What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-11-07 · 335 added, 483 removed, 190 unchanged (81% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets:

Cash and cash equivalents

Grants and accounts receivable, net of allowance of $ 160,246 as of September 30, 2024 and $ 49,663 at December 31, 2023

Restricted cash, current

Grants and accounts receivable, net of allowances of $ 173,356 and $ 157,701 as of March 31, 2025 and December 31, 2024, respectively

Prepaid expenses and other current assets

2 unchanged sentences

Restricted cash

Right-of-use assets

Right-of-use asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

Current maturities of long-term debt

Lease liability – current portion

Accrued expenses and other current liabilities

Lease liability – current portion

Total current liabilities

2 unchanged sentences

Total liabilities

Commitments and Contingencies (Note 6)

Commitments and Contingencies

Stockholders’ equity

Preferred Stock, par value $ 0.001 , 5,000,000 shares authorized;

no shares issued and outstanding at September 30, 2024 and December 31, 2023

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

54,500,613 and 54,240,265 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

no shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common Stock, par value $ 0.001 , 100,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

and 62,529,466 and 54,830,146 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

5 unchanged sentences

CYTOSORBENTS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three months ended September 30,

Nine months ended September 30,

CytoSorb sales

Other product sales

Total product sales

Total revenue

Cost of revenue

Other expenses:

Research and development

Legal, financial and other consulting

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

Three Months Ended March 31,

Product revenue

Cost of goods sold

Operating expenses

Research and development, net of grant income

Selling, general and administrative

Total expenses

Total operating expenses

Loss from operations

1 unchanged sentence

( 4,656,368 )

( 12,740,587 )

( 21,867,828 )

Other income (expense)

2 unchanged sentences

( 1,425,690 )

Miscellaneous income

Total other income (expense), net

3 unchanged sentences

( 6,088,711 )

( 12,835,098 )

( 22,672,487 )

Benefit from income taxes

2 unchanged sentences

( 6,088,711 )

( 12,835,098 )

( 22,672,487 )

Basic and diluted net loss per common share

Weighted average number of shares of common stock outstanding

( 2,334,091 )

( 9,193,520 )

Comprehensive loss:

Net loss attributable to common stockholders

( 1,478,358 )

1 unchanged sentence

Other comprehensive income (loss):

Foreign currency translation adjustment

Foreign currency translation adjustment, net of tax

( 2,736,354 )

2 unchanged sentences

( 4,865,536 )

( 13,521,344 )

( 22,017,695 )

See accompanying notes to condensed consolidated financial statements.

CYTOSORBENTS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2024 and 2023 (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

Comprehensive

1 unchanged sentence

Income (Loss)

Balance at June 30, 2024

( 293,006,279 )

Stock-based compensation - employees, consultants and directors

Other comprehensive loss:

foreign translation adjustment

( 2,330,743 )

ATM activation fees

Issuance of restricted stock units

( 2,334,091 )

Balance as of December 31, 2024

( 304,008,618 )

Balance at September 30, 2024

Stock-based compensation

Issuance of common stock from exercise of warrants

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

Other comprehensive loss, foreign currency translation adjustment, net of tax

( 2,736,354 )

Balance at December 31, 2023

( 2,736,354 )

Stock-based compensation - employees, consultants and directors

Other comprehensive loss:

foreign translation adjustment

Issuance of common stock offerings, net of fees

Warrants issued in connection with long-term debt

Issuance of restricted stock units

( 1,478,358 )

Balance at September 30, 2024

Balance as of March 31, 2025

( 305,486,976 )

1 unchanged sentence

Stockholders’

Income (Loss)

Balance at June 30, 2023

( 267,476,845 )

Stock-based compensation - employees, consultants and directors

Other comprehensive loss:

foreign translation adjustment

Issuance of common stock offerings, net of fees

Proceeds from exercise of stock options for cash

Issuance of restricted stock units

( 9,193,520 )

Balance at September 30, 2023

( 276,670,365 )

Balance at December 31, 2022

Balance as of December 31, 2023

( 283,289,661 )

Stock-based compensation - employees, consultants and directors

Other comprehensive income:

foreign translation adjustment

Issuance of common stock offerings, net of fees

Proceeds from exercise of stock options for cash

Issuance of restricted stock units

Legal/audit fees related to ATM offering

Stock-based compensation

Issuance of common stock offerings, net of fees incurred

Other comprehensive income, foreign currency translation adjustment, net of tax

( 6,088,711 )

Balance at September 30, 2023

Balance as of March 31, 2024

( 289,378,372 )

1 unchanged sentence

CYTOSORBENTS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Cash flows from operating activities

Net loss attributable to common stockholders

( 1,478,358 )

( 6,088,711 )

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

Accrued final fee

Adjustments to reconcile net loss attributable to common shareholders to net cash used in operating activities:

Amortization of debt discount

Amortization of loan costs

Non-cash compensation

Depreciation and amortization

Amortization of right-of-use asset

Write off of patent cost

Bad debt expense

Impairment of patents

Foreign currency transaction (gains) losses

( 3,013,984 )

Stock-based compensation

Foreign currency translation (gain) loss

Changes in operating assets and liabilities

8 unchanged sentences

Purchases of property and equipment

Payments for patent costs

Net cash used in investing activities

Cash flows from financing activities

Proceeds from long-term debt

Repayment of long-term debt

( 5,000,000 )

Payment of final fee

Payment of loan costs

Equity contributions - net of fees incurred

Proceeds from exercise of stock options

Net cash provided by financing activities

Proceeds from exercise of common stock warrants

Proceeds from rights offering, net of fees incurred

Net cash provided by (used in) financing activities

Effect of exchange rates on cash

1 unchanged sentence

( 5,522,757 )

( 13,785,520 )

Cash, cash equivalents and restricted cash - beginning of period

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

Cash, cash equivalents, and restricted cash – end of period

Supplemental disclosure of cash flow information

Cash paid during the period for interest

Cash paid for interest

Supplemental disclosure of non-cash financing activities

Warrants issued in connection with long-term debt

Issuance of restricted stock units

Fair value of common stock warrants issued in connection with the rights offering

Offering fees included in accounts payable

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of September 30, 2024 and December 31, 2023, and for the three and nine months ended September 30, 2024 and 2023.

The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and;

therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States ("U.S.

MARCH 31, 2025

NATURE OF BUSINESS AND BASIS OF PRESENTATION

CytoSorbents Corporation (the “Company”) is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification.

The Company, through its subsidiary CytoSorbents Medical, Inc.

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

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

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 and 2024.

The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

2 unchanged sentences

GAAP have been condensed or omitted.

The results for the three and nine months ended September 30, 2024 and 2023, 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, 2024, the Company’s cash, cash equivalents and restricted cash balances were approximately $ 12.2 million, including approximately $ 5.7 million in cash and cash equivalents and approximately $ 6.5 million in restricted cash, of which the unrestricted portion is not expected to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements.

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

As a result, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company continues to pursue additional milestones related to its recently announced Avenue Capital Group debt facility that would increase its unrestricted cash position by up to $ 10 million.

If these milestones are not achieved, the Company will need to raise additional capital to support our ongoing operations in the future.

Meanwhile the Company continues to evaluate other traditional and alternative sources of capital, including additional less or non-dilutive debt financing, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof.

The results for the three months ended March 2025 and 2024, 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 March 31, 2025, the Company’s total cash and cash equivalents and restricted cash was approximately $ 13.1 million, with $ 1.5 million classified as restricted, and $ 11.6 million as unrestricted and available to fund operations.

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

and Canada which is expected in 2025, and the related opportunity to receive Tranche 2 of Avenue Capital Commitment (see note 6.

Long-Term Debt) by December 31, 2025 and extend the principal re-payment terms of the facility beginning in the third quarter of 2026.

Additional sources of liquidity available to the Company include issuance of additional equity securities through the Series B Right Warrant, which expires June 10, 2025, or other public or private equity offerings, debt financings or from other sources.

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

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

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

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

As a result of these additional uncertainties, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

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

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

PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Please see Note 2 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10 - K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on March 14, 2024, for a description of all 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.

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.

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 of America dollar the foreign currency financial statements of the European subsidiary, for which the United States of America dollar is the functional currency, are included in operations.

The Euro is the functional currency of the European Subsidiary.

Foreign currency transaction gain (loss) included in net loss amounted to approximately $ 2,650,000 and $( 1,810,000 ) for the three months ended September 30, 2024 and 2023, respectively.

Foreign currency transaction gain (loss) included in net loss amounted to approximately $ 680,000 and $( 734,000 ) for the nine months ended September 30, 2024 and 2023, respectively.

The Company translates assets and liabilities of all of its foreign subsidiaries at the exchange rate in effect at the condensed consolidated balance sheet date.

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 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, 2024

December 31, 2023

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 $ 6,483,958 consists of cash of $ 5,000,000 which is restricted in accordance with the terms of the debt agreement with Avenue Capital Group (see Note 5), cash of $ 1,467,458 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 $ 16,500 that the Company is obligated to maintain as collateral for the credit limit on the Company’s credit card accounts.

Grants and Accounts Receivable

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

government and are presented at net realizable value.

At each balance sheet date, the Company estimates an expected allowance for credit losses inherent in the Company’s accounts receivable portfolio based on historical experience, specific allowances for known troubled accounts, and other available evidence.

In addition, also at each reporting date, this estimate is updated to reflect any changes in credit risk since the receivable was initially recorded.

This estimate is calculated on a pooled basis where similar risk characteristics exist.

The Company has identified the following portfolio segments:

direct customers, distributors/strategic partners and the U.S.

A fixed reserve percentage for each pool is derived from a review of the Company’s historical losses in relation to the total pool.

This estimate is adjusted quarterly for management’s assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant by the Company.

The Company believes historical loss information is a reasonable starting point in which to calculate the expected allowance for credit losses as the Company’s portfolio segments have remained constant over the Company’s historical evaluation period.

The Company writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there is no possibility of recovery.

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

The total amount of write-offs was immaterial to the consolidated financial statements as a whole for the three and nine months ended September 30, 2024 and 2023.

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

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist, and measures the allowance for credit losses using the following methods:

Direct Customers—The Company measures expected credit losses on direct customer receivables using an aging methodology.

The risk of loss for direct customer receivables is low based on the Company’s historical experience.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and supportable forecasts.

Distributors/Strategic Partners—The Company measures expected credit losses on distributor receivables using an individual reserve methodology.

The risk of loss in this portfolio is low based on the Company’s historical experience.

The estimate of expected credit losses considers the past payment history of each distributor.

Government— These receivables are related to the Company’s government grants.

The Company measures expected credit losses on these receivables using an individual reserve methodology.

The risk of loss in this portfolio is very low based on the Company’s historical experience, as these receivables are supported by approved grant award contracts.

Inventories are valued at the lower of cost or net realizable value under the first in, first out (FIFO) method.

At September 30, 2024 and December 31, 2023, the Company’s inventory was comprised of finished goods, which amounted to $ 1,430,325 and $ 2,155,457 , respectively;

work in process, which amounted to $ 1,049,319 and $ 838,871 , respectively;

and raw materials, which amounted to $ 768,112 and $ 685,801 , 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.

SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to significant accounting policies, effect of recent accounting pronouncements to the Company’s consolidated financial statements from the Annual Report on Form 10-K for the year ended December 31, 2024.

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.

During the three months ended September 30, 2024 and 2023, the Company recorded impairment charges of approximately $ 64,000 and $ 183,000 , respectively, and during the nine months ended September 30, 2024 and 2023, the Company recorded impairment charges of approximately $ 313,000 and $ 476,000 , respectively, related to the impairment of certain issued patents and pending patent applications in certain specific jurisdictions and the abandonment of certain pending patent application costs in the ordinary course of business.

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

The Company has no t recorded income tax expense or income tax benefit for the three and nine months ended September 30, 2024, and 2023 due to the generation of net operating losses, the benefits of which have been fully reserved.

During the three months ended March 31, 2025 and 2024, the Company recorded impairment charges of zero and approximately $ 64,000 , respectively, related to the impairment of certain issued patents and pending patent applications in certain specific jurisdictions

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

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

The Company has no t recorded income tax expense or income tax benefit for the three months ended March 31, 2025 and 2024 due to the generation of net operating losses, the benefits of which have been fully reserved.

Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities.

3 unchanged sentences

The Company follows accounting standards associated with uncertain tax positions.

The Company had no unrecognized tax benefits at September 30, 2024.

The Company is accounting for an uncertain tax position of approximately $ 2.1 million for the year ended December 31, 2023.

The Company had no unrecognized tax benefits as of March 31, 2025 and December 31, 2024.

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

The Company files tax returns in the U.S.

3 unchanged sentences

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

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

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

Through the IntraFi Network the Company maintains an Insured Cash Sweep account whereby all cash held in the Company’s money market accounts is swept daily in increments of less than $250,000 and deposited in a number of IntraFi’s network of 3,000 financial institutions.

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

This arrangement excludes the restricted cash balances.

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 and other income are from government agencies in the United States.

(See Note 4 for further information relating to the Company’s revenue.)

As of September 30, 2024, two distributors accounted for approximately 31 % of outstanding grants and accounts receivable.

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

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

As of March 31, 2025, one distributor accounted for approximately 14.7 % of outstanding grants and accounts receivable.

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

For the three months ended September 30, 2024 and 2023, no distributor or direct customers accounted for more than 10 % of the Company’s total revenue.

For the nine months ended September 30, 2024 and 2023, one distributor accounted for approximately 10 % for each period, of the Company’s total revenue.

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

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

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

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

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

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

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

Accordingly, these warrants have been classified as equity as of September 30, 2024 and December 31, 2023.

For the three months ended March 31, 2025 and 2024, no distributor or direct customers accounted for more than 10 % of the Company’s total revenue.

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 $ 89,000 and $ 140,000 , respectively, for the three months ended September 30, 2024 and 2023, and $ 267,000 and $ 341,000 , respectively, for the nine months ended September 30, 2024 and 2023.

Effect of Recent Accounting Pronouncements

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

ASU2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

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

The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years.

The Company adopted the provisions of ASU 2020-06 on January 1, 2024.

This did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09 entitled “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

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

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

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

In November 2023, the FASB issued ASU No.

2023-07 (“ASU 2023-07”), “Improvements to Reportable Segment Disclosures”.

The guidance primarily will require enhanced disclosures about significant segment expenses.

All disclosure requirements under ASU 2023-07 and existing segment disclosures in ASC 280, “Segment Reporting” are also required for public entities with a single reportable segment.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

A retrospective approach is required to be applied to all prior periods presented in the financial statements.

The Company plans to adopt the provisions of ASU 2023-07 in the first quarter of fiscal 2025 and continues to evaluate the disclosure requirements related to the new standard.

On April 3, 2024, the Financial Accounting Standards Board (the "FASB") began a project related to the accounting and reporting of government grants.

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

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

The FASB expects to issue and exposure draft of a proposed ASU in the fourth quarter of 2024.

The company is evaluating its accounting and reporting policy for government grants relative to this project and the requirements of IAS 20.

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.

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.

Total freight costs amounted to approximately $ 90,000 and $ 114,000 for the three months ended March 31, 2025 and 2024, respectively.

BALANCE SHEET COMPONENTS

The Company had the following major classes of inventories:

March 31, 2025

December 31, 2024

Raw materials

Work in process

Finished goods

Property and equipment

The Company’s property and equipment consist of the following:

Depreciation/

March 31, 2025

December 31, 2024

Furniture and fixtures

Equipment and computers

Leasehold improvements

Lesser of term of lease or estimated useful life

Less accumulated depreciation and amortization

Property and Equipment, Net

Depreciation expense for the three months ended March 31, 2025 and 2024, amounted to $ 305,700 and $ 342,200 , respectively.

Other assets consist of the following:

March 31, 2025

December 31, 2024

Patent applications pending

Patents issued

Less accumulated amortization of patents issued

( 1,312,727 )

( 1,254,850 )

Patent amortization expenses amounted to $ 62,800 and $ 55,100 for the three months ended March 31, 2025 and 2024, respectively.

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

Scheduled amortization of patents issued

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

March 31, 2025

December 31, 2024

Accrued salaries and commissions

Clinical studies

Deferred revenue

Professional fees

Goods received not invoiced

Accrued expenses and other current liabilities

COMMON STOCK, STOCK-BASED COMPENSATION AND WARRANTS

Rights Offering

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

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

Up to an additional 6.25 million shares of common stock may be issued upon exercise of the Right Warrants.

Once the 6.25 million shares of common stock reserved for the Right Warrants are issued, the remaining outstanding and unexercised Right Warrants will expire worthless.

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

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

A fair value of $ 288,442 and $ 54,563 has been allocated to the Series A Right Warrant and the Series B Right Warrant, respectively, and recorded within additional paid-in capital.

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

Series A Right Warrant

Series B Right Warrant

Common Stock Price as of Issuance Date

Risk-Free Rate

Dividend Rate

Minimum Exercise Price

Maximum Exercise Price

Formula for Exercise Price

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

Proceeds from the closing of the subscription period satisfy a debt covenant which allows for $ 5,000,000 of restricted cash on the Company’s condensed consolidated balance sheets to become unrestricted, and available for use.

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

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

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

The Right Warrants are transferable until they have expired.

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

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

As of March 31, 2025, the number of Series B Right Warrants unexercised warrants amounted to 6.25 million, of which only 4.85 million can be exercised pursuant to the maximum number of shares reserved for the Rights Warrants.

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

Shelf Registration

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

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

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

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

On September 26, 2024, the Company filed Amendment No.

1 to the Form S-3 with the SEC.

1 to Form S-3 with the Securities and Exchange Commission (the “SEC”).

The 2024 Shelf was declared effective by the SEC on September 30, 2024.

Because the Company’s market capitalization is less than $ 75 million, it will be subject to baby shelf rules which limit the amount of securities sales the Company can make to one-third of its public market float over a 12-month period.

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.

However, as a result of limitations related to our market capitalization discussed above, the Company may offer and sell shares of the Company's common stock having an aggregate offering price of up to approximately $ 19,700,000 from time to time through the Agent.

If the Company's public float increases above $75,000,000, the Company may sell additional amounts under the Sales Agreement.

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 2024 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 were no sales under the Sale Agreement during the year ended December 31, 2022.

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

In addition, during the year ended December 31, 2023, the Company paid approximately $ 61,000 in expenses related to the Sale Agreement.

During the nine months ended September 30, 2024, the Company sold 53,290 shares pursuant to the Sales Agreement at an average selling price of $ 1.03 per share, generating net proceeds of approximately $ 53,000 .

In addition, the Company incurred ATM activation fees of approximately $ 41,000 during the three and nine months ended September 30, 2024.

Stock-Based Compensation

Total share-based employee, director, and consultant compensation amounted to approximately $ 782,000 and $ 2,345,000 for the three and nine months ended September 30, 2024, respectively, and approximately $ 1,086,000 and $ 2,487,000 for the three and nine months ended September 30, 2023, respectively.

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

The summary of the stock option activity for the nine months ended September 30, 2024 is as follows:

The following table summarizes the Company’s stock-based compensation expense:

Three Months Ended March 31,

Stock-based compensation expense by category

Stock-options

Restricted stock-units (“RSUs”)

Total stock-based compensation expense

Stock-based compensation expense was recorded as follows:

$ 59,000 , $ 132,000 and $ 627,000 in cost of goods sold, research and development, and selling, general and administrative expenses for the three months ended March 31, 2025, respectively, and $ 959,000 was recorded in the selling, general and administrative expenses for the three months ended March 31, 2024 within the condensed consolidated statements of operations and comprehensive loss.

Stock-options

The summary of the stock option activity for the three months ended March 31, 2025, is as follows:

Exercise Price

Outstanding, December 31, 2024

Outstanding, March 31, 2025

The Company estimated the fair value of stock options granted during the three months ended March 31, 2025 using a Black-Scholes pricing model, which used the following inputs:

Exercise price (per share)

1.01 - $ 1.30

Outstanding, September 30, 2024

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 $ 0.84 to $ 1.08 per share) and expected life of the stock option ( 6 years ), the current price of the underlying stock and its expected volatility ( 77.8 %), expected dividends ( 0 )% on the stock and the risk free interest rate (ranging from 3.60 % to 4.65 %) for the expected term of the stock option.

The intrinsic value is calculated as the difference between the market value of the shares as of September 30, 2024 of $ 1.50 and the exercise price of the shares.

Expected volatility

Expected term*

Risk free rate

4.01 % - 4.40

*The expected term of the options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term.

In addition, the Company recognizes forfeitures as they occur.

The intrinsic value is calculated as the difference between the market value of the shares as of March 31, 2025, of $ 1.00 and the exercise price of the shares.

Options Outstanding

Outstanding at

September 30,

$ 0.84 - $ 13.20

1 unchanged sentence

Exercisable at

September 30,

The summary of the status of the Company’s non-vested options for the nine months ended September 30, 2024 is as follows:

The summary of the status of the Company’s non-vested options for the three months ended March 31, 2025 is as follows:

Non-vested, December 31, 2024

( 1,018,794 )

( 1,528,637 )

Non-vested, September 30, 2024

As of September 30, 2024, the Company had approximately $ 3,540,000 of total unrecognized compensation cost related to stock options which will be amortized over approximately 35 months .

On March 29, 2024, the Company granted options to purchase 380,480 shares of common stock to certain executive officers and certain other non-executive officer employees related to the Company’s salary reduction for stock options program.

These options will vest in full on January 31, 2025.

The grant date fair value of these unvested options amounted to approximately $ 249,000 .

On April 2, 2024, the Company granted options to purchase 1,214,400 shares of common stock to the Company’s employees which will be awarded based upon each employee’s 2024 individual performance evaluation.

Once awarded, these options will vest one half on the first anniversary of the grant date, one quarter on the second anniversary of the grant date, and one quarter on the third anniversary of the grant date.

