What changed in this filing

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Item 9A. Controls and Procedures

2022-03-10 compared with 2021-03-09 · 237 added, 161 removed, 838 unchanged (32% of the section changed)

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Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection.

Directors, Executive Officers and Control Persons.

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

Information required to be disclosed by this Item with respect to our executive officers is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Officers and Key Employees” contained in our definitive proxy statement for our 2022 annual meeting of stockholders scheduled to be held on June 7, 2022, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about our board of directors is incorporated in this Annual Report on Form 10-K by reference from the section entitled “Nomination and Election of Directors” contained in our definitive proxy statement for our 2022 annual meeting of stockholders scheduled to be held on June 7, 2022, which we intend to file within 120 days of the end of our fiscal year.

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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

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

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

Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 8, 2021).

Description of Capital Stock of CytoSorbents Corporation.

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

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

Fourth Amendment to the Amended and Restated Loan and Security Agreement, dated as of January 19, 2022, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 20, 2022).

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

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

Success Fee Letter, dated as of January 19, 2022, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc.

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

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 of Registrant’s Annual Report on Form 10-K filed on March 7, 2019).

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

Riley FBR, Inc.

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

Amendment No.

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

Riley FBR, Inc.

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

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 Company’s Current Report on Form 8-K, filed with the SEC on December 30, 2021).

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

(incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2021).

List of Subsidiaries.

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Based on this evaluation, management concluded that internal control over financial reporting was effective as of December 31, 2021.

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

Their report appears on page F-3.

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the COSO.

Basis for Opinion

Basis for Opinions

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

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Critical Audit Matter

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

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

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

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

The communication of the 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Stock Based Compensation

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

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

The Company recorded approximately $4,020,000 in stock-based compensation expense during the year ended December 31, 2021.

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

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March 10, 2022

PCAOB ID Number 100

CYTOSORBENTS CORPORATION

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Property and equipment – net

Restricted cash

Right of use asset

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Accrued expenses and other current liabilities

Current maturities of long-term debt

Lease liability – current portion

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Lease liability, net of current portion

Long-term debt, net of current maturities and debt issuance costs

Total liabilities

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

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

No shares issued and outstanding at December 31, 2021 and 2020

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

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( 1,033,661 )

( 1,461,045 )

Gain/(loss) on foreign currency transactions

( 2,577,913 )

Total other income (expense), net

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FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 and 2019

Stockholders’

Comprehensive

Stockholders’

Income (Loss)

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Cashless exercise of stock options

Success fee – Bridge Bank

Other comprehensive income, foreign translation adjustment

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Issuance of restricted stock options

Proceeds from exercise of warrants

Cashless exercise of warrants

Proceeds from exercise of stock options

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( 2,260,056 )

( 7,837,188 )

Balance at December 31, 2020

( 1,734,078 )

( 196,626,647 )

Stock based compensation - employees, consultants and directors

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( 24,558,648 )

( 7,837,188 )

Balance at December 31, 2021

( 221,185,295 )

( 196,626,647 )

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

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

Non-cash interest expense

Non-cash compensation

Depreciation and amortization

Amortization of right of use asset

Bad debt expense (recovery)

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Purchases of property and equipment

( 3,641,248 )

Net cash used by investing activities

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( 17,596,435 )

( 10,136,419 )

Cash and cash equivalents at beginning of year

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

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

As of December 31, 2021, the Company’s cash, cash equivalents and restricted cash balances were approximately $ 53.8 million, which the Company expects will fund the Company’s operations well beyond twelve months from the issuance of these financial statements.

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

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Nature of Business

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

The Company 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.

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

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

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

which is responsible for the management of the Company’s clinical trial activities in the United Kingdom.

CytoSorb, the Company's flagship product, was approved in the European Union (“EU”) in March 2011, and is currently being marketed and distributed in more than 70 countries around the world, as a safe and effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” or “cytokine release syndrome” seen in critical illnesses that may result in massive inflammation, organ failure and patient death.

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

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

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

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

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

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

CytoSorb is also being used during and after cardiac surgery to remove inflammatory mediators that can lead to post-operative complications, including multiple organ failure.

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

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

In April 2020, CytoSorb received United States Food and Drug Administration (“FDA”) Emergency Use Authorization (“EUA”) of CytoSorb for use in adult critically-ill COVID-19 patients with imminent or confirmed respiratory failure.

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

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

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

In April 2020, the Company also announced that the FDA had granted Breakthrough Designation for its DrugSorb-ATR Antithrombotic Removal System for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery.

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

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

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

In July 2021, the Company received full approval of its Investigative Device Exemption (“IDE”) to conduct the pivotal STAR-T (Safe and Timely Antithrombotic Removal – Ticagrelor) double-blind randomized control trial (“RCT”) for up to 120 patients in the United States to support FDA marketing approval.

In August 2021, the Company announced that it was granted a second Breakthrough Device designation for its DrugSorb-ATR Antithrombotic Removal System by the U.S.

Food and Drug Administration (FDA).

This Breakthrough Device designation covers the removal of the Direct Oral Anticoagulants (DOACs) apixaban and rivaroxaban in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiothoracic surgery.

In October 2021, the Company also received full FDA approval of an IDE application to conduct a double-blind, randomized, controlled clinical study for up to 120 patients entitled, “Safe and Timely Antithrombotic Removal – Direct Oral Anticoagulants (STAR-D),” in the United States to support FDA marketing approval.

If FDA marketing approval is obtained for either the removal of ticagrelor or direct oral anticoagulants indications, the device would be marketed as DrugSorb-ATR in the United States.

The DrugSorb-ATR Antithrombotic Removal System is based on the same polymer technology as CytoSorb.

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

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

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

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

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

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

These patents and patent applications are directed to various compositions and methods of use related to the Company’s blood purification technologies and are expected to expire between 2022 and 2038, absent any patent term extensions.

Management believes that any near-term expiring patents will not have a significant impact on the Company’s ongoing business.

Stock Market Listing

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

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

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

Cash and Cash Equivalents

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

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

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

Restricted Cash

The Company’s total restricted cash in the amount of $ 1,687,459 consists of cash of $ 1,467,459 that the Company is obligated to maintain as collateral for the outstanding letter of credit with Bridge Bank that was provided to the landlord of the College Road facility as security and cash of $ 220,000 that the Company is obligated to maintain as collateral for the credit limit on the Company’s credit card account.

Grants and Accounts Receivable

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Management reviews accounts receivable periodically to determine collectability.

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

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

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

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Costs are recorded as incurred.

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

Amounts invoiced in excess of costs actually incurred on fixed price contracts are classified as deferred revenue and are included in accrued expenses and other current liabilities in the consolidated balance sheet.

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

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

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

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

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

Substantially all of the Company’s grant and other income are from grant agencies in the United States.

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

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

As of December 31, 2021, one distributor accounted for approximately 12 % of outstanding grants and accounts receivables.

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

and accounts receivable.

For the years ended December 31, 2021, 2020 and 2019 no agency, distributor/strategic partners or direct customer represented more than 10 % of the Company’s total revenue.

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Net Loss per Common Share

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

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

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.

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

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 (See Note 12).

Stock-Based Compensation

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

S hipping and Handling Costs

Shipping and Handling Costs

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

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Total freight costs amounted to approximately $ 276,000 , $ 560,000 and $ 476,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

Effect of Recent Accounting Pronouncements

In November 2021, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update No.

2021-10 entitled “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance” (the “ASU”).

This ASU will require enhanced disclosures related to the Company’s contracts with the U.S.

The ASU is effective for annual periods beginning after December 15, 2021.

The Company intends to implement the provisions of this ASU during the first quarter of 2022.

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2021:

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All other countries

Total product

Total product revenue

Grant and other income:

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All other countries

Total product

Total product revenue

Grant and other income:

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All other countries

Total product

Total product revenue

Grant and other income:

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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.

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

sale in the United States.

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

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

These contacts fall into one of the following categories:

These contracts fall into one of the following categories:

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

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Contract receivables, which are included in accounts receivable

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

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

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

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

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 $ 303,824 and $ 286,301 at December 31, 2021 and 2020, respectively, and deferred grant revenue related to the billing on fixed price contracts in excess of costs incurred, which amounted to $ 1,947,353 and $ 728,351 at December 31, 2021 and 2020, respectively.

PROPERTY AND EQUIPMENT, NET:

Property and equipment - net, consists of the following:

Property and equipment - net, consist of the following:

Depreciation/

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approximately $ 189,000 for the year ended December 31, 2024;

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

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

approximately $ 189,000 for the year ended December 31, 2025 and approximately $ 188,000 for the year ended December 31, 2026.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

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Accrued salaries and commissions

Accrued royalties

Sales, payroll and income taxes payable

Clinical studies

Deferred revenue

Clinical studies

Accrued accounts payable

Accrued royalties

Professional fees

Customer rebates

Board of Director fees

Sales, payroll and income taxes payable

Travel and entertainment

Board of Director fees

LONG-TERM DEBT:

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

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

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

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

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

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

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

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

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

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

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

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

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

On January 19, 2022 (the “Fourth Amendment Closing Date”), the Company closed on the Fourth Amendment (the “Fourth Amendment”) of its Amended Loan and Security Agreement with Bridge Bank.

Under the terms of the Amendment, the Company received a commitment from Bridge Bank to provide a new term loan of up to $ 15 million, if needed.

The Fourth Amendment provides a tranche of term loans (the “Term C Loans") in the aggregate amount of $ 15 million, which are available for the Company to draw down at its sole discretion in three tranches of $ 5 million each at any time during the period commencing on the Fourth Amendment Date and ending on the earlier of (i) December 31, 2022 and (ii) the occurrence of an Event of Default (as defined in the Amended Loan and Security Agreement).

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

Pursuant to the Fourth Amendment, interest on the Term C Loans is subject to an interest rate cap of 8.00 %.

The Fourth Amendment, together with the Amended Loan and Security Agreement, provides for a period of interest only payments on the Term C Loan until the amortization date, which is January 1, 2024.

The interest-only period may be further extended through July 2024 if the Company maintains compliance with certain conditions as outlined in the Fourth Amendment.

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

The maturity date of the Term C Loan is December 1, 2025.

On the Fourth Amendment Closing Date, the Company was required to pay a non-refundable closing fee of approximately $ 18,750 , which will amortized as a monthly charge to interest expense.

On the Third Amendment Closing Date, the Company paid a non-refundable closing fee of $ 75,000 and the total unamortized loan costs related to the Term Loans amounted to approximately

These costs were amortized and written off as a charge to interest expense.

For the years ended December 31, 2021, 2020, and 2019, the Company recorded interest expense amounting to $ 75,000 , $ 76,718 and $ 33,175 , respectively related to these costs.

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

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

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

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

For the years ended December 31, 2021, 2020 and 2019 the Company recorded interest expense of $ 0 , $ 246,095 , and $ 82,031 , respectively, related to accrual and payment of the final fee.

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

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

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

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

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

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

Principal amount

Less unamortized debt acquisition costs

Plus accrued final fee

Less current maturities

Long-term debt net of current maturities

Payroll Protection Program:

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

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;

(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.

Paycheck Protection Program:

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

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

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

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

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

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

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

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

In March 2021, CytoSorbents Medical Inc.

entered into a lease agreement for a new operating facility at 305 College Road East, Princeton, New Jersey, which contains office, laboratory, manufacturing and warehouse space.

The lease commenced on June 1, 2021.

The Early Term

commenced on June 1, 2021 and lasted until September 30, 2021.

The lease also contains two five-year renewal options;

however, the Company has determined that it is not likely that they will exercise these options.

Commencing on September 30, 2021, the remaining lease term will last for 15.5 years.

The lease requires monthly rental payments of $ 25,208 for the Initial Early Term, $ 88,254 for the Early Term and initial monthly payments of approximately $ 111,171 in the first year of the remaining term.

Following the first year of the remaining term, the annual base rent will increase by approximately 2.75 % annually over the remaining term.

The lease also contains six months of rent abatement (months 1, 2, 3, 25, 26 and 27 of the remaining lease term).

In addition to the base rent, payments of operating expenses and real estate taxes will be required.

These payments are to be based on actual amounts incurred during 2021 multiplied by the Company’s share of the total building space ( 92.3 %).

The landlord will also provide an allowance of approximately $ 1,455,000 related to certain building improvements as outlined in the lease.

In April 2021, the Company provided the landlord with a letter of credit in the amount of approximately $ 1,334,000 as security.

The Company has determined that this lease should be treated as an operating lease in accordance with the provisions of ASC 842.

On April 1, 2021, the Company recorded a Right of Use asset and related lease liability of approximately $ 11.6 million, which represents the estimated present value of the lease payments at the commencement date discounted at the Company’s incremental borrowing rate of 9.8 %.

In addition, due to the six months of rent abatement and annual base rent escalations during the remaining lease term that commenced on September 30, 2021, the Company will recognize rent expense on this lease on straight line basis over the remaining term of the lease for the difference between the rent expense recognized and the required payments under the lease.

In April 2021, the Company entered into a Twentieth Amendment to Lease with the landlord at the existing Monmouth Junction facility which became effective May 31, 2021.

This amendment extends the term of the lease for the Company’s existing facility to May 31, 2022.

The Company’s base rent is approximately $ 35,000 per month.

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

The amendment also includes a one year renewal option.

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

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

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

Under the terms of this amendment, the Company will vacate a portion of the space as of May 31, 2022.

The Company will continue to lease the remaining space until December 31, 2022, at which time the Company will vacate the remaining space and the lease will terminate.

The Company’s base rent for the remaining space will be approximately $ 20,000 per month.

Monthly operating expenses will be approximately $ 11,000 per month.

In addition, the Company agreed to increase its security deposit by approximately $ 54,000 to a total of $ 150,000 .

At the end of the lease term, the entire security deposit will be paid to the landlord for the purpose of making any needed repairs to the vacated premises, and the Company will have no further obligation to pay for repairs to the vacated premises.

Effective April 1, 2021, the Company adjusted its incremental borrowing rate to the incremental borrowing rate used in the College Road lease and recalculated the right of use asset and lease liability under the amended terms of this lease.

In addition, the Company also adjusted the incremental borrowing rate and related right of use asset and lease liability on the existing Germany office lease effective April 1, 2021.

In September 2021, the Company extended its two operating leases for its office facility in Germany.

These leases require combined base rent payments amounting to approximately $ 12,100 per month.

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

In January 2021, CytoSorbents Europe GmbH entered into a lease for 1,068 square meters of additional warehouse space.

The lease commenced on April 1, 2021 and requires monthly payments of base rent of $ 7,784 and other costs of approximately $ 239 and has a term of five years.

The lease also has an option to extend the lease term for an additional five-year period through March 31, 2031.

The Company has determined that this lease should be treated as an operating lease in accordance with the provisions of ASC 842.

On April 1, 2020, the Company recorded a Right of Use asset and related lease liability at the estimated present value of the lease payments at the commencement date of approximately $ 594,000 .

Right-Of-Use Asset and Lease Liability:

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

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

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

The discount rate used was the Company's incremental borrowing rate, which is 9.8 %, as the Company could not determine the rate implicit in the lease.

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The maturities of the lease liabilities are as follows as of December 31, 2021:

Total lease payments

Present value discount

For the years ended December 31, 2021, 2020 and 2019, operating cash flows paid in connection with operating leases amounted to approximately $ 1,968,000 , $ 937,000 and $ 906,000 , respectively.

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

As of December 31, 2021 and 2020 the weighted average remaining lease term was 14.3 years and 4.0 years, respectively.

INCOME TAXES:

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Foreign tax provision

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

As of December 31, 2021, the Company had federal net operating loss ("NOL") carryforwards of approximately $ 83.5 million, state NOL carry forwards of approximately $ 9.3 million, and foreign NOL carry forwards of approximately $ 29.9 million, which may be available to offset future taxable income, if any.

The federal NOL carryforwards of $ 83.5 million, if not utilized, will expire between 2022 and 2037.

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

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

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

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

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

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

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

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

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

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

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

federal income tax.

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

The Company will receive a net cash amount of approximately $ 1,127,000 from the approved sale of the 2019 state NOL and research and development credits in the first quarter of 2021.

The Company will receive a net cash amount of approximately $ 736,000 from the approved sale of the 2020 state NOL and research and development credits in the first half of 2022.

The principal components of the Company’s deferred tax assets and liabilities are as follows:

12 unchanged sentences

Deferred tax liability:

( 4,069,166 )

Net deferred tax assets

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The code that has been utilized by the Company has zero import taxes associated with it.

The German Customs Authorities have indicated that the Company’s device might be better classified under a different code which has a 1.7 % tax attached to it.

The German Customs Authorities have indicated that the Company’s device would be better classified under a different code which has a 1.7 % tax associated with it.

As part of the audit process, the Company has provided the German Customs Authorities with extensive information about the CytoSorb device, including data regarding the uses of the device, as well as the instructions for use.

In addition, employees of the Company gave the auditors a technical presentation of the scientific properties of the device, focusing on it as an adsorber, as opposed to a filter.

The German Customs Authority’s technical staff is currently reviewing this information.

The audit process is on-going and the authorities have indicated it is expected to be completed by approximately March 31, 2021.

The Company’s maximum potential exposure arising to the audit is approximately $ 732,000 .

Based on a thorough review of the facts, management believes that it is not probable that this contingency is likely to occur.

Accordingly, no expense or related liability has been recorded in the Company’s December 31, 2020 consolidated financial statements related to this contingency.

The German Customs Authority informed us that the Company must use the code that carries the 1.7 % tax.

The audit process has been completed and the authorities have issued an assessment of approximately $ 641,000 for the periods through December 31, 2020.

This assessment was paid by the Company in October 2021.

Payroll Tax Examination

In December 2021, the Company was notified that its European subsidiary, CytoSorbents Europe GmbH, would be subject to an audit of their payroll tax and social cost filings for the four-year period from 2018 through 2021.

The Company has determined that payroll taxes and social costs were not paid on certain employee expense reimbursements as is required by German tax rules.

Accordingly, the Company has accrued approximately $ 598,000 as an estimate of this liability.

This liability is included in accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2021.

Approximately $ 154,000 of this liability relates to 2021, approximately $ 131,000 relates to 2020, approximately $ 175,000 relates to 2019 and approximately $ 138,000 relates to 2018.

The audit is on-going and is expected to be completed during the second quarter of 2022.

Employment Agreements

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After the expiration of the initial terms, the employment agreements will automatically renew for additional terms of one year unless either party provides written notice of non-renewal at least 60 days prior to a renewal.

These employment agreements have automatically renewed for an additional 1 year .

The foregoing employment agreements each provide for base salary and other customary benefits which include participation in group insurance plans, paid time off and reimbursement of certain business-related expenses, including travel and continuing educational expenses, as well as bonus and/or equity awards at the discretion of the Board of Directors.

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In connection with this agreement the Company granted the investor a future royalty of 3 % on all gross revenues received by the Company from the sale of its CytoSorb device.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded royalty expenses of approximately $ 1,172,000 , $ 675,000 , and $ 600,000 , respectively.

For the years ended December 31, 2021, 2020 and 2019, the Company recorded royalty expenses of approximately $ 1,193,000 , $ 1,172,000 , and $ 675,000 ,

respectively.

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

1 unchanged sentence

In an agreement dated September 1, 2006, the Company entered into a license agreement which provides the Company the exclusive right to use its patented technology and proprietary know how relating to adsorbent polymers for a period of 18 years .

Under the terms of the agreement, the Company has agreed to pay license fees of 2.5 % to 5 % on the sale of certain of its products if and when those products are sold commercially for a term not greater than 18 years commencing with the first sale of such product.

For the years ended December 31, 2021, 2020 and 2019 per the terms of the license agreement, the Company recorded licensing expenses of approximately $ 1,988,000 $ 1,954,000 and $ 1,125,000 , respectively.

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On July 26, 2018, the Company filed a registration statement on Form S-3 with the SEC (as amended, the “2018 Shelf”).

The 2018 Shelf, which was declared effective on August 7, 2018, enables the Company to offer and sell, in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $ 150 million.

Termination of Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On May 31, 2019, the Company delivered to Cantor Fitzgerald & Co.

("Cantor") written notice of termination (the "Termination Notice") of the Controlled Equity Offering Sales Agreement, dated November 4, 2015, by and between the Company and Cantor, as amended by Amendment No.

1 to Sales Agreement, dated July 26, 2018 (collectively, the "Sales Agreement").

In accordance with Section 13(b) thereof, the Sales Agreement terminated on June 10, 2019, ten (10) days after the delivery of the Termination Notice.

As provided in the Sales Agreement, the Sales Agreement terminated without liability of any party to any other party, except that certain provisions of the Sales Agreement identified therein shall remain in full force and effect notwithstanding the termination.

Pursuant to the Sales Agreement, the Company offered and sold, from time to time through Cantor, shares of the Company's common stock.

In the aggregate, the Company sold 2,094,140 shares pursuant to the Sales Agreement, at an average selling price of $ 8.72 per share, generating net proceeds of approximately $ 17.7 million from November 4, 2015 through December 31, 2018.

There were no sales during the year ended December 31, 2019.

The 2018 Shelf, which was declared effective on August 7, 2018, enabled 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.

The 2018 Shelf terminated automatically upon the 2021 Shelf (as defined below) being declared effective on July 27, 2021.

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.

Open Market Sale Agreement with Jefferies LLC and B.

Riley FBR, Inc.

On July 9, 2019, the Company entered into an Open Market Sale Agreement (the “New Sale Agreement”) with Jefferies LLC and B.

On July 9, 2019, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC and B.

Riley FBR, Inc.

(each an “Agent” and, together, the “Agents”), pursuant to which the Company may sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $ 25 million through the Agents, as the Company’s sales agents.

All shares of the Company’s common stock offered and sold, or to be offered and sold under the New Sale Agreement were or will be issued and sold pursuant to the Company’s 2018 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions.

On April 20, 2020, the Company and the Agents entered into an amendment to the New Sale Agreement (the “Amendment”) to provide for an increase in the aggregate offering amount under the New Sales Agreement, such that as of April 20, 2020, the Company may offer and sell Shares having an additional aggregate offering price of up to $ 50 million under the New Sale Agreement, as amended by the Amendment (the “Amended Sale Agreement”).

Subject to the terms of the Amended Sales Agreement, the Agents are required to use their commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

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

(each an “Agent” and, together, the “Agents”), pursuant to which the Company could sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $ 25 million through the Agents, as the Company’s sales agents.

All shares of the Company’s common stock offered and sold, or to be offered and sold under the Sale Agreement would have been issued and sold pursuant to the Company’s 2018 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions.

On April 20, 2020, the Company and the Agents entered into an amendment to the Sale Agreement (the “Amendment”) to provide for an increase in the aggregate offering amount under the Sales Agreement, such that as of April 20, 2020, the Company could offer and sell Shares having an additional aggregate offering price of up to $ 50 million under the Sale Agreement, as amended by the Amendment (the “Amended Sale Agreement”).

Subject to the terms of the Amended Sales Agreement, the Agents were required to use their commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

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

The Company has also agreed to provide the Agents with customary indemnification rights.

The offering of the shares of the Company’s common stock under the Amended Sales Agreement will terminate upon the earliest of (a) the sale of the maximum number or amount of the shares of the Company’s stock permitted to be sold under the Amended Sale Agreement and (b) the termination of the Amended Sale Agreement by the parties thereto.

During the year ended December 31, 2019, the Company sold 191,244 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 4.11 per share, generating net proceeds of approximately $ 762,000 .

During the year ended December 31, 2020, the Company sold 4,110,625 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 6.64 per share, generating net proceeds of approximately $ 26.5 million.

There were no sales pursuant to the Amended Sale Agreement during the year ended December 31, 2021.

In the aggregate, the Company has sold 4,301,869 shares pursuant to the Amended Sale Agreement, at an average selling price of $ 6.53 per share, generating net proceeds of approximately $ 27.2 million.

In addition, during the year ended December 31, 2020, the Company paid approximately $ 49,000 in expenses related to the Amended Sale Agreement.

In addition, during the year ended December 31, 2020, the Company paid approximately $ 49,000 related to the Amended Sale Agreement.

The Company may no longer offer and sell additional shares of the Company’s common stock under the Amended Sale Agreement following the declaration of effectiveness of the 2021 Shelf on July 27, 2021.

Open Market Sale Agreement with Jefferies LLC

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 could 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.

All shares of the Company’s common stock offered and sold, or to be offered and sold under the Sale Agreement would have been issued and sold pursuant to the Company’s 2021 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions.

Subject to the terms of the Sales Agreement, the Agent is required to use their commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The Company is required to pay the 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.

There were no sales pursuant to the Amended Sale Agreement during the year ended December 31, 2021.

In addition, during the year ended December 31, 2021, the Company paid approximately $ 90,000 related to the Amended Sale Agreement.

Stock Option Plans

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Only employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are eligible to receive options, which are not ISOs, i.e.

“Non-Qualified Options.” Because the Company has not yet obtained shareholder approval of the 2006 Plan, all options granted thereunder to date are “Non-Qualified Options” and until such shareholder approval is obtained, all future options issued under the 2006 Plan will also be “Non-Qualified Options.”

“Non-Qualified Options.” Because the Company has not obtained shareholder approval of the 2006 Plan, all options granted thereunder to date are “Non-Qualified Options” and until such shareholder approval is obtained, all future options issued under the 2006 Plan will also be “Non-Qualified Options.”

In December 2014, the Company’s received shareholder approval authorizing the Board of Directors to implement the form, terms and provisions of the 2014 Plan.

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Outstanding, December 31, 2021

The fair value of each stock option was estimated using the Black Scholes pricing model which takes into account as of the grant date the exercise price (ranging from $ 5.00 - $ 10.58 per share in 2020) and expected life of the stock option ( 10 years in 2020), the current price of the underlying stock and its expected volatility (ranging from 61.7 to 69.8 percent in 2020), expected dividends (- 0 - percent) on the stock and the risk free interest rate ( 0.28 to 0.96 percent) for the term of the stock option.

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

Current Price

Stock and its

Expected Life

Exercise Price

Interest Rate

December 31, 2019

3.84 to $ 8.25 per share

61.9 % to 74.3

1.40 % to 2.61

December 31, 2020

5.00 - $ 10.58 per share

61.7 % to 69.8

0.28 % to 0.96

December 31, 2021

4.26 - $ 11.39 per share

58.2 % to 60.7

0.47 % to 1.39

In addition, the Company recognizes forfeitures as they occur.

The intrinsic value is calculated at the difference between the market value as of December 31, 2021 of $ 4.19 and the exercise price of the shares.

Options Exercisable

Exercisable at

Options Outstanding

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$ 2.65 - $ 14.50

Options Exercisable

Exercisable at

The summary of the status of the Company’s non-vested options for the year ended December 31, 2021 is as follows:

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As of December 31, 2021, the Company had approximately $ 5,932,000 of total unrecognized compensation cost related to stock options which will, on average, be amortized over 41 months .

In 2021, the Board of Directors intends to grant a pool of options to purchase shares of common stock to the Company’s employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2021 operations.

Since these options relate exclusively to the achievement of 2021 milestones, no charge for these options has been recorded in the consolidated statements of operations for the year ended December 31, 2020.

The Company will assess the likelihood of meeting these milestones throughout 2021 and will record stock option expense as appropriate.

Awards of Stock Options:

On February 28, 2020, the Board of Directors granted options to purchase 1,114,325 shares of common stock to the Company's employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company's 2020 operations.

On April 12, 2021, the Board of Directors granted options to purchase 1,323,400 shares of common stock to the Company’s employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2021 operations.

Once awarded, these options will vest in four equal tranches, the first tranche vesting on the date of the award.

The grant date fair value of these unvested options amounted to approximately $ 7,042,000 .

Based upon an assessment by management, which was reviewed with the Board of Directors, as of December 31, 2020, the Company met approximately 88 % of these milestones, and accordingly we have recorded $ 914,000 in stock option expense related to these options for the year ended December 31, 2020.

On July 22, 2019, the Board of Directors granted options to purchase 926,800 shares of common stock to the Company's employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company's 2019 operations.

We have recorded approximately $ 273,000 in stock option expense related to these options for the year ended December 31, 2021 in accordance with the determination made by the Board of Directors on March 1, 2022

On February 28, 2020, the Board of Directors granted options to purchase 1,114,325 shares of common stock to the Company’s employees which will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2020 operations.

The grant date fair value of these unvested options amounted to approximately $ 3,883,000 .

On February 18, 2020, Board of Directors determined that the Company has met 35 % of these milestones, and accordingly we have recorded approximately $ 735,000 and $ 315,000 of stock option expense related to these options for the years ended December 31, 2020 and 2019, respectively.

On March 15, 2018, the Board of Directors granted options to purchase 531,900 shares of common stock to the Company’s management.

On April 23, 2018, the Board of Directors granted options to purchase 668,550 shares of common stock to the Company’s employees.

These grants, which total 1,200,450 shares of common stock, will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2018 operations.

On April 12, 2021, Board of Directors determined that the Company met approximately 88 % of these milestones, and accordingly we have recorded $ 1,070,000 and $ 914,000 in stock option expense related to these options for the year ended December 31, 2021, and 2020, respectively.

The grant date fair value of these unvested options amounted to approximately $ 4,294,000 .

On February 19, 2019, based upon the finalization of its review of the Company's progress to meeting the predetermined milestones for 2018, the Board of Directors determined that 726,920 of these options would immediately vest.

Accordingly, a charge of approximately $ 3,381,000 related to these options has been recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2018.

On February 18, 2020, Board of Directors determined that the Company has met 35 % of these milestones, and accordingly the Company has recorded approximately $ 667,000 and $ 735,000 of stock option expense related to these options for the years ended December 31, 2021, and 2020, respectively.

Change in Control-Based Awards of Restricted Stock Units:

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December 31, 2020

Forfeited 2021

December 31, 2021

Due to the uncertainty over whether these restricted stock units will vest, which will only happen upon a Change in Control, no charge for these restricted stock units has been recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021.

Performance-Based Awards of Restricted Stock Units:

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2017, on February 28, 2018, the Board of Directors granted 146,200 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2017.

These awards were valued at approximately $ 1,148,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded an expense/(recovery) of approximately $( 23,000 ), $ 150,000 , and $ 329,000 , respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2018, on March 4, 2019 the Board of Directors granted 22,220 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2018.

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2018, on March 4, 2019, the Board of Directors granted 22,220 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately $ 179,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

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For the years ended December 31, 2021, and 2020, the Company recorded a charge of approximately $ 259,000 and $ 564,000 , respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2019, on February 28, 2020, the Board of Directors granted 168,100 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31, 2020.

Pursuant to a review of the compensation of the senior management of the Company and managements' performance in 2020, on February 28, 2020, the Board of Directors granted 168,100 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately $ 1,014,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant, and vest one third on the date of the grant one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2021 and 2020, the Company recorded a charge of approximately $ 528,000 and $ 619,000 related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and management’s performance in 2021, on April 12, 2021, the Board of Directors granted 235,765 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately $ 2,120,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant.

For the years ended December 31, 2021, the Company recorded a charge of approximately $ 1,207,000 related to these restricted stock unit awards.

Additionally, in 2021 certain employees were offered 91,750 restricted stock units as a condition of their employment.

These awards were valued at approximately $ 713,868 at the date of issuance.

46,750 of these restricted stock units vest upon the earlier of a

Change in Control or one third after the second anniversary of the award, one third on the third anniversary of the award, and one third on the fourth anniversary of the award.

The other 45,000 of these restricted stock units vest upon the earlier of a Change in Control or four years from the date of the award.

For the years ended December 31, 2021, the Company recorded a charge of approximately $ 178,000 related to these restricted stock unit awards.

The following table outlines the restricted stock unit activity for the year ended December 31, 2021:

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NET LOSS PER SHARE:

Basic earnings per share and diluted earnings per share for the years ended December 31, 2020, 2019 and 2018 have been computed by dividing the net loss attributable to common shareholders for each respective period by the weighted average number of shares outstanding during that period.

All outstanding warrants and options and restricted stock awards representing approximately 7,786,000 , 6,503,000 , and 6,232,000 incremental shares at December 31, 2020, 2019 and 2018, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive.

Basic net loss per share and diluted net loss per share for the years ended December 31, 2021, 2020 and 2019 have been computed by dividing the net loss attributable to common shareholders for each respective period by the weighted average number of shares outstanding during that period.

All outstanding warrants and options and restricted stock awards representing approximately 9,902,000 , 7,786,000 , and 6,503,000 incremental shares at December 31, 2021, 2020 and 2019, respectively, have been excluded from the computation of diluted net loss per share as they are anti-dilutive.

RETIREMENT PLAN:

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Employees are eligible to participate in the plan on the first day of the calendar quarter following three full months of employment.

Participants may defer up to 100 % of their eligible compensation subject to certain IRC limitations.

In addition, the Company provides for a matching contribution of twenty percent of the participants’ contribution on a maximum of five percent of compensation.

Participants may defer up to 100 % of their eligible compensation subject to certain IRC limitations.Prior to 2021, the Company provided for a matching contribution of twenty percent of the participants’ contribution on a maximum of five percent of compensation.

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

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SUBSEQUENT EVENT:

In January 2021, CytoSorbents Europe GmbH entered into a lease for additional warehouse space.

The lease commences on April 1, 2021, requires monthly payments of base rent and other costs of approximately $ 7,900 and has a term of five years .

The lease also has an option to extend the lease term for an additional five years .

On January 19, 2022, the Company closed on the Fourth Amendment of its Amended Loan and Security Agreement with Bridge Bank.

Under the terms of the Amendment, the Company received a commitment from Bridge Bank to provide a new term loan of up to $ 15 million, if needed.

QUARTERLY FINANCIAL RESULTS (UNAUDITED):

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( 4,677,530 )

( 6,406,285 )

( 9,307,012 )

Net loss per share, basic and diluted

8 unchanged sentences

( 2,866,956 )

( 6,885,061 )

( 3,949,351 )

Net loss per share, basic and diluted

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures