Cytosorbents Corp 10-Q

Item 1. Financial Statements. CYTOSORBENTS CORPORATION CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ 2022 ​ December 31, ​ (Unaudited) 2021 ​ ​ ​ ​ ASSETS ​ ​ ​ Current Assets: ​ ​ ​ Cash and cash equivalents ​ $ 22,552,239 ​ $ 52,137,707 Grants and accounts receivable, net of allowance for doubtful accounts of $ 66,634 as of September 30, 2022 and $ 60,539 at December 31, 2021 ​ 4,961,245 ​ 4,523,430 Inventories ​ 3,541,596 ​ 4,766,098 Prepaid expenses and other current assets ​ 1,325,724 ​ 2,871,655 Total current assets ​ 32,380,804 ​ 64,298,890 ​ ​ ​ ​ ​ Property and equipment, net ​ 10,711,690 ​ 5,150,886 Restricted cash ​ ​ 1,687,459 ​ ​ 1,687,459 Right-of-use assets ​ ​ 12,794,340 ​ ​ 13,423,472 Other assets ​ 4,695,265 ​ 4,958,575 Total Assets ​ $ 62,269,558 ​ $ 89,519,282 ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current Liabilities: ​ ​ Accounts payable ​ $ 2,347,823 ​ $ 2,805,235 Lease liability – current portion ​ ​ 376,529 ​ ​ 570,566 Accrued expenses and other current liabilities ​ 7,394,293 ​ 10,314,341 Total current liabilities ​ 10,118,645 ​ 13,690,142 Lease liability, net of current portion ​ ​ 13,009,413 ​ ​ 13,250,943 Total Liabilities ​ 23,128,058 ​ 26,941,085 ​ ​ ​ Commitments and Contingencies (Note 6) ​ ​ ​ ​ Stockholders’ Equity: ​ ​ Preferred Stock, Par Value $ 0.001 , 5,000,000 shares authorized; - 0 - shares issued and outstanding at September 30, 2022 and December 31, 2021 ​ ​ — ​ ​ — Common Stock, Par Value $ 0.001 , 100,000,000 shares authorized; 43,634,845 and 43,478,487 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively ​ 43,634 ​ 43,478 Additional paid-in capital ​ 286,129,098 ​ 283,194,429 Accumulated other comprehensive income ​ 6,200,520 ​ 525,585 Accumulated deficit ​ ( 253,231,752 ) ​ ( 221,185,295 ) Total Stockholders’ Equity ​ 39,141,500 ​ 62,578,197 Total Liabilities and Stockholders’ Equity ​ $ 62,269,558 ​ $ 89,519,282 ​ See accompanying notes to consolidated financial statements . ​ 3 Table of Contents CYTOSORBENTS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ Nine months ended September 30, ​ ​ 2022 ​ 2021 ​ 2022 ​ 2021 ​ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue: ​ ​ ​ ​ CytoSorb sales ​ $ 6,271,228 ​ $ 8,901,089 ​ $ 21,176,194 ​ $ 30,405,114 Other sales ​ 191,468 ​ 797 ​ ​ 541,694 ​ ​ 5,578 Total product sales ​ 6,462,696 ​ 8,901,886 ​ ​ 21,717,888 ​ ​ 30,410,692 Grant income ​ 1,648,657 ​ 858,530 ​ ​ 3,580,447 ​ ​ 1,972,640 Total revenue ​ 8,111,353 ​ 9,760,416 ​ ​ 25,298,335 ​ ​ 32,383,332 Cost of revenue ​ 4,493,976 ​ 2,462,946 ​ ​ 10,322,315 ​ ​ 7,924,608 Gross margin ​ 3,617,377 ​ 7,297,470 ​ ​ 14,976,020 ​ ​ 24,458,724 Other expenses: ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 3,290,149 ​ 4,262,206 ​ ​ 11,716,976 ​ ​ 10,243,572 Legal, financial and other consulting ​ 609,518 ​ 664,689 ​ ​ 2,089,330 ​ ​ 2,090,310 Selling, general and administrative ​ 8,735,048 ​ 7,776,575 ​ ​ 26,335,238 ​ ​ 25,307,766 Total expenses ​ 12,634,715 ​ 12,703,470 ​ ​ 40,141,544 ​ ​ 37,641,648 Loss from operations ​ ( 9,017,338 ) ​ ( 5,406,000 ) ​ ​ ( 25,165,524 ) ​ ​ ( 13,182,924 ) Other income/(expense): ​ ​ ​ ​ ​ ​ ​ ​ Interest income (expense), net ​ 46,845 ​ 12,766 ​ ​ 78,849 ​ ​ 15,713 Loss on foreign currency transactions ​ ​ ( 3,230,315 ) ​ ​ ( 1,013,051 ) ​ ​ ( 6,966,613 ) ​ ​ ( 2,084,425 ) Miscellaneous income (expense) ​ ( 29 ) ​ — ​ ​ 6,831 ​ ​ — Total other expense ​ ( 3,183,499 ) ​ ( 1,000,285 ) ​ ​ ( 6,880,933 ) ​ ​ ( 2,068,712 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss before benefit from income taxes ​ ( 12,200,837 ) ​ ( 6,406,285 ) ​ ​ ( 32,046,457 ) ​ ​ ( 15,251,636 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit from income taxes ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss attributable to common shareholders ​ $ ( 12,200,837 ) ​ $ ( 6,406,285 ) ​ $ ( 32,046,457 ) ​ $ ( 15,251,636 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted net loss per common share ​ $ ( 0.28 ) ​ $ ( 0.15 ) ​ $ ( 0.74 ) ​ $ ( 0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares of common stock outstanding ​ 43,606,980 ​ ​ 43,396,464 ​ ​ 43,552,238 ​ ​ 43,319,507 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 12,200,837 ) ​ $ ( 6,406,285 ) ​ $ ( 32,046,457 ) ​ $ ( 15,251,636 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency translation adjustment ​ 2,658,809 ​ ​ 807,965 ​ ​ 5,674,935 ​ ​ 1,701,202 Total Comprehensive loss ​ $ ( 9,542,028 ) ​ $ ( 5,598,320 ) ​ $ ( 26,371,522 ) ​ $ ( 13,550,434 ) ​ See accompanying notes to consolidated financial statements. ​ 4 Table of Contents CYTOSORBENTS CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the three and nine months ended September 30, 2022 and 2021 (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Par value Capital Income (Loss) Deficit Equity Balance at June 30, 2022 ​ 43,574,619 ​ $ 43,575 ​ $ 285,005,396 ​ $ 3,541,711 ​ $ ( 241,030,915 ) ​ $ 47,559,767 Stock-based compensation - employees, consultants and directors ​ — ​ ​ — ​ ​ 1,005,403 ​ ​ — ​ ​ — ​ ​ 1,005,403 Other comprehensive loss: foreign translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ 2,658,809 ​ ​ — ​ ​ 2,658,809 Stock issued to vendor in lieu of cash payment ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of restricted stock units ​ 60,226 ​ ​ 59 ​ ​ 118,299 ​ ​ — ​ ​ — ​ ​ 118,358 Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12,200,837 ) ​ ​ ( 12,200,837 ) Balance at September 30, 2022 ​ 43,634,845 ​ $ 43,634 ​ $ 286,129,098 ​ $ 6,200,520 ​ $ ( 253,231,752 ) ​ $ 39,141,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 ​ 43,478,487 ​ $ 43,478 ​ $ 283,194,429 ​ $ 525,585 ​ $ ( 221,185,295 ) ​ $ 62,578,197 Stock-based compensation - employees, consultants and directors — ​ ​ — ​ ​ 2,554,092 ​ ​ — ​ ​ — ​ ​ 2,554,092 Other comprehensive income: foreign translation adjustment — ​ ​ — ​ ​ — ​ ​ 5,674,935 ​ ​ — ​ ​ 5,674,935 Stock issued to vendor in lieu of cash payment ​ 12,500 ​ ​ 12 ​ ​ 42,487 ​ ​ — ​ ​ — ​ ​ 42,499 Issuance of restricted stock units ​ 143,858 ​ ​ 144 ​ ​ 378,449 ​ ​ — ​ ​ — ​ ​ 378,593 Legal/audit fees related to ATM offering ​ — ​ ​ — ​ ​ ( 40,359 ) ​ ​ — ​ ​ — ​ ​ ( 40,359 ) Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 32,046,457 ) ​ ​ ( 32,046,457 ) Balance at September 30, 2022 43,634,845 ​ $ 43,634 ​ $ 286,129,098 ​ $ 6,200,520 ​ $ ( 253,231,752 ) ​ $ 39,141,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Par value Capital Income (Loss) Deficit Equity Balance at June 30, 2021 ​ 43,337,905 ​ $ 43,338 ​ $ 280,654,464 ​ $ ( 840,841 ) ​ $ ( 205,471,998 ) ​ $ 74,384,963 Stock-based compensation - employees, consultants and directors ​ — ​ ​ — ​ ​ 998,642 ​ ​ — ​ ​ — ​ ​ 998,642 Other comprehensive loss: foreign translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ 807,965 ​ ​ — ​ ​ 807,965 Proceeds from exercise of stock options ​ 102,437 ​ ​ 103 ​ ​ 589,615 ​ ​ — ​ ​ — ​ ​ 589,718 Cashless exercise of stock options ​ 4,561 ​ ​ 5 ​ ​ ( 5 ) ​ ​ — ​ ​ — ​ ​ — Issuance of restricted stock units ​ 30,745 ​ ​ 30 ​ ​ 236,076 ​ ​ — ​ ​ — ​ ​ 236,106 Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 6,406,285 ) ​ ​ ( 6,406,285 ) Balance at September 30, 2021 ​ 43,475,648 ​ $ 43,476 ​ $ 282,478,792 ​ $ ( 32,876 ) ​ $ ( 211,878,283 ) ​ $ 70,611,109 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2020 ​ 43,221,999 ​ $ 43,222 ​ $ 277,533,082 ​ $ ( 1,734,078 ) ​ $ ( 196,626,647 ) ​ $ 79,215,579 Stock-based compensation - employees, consultants and directors — ​ ​ — ​ ​ 3,224,255 ​ ​ — ​ ​ — ​ ​ 3,224,255 Other comprehensive income: foreign translation adjustment — ​ ​ — ​ ​ — ​ ​ 1,701,202 ​ ​ — ​ ​ 1,701,202 Proceeds from exercise of stock options 137,102 ​ ​ 137 ​ ​ 795,986 ​ ​ — ​ ​ — ​ ​ 796,123 Cashless exercise of stock options 9,885 ​ ​ 10 ​ ​ ( 2,841 ) ​ ​ — ​ ​ — ​ ​ ( 2,831 ) Issuance of restricted stock units 106,662 ​ ​ 107 ​ ​ 928,310 ​ ​ — ​ ​ — ​ ​ 928,417 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 15,251,636 ) ​ ​ ( 15,251,636 ) Balance at September 30, 2021 43,475,648 ​ $ 43,476 ​ $ 282,478,792 ​ $ ( 32,876 ) ​ $ ( 211,878,283 ) ​ $ 70,611,109 ​ See accompanying notes to consolidated financial statements. ​ 5 Table of Contents CYTOSORBENTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ​ Nine months ​ ​ ended ​ ended ​ ​ September 30, ​ September 30, ​ ​ 2022 ​ 2021 ​ (Unaudited) (Unaudited) Cash flows from operating activities: ​ ​ ​ ​ Net loss ​ $ ( 32,046,457 ) ​ $ ( 15,251,636 ) Adjustments to reconcile net loss to net cash used by operating activities: ​ ​ ​ ​ ​ Non-cash restricted stock unit compensation ​ ​ 149,368 ​ 1,875,422 Depreciation and amortization ​ ​ 659,407 ​ 517,176 Amortization of right of use asset ​ ​ 193,567 ​ ​ — Impairment of patents ​ ​ 431,426 ​ — Bad debt expense ​ ​ 10,369 ​ 6,137 Stock-based compensation ​ ​ 2,554,092 ​ 3,224,255 Foreign currency transaction loss ​ ​ 6,966,613 ​ 2,084,425 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ Grants and accounts receivable ​ ​ ( 860,022 ) ​ ( 278,105 ) Inventories ​ ​ 459,434 ​ ( 2,099,051 ) Prepaid expenses and other current assets ​ ​ 1,577,559 ​ 1,243,579 Other assets ​ ​ 53,226 ​ ( 136,773 ) Accounts payable and accrued expenses ​ ​ ( 3,042,537 ) ​ 300,571 Net cash used in operating activities ​ ​ ( 22,893,955 ) ​ ( 8,514,000 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 5,873,928 ) ​ ( 2,108,821 ) Payments for patent costs ​ ​ ( 375,568 ) ​ ( 499,691 ) Net cash used in investing activities ​ ​ ( 6,249,496 ) ​ ( 2,608,512 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ Equity contributions - net of fees incurred ​ ​ ( 40,359 ) ​ — Proceeds from exercise of stock options ​ ​ — ​ 796,123 Net cash provided by (used in) financing activities ​ ​ ( 40,359 ) ​ ​ 796,123 Effect of exchange rates on cash ​ ​ ( 401,658 ) ​ ( 52,366 ) Net change in cash, cash equivalents and restricted cash ​ ​ ( 29,585,468 ) ​ ( 10,378,755 ) ​ ​ ​ ​ ​ ​ ​ Cash, cash equivalents and restricted cash - beginning of period ​ ​ 53,825,166 ​ 71,421,601 Cash, cash equivalents and restricted cash - end of period ​ $ 24,239,698 ​ $ 61,042,846 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ Cash paid during the period for interest ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of non-cash financing activities: ​ ​ ​ ​ ​ Issuance of common stock to vendor in lieu of cash payment ​ $ 42,499 ​ $ — Capital expenditures included in accounts payable ​ $ 280,729 ​ $ — Settlement of accrued bonuses with restricted stock units ​ $ 378,593 ​ $ 928,417 ​ See accompanying notes to consolidated financial statements. ​ 6 Table of Contents CytoSorbents Corporation Notes to Consolidated Financial Statements (UNAUDITED) September 30, 2022 1. BASIS OF PRESENTATION The interim consolidated financial statements of CytoSorbents Corporation (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments, for a fair statement of the Company’s consolidated financial position and results of operations for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2022. The results for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period. As of September 30, 2022, the Company’s cash and cash equivalents balances were approximately $22.6 million, which the Company expects will fund the Company’s operations beyond twelve months from the issuance of these consolidated financial statements. In addition, the Company has $ 15 million of debt availability and $ 25 million of availability under its ATM facility to provide additional liquidity, as needed. As a result, the Company has determined that the going concern risk has been substantially mitigated. ​ 2. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. (formerly known as CytoSorbents, Inc.), is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology. The Company, through its wholly owned European subsidiary, CytoSorbents Europe GmbH, conducts sales and marketing related operations for the CytoSorb device. In March 2016, the Company formed CytoSorbents Switzerland GmbH, a wholly-owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the second quarter of 2016, provides marketing and direct sales services in Switzerland. In November 2018, the Company formed CytoSorbents Poland Sp. z.o.o., a wholly-owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the first quarter of 2019, provides marketing and direct sales services in Poland. In the third quarter of 2019, the Company formed CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc., which is responsible for the management of the Company’s clinical trial activities in the United Kingdom. In March 2022, the Company formed CytoSorbents Medical UK Limited to provide marketing and direct sales services in the United Kingdom and the Republic of Ireland. 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 an 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 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 is effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA. 7 Table of Contents 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 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 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. In May 2022, the Company announced that the Company entered into a 3-year preferred supplier agreement with Asklepios, making CytoSorb available without restrictions to all of the approximate 170 healthcare facilities across 14 states throughout Germany at which Asklepios operates. This includes Asklepios Klinik St. Georg in Hamburg, Germany, which pioneered the use of CytoSorb to remove antithrombotic drugs during cardiothoracic surgery, and is well-known for their seminal publication on CytoSorb use for this application during emergency cardiac surgery in patients at high risk of bleeding. In June 2022, the Company announced that, following a successful pilot program in three countries, the Company signed an expanded non-exclusive agreement with Nikkiso Europe GmbH (“Nikkiso”) to distribute Nikkiso’s PureADJUST stand-alone hemoperfusion pump and accessories in a total of 14 countries. In addition to securing the rights to sell Nikkiso’s stand-alone pump and accessories in Germany, Austria, and Luxembourg, the Company entered into an expanded multi-country reseller agreement with Nikkiso covering the following countries: Belgium, Bosnia and Herzegovina, Croatia, Finland, France, Iceland, Lichtenstein, Poland, Serbia, Slovenia and Switzerland. The Company will also be able to provide field support services in these countries. In August 2022, the Company entered into a Marketing Agreement (the “Marketing Agreement”) with Fresenius Medical Care Deutschland GmbH (“Fresenius”), which expands the Company’s strategic partnership with Fresenius by establishing a multi-stage global collaboration to combat life-threatening diseases in critical