rate change

on deferred tax assets and liabilities.

The Company follows

the accounting standards associated with uncertain tax provisions.

The Company had no unrecognized tax benefits at December 31,

2019 or 2018.

See Note 9 for the impact of the tax rate change on deferred tax assets and liabilities.

The Company follows the accounting standards associated with uncertain tax provisions.

The Company had no unrecognized tax benefits at December 31, 2020 or 2019.

The Company files tax returns in the U.S.

federal and state jurisdictions.

The Company utilizes

the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss tax carryforwards

and Research and Development credits to an industrial company.

CytoSorbents Europe

GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp.

and CytoSorbents UK Limited files an annual corporate tax return,

a VAT return and a trade tax return in Germany, Switzerland, Poland and the United Kingdom, respectively.

The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss tax carryforwards and Research and Development credits to an industrial company.

CytoSorbents Europe GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp.

and CytoSorbents UK Limited files an annual corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland and the United Kingdom, respectively.

Use of Estimates

The preparation of

financial statements in conformity with accounting principles generally accepted in the United States of America requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets

and liabilities.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities.

Actual results could differ from these estimates.

Significant estimates in these financials are the valuation

of options granted and valuation methods used to determine the change in fair value of the down round feature related to certain

of the Company’s outstanding warrants.

The valuation of options granted is a significant estimate in these consolidated financial statements.

Concentration of Credit Risk

The Company maintains

cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation.

The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation.

Management monitors the soundness of these institutions in an effort to minimize its collection risk of these balances.

A significant portion of our revenues are

from product sales in Germany.

A significant portion of our revenues are from product sales in Germany.

Substantially all of our grant and other income are from grant agencies in the United States.

Note 3 for further information relating to the Company’s revenue.)

As of December 31,

2019, no agency, distributor/strategic partners or direct customer represented more than 10% of outstanding grants and accounts

As of December 31, 2018, two distributors/strategic partners accounted for 29 percent of the outstanding grants and

accounts receivables.

For the years ended December 31, 2019, 2018 and 2017, no agency, distributor/strategic partners or direct

customer represented more than 10% of the Company’s total revenue.

(See Note 3 for further information relating to the Company’s revenue.)

As of December 31, 2020 and 2019, no agency, distributor/strategic partners or direct customer represented more than 10 %of outstanding grants and accounts receivables.

For the years ended December 31, 2020, 2019 and 2018 no agency, distributor/strategic partners or direct customer represented more than 10 % of the Company’s total revenue.

Financial Instruments

The carrying values

of cash and cash equivalents, accounts receivable, accounts payable and other debt obligations approximate their fair values due

to their short-term nature.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term nature.

Net Loss per Common Share

Basic earnings per

share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding

during the period.

Diluted earnings per common share is computed using the treasury stock method on the basis of the weighted-average

number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period.

Dilutive potential

common shares include outstanding warrants, stock options and restricted shares.

The computation of diluted earnings per share

does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings (See

Basic earnings per share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per common share is computed using the treasury stock method on the basis of the weighted-average number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period.

Dilutive potential common shares include outstanding warrants, stock options and restricted shares.

The computation of diluted earnings per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings (See Note 12).

Stock-Based Compensation

The Company accounts

for its stock-based compensation under the recognition requirements of accounting standards for accounting for stock-based compensation

for employees and directors whereby each option granted is valued at fair market value on the date of grant.

Under these accounting

standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model.

The Company also follows

the guidance of accounting standards for accounting for equity instruments that are issued to non-employees for acquiring, or in

conjunction with selling, goods or services for equity instruments issued to consultants.

Effects of Recent Accounting Pronouncements

In February 2016, the

FASB issued ASU 2016-02, “Leases (Topic 842)”.

ASU 2016-02 outlines reporting requirements for lessees to recognize

a right-of-use asset and corresponding liability on the balance sheet for all leases covering a period of greater than 12 months.

The liability is to be measured as the present value of the future minimum lease payments, plus any initial direct costs.

payments are discounted using the rate implicit in the lease, or, if not known, the lessee’s incremental borrowing rate.

The updated guidance is effective for public entities for fiscal years beginning after December 31, 2018.

The Company adopted the

updated guidance effective January 1, 2019.

See Note 8 for details regarding the Company’s leases.

The Company accounts for its stock-based compensation under the recognition requirements of accounting standards for accounting for stock-based compensation for employees and directors whereby each option granted is valued at fair market value on the date of grant.

Under these accounting standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model.

The Company also follows the guidance of accounting standards for accounting for equity instruments that are issued to non-employees for acquiring, or in conjunction with selling, goods or services for equity instruments issued to consultants.

S hipping and Handling Costs

The cost of shipping

product to customers and distributors is typically borne by the customer or distributor.

The Company records shipping and handling

costs in cost of revenue.

Total freight costs amounted to approximately $476,000, $424,000 and $257,000 for the years ended December

31, 2019, 2018 and 2017, respectively.

On January 1, 2018,

the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all related amendments (the

“new revenue standard”) to all contracts with customers using the modified retrospective method.

The adoption of the

new revenue standard had no impact on retained earnings as of December 31, 2017 and, accordingly, no cumulative adjustment was

We do not expect the new revenue standard to have a significant impact on our net income on an ongoing basis.

The following table

disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2019:

Distributors/

The cost of shipping product to customers and distributors is typically borne by the customer or distributor.

The Company records shipping and handling costs in cost of revenue.

Total freight costs amounted to approximately $ 560,000 , $ 476,000 and $ 424,000 for the years ended December 31, 2020, 2019 and 2018, respectively.

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2020:

United States

Distributors/

Strategic Partners

Product sales:

1 unchanged sentence

All other countries

Total product revenue

Total product

Grant and other income:

1 unchanged sentence

Total revenue

The following table

disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2018:

Distributors/

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2019:

United States

Distributors/

Strategic Partners

Product sales:

1 unchanged sentence

All other countries

Total product revenue

Total product

Grant and other income:

1 unchanged sentence

Total revenue

The following table

disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2017:

Distributors/

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2018:

United States

Distributors/

Strategic Partners

Product sales:

1 unchanged sentence

All other countries

Total product revenue

Total product

Grant and other income:

1 unchanged sentence

Total revenue

The Company has two

primary revenue streams:

(1) sales of the CytoSorb device and related device accessories and (2) grant income from contracts with

various agencies of the United States government.

The Company has two primary revenue streams:

(1) sales of the CytoSorb device and related device accessories and (2) grant income from contracts with various agencies of the United States government.

Both of these revenue streams are within the scope of this accounting pronouncement.

1 unchanged sentence

CytoSorb Sales

The Company sells its

CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners.

sales of the device are outside the United States, as CytoSorb is not yet approved in the United States.

Direct sales are fulfilled

from the Company’s office in Berlin, Germany.

Direct sales relate to sales to hospitals located in Germany, Switzerland,

Austria, Belgium, Luxembourg, Poland, the Netherlands, Sweden, Denmark and Norway.

There are no formal sales contracts with any

direct customers relating to product price or minimum purchase requirements.

However, there are agreements in place with certain

direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels.

The Company sells its CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners.

The majority of sales of the device are outside the United States, as CytoSorb is not yet approved for commercial sale in the United States.

However, in April 2020, the Company was granted Emergency Use Authorization (“EUA”) of CytoSorb for use in critically-ill patients infected with COVID-19 by the United States Food and Drug Administration (the “FDA”).

Direct sales outside the United States relate to sales to hospitals located in Germany, Switzerland, Austria, Belgium, Luxembourg, Poland, the Netherlands, Sweden, Denmark and Norway.

Direct sales are fulfilled from the Company’s office in Berlin, Germany.

There are no formal sales contracts with any direct customers relating to product price or minimum purchase requirements.

However, there are agreements in place with certain direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels.

The Company records the value of these items earned as a reduction of revenue.

These customers submit purchase orders and the order

is fulfilled and shipped directly to the customer.

Prices to all direct customers are based on a standard price list based on the

packaged quantity (6 packs vs 12 packs).

Distributor and strategic

partner sales make up the remaining product sales.

These customers submit purchase orders and the order is fulfilled and shipped directly to the customer.

Prices to all direct customers are based on a standard price list based on the packaged quantity (6 packs vs 12 packs).

Distributor and strategic partner sales make up the remaining product sales.

These distributors are located in various countries throughout the world.

Company has a formal written contract with each distributor/strategic partner.

These contracts have terms ranging from 1-5 years

in length, with three years being the typical term.

In addition, certain distributors are eligible for volume discount pricing

if their unit sales are in excess of the base amount in the contract.

Each distributor’s/strategic

partner’s contract has minimum annual purchase requirements in order to maintain exclusivity in their respective territories.

There is no additional

consideration or monetary penalty that would be required to be paid to CytoSorbents if a distributor does not meet the minimum

purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive

rights in the territory if such commitments are not met.

The Company has a formal written contract with each distributor/strategic partner.

These contracts have terms ranging from 1 - 5 years in length, with three years being the typical term.

In addition, certain distributors are eligible for volume discount pricing if their unit sales are in excess of the base amount in the contract.

Most distributor’s/strategic partner’s contracts have minimum annual purchase requirements in order to maintain exclusivity in their respective territories.

There is no additional consideration or monetary penalty that would be required to be paid to CytoSorbents if a distributor does not meet the minimum purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met.

