What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-03-30 compared with 2025-03-31 · 456 added, 781 removed, 672 unchanged (65% of the section changed)

18 unchanged sentences

Based on the evaluation of our disclosure controls and procedures as of December 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025.

Changes in Internal Control Over Financial Reporting

Discussion of Material Weakness

Material Weakness in Internal Control Over Financial Reporting

A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or combination of deficiencies, in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected on a timely basis.

In connection with our preparation and the audit of our consolidated financial statements as of and for the year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting related to the accounting for inventory and stock-based compensation corresponding to grants of Restricted Stock Units.

Specifically, our controls were not effectively designed or operating to ensure that inventory and restricted stock unit grants or vesting activities were recorded within the proper accounts and at the proper amounts.

Remediation Activities

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.

Material Weakness — Continuing from Prior Year

The Company previously disclosed a material weakness in internal control over financial reporting as of December 31, 2024 in our Annual Report on Form 10-K for the year ended December 31, 2024 related 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 grants or vesting activities were recorded within the proper accounts and at the proper amounts.

As described below, while management has developed and implemented certain remediation actions to address the material weakness, further actions are still ongoing or have not been implemented for a sufficient amount of time to test and conclude on the effectiveness of the remediation actions as of December 31, 2025.

Although most of our remediation efforts have been in place and functioning properly for much of the year, in connection with our preparation of our consolidated financial statements as of and for the year ended December 31, 2025, we

identified two transactions related to unique RSU vesting events that required adjustment.

As a result, the material weakness related to the accounting for stock-based compensation corresponding to Restricted Stock Units continues to be present as of December 31, 2025.

Material Weakness — Newly Identified in Current Year

During the year ended December 31, 2025, management identified a new material weakness related to the Company’s financial statement consolidation and reporting, as controls over the consolidation and monthly close processes were deemed not to be operating effectively, a determination which is at least partially attributable to the significant volume of manual procedures involved in these processes.

Specifically, deficiencies in the review and reconciliation of intercompany balances resulted in (i) losses not being appropriately allocated to the correct jurisdiction when preparing the income tax provision and (ii) foreign currency transaction gains related to an intercompany balance being recorded incorrectly during the fourth quarter of 2025.

As a result, net operating losses were not initially reflected properly in the income tax disclosures, and foreign currency transaction gains were materially misstated in the Company’s consolidated financial statements prior to being corrected.

Discussion of Remediation Activities

Remediation of the identified material weaknesses and strengthening our internal control environment is an identified priority for us and will continue to be a priority in 2026.

We are committed to completing the remediation of these material weaknesses as expeditiously as possible and expect these enhancements to be fully implemented during the fiscal year ending December 31, 2026.

However, the material weaknesses will not be considered fully remediated until the new controls have been operational for a sufficient period of time and tested to demonstrate their effectiveness.

With continued oversight from the Audit Committee, the Company’s management has begun to design and implement changes in processes and controls to remediate the material weaknesses described above.

These internal control enhancements include, but are not limited to, the following:

Accounting for Stock-Based Compensation Corresponding to Grants of Restricted Stock Units

Management intends to continue implementing measures to strengthen our internal control over 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.

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- Increasing oversight and review by executive management to ensure the completeness and accuracy of restricted stock unit expense calculations and their corresponding Journal Entries.

We are committed to completing the remediation of this material weakness as expeditiously as possible and expect these enhancements to be fully implemented during the fiscal year ending December 31, 2025.

However, the material weakness will not be considered fully remediated until the new controls have been operational for a sufficient period of time and tested to demonstrate their effectiveness.

Financial Statement Consolidation and Reporting

Actions to address this material weakness are currently being developed, with the following primary solutions having been identified:

- A consolidation tool is currently being implemented, which will eliminate the need for the Company to manually execute the consolidation of its various entities at the end of each period.

- A financial close automation tool is also being implemented, which will create automated workflows, approval streams, and checklists for a variety of period-end close procedures (balance sheet reconciliations, etc.).

- Period-end analytics and the metrics and variance thresholds applied to those analytics are to be enhanced in order to make them more precise tools for the purpose of identifying potential errors or misstatements.

Changes in Internal Control Over Financial Reporting

Except as discussed above, there were no changes in the Company’s internal control over financial reporting that occurred during year ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Notwithstanding the material weaknesses, management has concluded that the consolidated financial statements included elsewhere in this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.

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Directors, Executive Officers and Control Persons.

Information required by this Item regarding our executive officers, Board of Directors, Section 16(a) compliance, Audit Committee, Audit Committee financial expert, Code of Business Conduct and Ethics, and other corporate governance matters is incorporated by reference from our definitive proxy statement for our 2025 annual meeting of stockholders, scheduled for June 12, 2025.

This proxy statement, containing the sections “Officers and Key Employees,” “Nomination and Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Board of Directors and Corporate Governance 1 Matters,” will be filed within 120 days of our fiscal year end

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

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

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

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

The information required by this Item will be provided in an amendment to this Annual Report on Form 10-K/A.

Executive Compensation.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Executive Compensation,” “Director Compensation” and “Board of Directors and Corporate Governance Matters” contained in our definitive proxy statement for our 2025 annual meeting of stockholders scheduled to be held on June 12, 2025, which we intend to file within 120 days of the end of our fiscal year.

The information required by this Item will be provided in an amendment to this Annual Report on Form 10-K/A.

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

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled “Principal Stockholders,” “Stock Ownership of Directors, Nominees for Director, and Executive Officers” and “Equity Compensation Plan Information” contained in our definitive proxy statement for our 2025 annual meeting of stockholders scheduled to be held on June 12, 2025, which we intend to file within 120 days of the end of our fiscal year.

The information required by this Item will be provided in an amendment to this Annual Report on Form 10-K/A.

Certain Relationships and Related Transactions and Director Independence.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section(s) entitled “Certain Relationships and Related Party Transactions” and “Board of Directors and Corporate Governance Matters,” “Compensation for Executive Officers and Directors, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” contained in our definitive proxy statement for our 2025 annual meeting of stockholders scheduled to be held on June 12, 2025, which we intend to file within 120 days of the end of our fiscal year.

The information required by this Item will be provided in an amendment to this Annual Report on Form 10-K/A.

Principal Accounting Fees and Services.

This information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Audit and Other Fees” contained in our definitive proxy statement for our 2025 annual meeting of stockholders scheduled to be held on June 12, 2025, which we intend to file within 120 days of the end of our fiscal year.

The information required by this Item will be provided in an amendment to this Annual Report on Form 10-K/A.

Exhibits, Financial Statement Schedules.

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List of Exhibits

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

Second Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8

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

Second Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 6, 2024)

Description of Capital Stock of CytoSorbents Corporation (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 10, 2022).

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and Phillip P.

Chan (incorporated by reference to Exhibit 10.1

Amended and Restated Employment Agreement, dated as of July 30

Chan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 5, 2019)

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

and Vincent J.

Capponi (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on August 5, 2019)

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

and Kathleen P.

Bloch (incorporated by reference to Exhibit 10.3

Bloch (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on August 5, 2019)

Employment Agreement by and between the Company and Efthymios Deliargyris, M.D., dated April 12, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 27, 2020).

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Assignment and Assumption of Certain Royalty Rights, dated as of November 22, 2022, by and among Robert Shipley Living Trust, ROKK, LLC, and CytoSorbents Medical, Inc (incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 9,2023).

Stipulated Order and Settlement Agreement between Bro-Tech Corporation,

Stipulated Order and Settlement Agreement between Bro-Tech Corporation, dated as of August 7, 2006, by and between Bio-Tech Corporation, and Purolite International Ltd., and MedaSorb Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 8, 2006)

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

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

CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form

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

Amendment No.

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

and Western Alliance Bank (incorporated by reference to Exhibit 10.1

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

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

and Western Alliance Bank (incorporated by reference to Exhibit 10.1

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

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

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and Western Alliance Bank (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2022).

First Amendment to Loan Documents, dated November 13, 2025, by and among CytoSorbents Corporation, the lenders, and the administrative and collateral agent party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2025).

Form of Warrant to Purchase Shares of Stock of CytoSorbents Corporation by and between the Company and Avenue Venture Opportunities Fund, L.P., dated November 13, 2025 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2025).

Form of Warrant to Purchase Shares of Stock of CytoSorbents Corporation by and between the Company and Avenue Venture Opportunities Fund II, L.P.

dated November 13, 2025 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2025).

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

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

Open Market Sale AgreementSM, dated as of December 30, 2021, by and between CytoSorbents Corporation and Jefferies LLC (incorporated by reference from Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 30, 2021).

Marketing Agreement, dated as of August 1, 2022, by and between CytoSorbents Corporation and Fresenius Medical Care Deutschland GmbH (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2022).

Open Market Sale Agreement SM, dated as of December 30, 2021, by and between CytoSorbents Corporation and Jefferies LLC (incorporated by reference from Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 30, 2021).

Marketing Agreement, dated as of August 1, 2022, by and between CytoSorbents Corporation and Fresenius Medical Care Deutschlancd GmbH (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2022).

Lease, dated as of March 26, 2021, by and between 300 CR LLC and CytoSorbents Medical, Inc.

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Insider Trading Policy.

List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 15, 2024).

List of Subsidiaries.

Consent of WithumSmith+Brown, PC.

Power of Attorney

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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The following materials from CytoSorbents Form 10-K for the fiscal year ended December 31, 2025, formatted in Extensible Business Reporting Language (XBRL):

(1) Consolidated Balance Sheets at December 31, 2023 and December 31, 2022, (iii) Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021, (iii) Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity/(Deficit) for the years ended December 31, 2023, 2022 and 2021, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021, and (v) Notes to the Consolidated Financial Statements.

(1) Consolidated Balance Sheets at December 31, 2025 and December 31, 2024, (iii) Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025, and 2024, (iii) Consolidated Statements of Changes in Stockholders’ Equity/(Deficit) for the years ended December 31, 2025, and 2024, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024, and (v) Notes to the Consolidated Financial Statements.

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

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Form 10-K Summary.

In accordance with Section 13 or 15(d) of the Exchange Act, CytoSorbents Corporation has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 31st day of March, 2025.