care. The Marketing Agreement provides for the combined marketing and promotion of CytoSorb with Fresenius’ critical care products by Fresenius’ marketing organization worldwide, excluding the United States. The Marketing Agreement has an initial term of three years, with an automatic renewal for an additional two years at the end of such initial term, subject to earlier termination by either of the parties (the “Term”). Compared to the prior co-marketing agreement between the parties, the Marketing Agreement intends to increase the commitments from both parties and to ensure an ongoing and consistent level of marketing and promotional activity specifically focused around CytoSorb, where Fresenius will actively market and promote CytoSorb as the featured blood purification therapy for removal of cytokines, bilirubin, and myoglobin on its critical care platforms. Specifically, the Marketing Agreement provides that various Fresenius-led in-person, virtual, social media, and web-based marketing programs and events will feature the CytoSorb therapy and highlight the cooperation between the two companies in the field of critical care during the Term. In addition to strengthening and expanding the global marketing of CytoSorb, the Company and Fresenius also plan to work together to bring new innovative solutions to the market. The Marketing Agreement also includes the certification of compatibility of CytoSorb for usage on Fresenius’ current critical care platforms. The technology is based upon biocompatible, highly porous polymer sorbent beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. The Company has numerous products under development based upon this unique blood purification technology, which is protected by 21 issued U.S. patents and multiple international patents, with applications pending both in the U.S. and internationally, including HemoDefend, ContrastSorb, DrugSorb, DrugSorb-ATR and others. 8 Table of Contents 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 On December 17, 2014 the Company’s common stock, par value $ 0.001 per share, was approved for listing on the Nasdaq Capital Market (“Nasdaq”), and it began trading on Nasdaq on December 23, 2014 under the symbol “CTSO.” Previously, the Company’s common stock traded in the over-the-counter-market on the OTC Bulletin Board. Basis of Consolidation and Foreign Currency Translation The consolidated financial statements include the accounts of CytoSorbents Corporation and its wholly-owned subsidiaries, CytoSorbents Medical, Inc. and CytoSorbents Europe GmbH. In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o. and CytoSorbents Medical UK Limited, wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. Translation gains and losses resulting from the process of remeasuring into the United States Dollar, the foreign currency financial statements of the European subsidiary are included in operations. The Euro is the functional currency of CytoSorbents Europe GmbH. Foreign currency transaction loss included in net loss amounted to approximately $ 3,230,000 and $ 1,013,000 for the three months ended September 30, 2022 and 2021, respectively. Foreign currency transaction loss included in net loss amounted to approximately $ 6,967,000 and $ 2,084,000 for the nine months ended September 30, 2022 and 2021, respectively. The Company translates assets and liabilities of its foreign subsidiaries at the exchange rate in effect at the consolidated balance sheet date. The Company translates revenue and expenses at the daily average exchange rates during the period. The Company includes accumulated net translation adjustments in accumulated other comprehensive income as a component of stockholders’ equity. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments 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 to amounts shown in the consolidated balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 Cash and cash equivalents ​ $ 22,552,239 ​ $ 52,137,707 Restricted cash ​ 1,687,459 ​ 1,687,459 Total cash, cash equivalents and restricted cash ​ $ 24,239,698 ​ $ 53,825,166 ​ 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 accounts. Grants and Accounts Receivable Grants receivable represent amounts due from U.S. government agencies and are included in Grants and Accounts Receivable. Accounts receivable are unsecured, non-interest bearing customer obligations due under normal trade terms. The Company sells its devices to various hospitals and distributors. The Company performs ongoing credit evaluations of its customers’ financial conditions. Management reviews accounts receivable periodically to determine collectability. Balances that are determined to be uncollectible are 9 Table of Contents written off to the allowance for doubtful accounts. The allowance for doubtful accounts amounted to approximately $ 67,000 and $ 61,000 at September 30, 2022 and December 31, 2021, respectively. Inventories Inventories are valued at the lower of cost or net realizable value under the first in, first out (FIFO) method. As of September 30, 2022 and December 31, 2021, the Company’s inventory was comprised of finished goods, which amounted to $ 2,075,570 and $ 3,084,606 , respectively; work in process which amounted to $ 818,909 and $ 1,322,736 , respectively; and raw materials, which amounted to $ 647,117 and $ 358,756 , respectively. Devices used in clinical trials or for research and development purposes are removed from inventory and charged to research and development expenses at the time of their use. Donated devices are removed from inventory and charged to selling, general and administrative expenses. In September 2022, the Company experienced an equipment failure of a refrigeration unit at its new College Road manufacturing facility. This equipment stored various items of work-in-process inventory. The Company determined all the items that were stored in this unit were required to be scrapped. The value of this inventory was approximately $ 599,000 . Accordingly, this inventory was written-off and is included in cost of goods sold in the accompanying consolidated statements of operations and comprehensive loss in the three and nine months ended September 30, 2022. The Company has filed a claim with its insurance carrier related to this loss. The claim is currently under review by the insurance company. The claim has not yet been approved nor has a reimbursement amount been determined. Accordingly, in the third quarter of 2022, the Company has not recorded any provision for insurance reimbursement. The Company expects to record the insurance reimbursement at the time that the amount to be reimbursed is determined and approved by the insurance carrier. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of their economic useful lives or the term of the related leases. Gains and losses on depreciable assets retired or sold are recognized in the consolidated statements of operations and comprehensive loss in the year of disposal. Repairs and maintenance expenditures are expensed as incurred. Patents Legal costs incurred to establish and successfully defend patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term. In the event a patent is abandoned, the net book value of the patent is written off. Impairment or Disposal of Long-Lived Assets The Company assesses the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. There were no charges for impairments during the three months ended September 30, 2022. During the nine months ended September 30, 2022, the Company recorded an impairment charge of approximately $ 431,000 related to certain patent costs. There were no impairment charges during either of the three and nine months ended September 30, 2021. This charge is included in legal, financial and other consulting in the consolidated statements of operations and comprehensive loss. Revenue Recognition Product Sales : Revenues from sales of products to both direct and distributor/strategic partner customers are recognized at the time when control passes to the customer, in accordance with the terms of their respective contracts. Recognition of revenue occurs as each performance obligation is completed. 10 Table of Contents Grant Revenue : Revenue from grant income is based on contractual agreements. Certain agreements provide for reimbursement of costs, other agreements provide for reimbursement of costs and an overhead margin and certain agreements are performance based, where revenue is earned based upon the achievement of milestones outlined in the contract. Revenues are recognized when the associated performance obligation is fulfilled. Costs are recorded as incurred. 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. Research and Development and Clinical Trial Expenses All research and development costs, payments to laboratories and research consultants are expensed when incurred. Advertising Expenses Advertising expenses are included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss when incurred. Advertising expenses amounted to approximately $ 143,000 and $ 151,000 for the three months ended September 30, 2022 and 2021, respectively, and approximately $ 358,000 and $ 455,000 for the nine months ended September 30, 2022 and 2021, respectively. Income Taxes Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized. The Company has provided a valuation allowance against all deferred tax assets. Under Section 382 of the Internal Revenue Code, the net operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership. Additionally, net operating losses generated subsequent to the reverse merger may be limited in the event of changes in ownership. The Company follows accounting standards associated with uncertain tax positions. The Company had no unrecognized tax benefits at September 30, 2022 or December 31, 2021. The Company files tax returns in the U.S. federal and state jurisdictions. The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss carryforwards to an industrial company. Each of CytoSorbents Europe GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. Z.o.o. CytoSorbents Medical Limited and CytoSorbents UK Limited files an annual corporate tax return, VAT return and a trade tax return in Germany, Switzerland, Poland and the United Kingdom, respectively. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The valuation of options granted is a significant estimate in these consolidated financial statements. Concentration of Credit Risk The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation. Management monitors the soundness of these institutions in an effort to minimize its collection risk of these balances. A significant portion of the Company’s revenues are from product sales in Germany. Substantially all of the Company’s grant income is from government agencies in the United States. (See Note 4 for further information relating to the Company’s revenue.) As of September 30, 2022, two distributors accounted for approximately 39 % of outstanding grants and accounts receivable. As of December 31, 2021, one distributor accounted for approximately 12 % of outstanding grants and accounts receivables. For the three 11 Table of Contents months ended September 30, 2022, one distributor accounted for approximately 16 % of the Company’s total revenue and for the nine months ended September 30, 2022, no distributor or direct customer accounted for more than 10 % of total revenue. For the three and nine months ended September 30, 2021, no distributor or direct customer accounted for more than 10 % of the Company’s total revenue. Financial Instruments The carrying values of cash and cash equivalents, grants and accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term nature. Net Loss Per Common Share Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed using the treasury stock method utilizing 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 stock options and restricted shares. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings (see Note 8). Stock-Based Compensation The Company accounts for its stock-based compensation under the recognition requirements of accounting standards for accounting for stock-based compensation, for employees and directors whereby each option granted is valued at fair market value on the date of grant. Under these accounting standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. The Company also follows the guidance of accounting standards for accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services for equity instruments issued to consultants. Shipping and Handling Costs The cost of shipping product to customers and distributors is typically borne by the customer or distributor. The Company records other shipping and handling costs in cost of revenue. Total freight costs amounted to approximately $ 79,000 and $ 56,000 , respectively, for the three months ended September 30, 2022 and 2021, and $ 166,000 and $ 196,000 , respectively, for the nine months ended September 30, 2022 and 2021. Effect of Recent Accounting Pronouncements In November 2021, the Financial Accounting Standards Board (the “FASB”), issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance”. ASU 2021-10 will require enhanced disclosures related to the Company’s contracts with the U.S. Government. ASU 2021-10 is effective for annual periods beginning after December 15, 2021. The Company intends to implement the provisions of ASU 2021-10 during 2022 and does not believe this ASU will have a material impact on the Company’s financial statements. 3. STOCKHOLDERS’ EQUITY Preferred Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board of Directors. Common Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation increased the number of shares of common stock authorized for issuance from 50,000,000 shares to 100,000,000 shares. 12 Table of Contents 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. 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 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. All shares of the Company’s common stock offered and sold, or to be offered and sold under the Sale Agreement will be 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 its 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 have been no sales under the Sale Agreement. In addition, during the year ended December 31, 2021 and during the nine months ended September 30, 2022, the Company paid approximately $ 90,000 and $ 40,000 , respectively, in expenses related to the Sale Agreement. Stock-Based Compensation Total share-based employee, director, and consultant compensation amounted to approximately $ 1,005,000 and $ 2,554,000 for the three and nine months ended September 30, 2022, respectively, and $ 999,000 and $ 3,224,000 for the three and nine months ended September 30, 2021, respectively. These amounts are included in the consolidated statements of operations and comprehensive loss under selling, general and administrative expenses. The summary of the stock option activity for the nine months ended September 30, 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ Average ​ ​ ​ ​ Average ​ Remaining ​ ​ ​ ​ Exercise Price ​ Contractual ​ Shares per Share Life (Years) Outstanding, December 31, 2021 6,885,978 ​ $ 7.09 ​ 7.15 Granted 2,674,055 ​ $ 2.00 — Forfeited ( 1,221,475 ) ​ $ 8.77 — Expired ( 162,668 ) ​ $ 8.14 — Exercised — ​ $ — — Outstanding, September 30, 2022 8,175,890 ​ $ 5.15 7.17 ​ 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 $ 1.39 to $ 3.91 per share) and expected life of the stock option ( 10 years ), the current price of the underlying stock and its expected volatility ( 64.7 %), expected dividends ( 0 %) on the stock and the risk free interest rate (ranging from 1.52 % to 3.91 %) for the expected term of the stock option. 13 Table of Contents The intrinsic value is calculated as the difference between the market value of the shares as of September 30, 2022 of $ 1.36 and the exercise price of the shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ ​ Number ​ Weighted ​ Weighted ​ ​ ​ Range of ​ Outstanding at ​ Average ​ Average ​ Aggregate Exercise ​ September 30, ​ Exercise ​ Remaining ​ Intrinsic Price 2022 Price Life (Years) Value $ 1.39 - $ 13.20 8,175,890 ​ $ 5.15 ​ 7.17 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ Options Exercisable Number ​ Weighted ​ ​ Exercisable at ​ Average ​ Aggregate September 30, ​ Exercise ​ Intrinsic 2022 Price Value 4,611,352 ​ $ 6.36 ​ $ — ​ The summary of the status of the Company’s non-vested options for the nine months ended September 30, 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ Shares Fair Value ​ ​ ​ ​ ​ ​ Non-vested, December 31, 2021 2,994,846 ​ $ 4.68 Granted 2,674,055 ​ $ 1.21 Forfeited ( 1,221,475 ) ​ $ 8.77 Vested ( 882,888 ) ​ $ 3.74 Non-vested, September 30, 2022 3,564,538 ​ $ 2.13 ​ As of September 30, 2022, the Company had approximately $ 5,471,000 of total unrecognized compensation cost related to stock options which will be amortized over approximately 46 months . Awards of Stock Options: On August 10, 2022, the Board of Directors granted options to purchase 1,163,800 shares of common stock to the Company’s employees which will be awarded based upon each employee’s 2022 individual performance evaluation. Once awarded, these options will vest one quarter on February 15, 2023, one quarter on February 15, 2024, one quarter on February 15, 2025 and one quarter on February 15, 2026. The grant date fair value of these unvested options amounted to approximately $ 1,381,000 . During the three and nine months ended September 30, 2022, the Company recorded approximately $ 65,000 of stock option expense related to these options. On August 10, 2022, the Board of Directors granted options to purchase 772,905 shares of common stock to the Company’s employees. These options will vest one eighth on the six-month anniversary of the grant date, one eighth on the first anniversary of the grant date, one quarter on second anniversary of the grant date, one quarter on third anniversary of the grant date and one quarter on fourth anniversary of the grant date. The grant date fair value of these unvested options amounted to approximately $ 917,000 . During the three and nine months ended September 30, 2022, the Company recorded approximately $ 32,000 of stock option expense related to these options. On August 10, 2022, the Board of Directors granted options to purchase 113,850 shares of common stock to members of the Company’s Board of Directors. These options will vest one quarter on the grant date, one quarter on September 30, 2022, one quarter on 12/31/2022, and one quarter on 3/31/2023. The grant date fair value of these unvested options amounted to approximately $ 135,000 . During the three and nine months ended September 30, 2022, the Company recorded approximately $ 68,000 of stock option expense related to these options. On August 10, 2022, the Board of Directors granted options to purchase 1,163,800 shares of common stock to certain senior managers of the Company. These options will vest one quarter on the grant date, one quarter on the first anniversary of the grant date, one quarter on second anniversary of the grant date, one quarter on third anniversary of the grant date. The grant date fair value of these unvested 14 Table of Contents options amounted to approximately $ 562,000 . During the three and nine months ended September 30, 2022, the Company recorded approximately $ 132,000 of stock option expense related to these options. On August 10, 2022, the Board of Directors granted options to purchase 1,365,000 shares of common stock to certain senior managers of the Company which will only vest upon the achievement of certain specific, predetermined milestones related to the Company’s long-term performance goals. The grant date fair value of these unvested options amounted to approximately $ 1,620,000 . As of September 30, 2022, none of these milestones has been met. Accordingly, no charge for these options has been recorded in the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022. 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 Amended and Restated CytoSorbents Corporation 2014 Long-Term Incentive Plan. The following table is a summary of these restricted stock units: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted Stock Units ​ ​ ​ ​ Board of Executive Other ​ ​ ​ ​ ​ Directors ​ Management Employees Total ​ Intrinsic Value December 31, 2021 277,200 724,500 1,709,500 2,711,200 $ 11,359,928 Granted 69,300 55,000 339,250 463,550 ​ ​ Forfeited — — ( 235,750 ) ( 235,750 ) ​ ​ September 30, 2022 346,500 779,500 1,813,000 2,939,000 ​ $ 3,997,040 ​ Due to the uncertainty over whether these restricted stock units will vest, which only happens 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 three and nine months ended September 30, 2022 and 2021. Other Awards of Restricted Stock Units: On March 4, 2019, certain named executive officers and senior managers were granted 22,220 restricted stock units. 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 vested 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 three and nine months ended September 30, 2022 and 2021, the Company recorded expense of approximately $ 0 and $ 0 , and $ 0 and $ 12,000 , respectively, related to these restricted stock unit awards. On July 22, 2019, certain named executive officers and senior managers were granted 180,300 restricted stock units. These awards were valued at approximately $ 1,300,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested 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 three and nine months ended September 30, 2022 and 2021, the Company recorded expense of approximately $ 0 and $ 54,000 , and $ 0 and $ 259,000 , respectively, related to these restricted stock unit awards. On February 28, 2020, certain named executive officers and senior managers were granted 168,100 restricted stock units. 