Government Grants

The Company has been

the recipient of various grant contracts from various agencies of the United States government, primarily the Department of Defense,

to perform various research and development activities.

The Company has been the recipient of various grant contracts from various agencies of the United States government, primarily the Department of Defense, to perform various research and development activities.

These contacts fall into one of the following categories:

Fixed price –

the Company invoices the contract amount in equal installments over the term

of the contract without regard to the timing of the costs incurred related to this contract.

Cost reimbursement –

the Company submits monthly invoices during the term of the contract

for the amount of direct costs incurred during that month plus an agreed percentage that relates to allowable overhead and general

and administrative expenses.

Fixed price – the Company invoices the contract amount in equal installments over the term of the contract without regard to the timing of the costs incurred related to this contract.

If billings on fixed price contracts exceed the costs incurred, revenue will be deferred to the extent of the excess billings.

Cost reimbursement – the Company submits monthly invoices during the term of the contract for the amount of direct costs incurred during that month plus an agreed percentage that relates to allowable overhead and general and administrative expenses.

Cumulative amounts invoiced may not exceed the maximum amount of funding stipulated in the contract.

Cost plus –

this type of contract is similar to a cost reimbursement contract but this type

also allows for the Company to additionally invoice for a fee amount that is included in the contract.

Performance based –

the Company submits invoices only upon the achievement of the milestones

listed in the contract.

Cost plus – this type of contract is similar to a cost reimbursement contract but this type also allows for the Company to additionally invoice for a fee amount that is included in the contract.

Performance based - the Company submits invoices only upon the achievement of the milestones listed in the contract.

The amount to be invoiced for each milestone is documented in the contract.

In summary, the contracts

the Company has with customers are the distributor/strategic partner contracts related to CytoSorb product sales, agreements with

direct customers related to free-of-charge product and credit rebates based upon achieving minimum purchase levels, and contracts

with various government agencies related to the Company’s grants.

The Company does not currently incur any outside/third

party incremental costs to obtain any of these contracts.

The Company does incur internal costs, primarily salary related costs,

to obtain the contracts related to the grants.

Company employees spend time reviewing the program requirements and developing the

budget and related proposal to submit to the grantor agency.

There may additionally be travel expenditures involved with meeting

with government agency officials during the negotiation of the contract.

In summary, the contracts the Company has with customers are the distributor/strategic partner contracts related to CytoSorb product sales, agreements with direct customers related to free-of-charge product and credit rebates based upon achieving minimum purchase levels, and contracts with various government agencies related to the Company’s grants.

The Company does not currently incur any outside/third party incremental costs to obtain any of these contracts.

The Company does incur internal costs, primarily salary related costs, to obtain the contracts related to the grants.

Company employees spend time reviewing the program requirements and developing the budget and related proposal to submit to the grantor agency.

There may additionally be travel expenditures involved with meeting with government agency officials during the negotiation of the contract.

These internal costs are expensed as incurred.

The following table provides information

about receivables and contract liabilities from contracts with customers:

The following table provides information about receivables and contract liabilities from contracts with customers:

December 31, 2020

December 31, 2019

Receivables, which are included in grants and accounts receivable

Contract liabilities, which are included in accrued accrued expenses and other current liabilities

Contract liabilities

represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements

during the years ended December 31, 2019 and December 31, 2018.

Contract receivables, which are included in accounts receivable

Contract liabilities, which are included in expenses and other current liabilities

Contract receivables represent balances due from sales to distributors and amounts invoiced on grant contracts.

Contract liabilities represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements and deferred grant revenue related to the billing on fixed price contracts in excess of costs incurred as of December 31, 2020 and 2019.

PROPERTY AND EQUIPMENT, NET:

Property and equipment - net, consists of

the following:

Property and equipment - net, consists of the following:

Depreciation/

5 unchanged sentences

Property and Equipment, Net

Depreciation expense

for the years ended December 31, 2019, 2018 and 2017 amounted to $495,728, $329,469 and $177,776 respectively.

Depreciation expense for the years ended December 31, 2020, 2019 and 2018 amounted to $ 553,946 , $ 495,728 and $ 329,469 respectively.

OTHER ASSETS:

Other assets consist of the following:

Less accumulated amortization

Patent applications pending

Patents issued

Less accumulated amortization of patents issued

Security deposits

Amortization expense

amounted to $85,804, $61,082 and $40,495 for the years ended December 31, 2019, 2018 and 2017, respectively.

Amortization expense

for the next five years will be approximately $94,300 for the year ended December 31, 2020;

approximately $92,200 for the year

ended December 31, 2021;

Amortization expense amounted to $ 106,842 , $ 85,804 and $ 61,082 for the years ended December 31, 2020, 2019 and 2018, respectively.

Amortization expense for the next five years will be approximately $ 116,200 for the year ended December 31, 2021;

approximately $ 113,000 for the year ended December 31, 2022;

approximately $ 109,600 for the year ended December 31, 2023;

approximately $ 109,600 for the year ended December 31, 2024;

and approximately $ 109,600 for the year ended December 31, 2025.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities

consist of the following:

Accrued expenses and other current liabilities consist of the following:

Accrued salaries and commissions

Clinical studies

Accrued accounts payable

Accrued royalties

Sales, payroll and income taxes payable

Clinical studies

Deferred revenue

Accrued accounts payable

Professional fees

Travel and entertainment

Customer rebates

Board of Director fees

Travel and entertainment

LONG-TERM DEBT:

On June 30, 2016,

the Company and its wholly-owned subsidiary, CytoSorbents Medical, Inc.

(together, the “Borrower”), entered into a

Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, (the “Bank”), pursuant to which

the Company borrowed $10 million in two equal tranches of $5 million (the “Original Term Loans”).

On March 29, 2018

(the “Closing Date”), the Original Term Loans were refinanced with the Bank pursuant to an Amended and Restated Loan

and Security Agreement by and between the Bank and the Borrower (the “Amended and Restated Loan and Security Agreement”),

under which the Bank agreed to loan the Borrower up to an aggregate of $15 million to be disbursed in two tranches (1) one tranche

of $10 million (the “Term A Loan”), which was funded on the Closing Date and used to refinance the Original Term Loans,

and (2) a second tranche of $5 million which may be disbursed at the Borrower’s sole request prior to March 31, 2019 provided

certain conditions are met (the “Term B Loan”

and together with the Term A Loan, the “Term Loans”).

July 31, 2019 (the “Settlement Date”), the Borrower entered into the First Amendment to the Amended and Restated Loan

and Security Agreement (the “First Amendment”) with the Bank, which amended certain provisions of the Amended and Restated

Loan and Security Agreement and the 2018 Success Fee Letter (the “2018 Letter”).

In connection with the execution of

the First Amendment, the draw period for the Term B Loan was extended to August 15, 2019 and the Company drew down the full $5.0

million Term B Loan on the Settlement Date, bringing the total outstanding debt to $15,000,000 at July 31, 2019.

The proceeds of

Term Loans were used for general business requirements in accordance with the Amended and Restated Loan and Security Agreement.

The outstanding balances on Term Loans bear interest at the prime rate reported in the Wall Street Journal plus 3.66%.

was 8.41% at December 31, 2019.

On the Closing Date,

the Company was required to pay a non-refundable closing fee of $25,000, expenses incurred by the Bank related to the Amended and

Restated Loan and Security Agreement of $11,000 and a portion of the final fee for the period the Original Term Loans were outstanding

In addition, the Company incurred legal expenses related to the Amended and Restated Loan and Security Agreement of

$20,050 and $4,212 related to the First Amendment.

As of the Settlement Date, the total unamortized loan costs related to the Term

Loans amounted to $90,925.

These costs have been presented as a direct deduction from the proceeds of the loan on the consolidated

balance sheet in accordance with the provisions of ASC 850.

These costs are being amortized over the loan period as a charge to

interest expense.

For the years ended December 31, 2019, 2018 and 2017, the Company recorded interest expense amounting to $33,175,

$31,946, and $29,971, respectively related to these costs.

After accounting for the various costs outlined above, the effective

interest rate on the Term A Loan was 9.1% as of March 29, 2018.

Under the terms of the First Amendment, commencing on the first

calendar day of the calendar month after Term B Loan was made, the Company is required to make monthly payments of interest-only

through April 2020.

The interest-only period will be further extended through November 2020 provided the Borrower has been compliant

with its obligations under the financial covenant revenue test set forth in the Amended and Restated Loan and Security Agreement

for all months from the month immediately after the month in which the Term B Loan is funded through March 2020.

Commencing on

May 1, 2020, if the Company does not comply with financial covenant revenue test, the Company shall make equal monthly payments

of principal of $625,000, together with accrued and unpaid interest.

Commencing on November 1, 2020, if the Company complies with

the financial covenant revenue test, the Company shall make equal monthly payments of principal of $833,333, together with accrued

and unpaid interest.

In either event, all unpaid principal and accrued and unpaid interest shall be due and payable in full on

April 1, 2022.

In addition, the Amended and Restated Loan and Security Agreement requires the Company to pay a non-refundable final

fee equal to 2.5% of the principal amount of each Term Loan funded upon the earlier of the (i) April 1, 2022 maturity date or (ii)

termination of the Term Loan via acceleration or prepayment.

This final fee is being accrued and charged to interest expense

over the term of the loan.

For the years ended December 31, 2019, 2018 and 2017, the Company recorded interest expense of $82,031,

$65,104 and 52,083, respectively, related to the final fee.

The Term Loans are evidenced by a secured promissory notes issued to

the Bank by the Company.

