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Item 1A. Risk Factors

2026-03-30 compared with 2025-03-31 · 157 added, 189 removed, 290 unchanged (54% of the section changed)

Risks Related to our Business and our Industry

We have a history of losses and expect to incur substantial future losses.

We have a history of losses and may incur future losses.

We have experienced substantial operating losses since inception.

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Our losses have resulted principally from costs incurred in the research and development of our polymer technology, clinical studies and general and administrative expenses.

We intend 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 general and administrative expenses, are expected to result in continuing net losses for the foreseeable future.

The Company is targeting breakeven through a combination of improved sales (through expanding our customer base in existing markets, launching new products, and achieving additional regulatory approvals to enter new markets) manufacturing and operating efficiencies, and cost reduction and management programs.

The amount of future losses and when, if ever, we will achieve profitability are uncertain.

Our ability to achieve profitability will depend, among other things, on continued adoption and usage of our products in the market, obtaining additional regulatory approvals in markets not covered by the CE mark, establishing sales and marketing arrangements with third parties, satisfactory reimbursement in key territories, and raising sufficient funds to finance our activities.

No assurance can be given that our product development efforts will be successful, that our current CE Mark will enable us to achieve profitability, that additional regulatory approvals in other countries will be obtained, that any of our products will be manufactured at a competitive cost and will be of acceptable quality, that reimbursement will be available or satisfactory, that we will be able to achieve profitability or that profitability, if achieved, can be sustained, or our ability to raise additional capital when needed or on terms acceptable to us.

No assurance can be given that our product development and commercial efforts will be successful, that additional regulatory approvals in other countries will be obtained, that any of our products will be manufactured at a competitive cost and will be of acceptable quality, that reimbursement will be available or satisfactory, that we will be able to achieve profitability or that profitability, if achieved, can be sustained, or our ability to raise additional capital when needed or on terms acceptable to us.

Our failure with respect to any or all of these matters would have a material adverse effect on our business, operating results, financial condition and prospects.

We will require additional capital in the future to fund our operations.

As of December 31, 2024, we had current assets of approximately $21.9 million, including cash and cash equivalents of $3.3 million and current liabilities of approximately $9.8 million.

We may require additional capital in the future to fund our operations and failure to raise additional capital or generate cash flows necessary to maintain our operations could reduce our ability to compete successfully and harm our results of operations.

As of December 31, 2025, we had current assets of approximately $20.6 million, including total cash and cash equivalents of $7.8 million, including restricted cash of $1.5 million and current liabilities of approximately $9.7 million.

For the year ended December 31, 2025, our cash burn, which we define as the total of cash used in operating and investing activities from our statement of cash flows, was approximately $12.8 million.

Our current and historical cash burn is not necessarily indicative of our future use of cash and cash equivalents.

The Company will require additional financing in the future to support the commercialization of its products and proposed products, to initiate and complete new additional clinical studies, and for general working capital purposes.

If the Company were to obtain such additional financing through equity financing, the current ownership interest of its stockholders would be diluted and there can be no assurance that the Company will be successful in its capital raising efforts.

Should the financing the Company requires be unavailable to the Company, or on terms unacceptable to the Company when the Company requires it, the consequences could have a material adverse effect on the Company’s business, operating results, financial condition and prospects.

The amount of long-term capital needed is expected to depend on many factors, including:

● rate of sales growth and adoption of the Company’s products in the marketplace;

● product gross margin;

● continued progress and cost of the Company’s research and development programs;

● progress with and cost of the Company’s pre-clinical studies and clinical studies;

● the time and costs involved in obtaining regulatory clearance in other countries and/or for other indications;

● costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;

● costs of developing sales, marketing and distribution channels;

● market acceptance and reimbursement of the Company’s products;

and cost for training physicians and other health care personnel.

In the future, we may require additional financing to support our operations and may have to raise additional funds by selling equity, issuing debt, borrowing funds, refinancing our existing debt, or selling assets.

We may not be able to obtain additional debt or equity financing on favorable terms, in a timely manner, or at all.

If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests.

If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specific liquidity or other ratios, or restrict our ability to pay dividends or make acquisitions.

We would likely require additional capital to support the commercialization of our products and proposed products, to initiate and complete new additional clinical studies and for general working capital purposes.

The amount of long-term capital we require will depend on various factors, including the rate of sales growth and market adoption of our products;

product gross margins;

the progress and costs of our research and development, pre-clinical and clinical studies;

the time and expense associated with obtaining regulatory approvals in additional countries or for new indications;

costs related to protecting and enforcing our intellectual property;

the development of sales, marketing, and distribution capabilities;

and market acceptance, reimbursement, and training of physicians and other healthcare personnel.

We have an effective shelf registration statement dated September 30, 2024 with the SEC which enables us to raise up to $150 million in one or more offerings, through the issuance and sale of any combination of equity securities, debt securities, warrants and units.

Approximately $149.7 million of this amount was available as of December 31, 2025.

We have also allocated $25 million of our total shelf amount to our ATM facility.

A December 31, 2024, approximately $19.4 million was available for use under the ATM facility.

On December 30, 2021, we entered into an Open Market Sale Agreement with Jefferies LLC (the “Sale Agreement”).

Pursuant to the Sale Agreement we may offer to sell, from time to time, shares of our common stock, up to a maximum of $25,000,000.

During the year ended December 31, 2023, the Company sold 2,656,464 shares pursuant to the Sale Agreement, at an average selling price of $1.76 per share, generating net proceeds of approximately $4,532,000.

During the year ended December 31, 2024, the Company sold 382,823 shares pursuant to the Sale Agreement, at an average selling price of $1.04 per share, generating net proceeds of approximately $388,000.

We have also allocated $20 million of our total shelf amount to our ATM facility, under which we are not obligated to make or continue to make any sale of shares of our common stock under the “at-the-market” offerings.

During the year ended December 31, 2025, the Company did not sell any shares pursuant to the Sale Agreement (as defined below).

At December 31, 2025, approximately $19.4 million was available for use under the ATM facility, subject to certain limitations.

On December 30, 2021, we entered into an Open Market Sale Agreement with Jefferies LLC (the “Sale Agreement”), also referred to herein as our “ATM facility”).

Pursuant to the Sale Agreement we may offer to sell, from time to time, shares of our common stock, up to a maximum of $2.5 million.

During the year ended December 31, 2025, the Company did not sell any shares pursuant to the Sale Agreement.

In June 2024, we closed on a $20 million term-loan facility with Avenue Capital Group which provided an initial tranche of $15 million at the closing, of which $10 million was immediately available at closing and $5 million that remained classified as restricted cash through January 10, 2025, when it was released from its restriction.