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 vested 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 three and nine months ended September 30, 2022 and 2021, the Company recorded (income) expense of approximately $ 0 and $ 84,000 , and $( 65,000 ) and $ 443,000 , related to these restricted stock unit awards, respectively. On April 12, 2021, certain named executive officers and senior managers were granted 235,765 restricted stock units. These awards were valued at approximately $ 2,220,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested (or will 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 three and nine months ended September 30, 2022 and 2021, the 15 Table of Contents Company recorded expense of approximately $ 177,000 and $ 177,000 , and $ 50,000 and $ 1,030,000 , respectively, related to these restricted stock unit awards. On August 10, 2022, certain named executive officers and senior managers were granted 288,500 restricted stock units. These awards were valued at approximately $ 563,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested (or will 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 three and nine months ended September 30, 2022 and 2021, the Company recorded expense of approximately $ 214,000 and $ 0 , and $ 214,000 and $ 0 , respectively, related to these restricted stock unit awards. Additionally, in 2021 and 2020 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. 45,000 of the restricted stock units were forfeited in 2022. 16,750 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 30,000 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 three and nine months ended September 30, 2022 and 2021, the Company recorded (income) expense of approximately $ 0 and $ 45,000 , and $( 34,000 ) and $ 131,000 , respectively, related to these restricted stock unit awards. The following table outlines the restricted stock unit activity for the nine months ended September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ Shares Fair Value Non-vested, December 31, 2021 304,962 ​ $ 8.08 Granted ​ 288,500 ​ $ 1.95 Vested ( 235,120 ) ​ $ 5.38 Forfeited ​ ( 45,000 ) ​ $ 8.35 Non-vested, September 30, 2022 ​ 313,342 ​ $ 4.42 ​ ​ 4. REVENUE The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ ​ ​ ​ ​ ​ ​ ​ Distributors/ ​ Government ​ ​ ​ ​ Direct Strategic Partners Agencies Total Product sales: ​ ​ ​ ​ United States ​ $ 191,468 ​ $ 9,000 ​ $ — ​ $ 200,468 Germany ​ 2,493,044 ​ ​ — ​ ​ — ​ ​ 2,493,044 All other countries ​ 978,805 ​ ​ 2,790,379 ​ ​ — ​ ​ 3,769,184 Total product revenue ​ 3,663,317 ​ ​ 2,799,379 ​ ​ — ​ ​ 6,462,696 Grant and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ — ​ ​ — ​ ​ 1,648,657 ​ ​ 1,648,657 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 3,663,317 ​ $ 2,799,379 ​ $ 1,648,657 ​ $ 8,111,353 ​ 16 Table of Contents The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ ​ ​ ​ ​ ​ ​ ​ Distributors/ ​ Government ​ ​ ​ ​ Direct Strategic Partners Agencies Total Product sales: ​ ​ ​ ​ United States ​ $ 9,197 ​ $ 568,250 ​ $ — ​ $ 577,447 Germany ​ 3,662,409 ​ ​ — ​ ​ — ​ ​ 3,662,409 All other countries ​ 1,398,786 ​ ​ 3,263,244 ​ ​ — ​ ​ 4,662,030 Total product revenue ​ 5,070,392 ​ ​ 3,831,494 ​ ​ — ​ ​ 8,901,886 Grant and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ — ​ ​ — ​ ​ 858,530 ​ ​ 858,530 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 5,070,392 ​ $ 3,831,494 ​ $ 858,530 ​ $ 9,760,416 ​ The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ ​ ​ ​ ​ ​ ​ ​ Distributors/ ​ Government ​ ​ ​ ​ Direct Strategic Partners Agencies Total Product sales: ​ ​ ​ ​ United States ​ $ 541,695 ​ $ 181,750 ​ $ — ​ $ 723,445 Germany ​ 9,259,338 ​ ​ — ​ ​ — ​ ​ 9,259,338 All other countries ​ 3,245,637 ​ ​ 8,489,468 ​ ​ — ​ ​ 11,735,105 Total product revenue ​ 13,046,670 ​ ​ 8,671,218 ​ ​ — ​ ​ 21,717,888 Grant and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ — ​ ​ — ​ ​ 3,580,447 ​ ​ 3,580,447 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 13,046,670 ​ $ 8,671,218 ​ $ 3,580,447 ​ $ 25,298,335 ​ The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ ​ ​ ​ ​ ​ ​ ​ Distributors/ ​ Government ​ ​ ​ ​ Direct Strategic Partners Agencies Total Product sales: ​ ​ ​ ​ United States ​ $ 39,678 ​ $ 1,203,450 ​ $ — ​ $ 1,243,128 Germany ​ 15,678,750 ​ ​ — ​ ​ — ​ ​ 15,678,750 All other countries ​ 4,114,126 ​ ​ 9,374,688 ​ ​ — ​ ​ 13,488,814 Total product revenue ​ 19,832,554 ​ ​ 10,578,138 ​ ​ — ​ ​ 30,410,692 Grant and other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ — ​ ​ — ​ ​ 1,972,640 ​ ​ 1,972,640 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 19,832,554 ​ $ 10,578,138 ​ $ 1,972,640 ​ $ 32,383,332 ​ The Company has two primary revenue streams: (1) sales of the CytoSorb device and related device accessories and (2) grant income from contracts with various agencies of the United States government. The following is a brief description of each revenue stream. 17 Table of Contents CytoSorb Sales The Company sells its CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners. 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 U.S. FDA Emergency Use Authorization (EUA) of CytoSorb for use in critically-ill patients infected with COVID-19 with imminent or confirmed respiratory failure by 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. Direct sales are fulfilled from the Company’s warehouse facility in Berlin, Germany. There are no formal sales contracts with any direct customers relating to product price or minimum purchase requirements. However, there are agreements in place with certain direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels. The Company records the value of these items earned as a reduction of revenue. These customers submit purchase orders and the order is fulfilled and shipped directly to the customer. Prices to all direct customers are based on a standard price list based on the packaged quantity (6 packs versus 12 packs). Distributor and strategic partner sales make up the remaining product sales. These distributors are located in various countries throughout the world. The Company has a formal written contract with each distributor/strategic partner. These contracts have terms ranging from 1 - 5 years in length, with three years being the typical term. Certain distributors are eligible for volume discount pricing if their unit sales are in excess of the base amount in the contract. Most distributor’s/strategic partner’s contracts have minimum annual purchase requirements in order to maintain exclusivity in their respective territories. There is no additional consideration or monetary penalty that would be required to be paid to the Company if a distributor does not meet the minimum purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met. Government Grants The Company has been the recipient of various grant contracts from various agencies of the United States government, primarily the Department of Defense, to perform various research and development activities. These contracts fall into one of the following categories: 1. Fixed price – the Company invoices the contract amount in equal installments over the term of the contract without regard to the timing of the costs incurred related to this contract. If billings on fixed price contracts exceed the costs incurred, revenue will be deferred to the extent of the excess billings. 2. Cost reimbursement – the Company submits monthly invoices during the term of the contract for the amount of direct costs incurred during that month plus an agreed upon percentage that relates to allowable overhead and general and administrative expenses. Cumulative amounts invoiced may not exceed the maximum amount of funding stipulated in the contract. 