What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-03-31 · 164 added, 112 removed, 82 unchanged (77% of the section changed)

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one for the removal of ticagrelor and another for the removal of the direct oral anticoagulants (DOAC) apixaban and rivaroxaban in a cardiopulmonary bypass circuit during urgent cardiothoracic procedures.

In September 2024, the Company submitted a De Novo medical device application to the FDA requesting marketing approval to reduce the severity of perioperative bleeding in CABG patients on the antithrombotic drug ticagrelor, which was accepted for substantive review in October 2024.

On November 1, 2024 we received Medical Device Single Audit Program (MDSAP) certification, a key regulatory milestone that certifies compliance of our quality management system with the standard regulatory requirements of Canada, the United States, Brazil, Japan and Australia;

and then promptly submitted our Medical Device License (MDL) marketing application to Health Canada on November 1, 2024, with MDSAP certification – a requirement for the submission.

Our applications with FDA and Health Canada continue to be in substantive and interactive review, and we continue to expect regulatory decisions from both agencies in 2025.

The Company continues to actively pursue regulatory approval of DrugSorb-ATR with the U.S.

FDA and expects to pursue regulatory approval in Canada with better visibility from the FDA.

DrugSorb-ATR is not yet granted or approved in the United States and Canada, respectively.

See further discussion in ‘Cardiac Surgery’ below.

The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued U.S.

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Summary of Operational and Business Highlights

● Total product revenue (excluding grant income) was $35.6 million for the year ended December 31, 2024, an increase of $4.5 million, or 15%, compared to the year ended December 31, 2023

● Gross profit was 25.1 million for the year ended December 31, 2024, an increase of $3.2 million, or 14%, compared to the year ended December 31, 2023

● Total product revenue was $37.1 million for the year ended December 31, 2025, an increase of 4.1%, compared to the year ended December 31, 2024

● Gross profit for the year ended December 31, 2025 was 71.5% compared to 69.9% in the prior year,

● Our loss from operations was improved by 10.4% to approximately $14.7 million, from $16.5 million for the years ended December 31, 2025 and 2024 respectively.

This improvement was the result of revenue growth, and a 22% reduction in total operating expense.

● Secured a $20 million credit facility

● Launched the PuriFi Pump, and standalone hemoperfusion pump designed to support early treatment with CytoSorb without standard dialysis machines

● We submitted our DrugSorb-ATR DeNovo marketing application to the FDA on September 27, 2024, and announced FDA acceptance and initiation of substantive review of our application on October 22, 2024.

This filing included the results of our STAR-T pivotal trial, and was supported with real world evidence from our STAR Registry

● We received Medical Device Single Audit Program (MDSAP) certification on November 1, 2024, a key regulatory milestone that certifies compliance of our quality management system with the standard regulatory requirements of Cananda, the United States, Brazil, Japan and Australia

● Submitted our Medical Device License (MDL) marketing application to Health Canada on November 1, 2024, concurrent with MDSAP certification – a requirement for submission, with data from both the STAR-T trial and the STAR Registry

● Surpassed 270,000 CytoSorb treatments delivered cumulatively to date

● In the first quarter of 2025 we strengthened our balance sheet with the completion of a shareholder Rights Offering in January 2025 that provided $5.8 million net proceeds, and then added another $1.5 million, net proceeds with the exercise of the Series A Right Warrant in February.

This equity raise satisfied a debt covenant to release $5 million in restricted cash already on our balance sheet.

As a result, this raise increased our unrestricted cash liquidity by a total of $12.3 million.

This improvement was primarily the result of revenue growth and gross margin improvement.

● In the first quarter, we strengthened our balance sheet with the completion of a shareholder Rights Offering in January 2025 that provided $5.4 million net proceeds, and then added another $1.4 million net proceeds with the exercise of the Series A Right Warrant in February 2025.

● In April 2025, we further supplemented our cash balance with the receipt of $1.7 million from the sale of our 2023 and amended 2022 Net Operating Loss (NOL) and R&D tax credits from the Technology Business Tax Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority (NJEDA).

● We continued to see real world validation of improved clinical outcomes (reduced serious perioperative bleeding) in cardiac surgery patients on a blood thinner from data presented at several global cardiac surgery conferences including EuroPCR, ESCVS, EACTS, and TCT.