If the Company elects to prepay the Term Loans pursuant to the terms of the Amended and Restated Loan

and Security Agreement, it will owe a prepayment fee to the Bank, as follows:

(1) for a prepayment made on or after the funding

date of a Term Loan through and including the first anniversary of such funding date, an amount equal to 2.0% of the principal

amount of such Term Loan prepaid;

(2) for a prepayment made after the first anniversary of the funding date of a Term Loan through

and including the second anniversary of such funding date, an amount equal to 1.5% of the principal amount of such Term Loan prepaid;

and (3) for a prepayment made after the second anniversary of the funding date of a Term Loan through April 1, 2022, an amount

equal to 1.0% of the principal amount of such Term Loan prepaid.

Events of default which

may cause repayment of the Term Loans to be accelerated include, among other customary events of default, (1) non-payment

of any obligation when due, (2) the failure to perform any obligation required under the Amended and Restated Loan and Security Agreement

and to cure such default within a reasonable time frame, (3) the occurrence of a Material Adverse Event (as defined in the Amended

and Restated Loan and Security Agreement), (4) the attachment or seizure of a material portion of the Borrower’s assets if

such attachment or seizure is not released, discharged or rescinded within 10 days, and (5) if the Borrower becomes insolvent or

starts an insolvency proceeding or if an insolvency proceeding is brought by a third party against the Borrower and such proceeding

is not dismissed or stayed within 30 days.

The Amended and Restated Loan and Security Agreement includes customary loan conditions,

Borrower representations and warranties, Borrower affirmative covenants and Borrower negative covenants for secured transactions

of this type.

The Company is in substantial compliance with these covenants.

The Company’s

and CytoSorbents Medical, Inc.’s obligations under the Amended and Restated Loan and Security Agreement are joint and severable

and are secured by a first priority security interest in favor of the Bank with respect to the Company’s Shares (as defined

in the Amended and Restated Loan and Security Agreement) and the Borrower’s Collateral (as defined in the Amended and Restated

Loan and Security Agreement, which definition excludes the Borrower’s intellectual property and other customary exceptions).

2016 Success Fee Letter:

Pursuant to that certain

Success Fee Letter (the “2016 Letter”) entered into between the Borrower and the Bank in connection with the Original

Term Loans, the Borrower agreed to pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Original

Term Loans (the “2016 Letter Success Fee”) upon the first occurrence of any of the following events:

(a) a sale or

other disposition by the Borrower of all or substantially all of its assets;

(b) a merger or consolidation of the Borrower into

or with another person or entity, where the holders of the Borrower’s outstanding voting equity securities as of immediately

prior to such merger or consolidation hold less than a majority of the issued and outstanding voting equity securities of the successor

or surviving person or entity as of immediately following the consummation of such merger or consolidation;

a series of related transactions in which any “person”

or “group”

(within the meaning of Section 13(d)

and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes the “beneficial

(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a sufficient number of shares of all

classes of stock then outstanding of the Borrower ordinarily entitled to vote in the election of directors, empowering such “person”

or “group”

to elect a majority of the Board of Directors of the Borrower, who did not have such power before such transaction;

or (d) the closing price per share for the Company’s common stock on Nasdaq being $8.00 (after giving effect to any stock

splits or consolidations effected after the date thereof) or more for five successive business days.

On May 18, 2018, the 2016

Letter Success Fee became due to the Bank as result of an occurrence of the event described in clause (d) above.

The Company elected

to satisfy the 2016 Letter Success Fee by issuing shares of its common stock, which was permitted under the terms of the 2016 Letter.

On May 23, 2018, the Company issued 68,791 shares of its common stock in full satisfaction of the 2016 Letter Success Fee, and

the obligations of the Borrower under the 2016 Letter.

The 2016 Letter Success Fee was valued at $637,000 and was charged to interest

On June 30, 2016, the Company and its wholly-owned subsidiary, CytoSorbents Medical, Inc.

(together, the “Borrower”), entered into a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, (the “Bank”), pursuant to which the Company borrowed $ 10 million in two equal tranches of $ 5 million (the “Original Term Loans”).

On March 29, 2018, the Original Term Loans were refinanced with the Bank pursuant to an Amended and Restated Loan and Security Agreement by and between the Bank and the Borrower (the “Amended and Restated Loan and Security Agreement”), under which the Bank agreed to loan the Borrower up to an aggregate of $ 15 million to be disbursed in two tranches (1) one tranche of $ 10 million (the “Term A Loan”), which was funded on the Closing Date and used to refinance the Original Term Loans, and (2) a second tranche of $ 5 million which may be disbursed at the Borrower’s sole request prior to March 31, 2019 provided certain conditions are met (the “Term B Loan” and together with the Term A Loan, the “Term Loans”).

On July 31, 2019, the Borrower entered into the First Amendment to the Amended and Restated Loan and Security Agreement (the "First Amendment") with the Bank, which amended certain provisions of the Amended and Restated Loan and Security Agreement and the 2018 Success Fee Letter (the "2018 Letter").

In connection with the execution of the First Amendment, the draw period for the Term B Loan was extended to August 15, 2019 and the Company drew down the full $ 5.0 million Term B Loan on the Settlement Date, bringing the total outstanding debt to $ 15 million at July 31, 2019.

The proceeds of Term Loans were used for general business requirements in accordance with the Amended and Restated Loan and Security Agreement.

On December 4, 2020 (the “Closing Date”), the Company closed on the Third Amendment (the “Third Amendment”) of its Amended Loan and Security Agreement with Bridge Bank.

Under the terms of the Amendment, the Company repaid the outstanding principal balance of its existing $ 15 million term loans and simultaneously received a commitment from Bridge Bank to provide a new term loan of $ 15 million (the “New Term Loan”), if needed.

Under the terms of the Third Amendment, the Company may, at its sole discretion, draw down the New Term Loan at any time over the next twelve months.

The New Term Loan, if drawn, shall bear interest at the Index Rate (defined in the Amendment as the greater of 3.25% or the Prime Rate as published by the Wall Street Journal on the last business date of the month the immediately preceding the month in which the interest will accrue) plus 1.25 %.

In addition, the Company would be required to make payments of interest-only commencing on the first day of the month after the New Term Loan was made until January 2023.

The interest-only period may be further extended through July 2023 if the Company maintains compliance certain conditions as outlined in the Amendment.

Following the interest-only period, the Company will be required to make equal monthly payments of principal and interest until maturity of the New Term Loan.

The maturity date of the New Term Loan is December 1, 2024.

On the Closing Date, the Company was required to pay a non-refundable closing fee of $ 75,000 .

As of the Closing Date, the total unamortized loan costs related to the Term Loans amounted to approximately $ 45,000 .

These costs were written off on the Closing Date as a charge to interest expense.

For the years ended December 31, 2020, 2019, and 2018, the Company recorded interest expense amounting to $ 76,718 , $ 33,175 , and $ 31,946 , respectively related to these costs.

In addition, the Amended and Restated Loan and Security Agreement requires the Company to pay a non-refundable final fee equal to 2.5 % of the principal amount of each Term Loan funded upon the earlier of the (i) April 1, 2022 maturity date or (ii) termination of the Term Loan via acceleration or prepayment.

On the Closing Date, the Company paid a final fee of $ 375,000 .

For the years ended December 31, 2020, 2019 and 2018 the Company recorded interest expense of $ 246,095 , $ 82,031 and $ 65,104 , respectively, related to accrual and payment of the final fee.

The Company’s and CytoSorbents Medical, Inc.’s obligations under the Amended and Restated Loan and Security Agreement are joint and severable and are secured by a first priority security interest in favor of the Bank with respect to the Company’s Shares (as defined in the Amended and Restated Loan and Security Agreement) and the Borrower’s Collateral (as defined in the Amended and Restated Loan and Security Agreement, which definition excludes the Borrower’s intellectual property and other customary exceptions).

2018 Success Fee Letter:

Pursuant to the amended

2018 Letter, the Borrower shall pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Term B Loan

(as defined in the Restated Loan and Security Agreement) (the “Success Fee”) upon the first occurrence of any of the

following events:

Pursuant to the amended 2018 Letter, the Borrower shall pay to the Bank a success fee in the amount equal to 6.37 % of the funded amount of the Term B Loan (as defined in the Restated Loan and Security Agreement) (the "Success Fee”) upon the first occurrence of any of the following events:

(a) a sale or other disposition by the Borrower of all or substantially all of its assets;

(b) a merger or consolidation

of the Borrower into or with another person or entity, where the holders of the Borrower’s outstanding voting equity securities

as of immediately prior to such merger or consolidation hold less than a majority of the issued and outstanding voting equity securities

of the successor or surviving person or entity as of immediately following the consummation of such merger or consolidation;

a transaction or a series of related transactions in which any “person”

or “group”

(within the meaning

of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes the “beneficial

(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a sufficient number of shares of all

classes of stock then outstanding of the Borrower ordinarily entitled to vote in the election of directors, empowering such “person”

or “group”

to elect a majority of the Board of Directors of the Borrower, who did not have such power before such transaction;

or (d) the closing price per share for the Company’s common stock on the Nasdaq Capital Market being the greater of (i) 70%

or more over $7.05, the closing price of the Company’s common stock on March 29, 2018 (after giving effect to any stock splits

or consolidations effected after the date thereof) for five successive business days, or (ii) at least 26.13% more than the average

price of Company’s common stock for the 365 day period ending on the date of the funding of the Term B Loan.