Another tranche of $5 million may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application.

Under this initial facility, another tranche of $5 million would have been available at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company received FDA marketing approval of its DrugSorb-ATR application.

Concurrently with the closing of the first tranche, the Company paid off our existing debt with Bridge Bank.

On January 10, 2025, we closed the subscription period of its previously announced shareholder Rights Offering (the “Rights Offering”), raising aggregate gross proceeds of $6.25 million from the sale of all 6.25 million Units reserved for the Rights Offering.

Participants in the Rights Offering received Units, each Unit comprising of one share of common stock of the Company, one Series A Right Warrant to purchase one share of common stock, and one Series B Right Warrant to purchase one share of common stock.

The Right Warrants, as discussed below, will provide additional opportunity to purchase up to an additional 6,250,000 shares of common stock.

Proceeds from the Rights Offering satisfied the second condition of a debt covenant which now allows for the $5.0 million of restricted cash on our consolidated balance sheet to become unrestricted, and available for use.

On November 13, 2025, the Company and Avenue Capital Group entered into the First Amendment to Loan Documents (“the Amended Loan and Security Agreement”), amending the Company’s Loan and Security Agreement, dated June 28, 2024, as supplemented.

Under the terms of the Amended Loan and Security Agreement the Company drew an additional aggregate $2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and received an extension of the interest only period from July 1, 2026 to December 31, 2026, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity on July 1, 2027.

We will have access to an additional aggregate $2.5 million (“Tranche 2b”) from Avenue Capital Group, and a further six-month extension of the interest only period to the July 1, 2027 maturity date subject to FDA approval of DrugSorb-ATR, between January 1, 2026 and December 31, 2026.

Tranche 2a and Tranche 2b, in the aggregate, replace Tranche 2 of the original loan.

The Amended Loan and Security Agreement requires that we maintain certain operating cash burn targets (as defined in the Amended Loan and Security Agreement).

On January 10, 2025, the Company closed the subscription period of its previously announced rights offering (the “Rights Offering”), raising aggregate gross proceeds of $6.25 million ($5.4 million, net of fees) from the sale of all 6.25 million Units reserved for the Rights Offering.

Participants in the Rights Offering received Units, each Unit comprising of one share of common stock of the

Company, one Series A Right Warrant to purchase one share of common stock with an expiration date of February 24, 2025, and one Series B Right Warrant to purchase one share of common stock with an expiration date of April 10, 2025.

Up to an additional 6,250,000 shares of common stock may have been issued upon exercise of the Rights Warrants.

Proceeds from the closing of the subscription period satisfy a debt covenant which allowed for $5 million of restricted cash on the Company’s consolidated balance sheets to now become unrestricted, and available for use.

On February 24, 2025, approximately 1.4 million Series A Right Warrants were exercised by holders, including members of management and the Board of Directors, at an exercise price of $1.13 per warrant, providing an additional $1.6 million in aggregate gross proceeds ($1.4 million net of fees).

On April 4, 2025, the Board of Directors extended the expiration date of the Series B Right Warrants from April 10, 2025 to June 10, 2025.

On June 11, 2025, the 5-day volume weighted average price of Common Stock over the last five-trading days prior to June 10, 2025 was lower than the minimum required price of $2.00 and, as a result, the Series B Right Warrants issued in connection with the previously announced Rights Offering expired worthless pursuant to their terms.

The Right Warrants are exercisable commencing on their date of issuance and the exercise price shall be equal to (i) in the case of the Series A Right Warrants, 90% of the 5-day volume weighted average price of our Common Stock over the last 5-trading days prior to the expiration date of the Series A Right Warrants on February 24, 2025, rounded down to the nearest whole cent but (x) not lower than $1.00 and (y) not higher than $2.00, and (ii) in the case of the Series B Right Warrants, 90% of the 5-day volume weighted average price of our common stock over the last 5-trading days prior to the expiration date of the Series B Right Warrants on April 10, 2025, rounded down to the nearest whole cent but (x) not lower than $2.00 and (y) not higher than $4.00.

On April 4, 2025, the Board of Directors extended the expiration date of the Series B Right Warrants from April 10, 2025 to June 10, 2025.

As of the issuance date of this Annual Report on Form 10-K, we have raised a total of $6.8 million, net of offering fees, through the Rights Offering, and the exercise of the Series A Right Warrants.

The equity raises also provided for $5 million of restricted cash to become unrestricted.

As a result, our proforma unrestricted cash and cash equivalents, a non-GAAP measure, on December 31, 2024, assuming the net proceeds from the Rights Offering and the Series A Right Warrant exercise had occurred at that date, has increased by $12.3 million to $15.6 million, compared to the reported amount of $3.3 million

The Company will continue evaluating various financing alternatives, including debt financing, strategic partnerships and other non-equity financing arrangements, including royalty financing.

While there can be no assurance that the Company will be successful in obtaining alternative non-equity financing, if such financing is obtained through arrangements with collaborative partners or other non-dilutive sources, such as royalty financing, the Company may have to relinquish economic and/or proprietary rights to some of its technologies or products under development that it would otherwise seek to develop or commercialize itself.

Such events may have a material adverse effect on the Company’s business, operating results, financial condition and prospects.

These events may result in shareholder dilution and a decline in our share price, which could have a material adverse effect on the Company’s business, operating results, financial condition and prospects.

A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations.

A pandemic, epidemic or outbreak of an infectious disease may materially and adversely affect our business and operations.

As an example, an outbreak of an infectious disease could originate and spread rapidly, affecting global economies.

Such an event could

cause disruptions in our global supply chain, our ability to obtain raw materials, the manufacturing of and demand for our lead product, CytoSorb, the commercialization of CytoSorb, our research and development activities, and the conduct of current and future clinical trials.

It could also affect the operations of the U.S.

Food and Drug Administration and other health authorities, which could result in delays of reviews and approvals, including with respect to DrugSorb-ATR and our product candidates.

Such an event may impact and may continue to directly or indirectly impact our clinical trials, including but not limited to, the anticipated completion date of these trials and the pace of enrollment, as patients may avoid or may not be able to travel to healthcare facilities and physicians’ offices, and clinical trial staff may experience disruptions.

Such facilities and offices may be required to focus limited resources on other matters, and may not be available, in whole or in part, for clinical trial services.

There may be delays in patient enrollment in our clinical trials.

In addition, employee disruptions and remote working environments related to such an event and the federal, state and local responses to it, could materially impact the efficiency and pace with which we work and develop our product candidates, our ability to execute and invoice upon government grants and contracts, and the manufacturing of CytoSorb.

We may experience challenges in hiring necessary staff members to conduct our research and development activities, including technical staff.

Further, the potential economic impact brought on by, and the duration of, such an event is difficult to assess or predict, but could impact the global financial markets and reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

Additionally, the stock market may experience volatility, and macro factors may impact our critical care and cardiac surgery markets, including in certain geographies.

For example, widespread staffing shortages, decreased availability of hospital beds, fewer patients, increased hospital restrictions resulting in decreased access of our sales representatives to hospitals and fewer sales meetings with physicians could result in lower-than-expected sales of CytoSorb.

The ultimate impact of such an event is highly uncertain and subject to change.

Such an event could disrupt global economies and our supply chain, limit access to necessary raw materials, and impact the manufacturing, commercialization, and demand for CytoSorb.

It could also delay our research and development activities and the conduct, enrollment, and completion of current and future clinical trials, including due to patient access limitations, staffing shortages, or healthcare facilities prioritizing other matters.

Outbreaks may disrupt the operations of the U.S.

Food and Drug Administration and other health authorities, potentially delaying regulatory reviews and approvals, including for DrugSorb-ATR and other product candidates.

Employee disruptions, remote working environments, and hiring challenges could reduce operational efficiency and delay development timelines, grant execution, and manufacturing activities.

In addition, economic uncertainty and financial market volatility resulting from such events could limit our access to capital and negatively affect our liquidity.

Macroeconomic and healthcare system pressures, including staffing shortages, reduced hospital capacity, and restricted access to hospitals, may result in lower-than-expected sales of CytoSorb.

The ultimate impact of any such event remains uncertain.

Our operating results are subject to seasonal fluctuation.

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See “A pandemic, epidemic or outbreak of an infectious disease may materially and adversely affect our business and operations.” As a result, seasonality has had, and we expect it to continue to have, an impact on our results of operations.

Although historically we have been a research and development company, we are in the process of commercializing our products.

There can be no assurance that we will be successful in developing and expanding commercial operations or balancing our research and development activities with our commercialization activities .

Although historically we have been a research and development company, we are currently commercializing some of our products.

There can be no assurance that we will be successful in continuing and expanding commercial operations or balancing our research and development activities with our commercialization activities .

We have historically been engaged primarily in research and development activities and have generated limited revenues to date.

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See “Risk Factors ― “ Our business could be harmed by adverse economic conditions in Germany, our primary geographical market, or by economic and/or political instability in Germany, the EU or elsewhere caused by various factors.

” We are continuously working to obtain or improve upon the type and amount of reimbursement available to us in countries where CytoSorb is available, and as we attempt to move from an existing reimbursement platform to a new reimbursement platform, we may experience interruptions and/or reductions in the amount available for reimbursement.

” We are continuously working to

obtain or improve upon the type and amount of reimbursement available to us in countries where CytoSorb is available, and as we attempt to move from an existing reimbursement platform to a new reimbursement platform, we may experience interruptions and/or reductions in the amount available for reimbursement.

Because of this, there can be no assurance that new reimbursement will be obtained or that existing reimbursement will continue or that such reimbursement will be sufficient to adequately cover the cost of the device or treatment.

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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.

Efthymios Deliargyris, who began employment as Chief Medical Officer on May 1, 2020, with an initial term that expired on December 31, 2021.

On August 14, 2024, CytoSorbents Corporation entered into an executive employment agreement with Peter J.

Mariani, who began employment as Chief Financial Officer on August 14, 2024 following the retirement of former CFO Kathy Bloch, with an initial term that expires on December 31, 2025.

Mariani, who began employment as Chief Financial Officer on August 14, 2024 following the retirement of former CFO Kathy Bloch, with an initial term that expired on December 31, 2025.

After the expiration of the initial terms, the employment agreements 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 employment agreements for the Named Executive Officers above have automatically renewed for another one-year term.

The employment agreements for the Named Executive Officers above have automatically renewed for subsequent one-year terms.

There can be no assurance that key management personnel or other members of our management team and advisors will continue to provide services to us.

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We may be unable to recruit such personnel on a timely basis, if at all.

Management and other

employees may voluntarily terminate their employment with us at any time.

Management and other employees may voluntarily terminate their employment with us at any time.

Additionally, the increasing demand for qualified personnel may make it more difficult for us to attract and retain qualified employees.

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The loss of services of key personnel, or the inability to attract and retain additional qualified personnel, could result in delays in development or approval of our products, loss of sales and diversion of management resources.

We may not be successful in obtaining the FDA’s or Health Canada’s authorization and successful commercialization for DrugSorb-ATR in the U.S.

or Canada, respectively.

On April 25, 2025, the FDA issued a denial letter regarding the Company’s De Novo Request for DrugSorb-ATR, identifying remaining deficiencies that must be addressed before the De Novo Request can be granted, and the device can be authorized for commercialization in the U.S.

The Company filed an appeal of the decision through the formal appeal process with the FDA.

In July, the Company participated in an appeal hearing with the FDA for supervisory review (administrative appeal) under 21 CFR 10.75.

The appeal hearing included FDA senior leadership, Company management and our external surgical experts.

On August 14, 2025, the Company received an FDA appeal decision following its July 2025 in-person supervisory administrative review (appeal) meeting with the FDA under 21 CFR 10.75.

In the appeal decision, the FDA found no issues with device safety but upheld its prior De Novo denial decision citing the need for additional information to support the Company’s desired label indication.

Additionally, the FDA proactively proposed a potential expedited path forward for market authorization but noted the Company could also appeal to a final higher level within the FDA with the Director of the FDA’s Center for Devices and Radiologic Health (CDRH).

In September 2025, the Company announced that it decided to not file a final appeal with the CDRH because of positive FDA upper management feedback for a reasonable path forward that would allow for a suitable and potentially expedited De Novo grant for the Company’s original desired label indication.

The Company expects to file a new De Novo application with additional information that includes analyses of new real-world data to support its desired label indication.

As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA in November 2025.

The Company conducted a formal pre-submission meeting with the FDA in late January 2026 and continues to engage with the FDA to clarify and confirm the requirements for the new De Novo submission.

The interactive discussions regarding the information to be included in the new submission are ongoing, and the Company expects to provide an update of the anticipated timing for the new submission once these interactive

discussions with the FDA on the final requirements are complete.

Following the new De Novo submission, a regulatory decision would be expected following a typical 150-day review process but may be accelerated or extended depending on interactive discussions with the FDA related to submission questions.

On June 26, 2025, Health Canada issued a Notice of Refusal of the Company’s Medical Device License application, identifying remaining deficiencies that must be addressed before the application may be granted and the device authorized for commercialization.

On September 16, 2025 the Company announced that it had timely filed a Level 1 “Request For Reconsideration” with Health Canada.

However, following interactive discussions with the Medical Devices Directorate Bureau Director and the Company’s Canadian regulatory counsel, it was recommended that any subsequent review of DrugSorb-ATR in Canada be delayed until better clarity was received from the FDA.

As such, the Company withdrew the Request for Reconsideration and will provide a new Medical Device License application to Health Canada with improved visibility from the FDA.

We may be unsuccessful in obtaining the FDA’s or Health Canada’s authorization and successfully commercialization of DrugSorb-ATR in the U.S or Canada which may significantly impact our ability to generate any significant revenues or ever achieve and maintain a substantial level of sales of our product candidates in the U.S.

Acceptance of our medical devices in the marketplace is uncertain, and failure to achieve market acceptance will prevent or delay our ability to generate revenues.

Our future financial performance will depend, at least in part, upon the introduction and customer acceptance of our products.

Even with CE mark approval for our CytoSorb device as a cytokine adsorber, our products and product candidates may not achieve market acceptance in the countries that recognize and accept the CE mark.

Additional approvals from other regulatory authorities (such as the FDA) will be required before we can market our device in countries not covered by the CE mark.

Our future financial performance will depend, at least in part, upon the introduction, and customer and healthcare community acceptance of our products.

Even with current or future regulatory or marketing approvals for our CytoSorb, ECOS-300CY, and PuriFi pump devices, other products like VetResQ, and product candidates such as DrugSorb-ATR, these products may not achieve market acceptance in the countries where they are sold.

There is no guarantee that we will be able to achieve additional regulatory approvals, and even if we do, our products may not achieve market acceptance in the countries covered by such approvals.

The degree of market acceptance will depend upon a number of factors, including:

● the receipt of regulatory clearance of marketing claims for the uses that we are developing;

● the establishment and demonstration of the advantages, safety and efficacy of our polymer technology;

● pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;

● the development by our competitors of products or product candidates that are similar or identical to ours;

● our ability to attract corporate partners, including medical device companies, to assist in commercializing our products;

● our ability to effectively market our products.

The degree of market acceptance of our products will depend on several factors, including our ability to obtain regulatory clearance for marketing claims related to the uses we are developing;

demonstrate and achieve acceptance of the safety, efficacy, and advantages of our polymer technology, as reflected in product adoption, sales, reimbursement, and inclusion in treatment guidelines;secure favorable pricing and reimbursement from government and third-party payers;compete effectively against similar or competing products;

attract corporate partners to support commercialization;

and successfully market our products.

Physicians, patients, payers or the medical community in general may be unwilling to accept, utilize or recommend any of our products.

Approval of our CytoSorb device as a cytokine adsorber as well as the data we have gathered in our clinical studies to support device usage in this indication may not be sufficient for market acceptance in the medical community.

For example, the approval of our CytoSorb device as a cytokine adsorber as well as the data we have gathered in our clinical studies to support device usage in this indication may not be sufficient for market acceptance in the medical community.

We may also need to conduct additional clinical studies to gather additional data for marketing purposes.

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As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.

Our pending and future patent applications may not result in patents being issued, and even if issued, the patents may not meaningfully protect our products or product candidates, effectively prevent competitors and third parties

from commercializing competitive products or otherwise provide us with any competitive advantage.

Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative products in a non-infringing manner.

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Without patent protection for our products and product candidates, we may be open to competition from generic versions of such methods and devices.

We have commenced the process of seeking regulatory approvals of our products and product candidates, but the approval process involves lengthy and costly clinical studies and is, in large part, not in our control.

We have received and continue to seek additional regulatory approvals of our products and product candidates, but the approval process involves lengthy and costly clinical studies and is, in large part, not in our control.

The failure to obtain government approvals, internationally or domestically, for our products and product candidates, or to comply with ongoing governmental regulations could prevent, delay or limit introduction or sale of our products and result in the failure to achieve revenues or maintain our operations.

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Our products are subject to international regulation as medical devices under the Medical Devices Directive and, once our CE Mark under MDD expires in December 2028 will be subject to the new European Union Medical Device Regulation (“MDR”).

In Europe, which we expect to provide the initial market for our products, the notified body and Competent Authority govern, where applicable, development, clinical studies, labeling, manufacturing, registration, notification, clearance or approval, marketing, distribution, record keeping, and reporting requirements for medical devices.

In Europe, the notified body and Competent Authority govern, where applicable, development, clinical studies, labeling, manufacturing, registration, notification, clearance or approval, marketing, distribution, record keeping, and reporting requirements for medical devices.

Different regulatory requirements may apply to our products depending on how they are categorized by the notified body under these laws.

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Any new product that we submit for the CE Mark after August 2019 must be approved under the new Medical Devices Regulation.

Furthermore, if:

● we are not able to obtain re-certification for CytoSorb’s current use;

● we are not able to do so in time before the existing certificate expires;

● CytoSorb does not meet the new (and more stringent) requirements under the Medical Devices Regulation;

● any variation in the uses for which the CE Mark has been affixed CytoSorb requires us to perform further research or to modify the technical documentation required to affix the CE Mark, our revenues and operating results could be adversely affected and our reputation could be harmed.

We may pursue various indications for our product candidates, and they may be subject to different FDA regulatory pathways for marketing authorization, and under the jurisdiction of different FDA review divisions within the FDA’s Office of Device Evaluation.

As we seek to determine commercially viable indications for our product candidates, we may consider pursuing a variety of indications that may be approved through one of several different FDA regulatory clearance or approval pathways, and under the jurisdiction of different FDA review divisions within the FDA’s Office of Device Evaluation.

Furthermore, if we are unable to obtain re-certification for CytoSorb’s current use, fail to do so before the existing certificate expires, are unable to satisfy the more stringent requirements of the Medical Devices Regulation, or are required to conduct additional research or modify technical documentation in connection with any variation of the uses for which the CE Mark has been affixed, our revenues and operating results could be adversely affected and our reputation could be harmed:

We expect the pathways available to us will be impacted by the FDA regulatory history of the category of “sorbent hemoperfusion systems” and our options may also be impacted by the FDA’s interpretations and application of these and other regulatory standards to our product candidates.

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Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and medical devices to be reviewed and/or approved by necessary government agencies as well as affect whether we receive timely payment of amounts awarded to us under grants and contracts with government agencies which would adversely affect our business.

For example, over the last several years, including from December 22, 2018 until January 25, 2019, the U.S.

For example, over the last several years, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

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government agencies that fund research and development activities.

Our business could be negatively impacted by changes in the domestic and global political environment.

We ship our products internationally and as a result are subject to negative impacts in the global political environment.

For example, specific legislative and regulatory proposals can be introduced to change international trade law, regulations or interpretations thereof (possibly with retroactive effect) of various jurisdictions or limit treaty benefits that, if enacted, could materially increase the cost of our goods to export internationally, increase our effective tax rate, or have a material adverse impact on our financial condition and results of operation.

We cannot predict whether industry initiatives to seek tariff carve-outs for devices or other life sciences goods and products will be successful.

We also cannot predict the effect on our tax and tariff burden, if any, of the imposition of new or increased tariffs by one country and the response of other countries that retaliate in response.

It is possible that these changes could adversely affect our business.

Additionally, we could be negatively impacted by political policy changes domestically.

For example, federal and state budgetary cuts at state and federal agencies, the withholding of federal grant funds, staffing shortages and the reallocation of regulatory priorities by key federal agencies that oversee our products, services, and associated reimbursement, including FDA and the U.S.

Department of Health and Human Services more broadly could adversely affect our business.

Such political developments may require us to allocate significant time, resources, and expense to modifying our policies and procedures, processes, systems, and practices to ensure compliance or adapt to the new regulatory climate, particularly to the extent such actions are subject to protracted and uncertain legal challenges.

To the extent changes in the political environment have a negative impact on us or on our markets, our business, results of operation, and financial condition could be materially and adversely affected in the future.

Adverse economic conditions and political or regulatory developments could materially and adversely affect our business.

Weakness, volatility, or instability in the global economy, particularly in the United States and Europe, including inflation, rising energy costs, or financial market disruptions, could negatively affect demand for our products and harm our revenue and operating results.

In addition, changes in domestic or international political, trade, tax, or regulatory policies may increase our costs, disrupt our operations, or adversely affect our financial condition.

Because we operate internationally, we may be subject to evolving trade laws, tariffs, export restrictions, and potential retaliatory measures.

Domestically, we may be adversely affected by budgetary constraints, funding cuts, staffing shortages, or shifts in regulatory priorities at agencies overseeing our products and reimbursement, including the FDA and the U.S.

Department of Health and Human Services, which could delay approvals, disrupt oversight, or require significant resources to address compliance.

Additionally, keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, will require an increased amount of management attention and external resources.

If economic or political conditions deteriorate or regulatory requirements become more burdensome, our business, results of operations, and financial condition may be materially and adversely affected.

Clinical study results for our CytoSorb and/or DrugSorb-ATR device may not be indicative of our future clinical study results, and we cannot assure you that any clinical study results will lead to results sufficient for necessary regulatory clearances or product sales.

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There can be no assurance that we will successfully complete additional clinical studies or that our current or future clinical studies will lead to results necessary to receive additional regulatory approvals in markets not covered by the CE Mark.

While clinical studies conducted by us and others

have produced results we believe to be encouraging, data already obtained, or in the future obtained, from pre-clinical studies and clinical studies do not necessarily predict the results that will be obtained from later pre-clinical studies and clinical studies.

While clinical studies conducted by us and others have produced results we believe to be encouraging, data already obtained, or in the future obtained, from pre-clinical studies and clinical studies do not necessarily predict the results that will be obtained from later pre-clinical studies and clinical studies.

CytoSorb, DrugSorb-ATR and our other products and product candidates may fail to show the desired safety and efficacy in clinical development despite positive results in previous studies, which could result in decreased sales of our products and product candidates and have an adverse effect on our business and results of operations.

Moreover, pre-clinical and clinical data are susceptible to varying interpretations, which could delay, limit or prevent additional regulatory approvals in markets not covered by the CE Mark.

A number of companies in the medical device and pharmaceutical industries have suffered significant setbacks in advanced clinical studies, even after promising results in earlier studies.

A number of companies in the

medical device and pharmaceutical industries have suffered significant setbacks in advanced clinical studies, even after promising results in earlier studies.

The failure to adequately demonstrate the safety and effectiveness of CytoSorb, DrugSorb-ATR or another product under development could delay or prevent regulatory clearance of the device, resulting in delays to commercialization, and could materially harm our business and results of operations.

Even though we have received approval to apply the CE Mark to our CytoSorb device as a cytokine adsorber, there can be no assurance that we will be able to receive approval under the MDR for other potential applications of CytoSorb, or that we will receive regulatory clearance or marketing approval from authorities in other targeted regions or countries.

We rely extensively on research and testing facilities at various universities and institutions, which could adversely affect us should we lose access to those facilities.

At the same time, relationships with these individuals and entities are the subject of heightened scrutiny and may present the potential for future healthcare enforcement risk.

Although we have our own research laboratories and clinical facilities, we collaborate with numerous institutions, universities and commercial entities to conduct research and studies of our products.

We currently maintain a good working relationship with these parties.

However, should the situation change, the cost and time to establish or locate alternative research and development facilities could be substantial and delay gaining CE Mark for other potential applications of our products, our other product candidates or technologies, and/or FDA approval and commercializing our products.

In addition, our interactions, communications, and financial relationships with these individuals and entities present future healthcare enforcement risks.

We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued.

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Their association with these institutions may currently or in the future involve conflicting interests in the event they or these institutions enter into consulting or other arrangements with competitors of ours.

We have limited manufacturing experience and capabilities, we may not be able to manufacture sufficient quantities at an acceptable cost or quality, or without shut-downs or delays.

Although we have significant manufacturing experience and capabilities, we may not be able to manufacture sufficient quantities at an acceptable cost or quality, or without shut-downs or delays.

In March 2011, we received approval from our notified body to apply the CE Mark to our CytoSorb device for commercial sale as a cytokine adsorber.

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As such, we are subject to continual review and periodic inspections to assess compliance with cGMP/QSR requirements as required by our International notified body.

Accordingly, we must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and

quality control.

Accordingly, we must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

We have limited experience in establishing, supervising and conducting commercial manufacturing.

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We primarily source the raw materials for our products from domestic suppliers but may be required to source from international suppliers if our domestic suppliers are unable to meet our supply requirements.

Generally, we qualify only a single source of reagents and molded parts for use in each product due to the cost and time required to validate and qualify a second source of supply.

Generally, we typically second source and validate the quality of chemicals, raw materials, and molded parts.

do not have any significant concentration of risk with respect to any one particular supplier.

If we were to change the supplier of a raw material for a product, the cost for the material could be greater than the amount we paid with the previous supplier.

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From time to time, we may experience temporary or long-term disruptions in the supply of certain of our raw materials that could have a material adverse effect on our business, financial condition and results of operations.

Due to our limited marketing, sales and distribution experience, we may be unsuccessful in our efforts to sell our products.

We expect to enter into agreements with third parties for the commercial marketing, and distribution of our products.

There can be no assurance that parties we may engage to market and distribute our products will:

● satisfy their financial or contractual obligations to us;

● adequately market our products;

● not offer, design, manufacture or promote competing products.

Due to our limited resources for marketing, sales and distribution, and our reliance on many different distributors, we may be unsuccessful in our efforts to successfully commercialize our products in one or more countries.

We have limited resources for marketing, sales, and distribution.

We expect to enter into additional agreements with third parties for the commercial marketing, and distribution of our products.

There can be no assurance that any third parties we may engage to market and distribute our products will satisfy their financial or contractual obligations to us, effectively promote our products, or refrain from offering, designing, manufacturing, or promoting competing products.

If for any reason any party we engage is unable or chooses not to perform its obligations under our marketing and distribution agreement, we would experience delays in product sales and incur increased costs, which would harm our business and financial results.

Weakness in the global economy, and in particular in the United States and Europe, could negatively impact our revenue and operating results.

The United States and Europe and other economies may suffer from uncertainty, volatility, disruption, and other adverse conditions, such as inflation or the rising cost of energy, and these conditions have adversely impacted and may continue to adversely impact the business community and the financial markets.

Adverse economic and financial market conditions may negatively affect our markets, thereby negatively impacting our revenue and operating results.

As a result, if economic and financial market conditions weaken or deteriorate, then our revenue and operating results, including our ability to grow and expand our business and operations, could be materially and adversely affected.

Our results of operations can be significantly affected by foreign currency fluctuations and regulations.

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Due to the concentration of our product sales in this country, any of the foregoing may have a negative impact on our revenues, business operations and financial condition.

Significant economic downturns or international trade disruptions or disputes could adversely affect our business and operating results.

Significant portions of our business are conducted in Europe, including the U.K.;

and other international geographies.

Interruptions in international relationships such as the exit by the U.K.

from the EU, the war between Russia and Ukraine, the conflict in the Middle East, and trade disputes such as the current trade negotiations between the U.S.

and China, or the threatened tariffs with China, Canada, and Mexico, could result in changes to regulations governing our products and our intellectual property, disruption of our manufacturing or commercial operations, our inability to timely engage with and collect payment from customers in Russia and

other affected regions, or otherwise affect our ability to do business.

Additionally, global events such as the current COVID-19 coronavirus pandemic, war between Russia and Ukraine, and the conflict in the Middle East, that have or could, slow worldwide economies, disrupt travel and trade, and destabilize financial markets, may interfere with our ability to raise capital, sell and market our products, obtain reimbursement and payment of our products, or reduce the ability of our customers to pay for our product.

Although these global problems transcend our company and afflict companies across industries and borders, these and similar events could adversely affect us, or our business partners or customers.

Our business may be negatively affected if the United States and/or the countries in which we sell our products participate in wars, military actions or are otherwise the target of international terrorism.

Involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.

To the extent that such disruptions result in (i) delays or cancellations of customer orders, (ii) a general decrease in consumer spending on healthcare technology, (iii) our inability to effectively market and distribute our products globally (iv) our inability to timely engage with and collect payment from our customers or (v) our inability to access capital markets, our business and results of operations could be materially and adversely affected.

For example, in response to the conflict between Russia and Ukraine, the United States has imposed and may further impose, and other countries may additionally impose, broad sanctions or other restrictive actions against governmental and other entities in Russia.

CytoSorb is currently distributed in Russia.

While the existing sanctions do not currently prohibit the distribution of CytoSorb in Russia, additional sanctions may be imposed in the future that could prevent us from selling CytoSorb in this or other affected regions.

Additionally, further escalation of geopolitical tensions or new conflicts, such as the evolving conflict between Israel and Gaza and the surrounding areas, could have a broader impact that extends into other markets where we do business.

We are unable to predict whether acts of international terrorism or the involvement in a war or other military actions by the United States and/or the countries in which we sell or distribute our products, including Russia, will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.

Economic downturns, international trade disruptions, wars, terrorism, and geopolitical conflicts could materially and adversely affect our business and operating results.

Significant portions of our business are conducted in Europe (including the U.K.), Asia, and other international markets.

Economic instability, trade disputes, sanctions, tariffs, regulatory changes, pandemics, wars, military actions, acts of terrorism, and other geopolitical conflicts — including the war between Russia and Ukraine, the conflict in the Middle East, the evolving conflicts in Iran and Israel and the surrounding areas, and trade tensions involving the United States, China, Canada, and Mexico — could disrupt global commerce, financial markets, travel, and supply chains.

These events may result in changes to regulations affecting our products or intellectual property, disruptions to our manufacturing or commercial operations, delays or cancellations of customer orders, reduced healthcare spending, difficulties marketing and distributing our products, challenges engaging with or collecting payment from customers in affected regions (including Russia, where our products are distributed), or restrictions on sales due to existing or future sanctions.

Such conditions may also impair our ability to raise capital or access the capital markets.

We cannot predict the duration or severity of these events or their long-term impact.

Any significant economic downturn, trade disruption, armed conflict, terrorist activity, or related sanctions or retaliatory measures could materially and adversely affect our business, results of operations, and financial condition.

We could be adversely affected by violations of the Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

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We do business in a number of countries in which FCPA violations by other companies have recently been enforced.

Failure to comply with the FCPA, other anti-bribery laws or other laws governing the conduct of business with foreign government entities, including local laws, could disrupt our business and lead to severe criminal and civil penalties, including imprisonment, criminal and civil fines, loss of our export licenses, suspension of our ability to do business with the federal government, denial of government reimbursement for our products and/or exclusion from participation in government healthcare programs.

exclusion from participation in government healthcare programs.

Other remedial measures could include further changes or enhancements to our procedures, policies, and controls and potential personnel changes and/or disciplinary actions, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity.

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In addition, changes in our products or changes in applicable export or import laws, tariffs, and regulations may create delays in the introduction and sale of our products in international markets or, in some cases, prevent the export or import of our products to certain countries, governments or persons altogether.

Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws, tariffs, and regulations, or change in the countries, governments, persons, products, or technologies targeted by such laws, tariffs, and regulations, could also result in decreased use of our products, or in our decreased ability to export or sell our

products to existing or potential customers.

Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations.

Cyberattacks and other security breaches could compromise our proprietary and confidential information which could harm our business and reputation.

In the ordinary course of our business, we generate, collect and store proprietary information, including intellectual property and business information, as well as employee personal data.

The secure storage, maintenance, and transmission of and access to this information is important to our operations our day-to-day business and our reputation.

Security breaches have become more common across industries.

Computer hackers may attempt to penetrate our computer systems and, if successful, misappropriate our proprietary and confidential information including e-mails and other electronic communications, as well as our intellectual property and business data.

In addition, an employee, contractor, or other third-party with whom we do business may attempt to obtain such information, and may purposefully or inadvertently cause a breach involving such information.

Further, while many of our employees and certain suppliers with whom we do business operate in a remote working environment during the COVID-19 pandemic, the risk of cybersecurity attacks, particularly through phishing, are increased.

We have recently experienced multiple attempts by third parties to penetrate our computer systems.

While we have certain safeguards in place to reduce the risk of and detect cyber-attacks, as well as limit the potential exposure of proprietary and confidential information, including multi-layer security protections, our information technology networks and infrastructure may be vulnerable to unpermitted access by hackers or other breaches powered by new and sophisticated technologies, or employee error or malfeasance.

Further, we may not be immediately aware of any unpermitted access by hacker or other breaches and we may be unable to quickly and effectively remediate any such breaches.

Any such compromise of our data security and access to, or public disclosure or loss of, confidential business or proprietary information could disrupt our operations, damage our reputation, provide our competitors with valuable information, and subject us to additional costs which could adversely affect our business.

In the ordinary course of our business, we generate, collect, and store proprietary information, including intellectual property, business information, and employee personal data, and the secure storage, transmission, and access to this information are critical to our operations and reputation.

Cybersecurity incidents have become increasingly common across industries, and we face risks from hackers, employees, contractors, and other third parties who may attempt to gain unauthorized access to, misappropriate, or inadvertently expose our confidential information, including through phishing or other sophisticated attacks, particularly in remote working environments.

We have experienced previous attempts to penetrate our systems and, although we maintain multi-layered security safeguards, our information technology networks and infrastructure remain vulnerable to evolving threats, technological advances, and human error or malfeasance.

We may not detect unauthorized access promptly or be able to remediate breaches effectively.

Any compromise of our data security or unauthorized access to, or disclosure or loss of, confidential or proprietary information could disrupt our operations, harm our reputation, provide competitors with valuable information, result in additional costs, and materially and adversely affect our business.

Our failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.

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Legislators have stated that they intend to propose amendments to the CCPA before it goes into effect, and the California Attorney General will issue clarifying regulations.

Although the law includes limited exceptions, including for certain information collected as part of clinical trials as specified in the law, it may regulate or impact our processing of

personal information depending on the context.

Although the law includes limited exceptions, including for certain information collected as part of clinical trials as specified in the law, it may regulate or impact our processing of personal information depending on the context.

It remains unclear what, if any, modifications will be made to this legislation or how it will be interpreted.

Risks Connected to Our Securities

We are not in compliance with the continued listing standards of the Nasdaq Stock Market LLC (“Nasdaq”), and our common stock could be delisted if we do not regain compliance with listing standards within time frame required by the Nasdaq staff, which could have a material adverse effect on the liquidity of our common stock.

Our common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”).

On October 2, 2025, we were notified that we were not in compliance with the Nasdaq’s continued listing requirements relating to the minimum average closing price per share of our common stock, because the average closing price of our common stock over a consecutive 30 trading-day period was below $1.00 per share (the “Minimum Bid Price Requirement”).

We have timely notified the Nasdaq of our intent to regain compliance with the minimum price condition within a 180-day cure period provided by Nasdaq rules, or until March 31, 2026 (the “Compliance Date”).

We can regain compliance at any time within the cure period if, the closing bid price of the Company’s common stock meets or exceeds $1.00 per common share for a minimum of 10 consecutive business days prior to the Compliance Date, unless the Nasdaq staff exercises its discretion to require the Company to meet the Minimum Bid Price Requirement for a longer period pursuant to applicable Nasdaq rules.

If we fail to regain compliance with the Nasdaq’s minimum price condition by the end of the cure period, the Company would be eligible for an additional compliance period of 180 days provided it presents an acceptable plan to Nasdaq to regain compliance.

In accordance with the Nasdaq Listing Rules, the Company has filed for a 180-day extension to regain compliance with the Minimum Bid Price Requirement, including the Company’s intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

and expects the Nasdaq will respond to the Company’s request subsequent to March 31, 2026.

The Company intends to actively monitor the closing bid price of its common stock and will consider its options to regain compliance with the Minimum Bid Price Requirement.

There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq listing standards.

If the Company is unable to regain compliance with the Minimum Bid Price Requirement, our common stock will be subject to the Nasdaq’s suspension and delisting procedures.

During this time, our common stock will continue to be listed on the Nasdaq, subject to our compliance with other Nasdaq continued listing requirements.

However, there can be no assurance about our ability to regain compliance with the Nasdaq’s minimum price condition within the applicable cure periods.

The price of our common stock has been highly volatile due to factors that will continue to affect the price of our stock.

Our common stock closed as high as $1.31 and as low as $0.62 per share between January 1, 2025 and December 31, 2025 on Nasdaq.

On March 28, 2025, the closing price of our common stock, as reported on Nasdaq, was $1.00.

On December 31, 2025, the closing price of our common stock, as reported on Nasdaq, was $0.64.

Historically, medical device company securities such as our common stock have experienced extreme price fluctuations.

Some of the factors leading to this volatility include, but are not limited to:

● fluctuations in our operating results;

● announcements of product releases by us or our competitors;

● announcements of clinical data, analyst or media reports;

● financial status:

● announcements of acquisitions and/or partnerships by us and our competitors;

● general market conditions.

Some of the factors contributing to this volatility include fluctuations in our operating results;

regulatory developments;

announcements of product releases, clinical data, acquisitions, or partnerships by us or our competitors;

analyst or media reports;

changes in our financial condition;

and general market conditions.

There is no assurance that the price of our common stock will not continue to be volatile.

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As of December 31, 2025, three shareholders hold 16.6% of our shares and our directors and officers hold 6.3% of our shares on a fully diluted basis.

Our Board of Directors may, without stockholder approval, issue and fix the terms of shares of preferred stock and issue additional shares of common stock adversely affecting the rights of holders of our common stock.

On December 3, 2014, we effected a twenty-five-for-one (25:1) reverse split of our common stock.

Immediately after the reverse stock split, we changed our state of incorporation from the State of Nevada to the State of Delaware pursuant to an Agreement and Plan of Merger, dated December 3, 2014, whereby we merged with and into our recently formed, wholly-owned Delaware subsidiary.

Pursuant to the Agreement and Plan of Merger effecting the merger, we adopted the certificate of incorporation, as amended and restated, and bylaws of our Delaware subsidiary as our certificate of incorporation and bylaws at effective time of the merger.

As a result, our certificate of incorporation, as amended and restated, 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.

Currently, our certificate of incorporation, as amended and restated, which was effective June 12, 2019, authorizes the issuance of up to 100,000,000 shares of common stock, of which approximately 45,170,000 shares remain available for issuance as of December 31, 2024 and may be issued by us without stockholder approval.

Anti-takeover provisions in our charter documents and under Delaware law could prevent or delay transactions that our stockholders may favor and may prevent stockholders from changing the direction of our business or our management.

After giving effect to our merger into our wholly-owned Delaware subsidiary, provisions of our Certificate of Incorporation, as amended and restated, and bylaws may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares, and may also frustrate or prevent any attempt by stockholders to change the direction or management of us.

For example, these provisions:

● authorize the issuance of “blank check” preferred stock without any need for action by stockholders;

● eliminate the ability of stockholders to call special meetings of stockholders;

● prohibit stockholder action by written consent;

● establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

Compliance with changing corporate governance and public disclosure regulations may result in additional expense.

Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations will require an increased amount of management attention and external resources.

We intend to continue to invest all reasonably necessary resources to comply with evolving standards, which may result in increased general and administrative expense and a diversion of management time and attention from revenue-generating activities to compliance activities.

Our common stock is thinly traded on The Nasdaq Capital Market exchange and no assurances can be made about stock performance, liquidity, or maintenance of our Nasdaq listing.

Prior to December 23, 2014, our common stock was quoted on the OTCQB, which provided significantly less liquidity than a securities exchange (such as the New York Stock Exchange or the Nasdaq Stock Market).

On December 17, 2014, our common stock was approved for trading on Nasdaq.

Beginning on December 23, 2014, our common stock began trading on Nasdaq under the symbol “CTSO.” Although currently listed on Nasdaq, there can be no assurance that we will continue to meet Nasdaq’s minimum listing requirements or that of any other national exchange.

In addition, there can be no assurances that a liquid market will be created for our common stock.

If we are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop, our common stock may remain thinly traded.

Future sales of our common stock may cause our share price to fall.

On September 30, 2024 we entered into a new Open Market Sale Agreement with Jefferies LLC (the “Sale Agreement”).

Pursuant to the Sale Agreement we may offer to sell, from time-to-time shares of our common stock through “at-the-market” offerings, up to a maximum of $20,000,000.

We are not obligated to make or continue to make any sale of shares of our common stock under the “at-the-market” offerings.

Although any sale of securities pursuant to the “at-the-market” offerings will result in a concomitant increase in cash for each share sold, it may result in shareholder dilution and may cause our share price to fall.

The evaluation of potential financial misstatements and determination of the materiality and need to restate certain sections of our previously issued consolidated financial statements has been time consuming, resulted in additional expense and may subject us to additional risks and uncertainties, including loss of investor confidence, and the increased possibility of litigation and regulatory inquiries.

As discussed in Item 8’s Note 12 – Restatement of Previously Issued Financial Information, to correct misstatements in inventory and stock-based compensation for restricted stock units, we have restated certain sections of our audited consolidated financial statements as of and for the year ended December 31, 2023 and our interim unaudited consolidated financial statements contained in the Quarterly Reports on Form 10-Q as of and for the first three quarters of the years ended December 31, 2023 and December 31, 2024.

The process to identify and evaluate the materiality and impact of potential financial misstatements has been time consuming and resulted in additional expense.

The restatement may result in a loss of investor confidence in the accuracy of our financial disclosures and cause reputational risks for our business.

In addition, we have incurred, and may continue to incur, additional costs for accounting, audit and legal fees in connection with or related to the restatement.

For example, we have recently expended unanticipated fees for multiple accounting and legal advisors to assist with the application of technical accounting requirements.

Finally, the restatement could subject us to additional risks and uncertainties, including the increased possibility of litigation, regulatory inquiries, or other matters.

We have identified a material weakness in our internal control over financial reporting, which could, if not effectively remediated, result in additional restatements of our financial statements, and a failure to meet our reporting and financial obligations, each of which could adversely affect our results of operations and financial condition.

Our Board of Directors’ authority to issue additional securities and anti-takeover provisions in our governing documents under Delaware law could adversely affect the rights of our common stockholders and discourage or delay a change in control.

On December 3, 2014, we effected a 25:1 reverse stock split and changed our state of incorporation from Nevada to Delaware through a merger with our wholly owned Delaware subsidiary, at which time we adopted our current certificate of incorporation and bylaws.

Our certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock and up to 100,000,000 shares of common stock, a substantial portion of which remains available for issuance, in each case without stockholder approval.

The issuance of preferred stock with rights and preferences determined by our Board of Directors, or additional shares of common stock, could dilute existing stockholders and adversely affect the voting power and other rights of holders of our common stock.

In addition, provisions of our certificate of incorporation and bylaws, as well as Delaware law, may discourage, delay, or prevent a merger, acquisition, or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares, and may limit stockholders’ ability to influence the direction or management of the Company.

In our previous Form 10K, we identified a material weakness in our internal control over financial reporting, which could, if not effectively remediated, result in additional restatements of our financial statements, and a failure to meet our reporting and financial obligations, each of which could adversely affect our results of operations and financial condition.

As discussed above, our management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2025, due to a material weakness relating to the accounting for stock-based compensation corresponding to grants of restricted stock units.

Specifically, our controls were not effectively designed or operating to ensure that restricted stock unit expense was properly accounted for.

Specifically, our controls were not effectively designed or operating to ensure that non-cash restricted stock unit expense was properly accounted for.

We are actively engaged in remediating the identified material weakness.

Management has begun implementing measures to strengthen our internal control over financial reporting, including redesigning internal control procedures and enhancing documentation processes related to the accounting for restricted stock unit grant and vesting events.

These efforts are intended

to ensure accurate and timely reporting in accordance with U.S.

These efforts are intended to ensure accurate and timely reporting in accordance with U.S.

GAAP for both interim and annual periods.

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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 1A. Risk Factors