CYTOSORBENTS CORPORATION

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

To the Board of Directors and Stockholders of

CytoSorbents Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CytoSorbents Corporation (the ‘Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholder’s equity, cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

Restatement of the Previously Issued Consolidated Financial Statements

As discussed in Note 12 to the consolidated financial statements, the 2023 consolidated financial statements have been restated to correct material misstatements related to stock-based compensation expense for restricted stock units and inventory.

Emphasis of the Matter – Restatement of Unaudited Interim Condensed Consolidated Financial Statements

As discussed in Note 12 to the consolidated financial statements, the unaudited interim condensed consolidated financial statements as of and for the three months ended March 30, 2024 and 2023, as of and for the three and six months ended June 30, 2024 and 2023, and as of and for the three and nine months ended September 30, 2024 and 2023, have been restated to correct material misstatements related to stock-based compensation expense for restricted stock units and inventory.

We have audited the accompanying consolidated balance sheets of CytoSorbents Corporation (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of CytoSorbents Corporation as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the period ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the entity has suffered recurring losses from operations, has experienced cash used in operations, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the entity has suffered recurring losses from operations, has experienced negative cash flows from operations, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

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Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

These consolidated financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

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

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

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

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

CytoSorbents Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

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

Critical Audit Matter

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

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

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

Evaluation of warrants

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

Accounting For Warrants Associated with January 2025 Rights Offering

Description of the Matter

As described in Note 5 to the consolidated financial statements, the Company entered into a Loan and Security Agreement in June 2024.

As additional consideration for the commitment, the Company also issued the lender warrants with a fair value of $690,709 to purchase an aggregate of 1,645,569 shares of the Company’s common stock for cash at the exercise price of $0.79, which expire on June 28, 2029.

The Company determined that the warrants met all the criteria for equity classification and recorded them as a component of additional paid-in capital upon the closing of the transaction in July 2024.

The principal considerations for our determination of the financial statement classification of the warrants as a critical audit matter are the existence of complexities in applying the accounting standards related to certain warrant agreement provisions, including settlement provisions and derivative elements.

Auditing these elements involved especially complex auditor judgment, specialized knowledge and skills due to the terms of the applicable agreement

The Company issued warrants in connection with the January 2025 Rights Offering.

The accounting for the issuance of these warrants involves evaluation of complex accounting guidance to be performed by management as it relates to determining the accounting classification of the warrants.

It also involved management’s estimates and judgements in determining the fair value of the warrants.

This matter was identified as a critical audit matter due to the complexity in accounting for the warrants and the potential significant impact of these conclusions to the Company’s consolidated financial statements and related disclosures.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, obtaining an understanding of and evaluating the design and implementation of controls over management’s process for the accounting treatment, reading the agreements, and evaluating the accounting for the warrant issuance.

Testing management’s process included (i) evaluating the internal controls and application of the accounting framework used by management;

(ii) testing the mathematical accuracy of management’s calculations;

(iii) testing the inputs and assumptions used and (iv) testing the completeness and accuracy of the underlying data used in the calculations.

Professionals with specialized skill and knowledge were used to assist in (i) evaluating management’s application of the accounting framework and (ii) testing the mathematical accuracy of management’s calculation and evaluating the conclusion related to the accounting classification of the warrant issuance.

Our principal audit procedures performed to address this critical audit matter included the following:

Reviewed the executed Rights Offering and associated warrant agreements.

Reviewed management’s technical accounting memo evaluating the terms and conditions of the warrant agreements to determine the appropriate classification of the instruments.

Utilized personnel with specialized knowledge and skills in technical accounting to assist in:

(i) evaluating the terms of the warrants in relation to the relevant accounting literature, and (ii) assessing the appropriateness of conclusions reached by the Company.

Utilized personnel with specialized knowledge and skills in valuation to assist in:

(i) reviewing the valuation provided by management’s valuation specialist.

/s/ WithumSmith+Brown, PC

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

We have served as CytoSorbents Corporation’s auditor since 2004.

East Brunswick, New Jersey

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CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

At December 31,

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Restricted cash, current

Grants and accounts receivable, net of allowances of $ 157,701 and $ 49,663 at December 31, 2024 and 2023, respectively

Accounts receivable, net of allowances of $ 164 and $ 158 at December 31, 2025 and 2024, respectively

Inventories - net

Prepaid expenses and other current assets

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Right-of-use asset

Patents - net

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Lease liability – current portion

Current maturities of long-term debt

Total current liabilities

Lease liability, net of current portion

Long-term debt, net of current maturities

Long-term debt, net of debt discount

Total Liabilities

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no shares issued and outstanding at December 31, 2025 and 2024

Common Stock, Par Value $ 0.001 , 100,000,000 shares authorized at December 31, 2024 and 2023;

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

and 62,804,305 and 54,830,146 shares issued and outstanding at December 31, 2025 and 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

( 304,008,618 )

( 283,289,661 )

Total Stockholders’ Equity

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Product revenue

(in thousands, except share and per share data)

Cost of goods sold

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Selling, general and administrative

Restructuring

Total operating expenses

Loss from operations

( 16,785,939 )

( 31,948,620 )

Other income (expense):

Interest expense, net

( 1,399,092 )

Gain (loss) on foreign currency transactions

( 4,224,721 )

Miscellaneous income (expense)

Loss on abandoned patents

Total other income (expense), net

( 5,623,843 )

Loss before benefit from income taxes

( 22,409,782 )

( 30,060,499 )

Benefit from income taxes

Net loss attributable to common stockholders

( 20,718,957 )

( 29,246,760 )

Basic and diluted net loss per common share

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Comprehensive loss:

( 20,718,957 )

( 29,246,760 )

Other comprehensive income (loss):

Foreign currency translation adjustment

( 1,799,874 )

Foreign currency translation adjustment, net of tax

Comprehensive loss

( 16,691,953 )

( 31,046,634 )

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

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STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Comprehensive

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Balance at December 31, 2023

( 253,997,878 )

Cumulative effect of adjustments to beginning balance

Stock-based compensation (as restated)

Proceeds from the exercise of stock options for cash, net of fees incurred

Stock-based compensation

Issuance of common stock offerings, net of fees incurred

Common stock issued upon vesting of restricted stock units, less shares withheld to cover taxes

Other comprehensive loss, foreign currency translation adjustment

( 1,799,874 )

Net loss (as restated)

( 29,246,760 )

Balance at December 31, 2023 (as restated)

( 283,289,661 )

Issuance of warrants

Foreign currency translation adjustment

Balance at December 31, 2024

Stock-based compensation

Issuance of common stock offerings, net of fees incurred

Common stock issued upon vesting of restricted stock units, less shares withheld to cover taxes

Shares issued for exercise of stock options

Issuance of common stock and warrants from rights offerings, net of fees incurred

Issuance of common stock from exercise of warrants

Issuance of warrants

Other comprehensive loss, foreign currency translation adjustment

( 20,718,957 )

Foreign currency translation adjustment

Balance at December 31, 2025

( 304,008,618 )

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Cash flows from operating activities:

( 20,718,957 )

( 29,246,760 )

Adjustments to reconcile net loss to net cash used in operating activities:

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Amortization of loan costs

Amortization of patents

Depreciation and amortization

Amortization of right-of-use asset

Write off of inventory

Bad debt expense

Impairment of patents

Loss on abandoned patents

Write off of fixed assets

Foreign currency transaction (gains) losses

( 1,949,257 )

Stock-based compensation

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Grants and accounts receivable

( 1,720,419 )

Prepaid expenses and other current assets

( 1,351,805 )

Accounts payable and accrued expenses

( 1,807,575 )

Net cash used in operating activities

( 14,427,809 )

( 21,655,136 )

Cash flows from investing activities:

Purchases of property and equipment

Disposal of property and equipment

Net cash used in investing activities

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Repayment of long-term debt

( 5,000,000 )

Payment of final fee

Payment of loan costs

Proceeds from rights offering, net

Cash for exercise of warrants, net

Equity contributions - net of fees incurred

Proceeds from exercise of stock options

Net cash provided by financing activities

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Net change in cash, cash equivalents, and restricted cash

( 5,851,211 )

( 8,216,931 )

Cash, cash equivalents, and restricted cash at beginning of year

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Supplemental disclosure of non-cash financing activities:

Warrants issued in connection with long-term debt

Warrants issued in connection with modification of long-term debt

Capital expenditures included in accounts payable

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December 31, 2025

BASIS OF PRESENTATION

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

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

z.o.o., CytoSorbents Medical UK Limited, and CytoSorbents France SAS, the wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited and CytoSorbents India Private Limited, wholly-owned subsidiaries of CytoSorbents Medical, Inc.

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

As of December 31, 2024, the Company’s total cash and cash equivalents and restricted cash was approximately $ 9.8 million, with $ 6.5 million classified as restricted, and $ 3.3 million as unrestricted and available to fund operations.

This matter raises substantial doubt about the Company’s ability to continue as a going concern.

As of the issuance date of this Annual Report on Form 10-K, the Company has raised a total of $ 7.3 million, net of offering fees, through the Rights Offering (see Note 13 – Subsequent Event), and the exercise of the Series A Right Warrants (see Note 13 – Subsequent Event).

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 (See Note 5.

Long-Term Debt) by December 31, 2025 and extend the principal 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.

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.

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.

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

PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPAL BUSINESS ACTIVITY

Nature of Business

The Company is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification.

The Company through its subsidiary CytoSorbents Medical, Inc and based in New Jersey, is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology.

The Company, through its wholly-owned European subsidiary, CytoSorbents Europe GmbH, based in Berlin, Germany conducts sales and marketing related operations for the CytoSorb device outside of the United States.

The Company, through its subsidiary CytoSorbents Medical, Inc.

based in New Jersey, is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology.

The Company, through its wholly-owned European subsidiary, CytoSorbents Europe GmbH, based in Berlin, Germany, its wholly-owned Indian subsidiary, CytoSorbents India Private Limited, based in Kasavanahalli, India, and its wholly-owned Dubai entity, CytoSorbents MEA FZCO, based in CommerCity, Dubai, conducts sales and marketing related operations for the CytoSorb device outside of the United States.

Going Concern

As of December 31, 2025, the Company’s total cash and cash equivalents and restricted cash was approximately $ 7.8 million, with $ 1.5 million classified as restricted, and $ 6.3 million as unrestricted and available to fund operations.

These cash and restricted cash balances considered with the Company’s historical cash used in operations, notwithstanding the Company’s Strategic Workforce and Cost Reduction Plan (see Note 12, “Restructuring”) and the impact of the Amended Loan and Security Agreement (see Note 5, “Long - Term Debt”) 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.

The Company’s expected future capital requirements may depend on many factors including expanding the Company’s 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 Avenue Capital Commitment by December 31, 2026, and receive an additional 6-month extension of the interest-only period on the credit facility.

Additional sources of liquidity available to the Company include the 2024 Shelf (see Note 9, Stockholders’ Equity), other public or private equity offerings, debt financings, or from other sources.

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

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

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

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

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.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Foreign Currency Translation

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

and CytoSorbents Europe GmbH.

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

z.o.o., CytoSorbents Medical UK Limited and CytoSorbents France SAS, wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited and CytoSorbents India Private Limited, wholly-owned subsidiaries of CytoSorbents Medical, Inc.

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

z.o.o., CytoSorbents Medical UK Limited, and CytoSorbents France SAS, the wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, CytoSorbents India Private Limited, CytoSorbents Medical Canada, Inc., and CytoSorbents MEA FZCO, wholly-owned subsidiaries of CytoSorbents Medical, Inc.

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

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

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Assets and liabilities of foreign operations are translated at period-end exchange rates with the impacts of foreign currency translation recorded in cumulative translation adjustment, a component of accumulated other comprehensive income.

Foreign currency transactions gains and losses are included in other income (loss), net in the consolidated statements of operations and other comprehensive loss.

Foreign currency transaction gains and losses are included in other income (loss), net in the consolidated statements of operations and comprehensive loss.

Segment Information

The Company manages its operations and allocates resources as a single operating segment.

The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer (“CEO”) who makes operating decisions, assesses financial performance and allocates resources based on consolidated financial information.

As such, the Company has determined that it operates in one reportable segment.

The Company operates and manages its business as one reportable segment and one operating segment, which is the business of developing, testing and selling blood purification medical devices.

The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer (“CEO”).

The CODM assesses performance of the segment and decides how to allocate resources based on revenue growth, gross margin, operating expenses, adjusted net loss, adjusted EBITDA (as defined in Note 11, Segment Information) and cash burn (cash used in operating and investing activities) derived from the Company’s consolidated results of operations and cash flows and total assets of the segment.

Cash, Cash Equivalents, and Restricted Cash

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the consolidated balance sheets and consolidated statements of cash flows:

(amounts, in thousands)

Cash and cash equivalents

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Total cash, cash equivalents and restricted cash

* See Note 1 – Basis of Presentation for further discussion regarding restricted cash.

Grants and Accounts Receivable (Net of Allowance for Credit Losses)

Accounts Receivable (Net of Allowance for Credit Losses)

Trade accounts receivable consist of amounts due from direct customers, distributors and agencies of the U.S.

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If any recoveries are made from any accounts previously written off, they are recognized as an offset to credit loss expense in the year of recovery.

The total amount of write-offs was immaterial to the financial statements as a whole for the year ended December 31, 2024.

The total amount of write-offs was immaterial to the financial statements as a whole for the years ended December 31, 2025 and 2024.

The allowance for credit losses reflects accounts receivable balances that are written off when management determines they are uncollectible.

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

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

Cost is determined based upon standard cost, which approximates actual cost, using a first-in first-out (“FIFO”) basis.

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

Donated devices are removed from inventory and charged to selling, general and administrative expenses.

The Company regularly reviews inventory quantities on hand and records inventory reserves for excess, obsolete, expired, and slow moving inventory based upon historical usage, product shelf life, forecasted demand, regulatory considerations, and other relevant factors.

Inventory that is determined to be obsolete or expired is written off in the period such determination is made.

Property and Equipment

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

During the years ended December 31, 2024 and 2023, the Company wrote-off patent costs of approximately $ 333,735 and $ 655,685 , respectively, related to the impairment of certain issued patents and pending patent applications in certain specific jurisdictions and the

abandonment of certain pending patent application costs in the ordinary course of business.

This charge is included in legal, financial and other consulting in the consolidated statements of operations and comprehensive loss.

The Company accounts for leases in accordance with FASB Accounting Standards Update (“ASU”) 2016-02, Leases, Topic 842 (“ASC 842”).

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Revenue Recognition

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

The Company recognizes revenue in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services transferred to its customers.

To do this, the Company applies the following five-step model, to determine this amount:

(i) identify the contract with a customer:

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations;

and (v) recognize revenue when, or as, the Company satisfies the performance obligation.

Revenue is typically 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’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 performance obligations in contracts with direct customers and distributors/strategic partners are for the shipment of the CytoSorb device and related accessory parts.

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.

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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.

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.

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

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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 International Accounting Standard 20 (“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.

Research and Development

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

Grant income, net of expenses, is presented as a reduction of research and development expenses.

The Company records grant income, net of expenses, as a reduction of research and development expenses.

Refer to the “Effect of Recent Accounting Pronouncements” section below for additional information.

Advertising Expenses

Advertising costs are charged to activities when incurred.

Advertising expense amounted to approximately $ 335,284 and $ 252,686 , in 2024 and 2023, respectively, and is included in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive loss.

Advertising expense amounted to approximately $ 0.3 million, in both 2025 and 2024, and is included in selling, general, and administrative expenses in the consolidated statements of operations and comprehensive loss.

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

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

The Company is accounting for an uncertain tax position of approximate $ 2.2 and $ 2.1 million for the years ended December 31, 2024 and 2023, respectively.

The Company had no unrecognized tax benefits as of December 31, 2024 and 2023.

The Company had unrecognized tax benefits of $ 2.1 million and $ 2.2 million as of December 31, 2025 and 2024, respectively.

The Company files tax returns in the U.S.

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

z.o.o., CytoSorbents UK Limited, CytoSorbents Medical UK Limited and CytoSorbents France SAS file an annual corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland, France and the United Kingdom, respectively.

z.o.o., CytoSorbents UK Limited, CytoSorbents Medical UK Limited, CytoSorbents France SAS, CytoSorbents India Private Limited, and CytoSorbents MEA FZCO file an annual corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland, the United Kingdom, France, India, and Dubai, respectively.

Use of Estimates

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

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

Actual results could differ from these estimates.

The valuation of options granted, allowance for credit losses and recoverability of patents are significant estimates in these consolidated financial statements.

The valuation of options and warrants granted, allowance for credit losses and recoverability of patents are significant estimates in these consolidated financial statements.

Concentration of Credit Risk

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

Beginning in April of 2023, the Company joined the IntraFi network, and established an Insured CashSweep (“ICS”) account whereby all cash that was previously held in the Company’s money market account at Bridge Bank is swept daily in increments of less than $250,000 and deposited in a number of IntraFi’s 4,000 member banks.

This arrangement provides FDIC insurance coverage for all of the cash balances previously held in the money market account, which represents all of the cash and cash equivalents held at Bridge Bank.

The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a $250,000 limit.

At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts.

Through the IntraFi Network, the Company maintains an Insured Cash Sweep account whereby all cash held in the Company’s money market account is swept daily in increments of less than the FDIC insurance limit and deposited in a number of IntraFi’s network of 3,000 financial institutions.

This arrangement provides FDIC insurance coverage for all of the cash balances held in money market accounts.

This arrangement excludes the restricted cash balances.

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A significant portion of the Company’s revenues are from product sales in Germany.

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

As of December 31, 2024, and 2023 one distributor accounted for approximately 19 % of outstanding grants and accounts receivables.

For the years ended December 31, 2024 and 2023, one distributor accounted for 11 % and 10 %, respectively, of the Company’s total revenue.

Financial Instruments

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

See Note 3, “Revenue” for further information relating to the Company’s revenue.

The Company does not have any significant concentration of risk with respect to any one particular supplier.

As of December 31, 2025, one distributor accounted for approximately 17 % of the Company’s outstanding accounts receivable.

As of December 31, 2024, one distributor accounted for approximately 19 % of the Company’s outstanding accounts receivable.

For the year ended December 31, 2025, no distributor or direct customer accounted for more than 10 % of the Company’s revenue.

For the year ended December 31, 2024, one distributor accounted for approximately 11 % of the Company’s revenue.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, prepaid expense and other current assets, right-of-use assets, accounts payable and accrued expenses, lease liability – current portion, other current liabilities, and lease liability, net of current portion approximate their fair values due to their short-term nature.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815 “Derivatives and Hedging” (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.

The Company estimates the fair value of warrants using the Black-Scholes option pricing model or the Monte Carlo pricing model.

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The warrants issued upon the closing of the Company’s December 13, 2023, offering and the closing of the Company’s June 2024 debt financing both met the criteria for equity classification under ASC 815.

The warrants issued upon the closing of the Company’s December 13, 2023, offering, the closing of the Company’s June 2024 debt financing, the rights offering on January 10, 2025, and the execution of the debt amendment on November 13, 2025 all met the criteria for equity classification under ASC 815.

Accordingly, these warrants have been classified as equity as of December 31, 2025 and December 31, 2024.

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Stock-based compensation expense for awards with performance conditions is recognized when it is probable that the performance condition will be achieved and is then recognized over the requisite service period.

Any changes in the probability assessment are accounted for as a cumulative true up to the current period compensation cost.

Any changes in the probability assessment are accounted for as a cumulative adjustment to the current period compensation cost.

To estimate the fair value of an award, the Company uses the Black-Scholes option pricing model.

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Net Loss per Common Share

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

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

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

Net income or loss per common share is calculated as basic net income or loss per share and diluted net income per share, in the case of recognizing net income.

Basic net income per share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period.

Diluted net income per share is computed in the same manner as basic net income after assuming issuance of common stock for all potentially dilutive equivalent shares, which includes the potential dilution that could occur:

(i) if the RSUs with service conditions were fully vested (using the treasury stock method);

(ii) if all of the Company’s outstanding stock options that are in-the-money were exercised (using the treasury stock method);

(iii) if the RSUs with service and market conditions were considered contingently issuable;

(iv) if the RSUs with service and performance conditions were considered contingently issuable;

(v) if outstanding warrants were exercised;

and (vi) if convertible debt was converted to common stock.

The computation of diluted net loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

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Basic and Diluted:

As Restated *

Net loss attributable to common stockholders per consolidated statements of operations

( 20,718,957 )

( 29,246,760 )

Weighted average common shares outstanding used to compute basic and diluted loss per share

Net loss per common share attributable to common stockholders, basic and diluted

* See Note 12 – Restatement of Previously Issued financial information for details.

The following table presents the potentially dilutive shares that were excluded from the computation of diluted net loss per share of common stock attributable to common stockholders, because their effect was anti-dilutive, as adjusted to give effect to the Stock Split:

(amounts, in thousands, except share and per share data)

Basic and diluted weighted average common shares outstanding

Basic and diluted earnings per common share

As of December 31,

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Warrants for common stock

Convertible securities

* Total number of RSUs include 2,754,000 units with a Change in Control-Based performance condition.

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The Company records shipping and handling costs in cost of goods sold.

Total freight costs amounted to approximately $ 409,273 and $ 464,324 for the years ended December 31, 2024 and 2023, respectively.

Total freight costs amounted to approximately $ 0.5 and $ 0.4 million for the years ended December 31, 2025 and 2024, respectively.

Effect of Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”).

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S.

The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The Company implemented the updated guidance as of January 1, 2024, and this did not have an impact on its consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (Topic 280), which will require public companies to provide more transparency in both quarterly and annual reports about the expenses they incur from revenue generating reportable business segments.

In addition, the ASU requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker, an amount for other segment items by reportable business segment, including a description of its composition, and the primary measures of a business segment’s profit or loss in assessing segment performance.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company implemented the updated guidance as of December 31, 2024, which resulted in the addition of new segments disclosures (see Note 11).

Also, the implementation of ASU 2023-07, did not have an impact on other disclosures to the consolidated financial statements.

In December 2023, the FASB issued ASU No.

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Improvements to Income Tax Disclosures”.

This ASU provides guidance related to additional disclosures that will be required related to income taxes.

This ASU provides guidance related to additional disclosures related to income taxes.

The updated guidance is effective for public entities for fiscal years beginning after December 15, 2024.

This ASU will result in additional disclosures in the Company’s consolidated financial statements related to income taxes in 2025.

On November 19, 2024, the Financial Accounting Standards Board (the “FASB”) issued a proposed Accounting Standards Update to establish authoritative guidance for the accounting and reporting of government grants received by business entities.

The FASB has decided to pursue an International Accounting Standards 20 (“IAS 20”) accounting model.

Under IAS 20, a grant relating to income may be reported separately as ‘other income’ or deducted from the related expense.

The Company has evaluated its accounting and reporting policy for government grants relative to this project and the requirements of IAS 20.

As there is no authoritative guidance under U.S.

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

Reclassification of Grant Income and Operating Expenses

As noted above on Effect of Recent Accounting Pronouncements the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses.

For the years ended December 31, 2024 and 2023, Grant Income and the related expenses were as follows:

Grant income-related expenses

( 3,583,233 )

( 5,129,952 )

In addition, the Company changed its accounting policy to report legal, financial and other consulting costs, which was previously its own separate line item within the Operating Expenses section of the Consolidated Statements of Operations and Comprehensive Loss to now being merged into the Selling, General and Administrative Expenses line item.

These expenses previously presented within legal, financial and other consulting costs are general and administrative in nature;

accordingly, the updated presentation would provide the user of the Consolidated Financial Statements a better picture of the purpose of those expenses.

For the years ended December 31, 2024 and 2023, the total amount of expenses that would have been reported as Legal, financial and other consulting costs under the previous accounting policy amounted to $ 3,199,357 and $ 4,272,296 , respectively.

For comparative purposes, the Company has recorded the following reclassification adjustments to the previously reported Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023:

As Previously Reported

As Reclassified*

( 5,264,426 )

Total revenue

( 5,264,426 )

Cost of revenues

( 13,957,356 )

( 8,827,404 )

Research and development

( 15,728,915 )

( 15,594,442 )

Legal, financial and other consulting

( 4,272,296 )

Selling, general and administrative

( 33,600,065 )

( 4,272,296 )

( 37,872,361 )

Total operating expenses

( 53,601,276 )

( 53,466,803 )

* See Note 12 – Restatement to Previously Issued Financial Information for further adjustments to these line items.

For comparative purposes, the Company has recorded the following reclassification adjustments to the previously reported Consolidated Statements of Cash Flows:

As Previously Reported

As Reclassified*

Non-cash compensation

Stock-based compensation

* See Note 12 – Restatement to Previously Issued Financial Information for further adjustments to these line items.

* These reclassification adjustments reflected in these consolidated cash flows statements line items also reflect the restatement adjustments applicable to the statements of changes to stockholders’ equity.

The Company implemented the updated guidance as of January 1, 2025 using a prospective method.

This ASU resulted in additional disclosures in the Company’s consolidated financial statements related to income taxes in 2025.

Refer to Note 7, Income Taxes, for additional information.

In December 2025, the FASB issued ASU No.

2025-10 entitled “Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.” This ASU provides guidance related to business entities that receive a government grant.

The updated guidance requires grants related to income presented separately under a general heading such as other income or as a deduction from the related expense and is effective for annual reporting periods beginning after December 15, 2028.

The Company has early adopted this guidance and records grant income, net of expenses, as a reduction of research and development expenses for the years ended December 31, 2025 and 2024.

Recent Accounting Pronouncements Not Yet Effective

In November 2024, the FASB issued ASU 2024-03 entitled, “Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” This ASU requires public business entities (“PBEs”) to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements, including disclosing the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in each relevant expense caption.

It also requires PBEs to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and to disclose the total amount of selling expenses, and in the annual reporting periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05 entitled, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This ASU provides all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The amendments are effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods.

The Company is currently evaluating this standard and its impact on its consolidated financial statements.

Reclassifications

Certain amounts included in prior year financial statements have been reclassified to conform to the current year presentation.

These reclassifications did not have a material impact on the Company’s previously reported financial statements.

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2025:

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Strategic Partners

(amounts, in thousands)

Product revenue:

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Strategic Partners

(amounts, in thousands)

Product revenue:

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

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

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

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

CytoSorb is not yet approved for commercial sale in the United States.

The Company’s U.S.

sales relate to its VetResQ related products for emergency and critical care in animals.

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

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

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

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

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

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

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

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

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

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December 31, 2024

Contract receivables, which are included in grants and accounts receivable

(amounts in thousands)

Contract receivables, which are included in accounts receivable

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

Contract receivables represent balances due from product sales to distributors amounting to $ 4,233,888 and $ 3,270,724 at December 31, 2024 and 2023, respectively, and billed and unbilled amounts due on government contracts amounting to $ 193,002 and $ 575,547 at December 31, 2024 and 2023, respectively.

Contract receivable amounted to $ 3,822,452 as of January 1, 2023.

Contract liabilities represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements, which amounted to $ 176,714 and $ 196,322 at December 31, 2024 and 2023, respectively, and deferred grant liability related to the billing on fixed price government contracts in excess of costs incurred, which amounted to $ 419,328 and $ 1,376,819 at December 31, 2024 and 2023, respectively.

Contract receivables represent unconditional rights to consideration for goods delivered or services performed under contracts with customers, including purchase orders.

These amounts, which are included in accounts receivable on the consolidated balance sheets, were approximately $ 7.1 million, $ 5.6 million, and $ 5.3 million at December 31, 2025, 2024, and 2023, respectively.

Contract liabilities, which are included in accrued expenses and other current liabilities on the consolidated balance sheets, represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements, which amounted to $ 0.2 million at December 31, 2025, 2024, and 2023, and deferred grant liability related to the billing on fixed price government contracts in excess of costs incurred $ 0 , $ 0.4 million, and $ 1.4 million of deferred grant liability at December 31, 2025, 2024, and 2023 respectively.

BALANCE SHEET COMPONENTS

Inventories - net

The Company had the following major classes of inventory:

As Restated *

(amounts in thousands)

Raw Materials

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Finished Goods

* See Note 12 – Restatement of Previously Issued financial information for details.

Inventories – net

Property and equipment - net

The Company’s Property and equipment - net, consist of the following:

Depreciation/

(amounts in thousands)

Furniture and fixtures

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Lesser of term of lease or estimated useful life

Less accumulated depreciation and amortization

Less accumulated depreciation

Property and Equipment, Net

Depreciation expense for the years ended December 31, 2024 and 2023, amounted to $ 1,341,262 and $ 1,239,600 , respectively.

Other assets consist of the following:

Depreciation expense for the years ended December 31, 2025 and 2024, amounted to $ 1.2 million and $ 1.3 million, respectively.

Patents - net

Patents consist of the following:

(amounts in thousands)

Patent applications pending

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Less accumulated amortization of patents issued

( 1,254,850 )

( 1,021,233 )

Patent amortization expense amounted to $ 235,146 , and $ 222,836 for the years ended December 31, 2024 and 2023, respectively.

Patents - net

Patent amortization expense amounted to $ 0.3 million, and $ 0.2 million for the years ended December 31, 2025 and 2024, respectively.

During the years ended December 31, 2025 and 2024, the Company wrote-off patent costs of approximately $ 0.6 million and $ 0.3 million, respectively, related to the abandonment of certain issued patents and pending patent applications in certain specific jurisdictions and the abandonment of certain pending patent application costs in the ordinary course of business.

Patent amortization expense for the next five years and thereafter is scheduled as follows:

(amounts, in thousands)

Scheduled amortization of patents issued

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Accrued expenses and other current liabilities consist of the following:

(amounts, in thousands)

Accrued salaries and commissions

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Deferred revenue

Goods received not invoiced

Accrued expenses and other current liabilities

* See Note 12 – Restatement of Previously Issued financial information for details.

LONG-TERM DEBT

Avenue Capital Group:

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

Avenue Capital Group agreed to loan the Company up to an aggregate of $ 20 million, to be disbursed in two tranches:

(1) one tranche of $ 15 million (“Tranche 1”), of which $ 10 million was available to the Company on the Closing Date and $ 5 million constitutes restricted cash, which was released from its restriction on January 10, 2025, as the following conditions were achieved:

(i) the FDA has accepted Company’s application for review with respect to DrugSorb-ATR De Novo 510(k) and (ii) the Company has received a minimum of $ 3 million in net proceeds from the sale of its equity securities after the Closing Date.

The restriction will be released on a dollar for dollar basis for equity raised between $ 3 million and $ 5 million and (2) a second tranche of up to $ 5 million, which 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 (“Tranche 2” and together with Tranche 1, the “Avenue Capital Commitment”).

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 )%.

Loan and Security Agreement

June 28, 2024 Loan:

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 million (“Tranche 1”) consisted of $ 10 million, which was available to the Company on the Closing Date and $ 5 million constituted restricted cash, which was released from its restriction on January 10, 2025, as the following conditions were achieved:

(i) the United States Food and Drug Administration (the “FDA”) has 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 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 million and $ 5 million.

The second tranche (“Tranche 2”) consisted of $ 5 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 )%.

As additional consideration for the Commitment, on June 28, 2024, the Company also issued Avenue Capital Group with warrants with a fair value of $ 0.7 million to purchase an aggregate of 1,645,569 shares of the Company’s common stock for cash at the exercise price of $ 0.79 , which expire on June 28, 2029.

The number of warrants is fixed, however, the exercise price may be adjusted down if the Company raises equity (excluding sales of equity utilizing the Company’s at-the-market equity facility) at a share price that is lower than $ 0.79 .

These warrants meet the criteria for equity classification under ASC 815.

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 achieves for the trailing six-month period ended June 30, 2025, 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 October 22, 2024 the Company announced that the FDA had accepted its application of 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 (See note 13 – Subsequent Event) satisfied the second condition of the debt covenant which now allows for the $ 5 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

The loan requires interest-only payments for the first 25 months, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity.

All unpaid principal and accrued and unpaid interest shall be due and payable in full on July 1, 2027;

provided, however that if the Company draws the full amount of Tranche 2 by December 2025, all unpaid principal and accrued and unpaid interest shall be due and payable in full by January 1, 2028.

As of the Closing Date, the Company recorded the following discounts:

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

The Lenders were also granted the right while the Commitment is outstanding to convert up to an aggregate amount of $ 2 million of the principal amount of the outstanding Growth Capital Loans into the Company’s common stock at a fixed conversion price of 120 % of the Closing Price (as defined in the warrant) or $ 0.95 per share (the “Conversion Option”).

The obligations under the Loan and Security Agreement are secured by a first priority security interest in favor of the Lenders with respect to the Company’s Shares (as defined in the Loan and Security Agreement) and the Company’s Collateral (as defined in the Loan and Security Agreement), which includes the Company’s intellectual property, pursuant to that certain Intellectual Property Security Agreement, dated as of June 28, 2024, by and between the Company and the Administrative Collateral Agent.

November 13, 2025 Amended Loan and Security Agreement

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.

The Amended Loan and Security Agreement funded an additional aggregate $ 2.5 million (“Tranche 2a”) from Avenue Capital Group in November 2025 and extended 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 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, 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 the Company maintain revenue and certain operating cash burn targets prior to FDA approval of DrugSorb-ATR.

Upon a prepayment, the Company would incur a fee ranging from 1 % to 3 % of the outstanding principal, depending on the time of payment in relation to the maturity date.

The Loan and Security Agreement includes customary loan conditions, company representations and warranties, company affirmative covenants and company negative covenants for secured transactions of this type.

As of December 31, 2025, the Company was in compliance with these covenants.

The Company evaluated the amendment in accordance with applicable accounting guidance and determined that the amendment should be accounted for as a debt modification.

As a result of the debt amendment, there were no write-offs of existing unamortized deferred financing costs.

The Company recorded new deferred financing costs of approximately $ 0.6 million related to the

fair value of warrants issued in connection with the debt amendment.

The Company incurred approximately $ 0.1 million of third-party costs which were recorded as other expenses related to financing.

The Company’s obligations under the Amended Loan and Security Agreement are joint and several (see June 28, 2024 Loan for obligation under original loan agreement).

Under the terms of the Amended Loan and Security Agreement, the Company 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.

Debt Discounts Related to Avenue Capital Group Agreements

In connection with the long-term debt transactions, the Company recorded the following discounts:

(amounts, in thousands)

Fair value of warrants issued to Avenue Capital Group - 2024

Fair value of warrants issued to Avenue Capital Group - 2025

Debt issuance cost

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The Company amortizes debt discounts as interest expense using the interest method through the maturity date.

The loan and security agreement included a final payment upon maturity of $ 900,000 .

The loan and security agreement included a final payment upon maturity of $ 0.9 million.

The Company accretes the final payment as interest expense using the interest method through the maturity date.

Upon a prepayment, the Company would incur a fee ranging from 1 % to 3 % of the outstanding principal, depending of the time of payment in relation to the maturity date.

As of December 31, 2024, the Company was in compliance with these covenants.

As additional consideration for the Commitment, on June 28, 2024, the Company also issued Avenue Capital Group with warrants with a fair value of $ 690,709 to purchase an aggregate of 1,645,569 shares of the Company’s common stock for cash at the exercise price of $ 0.79 , which expire on June 28, 2029.

These warrants meet the criteria for equity classification under ASC 815.

The Company’s obligations under the Loan and Security Agreement are joint and several.

The Company’s obligations under the Amended Loan and Security Agreement are joint and several.

As of December 31, 2024, long-term debt consists of the following:

Long - term debt as of December 31, 2025, and 2024 consists of the following:

As of December 31, 2025

As of December 31, 2024

(amounts in thousands)

Principal amount

final payment upon maturity

Less unamortized debt discount

( 1,003,650 )

Less current maturities

Long-term debt net of current maturities

As of December 31, 2024, principal payments of long-term debt are due as follows:

As of December 31, 2025, principal payments of long-term debt, including the final payment, are due as follows:

(amounts, in thousands)

On June 28, 2024, concurrent with the closing of the Avenue Capital Group financing discussed above, the Company paid off its existing outstanding debt with Bridge Bank.

As of December 31, 2023, long-term debt consists of the following amounts due to Bridge Bank:

Principal amount

Accrued final fee

Less current maturities

Long-term debt net of current maturities

As of December 31, 2025, the following commitments survive after the termination of the Bridge Bank Amended and Restated Loan and Security Agreement and related amendments:

2022 Success Fee Letter

Pursuant to the 2022 Success Fee Letter, the Borrower will pay to the Bank a success fee equal to (i) 1 % of $ 5 million if the Company draws down the first tranche of the Term C Loan and is payable only if the Company’s stock price equals or exceeds $ 8 for five consecutive trading days;

Pursuant to the 2022 Success Fee Letter, the Company will pay to Bridge Bank a success fee equal to (i) 1 % of $ 5 million if the Company draws down the first tranche of the Company’s previously outstanding term loan with the Bank (the “Term C Loan”) and is payable only if the Company’s stock price equals or exceeds $ 8 for five consecutive trading days;

(ii) 1.5 % of $ 5 million if the Company draws down the second tranche of the Term C Loan and is payable only if the Company’s stock price equals or exceeds $ 10 for five consecutive trading days;

and (iii) 2 % of $ 5,000,000 if the Company draws down the third tranche of the Term C Loan and is payable only if the Company’s stock price equals or exceeds $ 12 for five consecutive trading days (together, the “Success Fee”).

Borrower may pay the Success Fee in cash or in shares of common stock, at Borrower’s sole discretion.

The right of Bank to receive the Success Fees and the obligation of the Borrower to pay the Success Fees hereunder shall terminate on the date that is fifth anniversary of the funding date of the last Term C Loans made but shall survive the termination of the Loan Agreement and any prepayment of the Term C Loans.

and (iii) 2 % of $ 5 million if the Company draws down the third tranche of the Term C Loan and is payable only if the Company’s stock price equals or exceeds $ 12 for five consecutive trading days (together, the “Success Fee”).

The Company may pay the Success Fee in cash or in shares of common stock, at the Company’s sole discretion.

The right of Bank to receive the Success Fees and the obligation of the Borrower to pay the Success Fees hereunder shall terminate on the date that is the fifth anniversary of the funding date of the last Term C Loans made but shall survive the termination of the Loan Agreement and any prepayment of the Term C Loans.

Prior to repayment of the loan on June 28, 2024, the Company had drawn the first tranche of the loan and would be subject to total success fees of less than $ 0.1 million if the stock price exceeds $ 8.00 for five consecutive trading days prior to December 27, 2027.

The Company did no t draw down the second or third tranche prior to repayment of the loan.

The termination date of the 2022 Success Fee Letter is December 27, 2027.

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For the year ended December 31,

(amounts, in thousands)

Cash paid in connection with operating leases

Operating lease expense

Supplemental balance sheet information related to operating leases is as follows:

(amounts, in thousands)

Right-of-use asset

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Weighted average remaining lease term

Lease Expense

The components of lease expense were as follows:

For the year ended December 31,

(amounts, in thousands)

Operating lease cost

Variable lease cost

Total lease cost

As of December 31, 2025, the maturities of the lease liabilities are as follows:

1 unchanged sentence

Imputed interest

( 9,544,184 )

Total lease liability

The Company accounts for income taxes under ASC 740.

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

In December 2023, FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

The Company adopted ASU 2023-09 for the annual period beginning January 1, 2025, using a prospective transition method in accordance with ASC 740-10-65-9.

Accordingly, the Company has presented the enhanced income tax disclosures, including disaggregated effective tax rate reconciliation and disaggregated income taxes paid, beginning with the year ended December 31, 2025, and has not restated prior-period comparative disclosures.

The adoption of ASU 2023-09 affected only the Company’s income tax disclosures and did not have a material impact on its consolidated financial position, results of operations, or cash flows.

The Company’s consolidated loss before income taxes for the years ended December 31, 2025 and 2024 is as follows:

Year Ended December 31,

( 11,722,734 )

( 21,913,297 )

( 10,687,048 )

( 8,147,202 )

( 22,409,782 )

( 30,060,499 )

The provision for income taxes consists of the following:

(amounts, in thousands)

The benefit for income taxes consists of the following:

(amounts, in thousands)

State Tax, including sale of New Jersey losses & credits

( 1,690,825 )

Foreign tax provision

( 1,690,825 )

Total current

State Tax, including sale of New Jersey losses & credits

Foreign tax provision

Total deferred

Total income tax provision (benefit)

State Tax, including sale of New Jersey losses & credits

Foreign tax provision

Income taxes paid (net of refunds received) for the years ended December 31, 2025 and 2024, consisted of the following:

(amounts, in thousands)

The Company has deemed any foreign earnings will be indefinitely reinvested.

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The Company will continue to analyze their stance if their circumstances change in the future.

As of December 31, 2024, the Company had federal net operating loss (“NOL”) carry forwards of $ 103,299,951 , state NOL carry forwards of $ 6,449,176 , and foreign NOL carry forwards of $ 59,061,197 which are available to reduce future taxable income.

As of December 31, 2025, the Company had federal net operating loss (“NOL”) carry forwards of $ 118.8 million, state NOL carry forwards of $ 11.8 million, and foreign NOL carry forwards of $ 68.0 million which are available to reduce future taxable income.

Any unutilized NOL carry forwards will begin to expire at various dates starting in 2026 and some may be carried indefinitely.

As of December 31, 2024 and 2023, the Company had Federal and state research and development tax credit carryforwards of $ 2,224,012 and $ 0 (net of uncertain tax benefits), respectively, available to reduce future tax liabilities which will begin to expire at various dates starting in 2026.

As of December 31, 2025 and 2024, the Company had Federal and state research and development tax credit carryforwards of $ 2.1 million and $ 2.2 million (net of uncertain tax benefits), respectively, available to reduce future tax liabilities which will begin to expire at various dates starting in 2026.

The federal NOL carryforwards of $ 47.6 million, if not utilized, will expire between 2026 and 2038.

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The Company may be eligible, from time to time, to receive cash from the sale of its Net Operating Losses and R&D tax credits under the State of New Jersey Technology Business Tax Certificate Transfer Program.

As of December 31, 2024, the Company has accrued a receivable $ 1,690,825 from the approved sale of the 2023 state NOL and research and development credits.

As of December 31, 2025, the Company has accrued a receivable $ 0.4 million from the approved sale of the 2024 state NOL and research and development credits.

The Company expects to collect this receivable in the first half of 2026.

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Year Ended December 31,

(amounts, in thousands)

Current and long term deferred tax assets:

2 unchanged sentences

Federal R&D Credit

NJ R&D Credit

Research and development credit carryforward

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Less valuation allowance

( 48,267,681 )

( 45,334,554 )

Deferred tax liability:

Right of Use Asset

( 3,235,808 )

( 3,389,756 )

Net deferred tax assets

3 unchanged sentences

Based on this assessment, management has established a full valuation allowance against all of the deferred tax assets for each period because it is more likely than not that all of the deferred tax assets will not be realized.

The changes in valuation allowance for the years ended December 31, 2024 and 2023 were $ 2,933,127 and $ 6,031,103 , respectively.

A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

The changes in valuation allowance for the years ended December 31, 2025 and 2024 were $ 4.6 million and $ 2.9 million, respectively.

A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows for the year ended December 31 2025:

Year Ended December 31,

Federal statutory rate

State and local income taxes, net of federal income tax effect

Foreign tax effects

Foreign rate differential

Foreign-exchange tax effects

Change in valuation allowance

Foreign deferred tax adjustments

Other foreign jurisdictions

Total foreign tax effects

Research and development tax credits

Changes in valuation allowance

Nontaxable or nondeductible items

Incentive stock options

Restricted stock units shortfall

Deferred true-ups

Expiring Federal NOL

Total nontaxable or nondeductible items

Changes in unrecognized tax benefits

Federal R&D credit

Consolidation and intercompany eliminations

Effective income tax rate

For the year ended December 31, 2025, state income taxes in New Jersey comprise the state and local income taxes, net of federal income tax effect category .

A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows for the year ended December 31 2024:

Year Ended December 31,

Federal statutory rate

State taxes, net of federal benefit

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Year Ended December 31,

(amounts, in thousands)

Balance at beginning of the year

2 unchanged sentences

Balance at end of the year

The total amount of unrecognized tax benefits that could affect our effective tax rate, if recognized, was $ 2.2 million and $ 2.1 as of December 31, 2024 and 2023, respectively.

The Company and its subsidiaries file income tax returns in the U.S.

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For year ended December 31, 2025, there are no interest and penalties relating to our uncertain tax positions.

The Company is accounting for an uncertain tax position of approximately $ 2.1 million and $ 2.2 million as of December 31, 2025 and 2024, respectively.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company intends to defend vigorously against any future claims and litigation.

On March 5, 2024, a former employee, filed a complaint against us in the Superior Court of New Jersey, Law Division, Mercer County, alleging breach of the New Jersey Conscientious Employee Protection Act (“CEPA”).

The complaint specifically alleges that we violated the provisions of the CEPA by allegedly terminating the employee in retaliation for complaining about certain business practices.

We dispute these allegations and intend to vigorously defend against them, but there can be no assurance as to the outcome of the litigation.

On March 5, 2024, a former employee filed a complaint against us in the Superior Court of New Jersey, Law Division, Mercer County, alleging retaliatory termination in breach of the New Jersey Conscientious Employee Protection Act (“CEPA”).

Following further discussion, the parties agree there was a professional misunderstanding between them and have amicably resolved the litigation.

Royalty Agreement

The Company is party to various royalty and license agreements that require the payment of royalty fees.

The Company is, at times, party to various royalty and license agreements that require the payment of royalty fees.

Currently the Company records royalty expense of 3 % on sales of Covered Products, under the ROKK, LLC Royalty Contract.

Royalty expense amounted to approximately $ 1.1 million and $ 1.9 million for the years ended December 31, 2025 and 2024, respectively.

6 unchanged sentences

Effective January 1, 2021, the Company changed its matching contribution to 100 % of the participants contribution up to three percent of compensation plus 50 % of the participants contribution over three percent of compensation up to a maximum of five percent of compensation.

Matching contributions amounted to $ 472,022 and $ 405,408 for the years ended December 31, 2024 and 2023, respectively.

Matching contributions amounted to $ 0.3 million and $ 0.4 million for the years ended December 31, 2025 and 2024, respectively.

STOCKHOLDERS’ EQUITY

9 unchanged sentences

Proceeds, Net of Fees

December 13, 2023 Offering

January 10, 2025 Offering

Series A Rights Warrants

Open Market Sale Agreement with Jefferies LLC

December 13, 2023 Offering

On December 13, 2023, the Company closed on a registered direct offering for the sale of common stock, directly to investors, which included warrants to purchase up to 2,706,561 shares of common stock (the “Offering”).

Each share of common stock and accompanying warrant to purchase up to 0.35 shares of common stock, were sold together for a combined purchase price of $ 1.33 (before issuance costs).

Each warrant is immediately cash exercisable at an exercise price of $ 2.00 per share and will expire on the fifth anniversary of the issue date.

The Company’s executive officers, directors, and certain non-executive officer employees of the Company also participated in the Offering with a combined investment of $ 435,000 .

Shelf Registration

On July 14, 2021, the Company filed a registration statement on Form S-3 with the SEC, which was amended on July 20, 2021 and declared effective by the SEC on July 27, 2021 (as amended, the “2021 Shelf”).

The 2021 Shelf enables the Company to offer and sell, in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $ 150 million and expires after three years.

On July 26, 2024, the Company filed a registration statement on Form S-3 with the SEC (the “2024 Shelf”), which enables the Company to offer and sell in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $ 150 million.

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On December 30, 2021, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (the “Agent”), pursuant to which the Company may sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $ 25 million through the Agent, as the Company’s sales agent.

However, as a result of limitations related to our market capitalization discussed above, the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to approximately $ 19.7 million from time to time through the Agent.

However, as a result of limitations related to the Company’s market capitalization discussed above, the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to approximately $ 19.7 million from time to time through the Agent.

If the Company’s public float increases above $75 million, the Company may sell additional amounts under the Sales Agreement.

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The Company is required to pay the Agent a commission of up to 3.0 % of the gross proceeds from the sale of the shares of the Company’s common stock sold thereunder, if any.

January 10, 2025 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, and one Series B Right Warrant to purchase one share of common stock (collectively, the “Rights Warrants”).

Up to an additional 6.25 million shares of common stock were available for issue upon exercise of the Right Warrants.

Once the 6.25 million shares of common stock reserved for the Right Warrants were issued, the remaining outstanding and unexercised Right Warrants would have expired worthless.

Management and the Board of Directors of the Company subscribed for approximately 450,000 of the total Units prior to any pro rata adjustment.

Subscribers of basic subscription rights in the Rights Offering were allocated Units based upon their pro-rata share of 6.25 million Units.

The Series A Right Warrants and the Series B Right Warrants expired on February 24, 2025 and June 10, 2025, respectively.

The warrants do not have a redemption feature and are classified as equity instruments.

A fair value of approximately $ 0.3 million and approximately $ 0.1 million has been allocated to the Series A Right Warrant and the Series B Right Warrant, respectively, and recorded within additional paid-in capital.

The warrants were valued on the date of issuance using the Monte Carlo pricing model with the following assumptions:

Series A Right

Series B Right

Common Stock Price as of Issuance Date

Risk-Free Rate

Dividend Rate

Minimum Exercise Price

Maximum Exercise Price

Formula for Exercise Price

90 % of the 5-day volume weighted average stock price as of the exercise date rounded down to the nearest cent, not to fall outside the range of the maximum and minimum exercise prices.

Proceeds from the closing of the subscription period satisfied a debt covenant which allowed for $ 5.0 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

The Right Warrants were exercisable commencing on their date of issuance and the exercise price is equal to (i) in the case of the Series A Right Warrants, 90 % of the five -day volume weighted average price of Common Stock over the last five 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 five -day volume weighted average price of Common Stock over the last five trading days prior to the extended expiration date of the Series B Right Warrants on June 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 required additional investment separate from the purchase of the Units.

6.25 million shares of common stock were reserved for exercise of the Right Warrants.

The Right warrants were transferrable until expiration.

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).

All of the remaining 4.85 million Series A Right Warrants expired on February 24, 2025.

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 five -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.

STOCK-BASED COMPENSATION

Stock Option Plans

As of December 31, 2024, the Company had two Long Term Incentive Plans (the “2014 Plan” and the “2006 Plan”) to attract, retain, and provide incentives to employees, officers, directors, and consultants.

As of December 31, 2025, the Company had two Long Term Incentive Plans (the “2014 Plan” and the “2006 Plan”, collectively, the “Plans”)) to attract, retain, and provide incentives to employees, officers, directors, and consultants.

The Plans generally provide for the granting of stock, stock options, stock appreciation rights, restricted shares, or any combination of the foregoing to eligible participants.

In June 2024, the Company amended and restated CytoSorbents Corporation 2014 Long-term Incentive Plan (the “Plan”).

The amended and restated CytoSorbents Corporation 2014 Long-term Incentive Plan (the “Plan”) increased the number of shares to be reserved and authorized for issuance under the Plan by 7,500,000 shares to 20,900,000 shares of our Common Stock.

The amended and restated Plan increased the number of shares to be reserved and authorized for issuance under the Plan by 7,500,000 shares to 20,900,000 shares of the Company’s Common Stock.

A total of 20,900,000 and 2,400,000 shares of common stock are reserved for issuance under the 2014 Plan and the 2006 Plan, respectively.

As of December 31, 2023, there were approximately 647,000 and 654,000 shares of common stock remaining for issuance under the 2014 Plan and the 2006 Plan, respectively.

As of December 31, 2024, there were approximately 3,700,000 and 654,000 shares of common stock remaining for issuance under the 2014 Plan and the 2006 Plan, respectively.

As of December 31, 2024, there were approximately 8.7 million shares of common stock remaining for issuance under the Plans.

As of December 31, 2025, there were approximately 9.7 million shares of common stock remaining for issuance under the Plans.

Total stock-based compensation expense for the year ended December 31, 2025 amounted to $ 2.8 million, of which $ 1.9 million and $ 0.9 million were for stock options and restricted stock units, respectively.

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These amounts are included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

The following non-cash stock-based compensation expense, which relates to stock options and restricted stock units (“RSUs”), is included in each of the respective line items in the Company’s consolidated statements of operations and comprehensive loss:

Year Ended December 31,

Stock-based compensation expense by category

(amounts, in thousands)

Cost of goods sold

Research and development, net of grant income

Selling, general and administrative

Total stock-based compensation expense

The summary of the stock option activity for the years ended December 31, 2025 and 2024 is as follows:

Outstanding, December 31, 2023

( 1,391,897 )

Outstanding, December 31, 2024

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The fair value of each stock option was estimated using the Black-Scholes pricing model which takes the following inputs into account.

Expected Life

Weighted Average Expected Life

Exercise Price

21 unchanged sentences

Non-vested, December 31, 2025

As of December 31, 2024, the Company had approximately $ 3,035,000 of total unrecognized compensation cost related to stock options which will, on average, be amortized over 32 months .

As of December 31, 2025, the Company had approximately $ 1.5 million of total unrecognized compensation cost related to stock options which will, on average, be amortized over 17 months .

The summary of the status of the Company’s non-vested options for the year ended December 31, 2024, is as follows:

1 unchanged sentence

( 1,391,897 )

( 1,562,137 )

Non-vested, December 31, 2024

As of December 31, 2023, the Company had approximately $ 4,868,000 of total unrecognized compensation cost related to stock options which will, on average, be amortized over 42 months .

As of December 31, 2024, the Company had approximately $ 3.0 million of total unrecognized compensation cost related to stock options which will, on average, be amortized over 32 months .

Change in Control-Based Awards of Restricted Stock Units:

The Board of Directors has granted restricted stock units to members of the Board of Directors, to the Company’s executive officers, and to employees of the Company.

These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Company’s 2014 Long-Term Incentive Plan.

The following table is a summary the outstanding balance of these restricted stock units at the end of each of the past two calendar years:

Intrinsic Value

These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Company’s 2014 Long-Term Incentive Plan, or upon certain life events.

The following table is a summary of the outstanding balance of these restricted stock units at the end of each of the past two calendar years:

Weighted Average Grant Date Fair Value

December 31, 2023

3 unchanged sentences

December 31, 2025

Due to the uncertainty over whether these restricted stock units will vest, which will only happen upon a Change in Control, no charge for these restricted stock units has been recorded in the consolidated statements of operations and comprehensive loss through the year ended December 31, 2024.

Due to the uncertainty over whether these restricted stock units will vest, which will only happen upon a Change in Control, or upon certain life events, the Company will only record expense only upon an actual vesting event.

For the year ended December 31, 2025 the Company recorded non-cash charges totaling $ 0.5 million upon the death of two participants holding a total of 65,000 units.

Other Restricted Stock Units:

5 unchanged sentences

Non-vested, December 31, 2024

At December 31, 2024 and December 31, 2023, the remaining weighted average vesting period for restricted stock awards subject to vesting was 43 months and 37 months , respectively and the remaining unrecognized restricted stock unit compensation expense was $ 538,000 and $ 842,000 , respectively.

As of December 31, 2024, the Company had 2,706,561 warrants outstanding related to the Company’s December 13, 2023 Offering.

At December 31, 2025 and December 31, 2024, the remaining weighted average vesting period for restricted stock awards subject to vesting was 24 months and 43 months , respectively.

The remaining unrecognized restricted stock unit compensation expense was $ 0.5 million at both December 31, 2025 and 2024.

As of December 31, 2025, the Company had 5,780,701 warrants outstanding.

Of this amount, 2,706,561 related to the Company’s December 13, 2023 Offering.

These warrants are immediately cash exercisable at an exercise price of $ 2.00 per share and expire on December 13, 2028.

Another 1,645,569 warrants were issued on June 28, 2024 in connection with the Company’s Loan and Security Agreement with Avenue and these warrants have an exercise price of $ 0.79 and expire on June 28, 2029.

Another 1,645,569 warrants were issued on June 28, 2024 in connection with the Company’s Loan and Security Agreement with Avenue (See Note 5, Long-Term Debt) and these warrants have an exercise price of $ 0.79 and expire on June 28, 2029.

These warrants are exercisable into the Company’s common stock.

In connection with the Amended Loan and Security Agreement, the Company 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.

SEGMENT INFORMATION

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The Company’s chief operating decision maker, or CODM, is the Company’s Chief Executive Officer.

The CODM assesses performance of the segment and decides how to allocate resources based on Revenue growth, Gross Margin, Operating Expenses, adjusted net loss, adjusted EBITDA and cash burn (cash used in operating and investing activities) derived from the Company’s consolidated results of operations and cash flows and total assets of the segment.

The CODM assesses performance of the segment and decides how to allocate resources based on revenue growth, gross margin, operating expenses, adjusted net loss, adjusted EBITDA (EBITDA, as defined below, adjusted for stock-based compensation, (gain) loss on foreign currency transactions, and restructuring) and cash burn (cash used in operating and investing activities) derived from the Company’s consolidated results of operations and cash flows and total assets of the segment.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

2 unchanged sentences

Factors used in determining the reportable segment include the nature of the Company’s operations, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance.

The accounting policies of the segment are the same as those described in Note 2 to the consolidated financial statements of the Company included in this Annual Report on Form 10-K.

The Company operates as one reportable operating segment.

Consisting of one reportable operating segment, the components presented in the consolidated statements of operations also present the components of the Company’s single operating segment.

The accounting policies of the segment are the same as those described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies.

The Company operates under one reportable business segment for which segment disclosure is consistent with the management decision making process that determines the allocation of resources and the measuring of performance.

The components presented in the consolidated statements of operations and comprehensive loss also present the components of the Company’s single operating segment.

The CODM uses financial metrics to evaluate the Company’s spending and monitor budget versus actual results.

1 unchanged sentence

The financial metrics used by the CODM in evaluating the Company’s spending and monitoring budget versus actual results are as follows:

As Restated *

Product revenue

Years ended December 31,

(amounts, in thousands)

Total operating expenses

Loss from operations

EBITDA and Adjusted EBITDA (both non-GAAP measures):

( 20,718,957 )

( 29,246,760 )

Interest expense

Benefits from income taxes

( 1,690,825 )

Interest expense, net

Benefit from income taxes

Depreciation and amortization expense

Loss before interest expense, income taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure

( 19,440,586 )

( 28,443,541 )

Earnings (Loss) before interest expense, income taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure

Stock-based compensation

(Gain) loss on foreign currency transactions

( 1,949,257 )

Restructuring

Adjusted EBITDA, a non-GAAP measure

( 11,456,331 )

( 26,237,456 )

Adjusted net loss, a non-GAAP measure:

( 20,718,957 )

( 29,246,760 )

Stock-based compensation

Gain (loss) on foreign currency transactions

( 1,949,257 )

Restructuring

Adjusted net loss, a non-GAAP measure

Total cash used in operating and investing activities

( 15,097,239 )

( 22,591,372 )

* See Note 12 – Restatement of Previously Issued financial information for details.

Significant expense categories regularly provided to the CODM consist of the following:

Years ended December 31,

Research and development:

(amounts, in thousands)

Research and development, net of grant income:

Clinical expenses

Other research and development expenses

Total research and development

Total research and development, net of grant income

Selling, general and administrative

Commission expense

Royalty expense

3 unchanged sentences

Total selling, general and administrative

* See Note 12 – Restatement of Previously Issued financial information for details.

Capital expenditures of the segment totaled $ 669,430 and $ 936,236 for the years ended December 31, 2024 and 2023, respectively.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL INFORMATION

Restatement of Previously Issued Financial Information

During the year ended December 31, 2024, the Company identified and corrected the following errors, which were recorded incorrectly in previously issued financial statements included in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q:

- Overstatement of Inventory due to a clerical error.

- Understatement of stock-based compensation expense and related corrections of accrued liabilities, additional paid in capital, and accumulated deficit related to errors in the application of the Company’s accounting policy for RSUs.

Based on the Company’s accounting policy for stock-based compensation, expense for RSUs is measured and recorded against additional paid-in-capital based on estimated fair values at the award’s grant date.

The Company incorrectly adjusted compensation expense based on the fair value of the award at its vesting date.

In addition, the Company recorded part of the compensation expense against accrued liabilities.

The following periods were impacted by the restatement:

- the audited consolidated financial statements as of and for the year ended December 31, 2023,

- the interim unaudited condensed consolidated financial statements as of and for the first three quarters of the year ended December 31, 2023, and

- the interim unaudited condensed consolidated financial statements as of and for the first three quarters of the year ended December 31, 2024.

Summary of Effect of Restatement of Previously Issued Financial Information

The tables below summarize the impact of the restated amounts on the previously reported consolidated balance sheets for the impacted periods.

The Consolidated Balance Sheet adjustments in the tables below that impact the line items of additional paid-in

capital, accumulated deficit, and total stockholders’ equity also reflecting the same amounts that those line items were impacted in the Consolidated Statements of Changes in Stockholders’ Equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of March 31, 2023, as previously reported (Unaudited)

( 261,323,761 )

Effect of restatement

As of March 31, 2023, as restated (Unaudited)

( 261,364,727 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of June 30, 2023, as previously reported (Unaudited)

( 267,476,845 )

Effect of restatement

As of June 30, 2023, as restated (Unaudited)

( 267,965,940 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of September 30, 2023, as previously reported (Unaudited)

( 276,670,365 )

Effect of restatement

As of September 30, 2023, as restated (Unaudited)

( 277,135,226 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of December 31, 2023, as previously reported

( 282,505,272 )

Effect of restatement

As of December 31, 2023, as restated

( 283,289,661 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of March 31, 2024, as previously reported (Unaudited)

( 288,863,133 )

Effect of restatement

As of March 31, 2024, as restated (Unaudited)

( 289,378,372 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of June 30, 2024, as previously reported (Unaudited)

( 293,006,279 )

Effect of restatement

As of June 30, 2024, as restated (Unaudited)

( 293,673,480 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

Liabilities and

Total Current

Additional paid-

Stockholders’

As of September 30, 2024, as previously reported (Unaudited)

( 295,340,370 )

Effect of restatement

( 1,099,333 )

As of September 30, 2024, as restated (Unaudited)

( 296,439,703 )

* The restatement adjustment reflected in these balance sheet line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

The tables below summarize the impact of the restated and reclassified amounts on the previously reported consolidated statements of operations and comprehensive loss:

Three Months Ended (Unaudited)

September 30,

Cost of goods sold:

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Gross Profit:

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Selling, general and administrative:

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Total Operating Expenses:

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Loss From Operations

As previously reported

( 7,891,596 )

( 6,559,237 )

( 7,350,198 )

( 14,450,832 )

( 21,867,828 )

( 31,209,254 )

Effect of restatement

( 7,888,143 )

( 7,007,373 )

( 7,344,937 )

( 14,895,515 )

( 22,307,250 )

( 31,948,620 )

Loss Before Benefit From Income Taxes

As previously reported

( 7,325,883 )

( 6,153,084 )

( 9,193,520 )

( 13,478,967 )

( 22,672,487 )

( 29,321,134 )

Effect of restatement

( 7,322,430 )

( 6,601,220 )

( 9,188,259 )

( 13,923,650 )

( 23,111,909 )

( 30,060,499 )

Net Loss Attributable To Common Stockholders

As previously reported

( 7,325,883 )

( 6,153,084 )

( 9,193,520 )

( 13,478,967 )

( 22,672,487 )

( 28,507,395 )

Effect of restatement

( 7,322,430 )

( 6,601,220 )

( 9,188,259 )

( 13,923,650 )

( 23,111,909 )

( 29,246,760 )

Basic And Diluted Net Loss Per Common Share

As previously reported

Effect of restatement

Comprehensive Loss

As previously reported

( 7,934,091 )

( 6,545,758 )

( 7,537,846 )

( 14,479,849 )

( 22,017,695 )

( 30,307,269 )

Effect of restatement

( 7,930,638 )

( 6,993,894 )

( 7,532,585 )

( 14,924,532 )

( 22,457,117 )

( 31,046,634 )

Three Months Ended (Unaudited)

September 30,

Cost of goods sold :

As previously reported (Incl.

reclassification)

Effect of restatement

As restated and reclassified

Gross Profit:

As previously reported (Incl.

reclassification)

Effect of restatement

As restated and reclassified

Selling, general and administrative:

As previously reported (Incl.

reclassification)

Effect of restatement

As restated and reclassified

Total Operating Expenses:

As previously reported (Incl.

reclassification)

Effect of restatement

As restated and reclassified

Loss From Operations

As previously reported

( 4,925,518 )

( 3,418,822 )

( 4,396,247 )

( 8,344,341 )

( 12,740,587 )

Effect of restatement

( 4,656,368 )

( 3,570,785 )

( 4,829,679 )

( 8,227,154 )

( 13,056,832 )

Loss Before Benefit From Income Taxes

As previously reported

( 6,357,861 )

( 4,143,146 )

( 2,334,091 )

( 10,501,007 )

( 12,835,098 )

Effect of restatement

( 6,088,711 )

( 4,295,109 )

( 2,767,523 )

( 10,383,820 )

( 13,151,343 )

Net Loss Attributable To Common Stockholders

As previously reported

( 6,357,861 )

( 4,143,146 )

( 2,334,091 )

( 10,501,007 )

( 12,835,098 )

Effect of restatement

( 6,088,711 )

( 4,295,109 )

( 2,767,523 )

( 10,383,820 )

( 13,151,343 )

Basic And Diluted Net Loss Per Common Share

As previously reported

Effect of restatement

Comprehensive Loss

As previously reported

( 5,134,686 )

( 3,721,824 )

( 4,664,834 )

( 8,856,510 )

( 13,521,344 )

Effect of restatement

( 4,865,536 )

( 3,873,787 )

( 5,098,266 )

( 8,739,323 )

( 13,837,589 )

The table below summarizes the impact of the restated amounts on the previously reported consolidated statements of cash flows.

The consolidated statements of cash flows adjustments in the tables below that impact the line items of stock-based compensation

also reflect the same amounts that the stock-based compensation line items was impacted by in the consolidated statements of changes in stockholders’ equity.

September 30,

Cash Flows From Operating Activities:

Net Loss Attributable To Common Stockholders:

As previously reported

( 7,325,883 )

( 13,478,967 )

( 22,672,487 )

( 28,507,394 )

Effect of restatement

( 7,322,430 )

( 13,923,650 )

( 23,111,909 )

( 29,246,760 )

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Stock-Based Compensation*

As previously reported

Effect of restatement

As previously reported

Effect of restatement

Accounts Payable and accrued expenses

As previously reported

Cumulative effect of restatement adjustments on balance sheet (year-to-date)

Non-cash reclassification to additional paid-in-capital

* The restatement adjustment reflected in this statements of cash flows line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

September 30,

Cash Flows From Operating Activities:

Net Loss Attributable To Common Stockholders:

As previously reported

( 6,357,861 )

( 10,501,007 )

( 12,835,098 )

Effect of restatement

( 6,088,711 )

( 10,383,820 )

( 13,151,343 )

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Stock-Based Compensation*

As previously reported

Effect of restatement

Accounts Payable and accrued expenses

As previously reported

( 1,281,724 )

( 2,032,014 )

( 3,165,684 )

Cumulative effect of restatement adjustments on balance sheet (year-to-date)

Non-cash reclassification to additional paid-in-capital

( 1,281,724 )

( 2,032,014 )

( 3,165,684 )

* The restatement adjustment reflected in this statements of cash flows line items also reflect the restatement adjustments applicable to the statements of stockholders’ equity.

The table below summarizes the impact of the restated and reclassified amounts on the previously reported consolidated statements of changes in stockholders’ equity:

Three Months Ended (Unaudited)

September 30,

Net loss (row), Accumulated deficit (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

( 7,325,883 )

( 6,153,084 )

( 9,193,520 )

( 13,478,967 )

( 22,672,487 )

( 28,507,394 )

Effect of restatement

As restated and reclassified

( 7,322,430 )

( 6,601,220 )

( 9,188,259 )

( 13,923,650 )

( 23,111,909 )

( 29,246,760 )

Stock-based compensation (row), Additional paid-in capital (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Common stock issued upon vesting of restricted stock units, less shares withheld to cover taxes (row), Additional paid-in capital (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Three Months Ended (Unaudited)

September 30,

Net loss (row), Accumulated deficit (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

( 6,357,861 )

( 4,143,146 )

( 2,334,091 )

( 10,501,007 )

( 12,835,099 )

Effect of restatement

As restated and reclassified

( 6,088,711 )

( 4,295,109 )

( 2,767,523 )

( 10,383,820 )

( 13,151,344 )

Stock-based compensation (row), Additional paid-in capital (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

Common stock issued upon vesting of restricted stock units, less shares withheld to cover taxes (row), Additional paid-in capital (column), Stockholders’ equity (column)

As previously reported (incl.

reclassification)

Effect of restatement

As restated and reclassified

In relation to the errors discussed above, the consolidated statements of changes in stockholders’ equity includes a cumulative effect of adjustments to the beginning balances as of January 1, 2023 of additional paid-in-capital (increase of $ 777,310 ), accumulated deficit (decrease of $ 45,023 ) and stockholders’ equity (increase of $ 732,287 ).

Capital expenditures of the segment totaled $ 0.4 million and $ 0.7 million for the years ended December 31, 2025 and 2024, respectively.

RESTRUCTURING

Restructuring Plan

During the fourth quarter of 2025, the Company 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 %, and reduced and realigned operating and production expenses.

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

Restructuring Charges

The following table presents the components of restructuring charges.

Years ended December 31,

(amounts, in thousands)

Restructuring

Workforce reduction

Other restructuring costs

Total restructuring

The table below sets forth the estimated amount of unpaid restructuring charges as of December 31, 2025 and 2024 included in accrued expenses that are expected to be paid in less than one year.

Total additions to unpaid restructuring charges are limited to workforce reductions as the other components of restructuring costs do not require cash payments.

Year Ended December 31,

(amounts, in thousands)

Restructuring charges, beginning of the year

Restructuring charges unpaid and outstanding, end of year

SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date of issuance of these consolidated financial statements and has determined that there are no subsequent events outside the ordinary scope of business that require adjustment to, or disclosure in, the financial statements other than those described below.

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 ($ 5.8 million net of fees) from the sale of all 6.25 million Units reserved for the Rights Offering.

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 allows for $ 5,000,000 of restricted cash on the Company’s consolidated balance sheets to now 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.

6.25 million shares of common stock have been reserved 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.

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What changed 10-K

Item 9A. Controls and Procedures