Long-term debt consists

of the following at December 31, 2019 and 2018 as follows:

(b) a merger or consolidation of the Borrower into or with another person or entity, where the holders of the Borrower’s outstanding voting equity securities as of immediately prior to such merger or consolidation hold less than a majority of the issued and outstanding voting equity securities of the successor or surviving person or entity as of immediately following the consummation of such merger or consolidation;

(c) a transaction or a series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of the Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a

majority of the Board of Directors of the Borrower, who did not have such power before such transaction;

or (d) the closing price per share for the Company’s common stock on the Nasdaq Capital Market being the greater of (i) 70 % or more over $ 7.05 , the closing price of the Company’s common stock on March 29, 2018 (after giving effect to any stock splits or consolidations effected after the date thereof) for five successive business days, or (ii) at least 26.13 % more than the average price of Company’s common stock for the 365 day period ending on the date of the funding of the Term B Loan.

This obligation shall terminate on the fifth anniversary of the funding of the Term B Loan and shall survive the termination of the loan agreement and the prepayment of the Term B Loan.

Long-term debt consists of the following at December 31, 2020 and 2019 as follows:

Principal amount

3 unchanged sentences

Long-term debt net of current maturities

Principal payments of long-term debt are

due as follows at December 31, 2019:

Effective January 1, 2019, the Company

adopted the provisions of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).

The provisions of this ASU

require the Company to record a right-of-use asset and related lease liability related to their leases.

Accordingly, the Company

has adjusted its December 31, 2018 consolidated balance sheet to properly reflect the provisions of this ASU as discussed below.

Description of Leases:

The Company leases its operating facilities

in both the United States and Germany under operating lease agreements.

In the United States, in January 2019, the Company entered

into an Eighteenth Amendment to Lease with the landlord which became effective February 1, 2019.

This amendment expands the Company’s

space to 19,920 square feet and extends the term of the lease to May 31, 2020.

The Company’s base rent is approximately $32,000

Payroll Protection Program:

On April 13, 2020, the Company received approximately $ 1,411,000 in loan proceeds from the Payroll Protection Program (the “PPP”) administered by the Small Business Administration (the “SBA”) of the United States government.

This program was established under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

On April 29, 2020, following a reassessment of the Company’s financial and operating position, including cash on hand and access to public capital markets, the Company repaid the PPP loan.

Effective January 1, 2019, the Company adopted the provisions of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842).

The provisions of this ASU require the Company to record a right-of-use asset and related lease liability related to their leases.

The Company leases its operating facilities in both the United States and Germany under operating lease agreements.

In the United States, in May 2020, the Company entered into a Nineteenth Amendment to Lease with the landlord which became effective May 1, 2020.

This amendment expands the Company's space to 20,821 square feet and extends the term of the lease to May 31, 2021.

The Company's base rent is approximately $ 34,000 per month.

In addition, the Company is obligated to pay monthly operating expenses of approximately $ 30,000 per month.

The amendment

also includes a one year renewal option.

The base rent for the renewal term will increase by the greater of five percent or the

increase in the Consumer Price Index.

There were no lease incentives and no initial direct costs were incurred related to this

lease amendment.

In Germany, the Company leases its operating

facility under two operating lease agreements.

These leases require combined base rent payments amounting to approximately $9,000

The amendment also includes a one year renewal option.

The base rent for the renewal term will increase by the greater of five percent or the increase in the Consumer Price Index.

There were no lease incentives and no initial direct costs were incurred related to this lease amendment.

In Germany, the Company leases its operating facility under two operating lease agreements.

These leases require combined base rent payments amounting to approximately $ 9,000 per month.

The initial lease term of both leases ends August 31, 2021.

In addition, the Company is obligated to monthly operating

expenses of approximately $2,900 per month.

In addition, the Company is obligated to monthly operating expenses of approximately $ 2,900 per month.

Both leases have a five year option to renew that would extend the lease term to August 31, 2026.

There are no provisions in the leases to increase the base rent during the renewal period.

There were no lease incentives

and no initial direct costs were incurred related to these leases.

Initial Measurement of Right-Of-Use Asset

and Lease Liability:

Under the provisions of this ASU, the Company

has adjusted its consolidated balance sheet at December 31, 2018 to reflect the value of the right-of-use asset and related lease

There were no lease incentives and no initial direct costs were incurred related to these leases.

Right-Of-Use Asset and Lease Liability:

The Company's consolidated balance sheets reflect the value of the right-of-use asset and related lease liability.

This value was calculated based on the present value of the remaining base rent lease payments.

The remaining lease

payments include the renewal periods for both facilities as the Company has determined that it is probable that the renewal options

will be exercised under each of the lease agreements.

The discount rate used was the Company’s incremental borrowing rate,

which is 9.16%, as the Company could not determine the rate implicit in the lease.

As a result, the value of the right-of-asset

and related lease liability is as follows:

Year Ended December 31,

The remaining lease payments include the renewal periods for both facilities as the Company has determined that it is probable that the renewal options will be exercised under each of the lease agreements.

The discount rate used was the Company's incremental borrowing rate, which is 9.16 %, as the Company could not determine the rate implicit in the lease.

As a result, the value of the right-of-use asset and related lease liability is as follows:

Right-of-use asset

2 unchanged sentences

Lease liability, net of current portion

The maturities of the lease liabilities are as follows as of

December 31, 2019:

For the years ended December 31, 2019, 2018 and 2017, operating

cash flows paid in connection with operating leases amounted to approximately $906,000, $805,000 and $676,000, respectively.

As of December 31, 2019 and 2018, the weighted average remaining

lease term was 4.0 years and 4.5 years, respectively.

The maturities of the lease liabilities are as follows as of December 31, 2020:

For the years ended December 31, 2020, 2019 and 2018, operating cash flows paid in connection with operating leases amounted to approximately $ 937,000 , $ 906,000 and $ 805,000 , respectively.

As of December 31, 2020 and 2019 the weighted average remaining lease term was 4.0 years, respectively.

INCOME TAXES:

The Company accounts

for income taxes under FASB ASC 740 ("ASC 740").

Deferred income tax assets and liabilities are determined based upon

differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates

and laws that will be in effect when the differences are expected to reverse.

The Company's consolidated

loss before income taxes for the years ended December 31, 2019, 2018 and 2017 is as follows:

The Company accounts for income taxes under FASB ASC 740 ("ASC 740").

Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company’s consolidated loss before income taxes for the years ended December 31, 2020, 2019 and 2018 is as follows:

Year Ended December 31,

5 unchanged sentences

( 3,725,061 )

The benefit from income

taxes consists of the following:

( 8,964,262 )

( 20,358,090 )

( 17,830,725 )

The benefit from income taxes consists of the following:

Year Ended December 31,

1 unchanged sentence

Foreign tax provision

As of December 31,

2019, the Company had federal net operating loss ("NOL") carry forwards of approximately $61.4 million, state NOL carry

forwards of approximately $10.0 million, and foreign NOL carry forwards of approximately $24.1 million, which may be available to

offset future taxable income, if any.

The federal net operating loss carryforwards of $41.4 million, if not utilized, will expire

between 2021 and 2037.

The federal net operating loss carryforwards of $20.0 million generated since 2018 are subject to an 80%

limitation on taxable income, do not expire and will carry forward indefinitely.

The state net operating loss carryforwards of

$10.0 million, if not utilized, will begin to expire in 2039.

As of December 31, 2019, the Company had Federal and state research

and development tax credit carryforwards of approximately $1,720,000 and $142,000, respectively, available to reduce future tax

liabilities, which will begin to expire at various dates starting in 2022.

The NOL carry forwards

are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

The NOLs may become subject

to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a

three-year period in excess of 50%, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as well

as similar state tax provisions.

In addition to the new provisions enacted under the Tax Cuts and Jobs Act, this could limit the

amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities.

The amount of the annual

limitation, if any, will generally be determined based on the value of the Company immediately prior to the ownership change.

ownership changes may further affect the limitation in future years.

On December 22, 2017,

the United States enacted the Tax Cuts and Jobs Act ("Tax Reform Legislation"), which made significant changes to U.S.

As of December 31, 2020, the Company had federal net operating loss ("NOL") carry forwards of approximately $ 72.8 million, state NOL carry forwards of approximately $ 5.0 million, and foreign NOL carry forwards of approximately $ 22.2 million, which may be available to offset future taxable income, if any.

The federal NOL carryforwards of $ 47.8 million, if not utilized, will expire between 2021 and 2037.

The federal NOL carryforwards of $ 25.0 million generated since 2018 are subject to an 80% limitation on taxable income , do not expire and will carry forward indefinitely.

The state NOL carryforwards of $ 5.0 million, if not utilized, will begin to expire in 2039.

As of December 31, 2020, the Company had Federal and state research and development tax credit carryforwards of approximately $ 2.2 million and $ 151,000 , respectively, available to reduce future tax liabilities, which will begin to expire at various dates starting in 2022.

The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

The NOLs may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions.

In addition to the new provisions enacted under the Tax Cuts and Jobs Act, this could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities.

The amount of the annual limitation, if any, will generally be determined based on the value of the Company immediately prior to the ownership change.

Subsequent ownership changes may further affect the limitation in future years.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("Tax Reform Legislation"), which made significant changes to U.S.

federal income tax law.

The Company expects that certain aspects of the Tax Reform Legislation will positively impact the Company’s

future after-tax earnings in the U.S., primarily due to the lower federal statutory tax rate.