● On July 31, 2025 the Company highlighted data demonstrating the vital and evolving role of CytoSorb therapy in the treatment of sepsis and septic shock–among the deadliest challenges in critical care medicine.

Recent data demonstrate early and intensive use of CytoSorb therapy was associated with improved clinical outcomes for patients suffering from these conditions.

The Company presented a World Sepsis Day Global Webinar on September 10, 2025 in commemoration of Sepsis Awareness Month and World Sepsis Day.

See our Current Report on Form 8-K, filed with the SEC on August 1, 2025, for additional information.

● On September 16, 2025, the Company announced that it would file a new De Novo application for DrugSorb-ATR with the FDA.

This decision followed an appeal meeting and decision by the FDA that upheld its previous denial of the Company’s DrugSorb-ATR De Novo application, but affirmed that there were no safety related issues with the device, and requested additional information to support the Company’s 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 November 13, 2025, the Company amended its credit facility with Avenue Capital Group which provided access to an additional aggregate $2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and for the 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.

The Company will have access to an additional aggregate $2.5 million (“Tranche 2b”) and also will receive a further six-month extension of the interest-only period to the July 1, 2027 maturity date upon FDA approval of DrugSorb-ATR by December 31, 2026.

● On November 13, 2025, the Company announced it initiated a strategic workforce and cost reduction plan (the “Strategic Workforce and Cost Reduction Plan”) to reduce costs, optimize operations, and accelerate a path to cash-flow profitability.

This initiative follows a comprehensive review of the Company’s cost structure and operating model.

As part of the Strategic Workforce and Cost Reduction Plan, the Company reduced its workforce by approximately 10%, reduced and realigned operating and production expenses, and now expects that the Company will reach operating cash flow break-even in the second half of 2026.

The Company recorded a restructuring charge in the fourth quarter of approximately $0.5 million that included cash-based severance and other compensation related charges of approximately $0.4 million, and other non-cash charges of approximately $0.1 million related to the restructuring.

Impact of Inflation and Other Issues:

The current high inflationary environment has impacted us in various ways.

Due to the current competitive labor market and rising inflation, our labor costs have risen significantly in order to attract and retain qualified employees throughout our organization.

In addition, we have experienced raw material price increases primarily related to the oil-based chemicals used in the polymer manufacturing process as well additional requests for higher fuel surcharges from most suppliers.

The recent high inflationary environment impacted us in various ways.

Due to the competitive labor market and rising inflation, our labor costs have risen significantly in order to attract and retain qualified employees throughout our organization.

In addition, we have experienced raw material price increases primarily related to the oil-based chemicals used in the polymer manufacturing process as well as additional requests for higher fuel surcharges from most suppliers.

Rising energy costs, including electricity and fossil fuels, have also made it more expensive to support our operations, manufacturing, and commercial activities.

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however, we have been able to substantially mitigate these cost increases by implementing bulk shipping methods.

Inflationary pressures may continue to impact our product gross margins in the future.

Inflationary pressures may continue to impact our product gross margins and other costs in the future.

Results of Operations

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For the Year Ended December 31,

Product revenue

(in thousands)

Cost of goods sold

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Selling, general and administrative

Restructuring

Total operating expenses

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Gain (loss) on foreign currency transactions

Miscellaneous income (expense)

Loss on abandoned patents

Total other income (expense), net

Loss before benefit from income taxes

Product Revenue

For the year ended December 31, 2024, we generated total revenue of approximately $35.6 million as compared to revenues of approximately $31.1 million for the year ended December 31, 2023, an increase of approximately $4.5 million, or 15%.

The increase in revenues related to increases in direct sales and distributor sales of $1.7 million or 9%, and $2.7 million or 22%, respectively, during the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Benefit from income taxes

For the year ended December 31, 2025, we generated total revenue of approximately $37.1 million as compared to revenues of approximately $35.6 million for the year ended December 31, 2024, an increase of approximately $1.5 million, or 4.1%, and down 0.4% on a constant currency basis.

Revenue growth was led by strength in our distributor and strategic partner sales and direct sales outside of Germany, partially offset by lower revenue in our direct German market.

The Company began a proactive reorganization and strategic realignment of our German commercial team and sales approach in the first quarter of 2025.

We are making progress with this important initiative, and remain confident it will lead to stronger execution and improved performance.

Gross profit was approximately $26.5 million for the year ended December 31, 2025, an increase of approximately $1.6 million or 6.4%, as compared to gross profit of $24.9 million for the year ended December 31, 2024.