The grant date fair value of these unvested options amounted to approximately $ 830,000 .

On April 2, 2024, the Company granted options to purchase 922,147 shares of common stock to certain of the Company’s employees.

These options will vest in full on the first anniversary of the grant date.

The grant date fair value of these unvested options amounted to approximately $ 594,000 .

On April 2, 2024, the Company granted options to purchase 110,000 shares of common stock to members of the Company’s Board of Directors.

These options will vest in full on the first anniversary of the grant date.

The grant date fair value of these unvested options amounted to approximately $ 71,000 .

On April 2, 2024, the Company granted options to purchase 556,000 shares of common stock to certain senior managers of the Company.

These options will vest one half on the first anniversary of the grant date, one quarter on second anniversary of the grant date, and one quarter on third anniversary of the grant date.

The grant date fair value of these unvested options amounted to approximately $ 380,000 .

On April 8, 2024, the Company granted options to purchase 131,339 shares of common stock employees related to the Company’s salary reduction for stock options program.

The grant date fair value of these unvested options amounted to approximately $ 85,000 .

These options will vest in full on January 31, 2025.

On August 14, 2024, the Company granted, in connection with the appointment of its new Chief Financial Officer, options to purchase 80,000 shares of common stock which will vest as follows:

41,000 options upon the six - month anniversary of the date of grant and 13,000 options upon each of the first, second and third anniversaries of the date of grant.

The Company also granted options to purchase 215,000 shares of common stock that will vest only upon the achievement of certain milestones pursuant to the terms of the Company's existing 2022 - 2025 performance pool in place for the Company's management team.

During the nine months ended September 30, 2024, 78,000 options were awarded to newly hired employees or to consultants in connection with their employment or consulting agreements.

Change in Control-Based Awards of Restricted Stock Units:

Non-vested, March 31, 2025

As of March 31, 2025, the Company had approximately $ 2,267,000 of total unrecognized compensation cost related to stock options which will, on average, be amortized over approximately 35 months .

Change in Control-Based RSUs

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, as amended.

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

Intrinsic Value

December 31, 2023

September 30, 2024

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, 2024 and 2023.

Other Awards of Restricted Stock Units:

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, 2024 and 2023, the Company recorded a charge (income) of approximately $( 67,000 ) and $ 27,000 , and $ 106,000 and $ 214,000 , respectively, related to these restricted stock unit awards.

On July 7, 2023, certain named executive officers and senior managers were granted 250,000 restricted stock units.

These awards were valued at approximately $ 883,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and will vest two-thirds on the first anniversary of 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, 2024 and 2023, the Company recorded a charge (income) of approximately $( 234,000 ) and $( 13,000 ) and $ 102,000 and $ 0 , respectively, related to these restricted stock unit awards.

On September 18, 2023, a former named executive officer was granted 45,000 restricted stock units.

This award was valued at approximately $ 89,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant.

These restricted stock units vested (will vest) as follows:

25,000 on the date of the grant, 10,000 on the first anniversary of the date of the grant and 10,000 on the second anniversary of the date of the grant.

For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $( 1,000 ) and $ 9,000 and $ 50,000 and $ 0 , respectively, related to these restricted stock unit awards.

On April 2, 2024, the Board of Directors granted 343,000 restricted stock units to certain senior managers of the Company.

These awards were valued at approximately $ 328,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and will vest one half on the first anniversary of the grant date and one half on the second anniversary of the grant date.

For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge of approximately $ 41,000 and $ 81,000 and $ 0 and $ 0 , respectively, related to these restricted stock unit awards.

On August 14, 2024, the Company granted, in connection with the appointment of its new Chief Financial Officer, 65,000 restricted stock units.

This award was valued at approximately $ 63,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant.

These restricted stock units will vest equally on the first anniversary of the date of the grant and the second anniversary of the date of the grant.

For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge of approximately $ 4,000 and $ 4,000 and $ 0 and $ 0 , respectively, related to these restricted stock unit awards.

Additionally, certain employees were offered a total of 213,000 restricted stock units as a condition of their employment.

These awards were valued at approximately $ 517,000 at the date of issuance.

40,000 of these restricted stock units valued at $ 149,000 were forfeited as of September 30, 2024.

33,000 of these restricted stock units valued at approximately $ 231,000 were vested as of September 30, 2024.

The remaining 140,000 of these restricted stock units will vest upon the earlier of a Change in Control or in three or four years from the date of the award, whichever occurs first.

For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $( 23,000 ) and $( 186,000 ), and $ 8,000 and $ 0 , respectively, related to these restricted stock unit awards.

The following table outlines the restricted stock unit activity for the nine months ended September 30, 2024:

Non-vested, December 31, 2023

Non-vested, September 30, 2024

As of September 30, 2024, the Company had 4,352,130 warrants outstanding.

Outstanding, December 31, 2024

Outstanding, March 31, 2025

Due to the uncertainty over whether these restricted stock units will vest, which will only happen upon a Change in Control, no charge for these restricted stock units have ever been recorded in the Company’s condensed consolidated statements of operations and comprehensive loss.

Other RSU Awards

The following table outlines the restricted stock unit activity for the three months ended March 31, 2025:

Non-vested, January 1, 2025

Non-vested, March 31, 2025

As of March 31, 2025, the remaining weighted average vesting period for restricted stock awards subject to vesting was 28 months and the remaining unrecognized restricted stock unit compensation expense was $ 407,000 .

Warrants related to the December 2023 equity offering and June 2024 Loan and Security Agreement

As of March 31, 2025, the Company had 4,352,130 warrants outstanding.

2,706,561 warrants outstanding are related to the Company’s December 13, 2023 offering, and these warrants are immediately cash exercisable at an exercise price of $ 2.00 per share and expire on December 13, 2028.

Another 1,645,569 warrants were issued on June 28, 2024 in connection with the closing of the Company’s Loan and Security Agreement with Avenue Capital Group (see note 6.

Long-Term Debt).

These warrants have an exercise price of $ 0.79 and expire on June 28, 2029.

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

The number of warrants is fixed;

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

These warrants can be exercised into common stock.

The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2024:

United States

Distributors/

Strategic Partners

Product sales:

United States

All other countries

Total product revenue

Grant and other income:

United States

Total revenue

The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2023:

United States

Distributors/

Strategic Partners

Product sales:

United States

All other countries

Total product revenue

Grant and other income:

United States

Total revenue

The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2024:

United States

REVENUE AND SEGMENT INFORMATION

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

Distributors/

Strategic Partners

Product sales:

Product revenue:

United States

All other countries

Total product revenue

Grant and other income:

United States

Total revenue

The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2023:

United States

Product revenue

The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended March 31, 2024:

Distributors/

Strategic Partners

Product sales:

Product revenue:

United States

All other countries

Total product revenue

Grant and other income:

United States

Total revenue

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.

Product revenue

CytoSorb Sales

2 unchanged sentences

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

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

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

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

10 unchanged sentences

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 CytoSorbents if a distributor does not meet the minimum purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met.

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:

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.

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.

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.

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.

These government contracts have terms ranging from three months to four years.

The Company may apply for an extension of the term of the contract in order to complete its research and development activities but would not receive additional funding during the extension period in excess of the original contract.

See Note 2 regarding the accounting policies related to these contracts.

The Company is evaluating the potential reclassification of grant income and related costs of goods sold to net with research and development expenses.

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.

There is no additional consideration or monetary penalty that would be required to be paid to CytoSorbents if a distributor does not meet the minimum purchase commitments included in the contract;

however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met.

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.

The following table provides information about receivables and contract liabilities from contracts with customers:

September 30, 2024

March 31, 2025

December 31, 2024

Receivables, which are included in grants and accounts receivable

Contract receivables, which are included in grants and accounts receivable

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

Contract receivables represent balances due from product sales to distributors amounting to $ 4,528,972 and $ 3,270,724 at September 30, 2024 and December 31, 2023, respectively, and billed and unbilled amounts due on government contracts amounting to $ 316,261 and $ 575,547 at September 30, 2024 and December 31, 2023, respectively.

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 $ 51,192 and $ 196,322 as of September 30, 2024 and December 31, 2023, respectively, and deferred grant revenue related to the billing on fixed price contracts in excess of costs incurred, which amounted to $ 786,400 and $ 1,376,819 at June 30, 2024 and December 31, 2023, respectively.

LONG-TERM DEBT, NET

Contract receivables represent balances due from product sales to distributors amounting to $ 5,583,481 and $ 4,233,888 as of March 31, 2025 and December 31, 2024, respectively, and billed and unbilled amounts due on government contracts amounting to $ 278,197 and $ 193,002 as of March 31, 2025 and December 31, 2024, respectively.

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 $ 183,714 and $ 176,714 as of March 31, 2025 and December 31, 2024, respectively, and deferred grant liability related to the billing on fixed price government contracts in excess of costs incurred, which amounted to $ 546,028 and $ 419,328 as of March 31, 2025 and December 31, 2024, respectively.

Segment Information

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

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

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

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

All material long-lived assets are located in New Jersey, United States and Berlin, Germany.

Long-lived assets consist of property and equipment, net and operating lease right-of-use assets.

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

The Company operates as one reportable operating segment.

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

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

The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing resource allocation across the organization.

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

Three Months Ended

Product revenue

Total operating expenses

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

Net loss attributable to common stockholders

( 1,478,358 )

( 6,088,711 )

Interest expense, net

Benefit from income taxes

Depreciation and amortization expense

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

( 5,684,772 )

Stock-based compensation

Loss (gain) on foreign currency transactions

( 3,013,984 )

Adjusted EBITDA, a non-GAAP measure

( 2,700,279 )

( 3,299,617 )

Adjusted net loss, a non-GAAP measure:

Net loss attributable to common stockholders

( 1,478,358 )

( 6,088,711 )

Stock-based compensation

Loss (gain) on foreign currency transactions

( 3,013,984 )

Adjusted net loss, a non-GAAP measure

( 3,673,916 )

( 3,703,556 )

Total cash used in operating and investing activities

( 3,512,197 )

( 4,956,777 )

March 31, 2025

December 31, 2024

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

Three Months Ended

Research and development:

Clinical expenses

Other research and development expenses

Total research and development

Selling, general and administrative

Royalty expense

Stock-based compensation

Legal, financial and consulting

Other general and administrative

Total selling, general and administrative

Capital expenditures of the segment totaled $ 47,242 and $ 127,018 for the three months ended March 31, 2025 and 2024, respectively.

LONG-TERM DEBT

Avenue Capital Group

On June 28, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement (as amended, supplemented, restated or otherwise modified as of the date hereof and from time to time, the “Loan and Security Agreement”) with Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership (“Avenue”), Avenue Venture Opportunities Fund II, L.P., a Delaware limited partnership (“Avenue 2” and, together with Avenue, the “Lenders”), and Avenue Capital Management II, L.P., a Delaware limited partnership (the “Administrative and Collateral Agent”).

Under the Loan and Security Agreement, the Lenders have agreed to loan to the Company up to an aggregate of $ 20 million, to be disbursed in two tranches:

(1) one tranche of $ 15 million (“Growth Capital Loan Tranche 1”) on the Closing Date, with $ 4.5 million funded by Avenue and $ 10.5 million funded by Avenue 2, of which $ 10 million is available to the Company on the Closing Date and $ 5 million constitutes restricted cash subject to release to the Company prior to March 31, 2025, provided (i) the FDA has accepted Company’s application for review with respect to DrugSorb-ATR De Novo 510(k) and (ii) the Company has received a minimum of $ 3 million in net proceeds from the sale of its equity securities after the Closing Date.

The restriction will be released on a dollar for dollar basis for equity raised between $ 3 million and $ 5 million and (2) a second tranche of up to $ 5 million, which may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application (“Growth Capital Loan Tranche 2” and together with Growth Capital Loan Tranche 1, the “Growth Capital Loans” or the “Commitment”).

The proceeds from the Commitment were used to pay off the existing outstanding debt with Bridge Bank, and will additionally be used for working capital purposes and to fund general business requirements in accordance with the terms of the Loan and Security Agreement.

Each Growth Capital Loan shall bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate (as defined in the Loan and Security Agreement) plus five percent ( 5.00 %) or (B) thirteen and one-half percent ( 13.50 %).

Commencing on August 1, 2024, the Company shall make monthly payments during the term of each Growth Capital Loan of interest only during the initial 25-month period following the Closing Date (as may be extended to the 30 months anniversary of the Closing Date upon satisfaction of certain conditions) and thereafter to maturity in equal monthly installments of principal plus accrued and unpaid interest.

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

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

In addition, the Loan and Security Agreement required the Company to pay a non-refundable commitment fee equal to 1.00 % of the Commitment due and payable on the Closing Date.

In addition to the non-refundable commitment fee, the Company also paid financial advisor fees and legal fees of approximately $ 640,000 related to the Commitment.

These costs are being amortized over the loan period as a charge to interest expense.

During the three and nine months ended September 30, 2024, the Company recorded interest expense of approximately $ 58,000 related to these costs.

In addition, the Loan and Security Agreement requires the Company to pay a non-refundable final payment equal to 4.5 % of the original commitment amount.

This final payment has been accrued and included as part of the debt discount.

This discount will be charged to interest expense over the term of the loan.

For the three and nine months ended September 30, 2024, the Company recorded interest expense of approximately $ 132,000 related to the debt discount.

The Capital Growth Loans are evidenced by secured promissory notes issued to the Lenders by the Company.

If the Company elects to prepay the Growth Capital Loan(s) pursuant to the terms of the Loan and Security Agreement, it will owe a prepayment fee to the Lenders, as follows:

(1) for a prepayment made on or after the funding date of a Growth Capital Loan through and including the first anniversary of such funding date, an amount equal to 3.00 % of the principal amount of such Growth Capital Loan prepaid;

(2) for a prepayment made after the first anniversary of the funding date of a Growth Capital Loan through and including the second anniversary of such funding date, an amount equal to 2.00 % of the principal amount of such Growth Capital Loan prepaid;

and (3) for a prepayment made any time after the second anniversary of the funding date of a Growth Capital Loan, an amount equal to 1.00 % of the principal amount of such Growth Capital Loan prepaid.

Events of default which may cause repayment of the Commitment to be accelerated include, among other customary events of default, (1) non-payment of any obligation when due, (2) the failure to perform any obligation required under the Loan and Security Agreement and to cure such default within a reasonable time frame, (3) the occurrence of any circumstance that has a Material Adverse Effect (as defined in the Loan and Security Agreement), (4) default beyond any applicable grace period or cure under any other agreement involving the borrowing of money in excess of the Threshold Amount (as defined in the Loan and Security Agreement), (5) any judgment(s) singly or in the aggregate in excess of the Threshold Amount entered against the Company that remain unsatisfied, unvacated or unstayed for 15 days or more after entry thereof (to the extent not otherwise covered by independent third-party insurance), and (6) if the Company becomes insolvent or starts an insolvency proceeding or if an insolvency proceeding is brought by a third party against the Company and such proceeding is not dismissed or stayed within 45 days .

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

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

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

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

The restriction was released on a dollar-for-dollar basis for equity raised between $ 3 million and $ 5 million and (2) a second tranche of up to $ 5 million, which may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application (“Tranche 2” and together with Tranche 1, the “Avenue Capital Commitment”).

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

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

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

Proceeds from the Rights Offering on January 10, 2025 (see note 10.

Subsequent Events) satisfied the second condition of the debt covenant which now allows for the $ 5 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

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

provided, however that if the Company draws the full amount of Tranche 2 by December 31, 2025, and achieves for the trailing six month period ended June 30, 2026, at least $ 25 million of product revenue, the interest only period will be extended by six months to January 1, 2027, followed by equal monthly installments of principal plus accrued and unpaid interest through January 1, 2028

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

Fair value of warrants issued to Avenue Capital Group

Debt issuance cost

Commitment fee paid on the Closing Date ( 1 % of the Avenue Capital Group commitment)

Total discounts recorded at inception against Avenue Capital Group Long-Term Debt

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

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

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

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

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

As of September 30, 2024, the Company was in compliance with these covenants.

As additional consideration for the Commitment, on June 28, 2024, the Company also issued each Lender a warrant instrument (each, a “Warrant”) entitling the Lenders to purchase an aggregate of 1,645,569 shares of the Company’s common stock for cash at the exercise price of $ 0.79 and expire on June 28, 2029.

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

Accordingly, the Company has recorded a debt discount and additional paid-in capital of approximately $690,000 related to these warrants as of June 30, 2024.

This discount will be charged to interest expense over the term of the loan.

The Lenders were also granted the right while the Commitment is outstanding to convert up to an aggregate amount of $ 2,000,000 of the principal amount of the outstanding Growth Capital Loans into the Company’s common stock at a fixed conversion price of 120 % of the Closing Price (as defined in the warrant) or $ 0.95 per share (the “Conversion Option”).

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

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

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

The number of warrants is fixed;

These warrants meet the criteria for equity classification under Accounting Standards Codification 815.

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

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

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

Long-term debt consists of the following as of September 30, 2024:

As of March 31, 2025, long-term debt consists of the following:

Principal amount

Accrued final fee

Less unamortized debt discount

( 1,455,858 )

Less unamortized debt acquisition costs

Less Current maturities

Long-term debt net of current maturities

Principal payments of long-term debt are due as follows during the periods ending September 30:

Long-term debt

As of March 31, 2025, principal payments of long-term debt are due as follows:

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

The following items survive the termination of the Bridge Bank Amended and Restated Loan and Security Agreement and related amendments:

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 terminated on the fifth anniversary of the funding of the Term B Loan which was July 31, 2024.

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

2022 Success Fee Letter

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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”).

As of June 28, 2024, the Company had drawn down only the first tranche of the Term C Loan.

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 the fifth anniversary of the funding date of the last Term C Loans made but shall survive the termination of the Loan Agreement and any prepayment of the Term C Loans.

The termination date of this Letter is December 27, 2027.

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.

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

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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

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

The complaint specifically alleges that we violated the provisions of the CEPA by allegedly terminating Ms.

Greene in retaliation for complaining about certain business practices.

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

Royalty/License Agreements

Royalty Agreements

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

Royalty expense amounted to approximately $ 354,000 and $ 537,000 , respectively, for the three months ended September 30, 2024 and 2023.

For the nine months ended September 30, 2024 and 2023, royalty expense amounted to approximately $ 1,594,000 and $ 1,643,000 , respectively.

In addition, the Company’s license agreement with Purolite expired on August 6, 2024.

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

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 ended September 30, 2021.

The lease also contains two five-year renewal options;

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

Commencing on September 30, 2021, the remaining lease term will end in 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 $ 1,467,000 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 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 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

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 of the facilities in Germany and do not include the renewal periods for the United States facility.

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,

Royalty expense amounted to approximately $ 258,000 and $ 712,000 for the three months ended March 31, 2025, and 2024, respectively.

Royalty expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.

Employees are eligible to participate in the Company’s 401(k) 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 Internal Revenue Code limitations.

The Company matches one hundred percent of the participants contribution up to three percent of compensation plus fifty percent of the participants contribution over three percent of compensation up to a maximum of five percent of compensation.

Matching contributions amounted to $ 87,000 and $ 95,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company has operating leases that primarily relate to operating facilities in both the United States and Germany.

The Company leases its operating facilities under operating lease arrangements with varying expiration dates through March 2037.

As of March 31, 2025, the remaining lease term of the Company’s operating leases ranges from six to twelve years .

Supplemental statement of operations and cash flows related to the operating lease liability is as follows (excluding variable payments and expenses):

Cash paid in connection with the operating leases

Operating lease expense

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

Right-of-use asset

Total lease liability

Less current portion

Lease liability - current portion

Lease liability - net of current portion

The maturities of the lease liabilities are as follows for the periods ending September 30:

Total lease payments

Present value discount

Total lease liability

Weighted average discount rate

Weighted average remaining lease term

As of March 31, 2025, the maturities of the operating lease liability are as follows:

2025 (since April 1, 2025)

Future operating lease payments

Imputed interest

( 9,229,203 )

For the three months ended September 30, 2024 and 2023, operating cash flows paid in connection with operating leases amounted to approximately $ 547,000 and $ 633,000 , respectively, and $ 1,684,000 and $ 1,801,000 , respectively, for the nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, the weighted average remaining lease term was years 11.9 and 12.7 years, respectively.

Total operating lease liability

NET LOSS PER SHARE

Basic loss per share and diluted loss per share for the three and nine months ended September 30, 2024 and 2023 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 warrants, options and restricted stock awards representing approximately 20,328,000 and 14,119,000 incremental shares at September 30, 2024 and 2023, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive.

Basic loss per share and diluted loss per share for the three months ended March 31, 2025 and 2024 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 warrants, options and restricted stock awards representing approximately 20,092,880 and 16,061,000 incremental shares for the three months ended March 31, 2025 and 2024, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive.

SUBSEQUENT EVENTS

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

Receipt of $ 1.7 million from New Jersey Business Tax Certificate Program

On April 21, 2025, the Company announced that it received $ 1.7 million in cash proceeds from the sale of 2023 and amended 2022 Net Operating Loss (NOL) and R&D tax credits from the Technology Business Tax Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority (NJEDA).

The program allows technology and biotechnology businesses with net operating losses to turn their tax losses and credits into cash to buy equipment or facilities, or for other allowable expenditures.

The Company amended its tax return for 2022 following the passage of New Jersey tax reform legislation, A.B.

5323, on July 3, 2023, containing provisions that retroactively allowed taxpayers in New Jersey to immediately deduct from research and experimental (R&E) expenditures for which state R&D credit is claimed.

The legislation was retroactive to January 1, 2022.

The Company intends to utilize the funding to help drive ongoing growth, including preparations for the anticipated launch of DrugSorb-ATR in the U.S.

and Canada, scaling up manufacturing in the Princeton facility, and supporting other key strategic initiatives.

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-Q

Item 1. Financial Statements