Set forth below is a discussion of

certain provisions of the Tax Reform Legislation and our preliminary assessment of the effect of such provisions on the Company’s

results of operations, cash flows and consolidated financial statements.

Beginning January 1,

2018, the Company’s U.S.

The Company expected that certain aspects of the Tax Reform Legislation will positively impact the Company’s future after-tax earnings in the U.S., primarily due to the lower federal statutory tax rate.

Set forth below is a discussion of certain provisions of the Tax Reform Legislation and our preliminary assessment of the effect of such provisions on the Company’s results of operations, cash flows and consolidated financial statements.

Beginning January 1, 2018, the Company’s U.S.

income, if any, is taxed at a 21 percent federal corporate rate.

Further, the Company is required

to recognize the effect of this rate change on our deferred tax assets and liabilities, and deferred tax asset valuation allowances

in the period the tax rate change is enacted.

The Company does not expect any material non-cash impact from this rate change, with

adjustments to deferred tax balances offset by adjustments to deferred tax valuation allowances.

Further, the Tax Reform

Legislation provides for a one-time “deemed repatriation”

of accumulated foreign earnings for the year ended December

Further, the Company is required to recognize the effect of this rate change on our deferred tax assets and liabilities, and deferred tax asset valuation allowances in the period the tax rate change is enacted.

The Company does not expect any material non-cash impact from this rate change, with adjustments to deferred tax balances offset by adjustments to deferred tax valuation allowances.

Further, the Tax Reform Legislation provides for a one-time “deemed repatriation” of accumulated foreign earnings for the year ended December 31, 2017.

The Company did not pay U.S.

federal cash taxes on the deemed repatriation due to an accumulated deficit in foreign earnings

for tax purposes.

federal cash taxes on the deemed repatriation due to an accumulated deficit in foreign earnings for tax purposes.

The Company does not expect that our future foreign earnings will be subject to U.S.

federal income tax.

The Global Intangible

Low-Taxed Income ("GILTI") provisions of the Tax Reform Act, enacted on December 22, 2017, require the Company to include

income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible

An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject

to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes.

The Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Reform Act, enacted on December 22, 2017, require the Company to include in its U.S.

income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes.

The Company has elected to account for the tax effects of this provision in the period that is subject to such tax.

concluded it was not subject to GILTI in 2019 and as such there was no impact from GILTI included in its 2019 provision.

does not expect to be subject to GILTI.

However, in accordance with FASB guidance, the Company’s policy will be to

recognize GILTI in the period it arises and it will not recognize a deferred charge with regard to GILTI.

In addition, the Tax

Reform Legislation provides for 100 percent bonus depreciation on tangible property expenditures through 2022.

The bonus depreciation

percentage is phased down from 100 percent beginning in 2023 through 2026.

We do not expect this to have a material impact to the

Sale of Net Operating Losses

The Company may be

eligible, from time to time, to receive cash from the sale of its New Jersey Net Operating Losses and R&D tax credits under

the State of New Jersey Technology Business Tax Certificate Transfer Program.

The Company expects

to receive a net cash amount of $1,092,446 from the approved sale of the 2018 state NOL and research and development credits in

the first quarter of 2020.

The principal components

of the Company's deferred tax assets and liabilities are as follows:

The Company concluded it was not subject to GILTI in 2019 and as such there was no impact from GILTI included in its 2019 provision.

The Company does not expect to be subject to GILTI.

However, in accordance with FASB guidance, the Company’s policy will be to recognize GILTI in the period it arises and it will not recognize a deferred charge with regard to GILTI.

In addition, the Tax Reform Legislation provides for 100 percent bonus depreciation on tangible property expenditures through 2022.

The bonus depreciation percentage is phased down from 100 percent beginning in 2023 through 2026.

We do not expect this to have a material impact to the Company.

Sale of Net Operating Losses (NOLs)

The Company may be eligible, from time to time, to receive cash from the sale of its New Jersey Net Operating Losses and R&D tax credits under the State of New Jersey Technology Business Tax Certificate Transfer Program.

The Company will receive a net cash amount of approximately $ 1,127,000 from the approved sale of the 2019 state NOL and research and development credits in the first quarter of 2021.

The principal components of the Company’s deferred tax assets and liabilities are as follows:

Year Ended December 31,

Current and long term deferred tax assets:

Deferred tax assets:

Net operating loss carry forward

10 unchanged sentences

Net deferred tax assets

In assessing the realization

of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets

will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during

the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax

liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this assessment, management

has established a full valuation allowance against all of the deferred tax assets for each period because it is more likely than

not that all of the deferred tax assets will not be realized.

The increases (decreases) in valuation allowance

for the years ended December 31, 2019, 2018 and 2017 were $4,623,930, $4,806,456 and $(3,004,712) respectively.

A reconciliation of income tax (expense)

benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this assessment, management has established a full valuation allowance against all of the deferred tax assets for each period because it is more likely than not that all of the deferred tax assets will not be realized.

The increases in valuation allowance for the years ended December 31, 2020, 2019 and 2018 were $ 1,936,733 , $ 4,623,931 and 4,806,456 , respectively.

A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

Year Ended December 31,

7 unchanged sentences

COMMITMENTS AND CONTINGENCIES:

Customs Examination

In October 2020, the Company received a notice from the German Customs Authorities that they would be conducting an audit of the Company’s import transactions for the years 2018 through 2020 in order to determine if any import taxes would be due.

The audit commenced in early December 2020.

The primary import activity of the Company is the importation of CytoSorb devices from the United States.

The German Customs Authorities are challenging the Harmonized Code that the Company utilizes to import the CytoSorb devices into Germany.

The code that has been utilized by the Company has zero import taxes associated with it.

The German Customs Authorities have indicated that the Company’s device might be better classified under a different code which has a 1.7 % tax attached to it.

As part of the audit process, the Company has provided the German Customs Authorities with extensive information about the CytoSorb device, including data regarding the uses of the device, as well as the instructions for use.

In addition, employees of the Company gave the auditors a technical presentation of the scientific properties of the device, focusing on it as an adsorber, as opposed to a filter.

The German Customs Authority’s technical staff is currently reviewing this information.

The audit process is on-going and the authorities have indicated it is expected to be completed by approximately March 31, 2021.

The Company’s maximum potential exposure arising to the audit is approximately $ 732,000 .

Based on a thorough review of the facts, management believes that it is not probable that this contingency is likely to occur.

Accordingly, no expense or related liability has been recorded in the Company’s December 31, 2020 consolidated financial statements related to this contingency.

Employment Agreements

On July 30, 2019, CytoSorbents

Corporation entered into amended and restated executive employment agreements with its principal executives, Dr.

President and Chief Executive Officer, Vincent Capponi, Chief Operating Officer, and Kathleen P.

On July 30, 2019, CytoSorbents Corporation entered into amended and restated executive employment agreements with its principal executives, Dr.

Chan, Chief Executive Officer, Vincent Capponi, President and Chief Operating Officer, and Kathleen P.

Bloch, Chief Financial Officer.

Each of the agreements has an initial term of three years , and was retroactively effective as of January 1, 2019.

After the expiration

of the initial terms, the employment agreements will automatically renew for additional terms of one year unless either party provides

written notice of non-renewal at least 60 days prior to a renewal.

On May 30, 2017, CytoSorbents Corporation announced the appointment

Mortensen as the Company’s Chief Medical Officer, pursuant to the terms of an employment agreement dated May

Mortensen’s employment agreement provides for an initial term commencing on June 1, 2017 and ending on December

Mortensen’s contract has not been renewed.

The foregoing employment agreements each

provide for base salary and other customary benefits which include participation in group insurance plans, paid time off and reimbursement

of certain business related expenses, including travel and continuing educational expenses, as well as bonus and/or equity awards

at the discretion of the Board of Directors.

In addition, the agreements provide for certain termination benefits in the event

of termination without “Cause”

or voluntary termination of employment for “Good Reason”, as defined in

each agreement.

The agreements also provide for certain benefits in the event of a “Change of Control”

of the Company,

as defined in each agreement.

The Company is, from

time to time, subject to claims and litigation arising in the ordinary course of business.

The Company intends to defend vigorously

against any future claims and litigation.

On April 12, 2020, CytoSorbents Corporation entered into an executive employment agreement with Dr.

Efthymios Deliargyris, who began employment as Chief Medical Officer on May 1, 2020, with an initial term that expires on December 31, 2021.

After the expiration of the initial terms, the employment agreements will automatically renew for additional terms of one year unless either party provides written notice of non-renewal at least 60 days prior to a renewal.

The foregoing employment agreements each provide for base salary and other customary benefits which include participation in group insurance plans, paid time off and reimbursement of certain business-related expenses, including travel and continuing educational expenses, as well as bonus and/or equity awards at the discretion of the Board of Directors.

In addition, the agreements provide for certain termination benefits in the event of termination without “Cause” or voluntary termination of employment for “Good Reason”, as defined in each agreement.

The agreements also provide for certain benefits in the event of a “Change of Control” of the Company, as defined in each agreement.

The Company is, from time to time, subject to claims and litigation arising in the ordinary course of business.

The Company intends to defend vigorously against any future claims and litigation.

The Company is not currently a party to any legal proceedings.

Royalty Agreements

Pursuant to an agreement

dated August 11, 2003, an existing investor agreed to make a $4 million equity investment in the Company.

These amounts were received

by the Company in 2003.