Product gross margins were 71% and 71% for the years ended December 31, 2024 and 2023, respectively.

Gross margins were 71.5% and 69.9% for the years ended December 31, 2025 and 2024, respectively.

Research and Development Expenses

Our research and development costs were approximately $5.1 million and $7.6 million for the years ended December 31, 2025 and 2024, respectively, a decrease of approximately $2.5 million, or 33.2%.

This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial in December 2023.

Clinical expenses excluding compensation were approximately $2.8 million and $9.2 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $6.4 million.

In addition, research and development compensation expenses decreased by $1.2 million from $3.6 million for the year ended December 31, 2023 to $2.4 million for the year ended December 31, 2024, due to reductions in headcount.

This decrease was driven by a decrease in our clinical trial costs due primarily to the completion of the STAR-T clinical trial, lower grant funded projects, as well as other clinical and product development program reductions.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $35.0 million and $38.3 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $3.3 million, or 9%.

This decrease was mainly due to a decrease in salaries of approximately $2.3 million related to headcount reductions, and a decrease in net legal, consulting and professional expenses of approximately $1.4 million.

Our selling, general and administrative expenses were approximately $35.6 million and $33.7 million for the years ended December 31, 2025 and 2024, respectively, an increase of approximately $1.9 million, or 5%.

This increase was mainly due to increases in legal, regulatory, financial and consulting costs including costs associated with our 2024 audited financial statements, as well as regulatory filings and initial costs associated with the anticipated approval and commercial launch of DrugSorb-ATR in North America, partially offset by decreases in stock-based compensation expense, and royalty expenses.

The decrease in stock-based compensation expense was primarily related to the full vesting of certain stock options in earlier periods and the decrease in royalty expense was the result of the expiration of a 4% royalty in August of 2024.

Restructuring Expenses

During the fourth quarter of 2025, we initiated a strategic workforce and cost reduction plan (the “Strategic Workforce and Cost Reduction Plan”) to reduce costs, optimize operations, and accelerate a path to cash-flow profitability.

Our restructuring expenses were $0.5 million for the year ended December 31, 2025.

These costs primarily included cash-based severance and related workforce reduction charges of $0.4 million and other non-cash costs of $0.1 million.

Loss From Operations

Our loss from operations decreased by 47% to approximately $16.8 million, from $31.9 million for the years ended December 31, 2024 and 2023 respectively.

This improvement was the result of revenue growth, and a 22% reduction in total operating expense.

Our loss from operations (including the impact of the $0.5 million restructuring charge) decreased by 10.4% to approximately $14.7 million, from $16.5 million for the years ended December 31, 2025 and 2024 respectively.

This improvement was the result of revenue growth and gross margin improvement.

Interest Expense, Net

For the year ended December 31, 2024, Interest expense, net, was approximately $1.4 million, as compared to $0.2 million for the year ended December 31, 2023.

The increase was due to interest incurred on the Avenue Capital Group debt that was closed during the second quarter of 2024.

This financing increased the principal amount of our debt to $15 million from $5 million and the interest rate increased to 13.5% from 8%.

For the year ended December 31, 2025, net interest expense was approximately $2.6 million, as compared to $1.4 million for the year ended December 31, 2024.

The increase was due to interest incurred on our credit facility for the full year of 2025, which began in the third quarter of 2024.

Additionally, we amended our credit facility which increased the principal balance outstanding under the credit facility by $2.5 million effective November 13, 2025.

Gain (Loss) on Foreign Currency Transactions

For the year ended December 31, 2024, the loss on foreign currency transactions was approximately $4.2 million, as compared to a gain on foreign currency transactions of approximately $1.9 million for the year ended December 31, 2023.

The loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S.

For the year ended December 31, 2025, the gain on foreign currency transactions was approximately $9.3 million, compared to a loss on foreign currency transactions of approximately $4.2 million for the year ended December 31, 2024.

The gain was directly related to the increase in the spot exchange rate of the Euro to the U.S.

dollar as of December 31, 2025, as compared to December 31,

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dollar was $1.17 per Euro as of December 31, 2025, as compared to $1.03 per Euro at December 31, 2024.

The 2023 gain is directly related to the increase of the exchange rate of the Euro as of December 31, 2023, as compared to December 31, 2022.