3. Cost plus – this type of contract is similar to a cost reimbursement contract but this type also allows for the Company to additionally invoice for a fee amount that is included in the contract. 4. Performance based – the Company submits invoices only upon the achievement of the milestones listed in the contract. The amount to be invoiced for each milestone is documented in the contract. In summary, the contracts the Company has with customers are the distributor/strategic partner contracts related to CytoSorb product sales, agreements with direct customers related to free-of-charge product and credit rebates based upon achieving minimum purchase levels, and contracts with various government agencies related to the Company’s grants. The Company does not currently incur any outside/third party incremental costs to obtain any of these contracts. The Company does incur internal costs, primarily salary related costs, to obtain the contracts related to the grants. Company employees spend time reviewing the program requirements and developing the budget and related proposal to submit to the grantor agency. There may additionally be travel expenditures involved with meeting with government agency officials during the negotiation of the contract. These internal costs are expensed as incurred. ​ 18 Table of Contents The following table provides information about receivables and contract liabilities from contracts with customers: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 December 31, 2021 Receivables, which are included in grants and accounts receivable ​ $ 4,217,149 ​ $ 3,000,708 Contract liabilities, which are included in accrued expenses and other current liabilities ​ $ 1,722,546 ​ $ 2,251,177 ​ 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, which amounted to $ 78,466 and $ 303,824 as of September 30, 2022 and December 31, 2021, respectively, and deferred grant revenue related to the billing on fixed price contracts in excess of costs incurred , which amounted to $ 1,644,080 and $ 1,947,353 at September 30, 2022 and December 31, 2021, respectively. ​ 5. LONG-TERM DEBT, NET On June 30, 2016, the Company and its wholly-owned subsidiary, CytoSorbents Medical, Inc. (together, the “Borrower”), entered into a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, (the “Bank”), pursuant to which the Company borrowed $ 10 million in two equal tranches of $ 5 million (the “Original Term Loans”). On March 29, 2018, the Original Term Loans were refinanced with the Bank pursuant to an Amended and Restated Loan and Security Agreement by and between the Bank and the Borrower (the “Amended and Restated Loan and Security Agreement”), under which the Bank agreed to loan the Borrower up to an aggregate of $ 15 million to be disbursed in two tranches (1) one tranche of $ 10 million (the “Term A Loan”), which was funded on the Closing Date and used to refinance the Original Term Loans, and (2) a second tranche of $ 5 million which may be disbursed at the Borrower’s sole request prior to March 31, 2019 provided certain conditions are met (the “Term B Loan” and together with the Term A Loan, the “Term Loans”). On July 31, 2019, the Borrower entered into the First Amendment to the Amended and Restated Loan and Security Agreement (the “First Amendment”) with the Bank, which amended certain provisions of the Amended and Restated Loan and Security Agreement and the 2018 Success Fee Letter (the “2018 Letter”). In connection with the execution of the First Amendment, the draw period for the Term B Loan was extended to August 15, 2019 and the Company drew down the full $ 5.0 million Term B Loan on the Settlement Date, bringing the total outstanding debt to $ 15 million at July 31, 2019. The proceeds of Term Loans were used for general business requirements in accordance with the Amended and Restated Loan and Security Agreement. On December 4, 2020 (the “Third Amendment 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, if needed. 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 and entered into the Fourth Amendment Success Fee Letter (the “2022 Success Fee Letter”). 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 Loans 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 Loans 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 , which was amortized and written off as a charge to interest expense. 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 the Term Loan funded upon the earlier of the (i) the maturity date or (ii) termination of the Term Loans via acceleration or prepayment. 19 Table of Contents The Company’s and CytoSorbents Medical, Inc.’s obligations under the Amended and Restated Loan and Security Agreement are joint and severable and are secured by a first priority security interest in favor of the Bank with respect to the Company’s Shares (as defined in the Amended and Restated Loan and Security Agreement) and the Borrower’s Collateral (as defined in the Amended and Restated Loan and Security Agreement, which definition excludes the Borrower’s intellectual property and other customary exceptions). 2018 Success Fee Letter: Pursuant to the amended 2018 Letter, the Borrower shall pay to the Bank a success fee in the amount equal to 6.37 % of the funded amount of the Term B Loan (as defined in the Restated Loan and Security Agreement) (the “Success Fee”) upon the first occurrence of any of the following events: (a) a sale or other disposition by the Borrower of all or substantially all of its assets; (b) a merger or consolidation of the Borrower into or with another person or entity, where the holders of the Borrower’s outstanding voting equity securities as of immediately prior to such merger or consolidation hold less than a majority of the issued and outstanding voting equity securities of the successor or surviving person or entity as of immediately following the consummation of such merger or consolidation; (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. 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. ​ ​ 6. COMMITMENTS AND CONTINGENCIES 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 sheets as of December 31, 2021 and September 30, 2022. 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 in 2022, subject to the availability of the German tax authorities. 20 Table of Contents Employment Agreements On July 30, 2019, CytoSorbents Corporation entered into amended and restated executive employment agreements with its principal executives, Dr. Phillip P. Chan, Chief Executive Officer, Vincent Capponi, President and Chief Operating Officer, and Kathleen P. Bloch, Chief Financial Officer. Each of the agreements has an initial term of three years and was retroactively effective as of January 1, 2019. On April 12, 2020, CytoSorbents Corporation entered into an executive employment agreement with Dr. Efthymios Deliargyris, who began employment as Chief Medical Officer on May 1, 2020, with an initial term that expired on December 31, 2021. After the expiration of the initial terms, the employment agreements will automatically renew for additional terms of one year unless either party provides written notice of non-renewal at least 60 days prior to a renewal. In January 2022, these employment agreements 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. In addition, the agreements provide for certain termination benefits in the event of termination without “Cause” or voluntary termination of employment for “Good Reason”, as defined in each agreement. The agreements also provide for certain benefits in the event of a “Change of Control” of the Company, as defined in each agreement. On September 30, 2022, Ms. Bloch notified the Company of her intention to retire effective March 31, 2023. A search has been initiated for Ms. Bloch’s replacement. Ms. Bloch and the Company expect to enter into a consulting arrangement under which Ms. Bloch will continue to provide services to the Company in a limited capacity following the effective date of her retirement. Litigation The Company is, from time to time, subject to claims and litigation arising in the ordinary course of business. The Company intends to defend vigorously against any future claims and litigation. The Company is not currently a party to any legal proceedings. Royalty Agreements Pursuant to an agreement dated August 11, 2003, an existing investor agreed to make a $ 4 million equity investment in the Company. These amounts were received by the Company in 2003. In connection with this agreement the Company granted the investor a perpetual royalty of 3 % on all gross revenues received by the Company from the sale of its CytoSorb device which such rights were assigned to an existing investor in 2017. For the three months ended September 30, 2022 and 2021, the Company recorded royalty expenses of approximately $ 187,000 and $ 265,000 , respectively. For the nine months ended September 30, 2022 and 2021, the Company recorded royalty expenses of approximately $ 627,000 and $ 904,000 , respectively. These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. On August 1, 2022, the Company entered into the Marketing Agreement with Fresenius, which expands the Company’s strategic partnership with Fresenius by establishing a multi-stage global collaboration to combat life-threatening diseases in critical care. The Marketing Agreement has an initial term of three years, with an automatic renewal for an additional two years at the end of such initial term, subject to earlier termination by either of the parties (the “Term”) To help support the increased marketing and promotional efforts of the expanded collaboration, the Company has agreed to subsidize a portion of the marketing costs through royalty payments to Fresenius. Initially, the Marketing Agreement provides for royalty payments equal to 0.9 % of the Company’s net sales of CytoSorb products made during the Term (excluding net sales in the United States). This initial royalty rate was determined based on certain assumptions regarding the percentage of the Company’s sale of CytoSorb products that are used with the Fresenius critical care platforms in the intensive care unit outside of the United States but is subject to adjustment if the Company determines that the underlying assumptions have changed significantly. For the three and nine months ended September 30, 2022, the Company recorded royalty expenses of approximately $ 48,000 . This expense is included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. License Agreement In an agreement dated September 1, 2006, the Company entered into a license agreement which provides the Company the exclusive right to use its patented technology and proprietary know how relating to adsorbent polymers for a period of 18 years . Under the terms of the agreement, the Company has agreed to pay license fees of 2.5 % to 5 % on the sale of certain of its products if and when those products are sold commercially for a term not greater than 18 years commencing with the first sale of such product. For the three months ended September 30, 2022 and 2021 pursuant to the terms of the license agreement, the Company recorded licensing expenses of 21 Table of Contents approximately $ 312,000 and $ 441,000 , respectively. For the nine months ended September 30, 2022 and 2021, pursuant to the terms of the license agreement, the Company recorded licensing expenses of approximately $ 1,046,000 and $ 1,507,000 , respectively. These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. ​ 7. LEASES The Company leases its operating facilities in both the United States and Germany under operating lease agreements. 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 Accounting Standards Codification (“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 a 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. Under the terms of this amendment, the Company vacated 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. The initial lease term of both leases ends August 31, 2026. In addition, the Company is obligated to monthly operating expenses of approximately $ 3,000 per month. Both leases have a five-year option to renew that would extend the lease term to August 31, 2031. There are no provisions in the leases to increase the base rent during the renewal period. There were no lease incentives and no initial direct costs were incurred related to these leases. 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 per month 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, 2021, 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 . 22 Table of Contents Right-Of-Use Asset and Lease Liability: The Company’s consolidated balance sheets reflect the value of the right-of-use asset and related lease liability. This value was calculated based on the present value of the remaining base rent lease payments. The remaining lease payments include the renewal periods for both facilities as the Company has determined that it is probable that the renewal options will be exercised under each of the lease agreements. The discount rate used was the Company’s incremental borrowing rate, which is 9.8 %, as the Company could not determine the rate implicit in the lease. As a result, the value of the right-of- use asset and related lease liability is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2022 2021 Right-of-use asset ​ $ 12,794,340 ​ $ 13,423,472 ​ ​ ​ ​ ​ ​ ​ Total lease liability ​ $ 13,385,942 ​ $ 13,821,509 Less current portion ​ ( 376,529 ) ​ ​ ( 570,566 ) Lease liability, net of current portion ​ $ 13,009,413 ​ $ 13,250,943 ​ The maturities of the lease liabilities are as follows during the years ended September 30th: ​ ​ ​ ​ ​ 2022 $ 1,668,230 2023 ​ 1,294,887 2024 ​ 1,685,727 2025 ​ 1,725,524 2026 ​ 1,766,416 Thereafter ​ 17,684,408 Total lease payments ​ ​ 25,825,192 Present value discount ​ ​ ( 12,439,250 ) Total ​ $ 13,385,942 ​ For the three months ended September 30, 2022 and 2021, operating cash flows paid in connection with operating leases amounted to approximately $ 659,000 and $ 593,000 , and $ 2,057,000 and $ 1,248,000 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and December 31, 2021, the weighted average remaining lease term was 12.8 years and 14.3 years, respectively. 8. NET LOSS PER SHARE Basic loss per share and diluted loss per share for the three months ended September 30, 2022 and 2021 have been computed by dividing the net loss for each respective period by the weighted average number of shares outstanding during that period. All outstanding options and restricted stock awards representing approximately 11,428,000 and 9,891,000 incremental shares at September 30, 2022 and 2021, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive. ​ ​ 23 Table of Contents