In connection with this agreement the Company granted the investor a future royalty of 3% on all gross

revenues received by the Company from the sale of its CytoSorb device.

For the years ended December 31, 2019, 2018 and 2017, the

Company recorded royalty expenses of approximately $675,000, $600,000 and $393,000 respectively.

These expenses are included in

selling, general and administrative expenses in the consolidated statements of operations.

License Agreements

In an agreement dated

September 1, 2006, the Company entered into a license agreement which provides the Company the exclusive right to use its patented

technology and proprietary know how relating to adsorbent polymers for a period of 18 years.

Under the terms of the agreement,

the Company has agreed to pay license fees of 2.5% to 5% on the sale of certain of its products if and when those products are

sold commercially for a term not greater than 18 years commencing with the first sale of such product.

For the years ended December

31, 2019, 2018 and 2017 per the terms of the license agreement, the Company recorded licensing expenses of approximately $1,125,000,

$1,002,000 and $655,000 respectively.

These expenses are included in selling, general and administrative expenses in the consolidated

statements of operations.

Royalty Agreement

Pursuant to an agreement dated August 11, 2003, an existing investor agreed to make a $ 4 million equity investment in the Company.

These amounts were received by the Company in 2003.

In connection with this agreement the Company granted the investor a future royalty of 3 % on all gross revenues received by the Company from the sale of its CytoSorb device.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded royalty expenses of approximately $ 1,172,000 , $ 675,000 , and $ 600,000 , respectively.

These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

License Agreement

In an agreement dated September 1, 2006, the Company entered into a license agreement which provides the Company the exclusive right to use its patented technology and proprietary know how relating to adsorbent polymers for a period of 18 years .

Under the terms of the agreement, the Company has agreed to pay license fees of 2.5 % to 5 % on the sale of certain of its products if and when those products are sold commercially for a term not greater than 18 years commencing with the first sale of such product.

For the years ended December 31, 2020, 2019 and 2018 per the terms of the license agreement, the Company recorded licensing expenses of approximately $ 1,954,000 $ 1,125,000 and $ 1,002,000 , respectively.

These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

STOCKHOLDERS’ EQUITY:

Preferred Stock

In June 2019, the Company

amended and restated its certificate of incorporation.

The amended and restated certificate of incorporation authorizes the issuance

of up to 5,000,000 shares of “blank check”

preferred stock, with such designation rights and preferences as may be

determined from time to time by the Board of Directors.

In June 2019, the Company

amended and restated its certificate of incorporation.

The amended and restated certificate of incorporation increased the number

of shares of common stock from 50,000,000 shares authorized to be issued to 100,000,000 shares.

July 26, 2018, the Company filed a registration statement on Form S-3 with the SEC (as amended, the “2018 Shelf”).

The 2018 Shelf, which was declared effective on August 7, 2018, enables the Company to offer and sell, in one or more offerings,

any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar

amount of $150 million.

of Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On May 31, 2019, the

Company delivered to Cantor Fitzgerald & Co.

(“Cantor”) written notice of termination (the “Termination Notice”)

of the Controlled Equity Offering Sales Agreement, dated November 4, 2015, by and between the Company and Cantor, as amended by

Amendment No.

1 to Sales Agreement, dated July 26, 2018 (collectively, the “Sales Agreement”).

In accordance with Section

13(b) thereof, the Sales Agreement terminated on June 10, 2019, ten (10) days after the delivery of the Termination Notice.

provided in the Sales Agreement, the Sales Agreement terminated without liability of any party to any other party, except that

certain provisions of the Sales Agreement identified therein shall remain in full force and effect notwithstanding the termination.

Pursuant to the Sales

Agreement, the Company offered and sold, from time to time through Cantor, shares of the Company’s common stock.

In the aggregate,

the Company sold 2,094,140 shares pursuant to the Sales Agreement, at an average selling price of $8.72 per share, generating net

proceeds of approximately $17,718,000 from November 4, 2015 through December 31, 2018.

There were no sales during the year ended

December 31, 2019.

Open Market Sale Agreement with Jefferies

In June 2019, the Company amended and restated its certificate of incorporation.

The amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board of Directors.

In June 2019, the Company amended and restated its certificate of incorporation.

The amended and restated certificate of incorporation increased the number of shares of common stock authorized for issuance from 50,000,000 shares to 100,000,000 shares.

July 24, 2020 Offering

On July 24, 2020, the Company closed an underwritten public offering of 6,052,631 shares of its common stock at a public offering price of $ 9.50 per share (the “Offering”).

The Company completed the Offering pursuant to the terms of an Underwriting Agreement, dated as of July 21, 2020, by and among the Company and Cowen and Company, LLC and SVB Leerink LLC, as representatives of the several underwriters named therein.

The Company received gross proceeds of approximately $ 57.5 million from the Offering and after deducting the underwriting discounts and commissions and fees and expenses payable by the Company in connection with the Offering, the Company received net proceeds of approximately $ 53.8 million.

Shelf Registration

On July 26, 2018, the Company filed a registration statement on Form S-3 with the SEC (as amended, the “2018 Shelf”).

The 2018 Shelf, which was declared effective on August 7, 2018, enables the Company to offer and sell, in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $ 150 million.

Termination of Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On May 31, 2019, the Company delivered to Cantor Fitzgerald & Co.

("Cantor") written notice of termination (the "Termination Notice") of the Controlled Equity Offering Sales Agreement, dated November 4, 2015, by and between the Company and Cantor, as amended by Amendment No.

1 to Sales Agreement, dated July 26, 2018 (collectively, the "Sales Agreement").

In accordance with Section 13(b) thereof, the Sales Agreement terminated on June 10, 2019, ten (10) days after the delivery of the Termination Notice.

As provided in the Sales Agreement, the Sales Agreement terminated without liability of any party to any other party, except that certain provisions of the Sales Agreement identified therein shall remain in full force and effect notwithstanding the termination.

Pursuant to the Sales Agreement, the Company offered and sold, from time to time through Cantor, shares of the Company's common stock.

In the aggregate, the Company sold 2,094,140 shares pursuant to the Sales Agreement, at an average selling price of $ 8.72 per share, generating net proceeds of approximately $ 17.7 million from November 4, 2015 through December 31, 2018.

There were no sales during the year ended December 31, 2019.

Open Market Sale Agreement with Jefferies LLC and B.

Riley FBR, Inc.

On July 9, 2019 the

Company entered into an Open Market Sale Agreement (the “New Sale Agreement”) with Jefferies LLC and B.

(each an “Agent”

and, together, the “Agents”), pursuant to which the Company may sell, from time to

time, at its option, up to an aggregate proceeds of $25,000,000 from shares of the Company’s common stock through the Agents,

as the Company’s sales agents.

Any shares of the Company’s common stock to be offered and sold under the New Sale Agreement

will be issued and sold pursuant to the Company’s 2018 Shelf by methods deemed to be an “at the market offering”

as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by

the Company, in privately negotiated transactions.

to the terms of the New Sale Agreement, the Agents will use their commercially reasonable efforts consistent with their

normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the

Company’s instructions (including any price, time or size limits or other customary parameters or conditions the

Company may impose).

The Company will pay the Agents a commission of up to 3.0% of the gross proceeds from the sale of the

shares of the Company’s common stock sold thereunder, if any.

The Company has also agreed to provide the Agents with

customary indemnification rights.

The offering of the shares of the Company’s common stock will terminate upon the

earliest of (a) the sale of the maximum number or amount of the shares of the Company’s stock permitted to be sold

under the New Sale Agreement and (b) the termination of the New Sale Agreement by the parties thereto.

During the year ended

December 31, 2019, the Company sold 191,244 shares pursuant to the New Sale Agreement, at an average selling price of $4.11

per share, generating net proceeds of approximately $762,000.

During the period from January 1, 2020 through March 2, 2020, the Company sold 2,435,086 shares pursuant to the New Sale Agreement, at an average selling price of

$5.64 per share, generating net proceeds of approximately $13,322,000.

In the aggregate, the Company has sold

2,626,330 shares pursuant to the New Sale Agreement, at an average selling price of $5.53 per share, generating net

proceeds of approximately $14,083,000.

As of December 31,

2019, the Company had two Long Term Incentive Plans (the “2014 Plan”

and the “2006 Plan”) to attract, retain,

and provide incentives to employees, officers, directors, and consultants.

The Plans generally provide for the granting of stock,

stock options, stock appreciation rights, restricted shares, or any combination of the foregoing to eligible participants.

A total of 13,400,000

and 2,400,000 shares of common stock are reserved for issuance under the 2014 Plan and the 2006 Plan, respectively.

As of December

31, 2019, there were outstanding options to purchase approximately 6,100,000 and 743,000 shares of common stock reserved under

the 2014 Plan and the 2006 Plan, respectively.

The 2014 and 2006 Plans

as well as grants issued outside of the Plan are administered by the Compensation Committee of the Board of Directors (the “Compensation

Committee”).

The Compensation Committee

is authorized to select from among eligible employees, directors, advisors and consultants those individuals to whom incentives

are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options.

The Compensation

Committee is also authorized to prescribe, amend and rescind terms relating to options granted under the Plans.

Generally, the

interpretation and construction of any provision of the Plans or any options granted hereunder is within the discretion of the

Compensation Committee.

The 2014 Plan provides

that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code.

employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are

eligible to receive options, which are not ISOs, i.e.

“Non-Qualified Options.”