The 2024 loss is directly related to the decrease of the exchange rate of the Euro as of December 31, 2024, as compared to December 31, 2023.

The exchange rate of the Euro to the U.S.

dollar was $1.03 per Euro as of December 31, 2024, as compared to $1.11 per Euro as of December 31, 2023.

Loss on Abandoned Patents

Loss on abandoned patents was approximately $0.6 million for the year ended December 31, 2025, an increase of approximately $0.2 million or 67.4%, as compared to loss on abandoned patents of $0.3 million for the year ended December 31, 2024.

Benefit from Income Taxes

Our benefit from income taxes was approximately $0.4 million and $1.7 million for the years ended December 31, 2025, and 2024, respectively.

This benefit was realized by utilizing the New Jersey Technology Business Tax Certificate Transfer Program whereby the State of New Jersey allows us to sell a portion of our state net operating losses to a third party.

Liquidity and Capital Resources

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As of December 31, 2025, we had current assets of approximately $20.6 million and current liabilities of approximately $9.7 million.

As of December 31, 2024, $19.7 million of our total shelf amount was allocated to our at-the-market facility (“ATM facility”), of which approximately $19.4 million remained available.

During the year ended December 31, 2024, the Company sold 382,823 shares pursuant to the Sale Agreement, at an average selling price of $1.01 per share, generating proceeds of approximately $179,000, net of fees.

In June of 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 constitutes restricted cash subject to release to the Company prior to March 31, 2025, provided certain conditions are met.

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.

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

In March of 2024, we received approximately $880,000 in cash from the approved sale of our net operating losses and research and development credits from the State of New Jersey.

We are also proactively managing our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to U.S.

FDA and Health Canada and the development of clinical data.

We have also instituted and continue to maintain tight control over expenditures and have lowered our spending significantly over the past year.

As of December 31, 2024, we have approximately $9.8 million in cash (a non-GAAP measure), including approximately $3.3 million in unrestricted cash and cash equivalents, $5 million in restricted cash classified as a current asset, and $1.5 million of non-current restricted cash which is not expected to fund Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements This matter raise substantial doubt about the Company’s ability to continue as a going concern.

However, as of the issuance date of this Annual Report on Form 10-K, the Company continues to be in the process of an equity raise through a Rights Offering that has included the following:

● 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.

● 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.

● Exercise of the Right Warrants require additional investment separate from the purchase of the Units.

We reserved 6.25 million shares of common stock for exercise of the Right Warrants, after which any remaining unexercised Right Warrants will immediately expire worthless.

The Right Warrants are transferable until they have expired.

● 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.

As of the issuance date of this Annual Report on Form 10-K, we have raised a total of $7.3 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 as reported amount of $3.3 million

Our expected future capital requirements may depend on many factors including expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the regulatory approval and introduction of DrugSorb-ATR in the U.S.

and Canada which is expected in 2025, and the related opportunity to receive Tranche 2 of Avenue Capital Commitment by December 31, 2025 and extend the principle re-payment terms of the facility beginning in the third quarter of 2026.

Additional sources of liquidity available to us include issuance of additional equity securities through the Series B Right Warrant, or other public or private equity offerings, debt financings or from other sources.

The sale of additional equity may result in dilution to our shareholders.

Effective Shelf Registration

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 $20 million of our total shelf amount to our ATM facility.

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

For the year ended December 31, 2025, we did not raise any proceeds under the ATM facility.

Loan and Security Agreement

On June 28, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement with Avenue Capital Group (“Loan”).

Avenue Capital Group agreed to loan the Company up to an aggregate of $20 million (the “Avenue Capital Commitment”), to be disbursed in two tranches.

The first tranche of $15.0 million (“Tranche 1”), consisted of $10.0 million which was available to the Company on the Closing Date and $5.0 million constituted restricted cash, which was released from its restriction on January 10, 2025, as the following conditions were achieved:

(i) the FDA accepted the Company’s application for review with respect to its DrugSorb-ATR De Novo 510(k) and (ii) the Company received a minimum of $3.0 million in net proceeds from the sale of its equity securities after the Closing Date.

The restriction was released on a dollar-for-dollar basis for equity raised between $3.0 million and $5.0 million.

The second tranche (“Tranche 2”) consisted of $5.0 million, which would have been disbursed at the Company’s request between July 1, 2025 and December 31, 2025, if the Company received FDA marketing approval of its DrugSorb-ATR application, which it did not.

The proceeds from the Avenue Capital Commitment were used to pay off the existing outstanding debt with Bridge Bank and were additionally used for working capital purposes and to fund general business requirements.

Amounts borrowed under the Avenue Capital Commitment bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate plus five percent (5.00%) or (B) thirteen and one-half percent (13.50%).

The loan required interest-only payments for the first 24 months through July 1, 2026, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity, on July 1, 2027;

provided, however that if the Company had drawn the full amount of Tranche 2 by December 31, 2025, and achieved for the trailing six month period ended June 30, 2026, at least $25 million of revenue, (the Interest only Milestone as defined in the Loan), the Interest only Period would have been extended by six months to January 1, 2027, followed by equal monthly installments of principal plus accrued and unpaid interest through January 1, 2028.

On November 13, 2025, the Company and Avenue Capital Group entered into the Amended Loan and Security Agreement, amending the Company’s Loan and Security Agreement, dated June 28, 2024, as supplemented.

The Amended Loan and Security Agreement funded an additional aggregate $2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and provided 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.

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

Tranche 2a and Tranche 2b, in the aggregate,

replace Tranche 2 of the Avenue Capital Commitment.

The Amended Loan and Security Agreement requires that the Company maintain certain operating cash burn targets (as defined in the Amended Loan and Security Agreement) prior to FDA approval of DrugSorb-ATR.

Under the terms of the Amended Loan and Security Agreement, we issued additional warrants to Avenue Capital Group to purchase 1,428,571 shares of the Company’s common stock for cash at the exercise price of $0.70, which expire on November 13, 2030.

The number of warrants and exercise price are fixed.

For further discussion regarding the Loan Agreement please see Note 5, Long Term Debt, to our Consolidated Financial Statements, included elsewhere in this Annual Report on Form 10-K.

Rights Offering

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 6.25 million shares of common stock may have been issued upon exercise of the Right Warrants.

Proceeds from the closing of the subscription period satisfied a debt covenant which allowed for $5 million of restricted cash on the Company’s consolidated balance sheets to 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.

Technology Business Tax Certificate Transfer Program

In April 2025, we further supplemented our cash balance with the receipt of $1.7 million from the sale of our 2023 and amended 2022 Net Operating Loss (NOL) and R&D tax credits from the Technology Business Tax Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority (NJEDA).

Resource Allocation and Path to Cash-Flow Profitability

We proactively manage our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to the FDA and Health Canada and the development of clinical data.

We have instituted and continue to maintain tight control over expenditures and have lowered our spending over the past year.

Further, on November 13, 2025, the Company announced it initiated a Strategic Workforce and Cost Reduction Plan to reduce costs, optimize operations, and accelerate a path to cash-flow profitability.

This initiative followed a comprehensive review of the Company’s cost structure and operating model.

The Company recorded a charge of $0.5 million that includes severance and other cash and non-cash charges related to the restructuring.

As of December 31, 2025, we have approximately $7.8 million in cash (a non-GAAP measure), including approximately $6.3 million in unrestricted cash and cash equivalents, and $1.5 million of non-current restricted cash which may not be sufficient to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements.

These cash and restricted cash balances considered with our historical cash used in operations, notwithstanding our Strategic Workforce and Cost Reduction Plan and the impact of the Amended Loan and Security Agreement, raises substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the accompanying consolidated financial statements are issued.

Our expected future capital requirements may depend on many factors, including expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the potential regulatory approval and introduction of DrugSorb-ATR in the U.S.

which would allow for the opportunity to receive Tranche 2b of the Amended Credit Facility, and receive an additional 6-month extension of the interest-only period on the credit facility.

Additional sources of liquidity available to us include the 2024 Shelf, other public or private equity offerings, debt financing or from other sources.

of additional equity may result in dilution to our shareholders.

There is no assurance that we will be able to secure funding on terms acceptable to us, or at all.

The increasing need for capital could also make it more difficult to obtain funding through either equity or debt.

Although the Company has taken actions to achieve cash flow breakeven, if it does not achieve this goal, the potential increased need for capital could also make it more difficult to obtain funding through either equity or debt.

Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying further regulatory approvals, or reducing headcount.

As a result of these additional uncertainties, 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.

The Company is actively pursuing financing sources, including less or non-dilutive debt financing, additional grant funding, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof.

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.

The Company routinely evaluates other financing sources, including less or non-dilutive debt financing, additional grant funding, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof.

There can be no assurance that management will be successful in these endeavors.

On September 16, 2025, the Company announced that it would file a new De Novo application for DrugSorb-ATR with the FDA.

This decision followed an appeal meeting and decision by the FDA to uphold its previous denial of the Company’s original DrugSorb-ATR application, but affirmed that there were no safety related issues with the device, and requested additional information to support the Company’s desired label indication.

As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA on November 7, 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.

Loan and Security Agreement

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Commencing on August 1, 2024, the Company shall make monthly interest only payments during the initial 25-month period following the Closing Date, followed by equal monthly installments through the maturity date consisting of principal plus accrued and unpaid interest.

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

The Amended Loan and Security Agreement provides for access to an additional aggregate $2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and for the 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, 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 Loan.

The Amended Loan and Security Agreement requires that we maintain certain operating cash burn targets (as defined) prior to FDA approval of DrugSorb-ATR and provides for a further six-month extension of the interest only period to the July 1, 2027 maturity date upon FDA approval of DrugSorb-ATR.

The number of warrants and exercise price are fixed.

On October 22, 2024, the Company announced that the FDA had accepted its application of for DrugSorb-ATR, which was one of the two conditions required by the restricted cash debt covenant.

Proceeds from the Rights Offering on January 10, 2025 satisfied the second condition of the debt covenant which now allows for the $5,000,000 of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

Proceeds from the Rights Offering on January 10, 2025 satisfied the second condition of the debt covenant which now allows for the $5.0 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

The proceeds from the Avenue Capital Commitment were used to pay off the existing outstanding debt with Bridge Bank and will additionally be used for working capital purposes and to fund general business requirements.

Amounts borrowed under the Avenue Capital Commitment shall bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate plus five percent (5.00%) or (B) thirteen and one-half percent (13.50)%.

For further discussion regarding the Loan Agreement please see Long Term Debt note to our Consolidated Financial Statements, included elsewhere in this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

For further discussion regarding the Loan Agreement please see Note 5, Long Term Debt, to our Consolidated Financial Statements, included elsewhere in this Annual Report on Form 10-K.

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 6.25 million shares of common stock may be issued upon exercise of the Right 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 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.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

We believe the following critical accounting policies and estimates have significant effect in the preparation of our consolidated financial statements.

Revenue Recognition

Revenue is recognized when the Company ships its products to its direct customers and distributors/strategic partners.

The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for the products shipped or the services provided under their grant contracts.

To achieve this core principle, the Company applies the following five steps:

Identify Contracts with Customers - The Company’s contracts with its direct customers are generally in the form of a purchase order.

The Company has formal written contracts with each of its distributors/strategic partners that define their respective territories and minimum purchase commitments which must be met in order to maintain exclusivity in their territory.

Distributors/strategic partner customers also submit purchase orders with each order that define the terms of shipment and transaction price.

Identify Performance Obligations - The performance obligations in contracts with direct customers and distributors/strategic partners are for the shipment of the CytoSorb device and related accessory parts.

Determine Transaction Price - The price charged is based on the Company’s price list for the CytoSorb device and related accessory parts for both direct customers and distributor/strategic partners.

The Company does not permit returns for product sales.

The Company also provides for certain rebates and discounts to direct customers for sales of its product that are earned based upon sales volume.

These amounts, which are earned based on calendar year sales volume, are recorded as a reduction of sales as earned.

Allocate Transaction Price to Performance Obligations - The transaction price for the performance obligation is based on the purchase orders received for both direct customers and on the type of contract and are outlined in each contract.

Recognize Revenue as Performance Obligations are Satisfied - The Company satisfies its performance obligation to direct customers and distributors/strategic partners generally upon shipment of the products.

Research and Development, Net of Grant Income

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

Currently, accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from the Company’s expansion or product development, and no products or services are transferred to the grantor.

As there is no authoritative guidance under U.S.

GAAP on accounting for grants to for profit business entities from government entities, the Company has adjusted its accounting policy for recording grants to analogize the guidance provided by IAS 20.

Accordingly, the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses.

Stock Based-Compensation

As discussed in Notes 2 and 11 to 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 $3,759,534 of stock-based compensation expense during the year ended December 31, 2024.

In 2024, the Company granted 1,214,400 performance awards, and recorded stock-based compensation expense of approximately $208,000 related to these awards.

The number of shares awarded are contingent on certain performance metrics, and the quantity of awards received can range based on the level of performance achieved.

Lease Commitments

We currently operate our leased facility in Princeton, New Jersey and two leased facilities in Berlin, Germany as follows:

● In March 2021, we entered into a lease agreement for a new 48,511 square foot operating facility at 305 College Road East, Princeton, New Jersey, which contains office, laboratory, manufacturing and warehouse space.

The lease commenced in April 2021 and expires in March 2037.

As of December 31, 2024, our monthly base rent is approximately $121,000.

● Our office facility leases in Berlin, Germany requires combined base rent payments for a total of 11,495 square feet amounting to approximately $12,100 per month.

The initial lease term of both leases ends August 31, 2026.

In addition, the Company is obligated to monthly operating expenses of approximately $3,000 per month.

● Our warehouse facility lease in Berlin, Germany commenced on April 1, 2021 and requires monthly payments of base rent of approximately $7,800 through its expiration on March 31, 2026.

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.

We believe the following critical accounting estimates have significant effect in the preparation of our consolidated financial statements.

Uncertain tax positions and valuation allowances:

The Company records income tax expense and related liabilities based on estimates of amounts expected to be taxable or deductible in tax returns filed in various jurisdictions.

These tax returns are subject to examination by taxing authorities, which may occur several years after the date of the financial statements.

During such examinations, disputes may arise regarding the timing or validity of certain items, including the recognition of taxable income or deductions, and the resolution of these matters may take an extended period of time.

The Company evaluates uncertain tax positions related to income taxes in accordance with FIN 48, which establishes the recognition threshold and measurement guidance for financial statement recognition of tax positions taken or expected to be taken in a tax return.

Under this guidance, the Company assesses whether the tax position is more likely than not to be sustained upon examination by the relevant taxing authority based on the technical merits of the position.

For positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement.

For positions that do not meet this threshold, no tax benefit is recognized in the financial statements.

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.

In addition, the Company offsets liabilities for unrecognized tax benefits against deferred tax assets associated with net operating loss or tax credit carryforwards when the uncertain tax position would be settled for the presumed amount at the balance sheet date.

The Company also evaluates its deferred tax assets and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized.

In assessing the need for a valuation allowance, the Company considers available positive and negative evidence, including expectations of future taxable income.

If the Company determines that it will be able to realize deferred tax assets in excess of the amount currently recorded, an adjustment would be made to increase income in the period such determination is made.

Conversely, if the Company determines that it will not be able to realize all or a portion of its deferred tax assets, the deferred

tax asset would be reduced and the resulting adjustment would be recognized as an expense in the period of determination.

Either determination could have a material impact on the Company’s financial statements.

Fair Value of Warrants

The Company issues warrants in connection with certain financing transactions.

The fair value of these warrants is estimated using the Black-Scholes option pricing model or the Monte Carlo pricing model, which requires management to make significant estimates and assumptions regarding inputs that are not directly observable in the market.

These estimates include, among other things, the expected volatility of the Company’s common stock, the expected term of the warrants, the risk-free interest rate, and the expected dividend yield.

Expected volatility is generally based on the historical volatility of the Company’s common stock and, when appropriate, comparable publicly traded companies.

The expected term represents the period of time the warrants are expected to remain outstanding, which may differ from the contractual term depending on the specific features of the warrants.

The risk-free interest rate is based on the yields of U.S.

Treasury securities with maturities consistent with the expected term of the warrants, and the dividend yield is based on the Company’s historical and expected dividend policy.

Because the valuation relies on significant assumptions, changes in these inputs could materially affect the estimated fair value of the warrants and the related amounts recorded in the Company’s financial statements.

If the warrants are classified as liabilities, the Company remeasures the fair value of the warrants at each reporting date, and changes in fair value are recognized in the consolidated statements of operations.

Accordingly, fluctuations in the underlying assumptions used in the valuation model, particularly expected volatility and the Company’s stock price, may result in significant non-cash gains or losses in future periods.

Management believes the assumptions used in estimating the fair value of the warrants are reasonable;

however, actual results and future changes in these assumptions could differ materially from those estimates and could have a material impact on the Company’s financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

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What changed 10-K

Item 7. Management’s Discussion and Analysis