Because the Company has not yet obtained

shareholder approval of the 2006 Plan, all options granted thereunder to date are “Non-Qualified Options”

such shareholder approval is obtained, all future options issued under the 2006 Plan will also be “Non-Qualified Options.”

In December 2014, the

Company’s received shareholder approval authorizing the Board of Directors to implement the form, terms and provisions of

the 2014 Plan.

Accordingly, any options issued to employees under the 2014 Plan will be ISOs within the meaning of Section 422

of the Internal Revenue Code.

On July 9, 2019, the Company entered into an Open Market Sale Agreement (the “New Sale Agreement”) with Jefferies LLC and B.

Riley FBR, Inc.

(each an “Agent” and, together, the “Agents”), pursuant to which the Company may sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $ 25 million through the Agents, as the Company’s sales agents.

All shares of the Company’s common stock offered and sold, or to be offered and sold under the New Sale Agreement were or will be issued and sold pursuant to the Company’s 2018 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions.

On April 20, 2020, the Company and the Agents entered into an amendment to the New Sale Agreement (the “Amendment”) to provide for an increase in the aggregate offering amount under the New Sales Agreement, such that as of April 20, 2020, the Company may offer and sell Shares having an additional aggregate offering price of up to $ 50 million under the New Sale Agreement, as amended by the Amendment (the “Amended Sale Agreement”).

Subject to the terms of the Amended Sales Agreement, the Agents are required to use their commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company is required to pay the Agents a commission of up to 3.0 % of the gross proceeds from the sale of the shares of the Company’s common stock sold thereunder, if any.

The Company has also agreed to provide the Agents with customary indemnification rights.

The offering of the shares of the Company’s common stock under the Amended Sales Agreement will terminate upon the earliest of (a) the sale of the maximum number or amount of the shares of the Company’s stock permitted to be sold under the Amended Sale Agreement and (b) the termination of the Amended Sale Agreement by the parties thereto.

During the year ended December 31, 2019, the Company sold 191,244 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 4.11 per share, generating net proceeds of approximately $ 762,000 .

During the year ended December 31, 2020, the Company sold 4,110,625 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 6.64 per share, generating net proceeds of approximately $ 26.5 million.

In the aggregate, the Company has sold 4,301,869 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 6.53 per share, generating net proceeds of approximately $ 27.2 million.

In addition, during the year ended December 31, 2020, the Company paid approximately $ 49,000 in expenses related to the Amended Sale Agreement.

Stock Option Plans

As of December 31, 2020, the Company had two Long Term Incentive Plans (the “2014 Plan” and the “2006 Plan”) to attract, retain, and provide incentives to employees, officers, directors, and consultants.

The Plans generally provide for the granting of stock, stock options, stock appreciation rights, restricted shares, or any combination of the foregoing to eligible participants.

A total of 13,400,000 and 2,400,000 shares of common stock are reserved for issuance under the 2014 Plan and the 2006 Plan, respectively.

As of December 31, 2020, there were shares remaining to purchase approximately 8,216,000 and 236,000 units of common stock reserved under the 2014 Plan and the 2006 Plan, respectively.

The 2014 and 2006 Plans as well as grants issued outside of the Plan are administered by the Compensation Committee of the Board of Directors (the “Compensation Committee”).

The Compensation Committee is authorized to select from among eligible employees, directors, advisors and consultants those individuals to whom incentives are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options.

The Compensation Committee is also authorized to prescribe, amend and rescind terms relating to options granted under the Plans.

Generally, the interpretation and construction of any provision of the Plans or any options granted hereunder is within the discretion of the Compensation Committee.

The 2014 Plan provides that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue Code.

Only employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are eligible to receive options, which are not ISOs, i.e.

“Non-Qualified Options.” Because the Company has not yet obtained shareholder approval of the 2006 Plan, all options granted thereunder to date are “Non-Qualified Options” and until such shareholder approval is obtained, all future options issued under the 2006 Plan will also be “Non-Qualified Options.”

In December 2014, the Company’s received shareholder approval authorizing the Board of Directors to implement the form, terms and provisions of the 2014 Plan.

Accordingly, any options issued to employees under the 2014 Plan will be ISOs within the meaning of Section 422 of the Internal Revenue Code.

Stock-based Compensation

Total share-based employee,

director, and consultant compensation for the years ended December 31, 2019, 2018 and 2017 amounted to approximately $ 1,666,000,

$4,437,000 and $3,314,000, respectively.

These amounts are included in selling, general, and administrative expenses on the consolidated

statements of operations.

The summary of the

stock option activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

Total share-based employee, director, and consultant compensation for the years ended December 31, 2020, 2019 and 2018 amounted to approximately $ 3,514,000 , $ 1,666,000 and $ 4,437,000 , respectively.

These amounts are included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

The summary of the stock option activity for the years ended December 31, 2020, 2019 and 2018 is as follows:

Outstanding January 1, 2018

2 unchanged sentences

Outstanding, December 31, 2020

The fair value of each

stock option was estimated using the Black Scholes pricing model which takes into account as of the grant date the exercise price

(ranging from $3.84 to $8.25 per share in 2019) and expected life of the stock option (10 years in 2019), the current price of

the underlying stock and its expected volatility (ranging from 61.9 to 74.3 percent in 2019), expected dividends (-0- percent)

on the stock and the risk free interest rate (1.40 to 2.61 percent) for the term of the stock option.

In addition, the Company

recognizes forfeitures as they occur.

The intrinsic value is calculated at the

difference between the market value as of December 31, 2019 of $3.85 and the exercise price of the shares.

The fair value of each stock option was estimated using the Black Scholes pricing model which takes into account as of the grant date the exercise price (ranging from $ 5.00 - $ 10.58 per share in 2020) and expected life of the stock option ( 10 years in 2020), the current price of the underlying stock and its expected volatility (ranging from 61.7 to 69.8 percent in 2020), expected dividends (- 0 - percent) on the stock and the risk free interest rate ( 0.28 to 0.96 percent) for the term of the stock option.

In addition, the Company recognizes forfeitures as they occur.

The intrinsic value is calculated at the difference between the market value as of December 31, 2020 of $ 7.97 and the exercise price of the shares.

Options Exercisable

Exercisable at

The summary of the status of the Company’s

non-vested options for the year ended December 31, 2019 is as follows:

Options Outstanding

Outstanding at

$ 5.68 - $ 10.58

The summary of the status of the Company’s non-vested options for the year ended December 31, 2020 is as follows:

Non-vested, January 1, 2020

Non-vested, December 31, 2020

As of December 31,

2019, the Company had approximately $3,098,000 of total unrecognized compensation cost related to stock options which will, on

average, be amortized over four years.

In 2020, the Board

of Directors intends to grant a pool of options to purchase shares of common stock to the Company’s employees which will

vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2020 operations.

options relate exclusively to the achievement of 2020 milestones, no charge for these options has been recorded in the consolidated

statements of operations for the year ended December 31, 2019.

The Company will assess the likelihood of meeting these milestones

throughout 2020 and will record stock option expense as appropriate.

As of December 31, 2020, the Company had approximately $ 2,898,000 of total unrecognized compensation cost related to stock options which will, on average, be amortized over 27 months .

In 2021, the Board of Directors intends to grant a pool of options to purchase shares of common stock to the Company’s employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2021 operations.

Since these options relate exclusively to the achievement of 2021 milestones, no charge for these options has been recorded in the consolidated statements of operations for the year ended December 31, 2020.

The Company will assess the likelihood of meeting these milestones throughout 2021 and will record stock option expense as appropriate.

Awards of Stock Options:

On July 22, 2019,

the Board of Directors granted options to purchase 926,800 shares of common stock to the Company’s employees which will

vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2019 operations.

date fair value of these unvested options amounted to approximately $4,294,000.

On 2020, Board of Directors determined that the

Company has met of these milestones, and accordingly we have recorded approximately of stock option expense related to these

options for the year ended December 31, 2019.

On March 15, 2018,

the Board of Directors granted options to purchase 531,900 shares of common stock to the Company’s management.

23, 2018, the Board of Directors granted options to purchase 668,550 shares of common stock to the Company’s employees.

These grants, which total 1,200,450 shares of common stock, will vest upon the achievement of certain specific, predetermined

milestones related to the Company’s 2018 operations.

On February 28, 2020, the Board of Directors granted options to purchase 1,114,325 shares of common stock to the Company's employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company's 2020 operations.

Once awarded, these options will vest in four equal tranches, the first tranche vesting on the date of the award.

The grant date fair value of these unvested options amounted to approximately $ 3,883,000 .

On February 19, 2019, based upon the finalization of its review of the Company’s progress to meeting the predetermined

milestones for 2018, the Board of Directors determined that 726,920 of these options would immediately vest.

Accordingly, a charge

of approximately $3,381,000 related to these options has been recorded in the consolidated statements of operations for the year

ended December 31, 2018.

On February 24, 2017,

the Board of Directors granted options to purchase 953,200 shares of common stock to the Company’s employees which will

vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2017 operations.

date fair value of these unvested options amounted to approximately $3,284,000.

On February 15, 2018, based upon the finalization

of its review of the Company’s progress to meeting the predetermined milestones for 2017, the Board of Directors determined

that 810,220 of these options would immediately vest.

Accordingly, a charge of approximately $2,791,000 related to these options

has been recorded in the consolidated statements of operations for the year ended December 31, 2017.

Change in Control-Based Awards of Restricted

The Board of Directors

has granted restricted stock units to members of the Board of Directors, to the Company’s executive officers, and to employees

of the Company.

These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Company’s

2014 Long-Term Incentive Plan.

The following table

is a summary of these restricted stock units:

Based upon an assessment by management, which was reviewed with the Board of Directors, as of December 31, 2020, the Company met approximately 88 % of these milestones, and accordingly we have recorded $ 914,000 in stock option expense related to these options for the year ended December 31, 2020.

On July 22, 2019, the Board of Directors granted options to purchase 926,800 shares of common stock to the Company's employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company's 2019 operations.

The grant date fair value of these unvested options amounted to approximately $ 4,294,000 .

On February 18, 2020, Board of Directors determined that the Company has met 35 % of these milestones, and accordingly we have recorded approximately $ 735,000 and $ 315,000 of stock option expense related to these options for the years ended December 31, 2020 and 2019, respectively.

On March 15, 2018, the Board of Directors granted options to purchase 531,900 shares of common stock to the Company’s management.

On April 23, 2018, the Board of Directors granted options to purchase 668,550 shares of common stock to the Company’s employees.

These grants, which total 1,200,450 shares of common stock, will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2018 operations.

The grant date fair value of these unvested options amounted to approximately $ 5,636,000 .

On February 19, 2019, based upon the finalization of its review of the Company's progress to meeting the predetermined milestones for 2018, the Board of Directors determined that 726,920 of these options would immediately vest.

Accordingly, a charge of approximately $ 3,381,000 related to these options has been recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2018.

Change in Control-Based Awards of Restricted Stock Units:

The Board of Directors has granted restricted stock units to members of the Board of Directors, to the Company’s executive officers, and to employees of the Company.

These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Company’s 2014 Long-Term Incentive Plan.

The following table is a summary of these restricted stock units:

Intrinsic Value

4 unchanged sentences

December 31, 2020

Due to the uncertainty

over whether these restricted stock units will vest, which will only happen upon a Change in Control, no charge for these restricted

stock units has been recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31,

Performance Based Stock Awards:

to a review of the compensation of the senior management of the Company and managements’

performance in 2016, on February

24, 2017, the Board of Directors granted 125,000 restricted stock units to certain senior managers of the Company in order to settle

bonuses accrued as of December 31, 2016.

These awards were valued at approximately $700,000 on the date of issuance, based upon

the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one

third on the first anniversary of the grant, and one third on the second anniversary of the date of the grant.

For the years ended

December 31, 2019, 2018 and 2017, the Company recorded a charge of approximately $150,000, $329,000, and $201,000, respectively

related to these restricted stock unit awards.

Pursuant to a review

of the compensation of the senior management of the Company and managements’

performance in 2017, on February 28, 2018, the

Board of Directors granted 146,200 restricted stock units to certain senior managers of the Company in order to settle bonuses

accrued as of December 31, 2017.

These awards were valued at approximately $1,148,000 at the date of issuance, based upon the market

price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the

first anniversary of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December

31, 2019, 2018 and 2017, the Company recorded a charge of approximately $363,000, $319,000, and $383,000, respectively related

to these restricted stock unit awards .

Pursuant to a review

of the compensation of the senior management of the Company and managements’

performance in 2018, on March 4, 2019 the Board

of Directors granted 22,220 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued

as of December 31, 2018.

These awards were valued at approximately $179,000 at the date of issuance, based upon the market price

of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the first

anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December

31, 2019, the Company recorded a charge of approximately $39,000 related to these restricted stock unit awards .

Pursuant to a review

of the compensation of the senior management of the Company and managements’

performance in 2019, on July 22, 2019 the Board

of Directors granted 180,300 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately

$1,300,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and

vest one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second

anniversary of the date of the grant.

For the years ended December 31, 2019, the Company recorded a charge of approximately $621,000

related to these restricted stock unit awards .

The following table

outlines the restricted stock unit activity for the year ended December 31, 2019:

Due to the uncertainty over whether these restricted stock units will vest, which will only happen upon a Change in Control, no charge for these restricted stock units has been recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2020.

Performance-Based Awards of Restricted Stock Units:

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2017, on February 28, 2018, the Board of Directors granted 146,200 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2017.

These awards were valued at approximately $ 1,148,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded an expense/(recovery) of approximately $( 23,000 ), $ 150,000 , and $ 329,000 , respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2018, on March 4, 2019 the Board of Directors granted 22,220 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2018.

These awards were valued at approximately $ 179,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2020, and 2019, the Company recorded a charge of approximately $ 33,000 and $ 39,000 , respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2019, on July 22, 2019 the Board of Directors granted 180,300 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately $ 1,300,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2020, and 2019, the Company recorded a charge of approximately $ 564,000 and $ 621,000 , respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2019, on February 28, 2020, the Board of Directors granted 168,100 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2020.

These awards were valued at approximately $ 1,014,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant, and vest one third on the date of the grant one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2020, the Company recorded a charge of approximately $ 619,000 related to these restricted stock unit awards.

The following table outlines the restricted stock unit activity for the year ended December 31, 2020:

Non-vested, January 1, 2020

Non-vested, December 31, 2020

of December 31, 2019, the Company has warrants outstanding to purchase 30,000 shares of the Company’s common stock.

warrants had an exercise price of $9.90 and expired on January 14, 2020.

During the year ended December 31, 2019, warrants representing

369,387 shares of the Company’s common stock were exercised.

As of December 31, 2020, the Company had no warrants outstanding.

NET LOSS PER SHARE

Basic earnings per

share and diluted earnings per share for the years ended December 31, 2019, 2018 and 2017 have been computed by dividing the net

loss attributable to common shareholders for each respective period by the weighted average number of shares outstanding during

All outstanding warrants and options and restricted stock awards representing approximately 6,503,000, 6,232,000,

and 6,326,000 incremental shares at December 31, 2019, 2018 and 2017, respectively, have been excluded from the computation of

diluted loss per share as they are anti-dilutive.

Basic earnings per share and diluted earnings per share for the years ended December 31, 2020, 2019 and 2018 have been computed by dividing the net loss attributable to common shareholders for each respective period by the weighted average number of shares outstanding during that period.

All outstanding warrants and options and restricted stock awards representing approximately 7,786,000 , 6,503,000 , and 6,232,000 incremental shares at December 31, 2020, 2019 and 2018, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive.

RETIREMENT PLAN

In June 2014, the Company

formed the CytoSorbents 401(k) Plan.

The plan is a defined contribution plan as described in section 401(k) of the Internal Revenue

Code (“IRC”) covering substantially all full-time employees.

Employees are eligible to participate in the plan on the

first day of the calendar quarter following three full months of employment.

Participants may defer up to 100% of their eligible

compensation subject to certain IRC limitations.

In addition, the Company provides for a matching contribution of twenty percent

of the participants’

contribution on a maximum of a five percent compensation contribution.

Matching contributions amounted

to approximately $43,800, $43,600 and $41,700 for the years ended December 31, 2019, 2018 and 2017, respectively.

In June 2014, the Company formed the CytoSorbents 401(k) Plan.

The plan is a defined contribution plan as described in section 401(k) of the Internal Revenue Code (“IRC”) covering substantially all full-time employees.

Employees are eligible to participate in the plan on the first day of the calendar quarter following three full months of employment.

Participants may defer up to 100 % of their eligible compensation subject to certain IRC limitations.

In addition, the Company provides for a matching contribution of twenty percent of the participants’ contribution on a maximum of five percent of compensation.

Effective January 1, 2021, the Company changed its matching contribution to 100 % of the participants contribution up to three percent of compensation plus 50 % of the participants contribution over three percent of compensation up to a maximum of five percent of compensation.

Matching contributions amounted to approximately $ 59,200 , $ 43,800 and $ 43,600 for the years ended December 31, 2020, 2019 and 2018, respectively.

SUBSEQUENT EVENT

During the period

from January 1, 2020 through March 2, 2020, the Company sold 2,435,086 shares pursuant to the Open Market Sale Agreement with

Jefferies LLC and B.

Riley FBR, Inc., at an average selling price of $5.64 per share, generating net proceeds of approximately

$13,322,000 (see Note 11).

In January 2021, CytoSorbents Europe GmbH entered into a lease for additional warehouse space.

The lease commences on April 1, 2021, requires monthly payments of base rent and other costs of approximately $ 7,900 and has a term of five years .

The lease also has an option to extend the lease term for an additional five years .

QUARTERLY FINANCIAL RESULTS (UNAUDITED)

Summarized quarterly data for 2019, 2018

and 2017 are as follows:

Summarized quarterly data for 2020, 2019 and 2018 are as follows:

For the Quarters Ended

1 unchanged sentence

Loss from operations

( 2,478,754 )

( 3,297,667 )

( 1,959,652 )

( 2,634,264 )

Net loss attributable to common stockholders

( 3,452,779 )

( 2,866,956 )

Net loss per share, basic and diluted

1 unchanged sentence

Loss from operations

( 4,285,193 )

( 3,629,997 )

( 5,627,546 )

( 5,431,328 )

Net loss attributable to common stockholders

( 4,883,827 )

( 3,547,405 )

( 6,885,061 )

( 3,949,351 )

Net loss per share, basic and diluted

1 unchanged sentence

Loss from operations

( 3,101,167 )

( 4,187,875 )

( 2,710,620 )

( 5,585,266 )

Net loss attributable to common stockholders

( 2,982,035 )

( 5,821,202 )

( 3,004,764 )

( 5,403,178 )

Net loss per share, basic and diluted

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures