CTSO US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of the results of operations and financial condition for the fiscal years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements, and the notes to those consolidated financial statements that are included elsewhere in this Report.

Overview

We are a leader in the treatment of life-threatening conditions in the intensive care unit and cardiac surgery through blood purification. CytoSorbents’ proprietary blood purification technologies are based on biocompatible, highly porous polymer beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. Cartridges filled with these beads can be used with standard blood pumps already in the hospital (e.g. dialysis, ECMO, heart-lung machines). CytoSorbents’ technologies are used in a number of broad applications. Specifically, four important applications are 1) the removal of blood thinners during and after cardiothoracic surgery to reduce the risk of severe bleeding 2) the removal of inflammatory agents in common critical illnesses such as sepsis, burn injury, trauma, lung injury, liver failure, cytokine release syndrome, and pancreatitis that can lead to massive inflammation, organ failure and patient death 3) the removal of liver toxins that accumulate in acute liver dysfunction or failure and 4) the removal of myoglobin in severe rhabdomyolysis that can otherwise lead to renal failure. In these diseases, the risk of death can be extremely high, and there are few, if any, effective treatments.

CytoSorbents’ lead product, CytoSorb®, is approved in the European Union and distributed in more than 70 countries worldwide, with more than 270,000 devices used cumulatively to date. CytoSorb was originally launched in the European Union under CE mark as the first cytokine adsorber. Additional CE mark extensions were granted for bilirubin and myoglobin removal in clinical conditions such as liver disease and trauma, respectively, and for ticagrelor and rivaroxaban removal in cardiothoracic surgery procedures. CytoSorb has also received FDA EUA in the United States for use in adult critically ill COVID-19 patients with impending or confirmed respiratory failure, to reduce pro-inflammatory cytokine levels. CytoSorb is not yet approved in the United States.

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In the U.S. and Canada, CytoSorbents is developing the DrugSorbTM-ATR antithrombotic removal system, an investigational device based on an equivalent polymer technology to CytoSorb, to reduce the severity of perioperative bleeding in high-risk surgery due to blood thinning drugs. It has received two FDA Breakthrough Device Designations: one for the removal of ticagrelor and another for the removal of the direct oral anticoagulants (DOAC) apixaban and rivaroxaban in a cardiopulmonary bypass circuit during urgent cardiothoracic procedures.

In September 2024, the Company submitted a De Novo medical device application to the FDA requesting marketing approval to reduce the severity of perioperative bleeding in CABG patients on the antithrombotic drug ticagrelor, which was accepted for substantive review in October 2024. On November 1, 2024 we received Medical Device Single Audit Program (MDSAP) certification, a key regulatory milestone that certifies compliance of our quality management system with the standard regulatory requirements of Canada, the United States, Brazil, Japan and Australia; and then promptly submitted our Medical Device License (MDL) marketing application to Health Canada on November 1, 2024, with MDSAP certification – a requirement for the submission. Our applications with FDA and Health Canada continue to be in substantive and interactive review, and we continue to expect regulatory decisions from both agencies in 2025. DrugSorb-ATR is not yet granted or approved in the United States and Canada, respectively.

The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued U.S. and international patents and registered trademarks, and multiple patent applications pending, including ECOS-300CY®, CytoSorb-XLTM, HemoDefend-RBCTM, HemoDefend-BGATM, VetResQ®, K+ontrolTM, DrugSorbTM, ContrastSorb, and others. For more information, please visit the Company’s website at www.cytosorbents.com or follow us on Facebook and X.

Summary of Operational and Business Highlights

● Secured a $20 million credit facility

● Surpassed 270,000 CytoSorb treatments delivered cumulatively to date

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Impact of Inflation and Other Issues:

The current high inflationary environment has impacted us in various ways. Due to the current competitive labor market and rising inflation, our labor costs have risen significantly in order to attract and retain qualified employees throughout our organization. In addition, we have experienced raw material price increases primarily related to the oil-based chemicals used in the polymer manufacturing process as well additional requests for higher fuel surcharges from most suppliers. Rising energy costs, including electricity and fossil fuels, have also made it more expensive to support our operations, manufacturing, and commercial activities. We have also experienced increases in our transportation costs; however, we have been able to substantially mitigate these cost increases by implementing bulk shipping methods. Inflationary pressures may continue to impact our product gross margins in the future.

Results of Operations

Comparison of the year ended December 31, 2024 and 2023

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the Year Ended December 31,

​ ​ ​ ​ As Restated ​

​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of

​ Amount Revenue Amount Revenue

Operating expenses: ​ ​ ​

Other income (expense): ​ ​ ​ ​

Miscellaneous income (expense) ​ (30) 0 % 96,755 0 %

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Product Revenue

For the year ended December 31, 2024, we generated total revenue of approximately $35.6 million as compared to revenues of approximately $31.1 million for the year ended December 31, 2023, an increase of approximately $4.5 million, or 15%. The increase in revenues related to increases in direct sales and distributor sales of $1.7 million or 9%, and $2.7 million or 22%, respectively, during the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Gross Profit

Gross profit was approximately $25.1 million for the year ended December 31, 2024, an increase of approximately $3.2 million or 14%, as compared to gross profit of $22.0 million for the year ended December 31, 2023. Product gross margins were 71% and 71% for the years ended December 31, 2024 and 2023, respectively.

Research and Development Expenses

Our research and development costs were approximately $6.9 million and $15.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $8.7 million, or 56%. This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial in December 2023. Clinical expenses excluding compensation were approximately $2.8 million and $9.2 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $6.4 million. In addition, research and development compensation expenses decreased by $1.2 million from $3.6 million for the year ended December 31, 2023 to $2.4 million for the year ended December 31, 2024, due to reductions in headcount.

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $35.0 million and $38.3 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $3.3 million, or 9%. This decrease was mainly due to a decrease in salaries of approximately $2.3 million related to headcount reductions, and a decrease in net legal, consulting and professional expenses of approximately $1.4 million.

Loss From Operations

Our loss from operations decreased by 47% to approximately $16.8 million, from $31.9 million for the years ended December 31, 2024 and 2023 respectively. This improvement was the result of revenue growth, and a 22% reduction in total operating expense.

Interest Expense, Net

For the year ended December 31, 2024, Interest expense, net, was approximately $1.4 million, as compared to $0.2 million for the year ended December 31, 2023. The increase was due to interest incurred on the Avenue Capital Group debt that was closed during the second quarter of 2024. This financing increased the principal amount of our debt to $15 million from $5 million and the interest rate increased to 13.5% from 8%.

Gain (Loss) on Foreign Currency Transactions

For the year ended December 31, 2024, the loss on foreign currency transactions was approximately $4.2 million, as compared to a gain on foreign currency transactions of approximately $1.9 million for the year ended December 31, 2023. The loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar as of December 31, 2024, as compared to December 31, 2023. The exchange rate of the Euro to the U.S. dollar was $1.03 per Euro as of December 31, 2024, as compared to $1.11 per Euro at December 31, 2023. The 2023 gain is directly related to the increase of the exchange rate of the Euro as of December 31, 2023, as compared to December 31, 2022. The exchange rate of the Euro to the U.S. dollar was $1.11 per Euro as of December 31, 2023, as compared to $1.07 per Euro as of December 31, 2022.

Benefit from Income Taxes

Our benefit from income taxes was approximately $1.7 million and $0.8 million for the years ended December 31, 2024, and 2023, respectively. This benefit was realized by utilizing the New Jersey Technology Business Tax Certificate Transfer Program whereby the State of New Jersey allows us to sell a portion of our state net operating losses to a third party.

Liquidity and Capital Resources

Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of December 31, 2024, we had current assets of approximately $21.6 million and current liabilities of approximately $9.9 million. As of December 31, 2024, $19.7 million of our total shelf amount was allocated to our at-the-market facility (“ATM facility”), of which approximately $19.4 million remained available.

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

In June of 2024, we closed on a $20 million term-loan facility with Avenue Capital Group which provided an initial tranche of $15 million at the closing of which $10 million was immediately available at closing and $5 million constitutes restricted cash subject to release to the Company prior to March 31, 2025, provided certain conditions are met. Another tranche of $5 million may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application. Concurrently with the closing of the first tranche, the Company paid off our existing debt with Bridge Bank.

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

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We are also proactively managing our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to U.S. FDA and Health Canada and the development of clinical data. We have also instituted and continue to maintain tight control over expenditures and have lowered our spending significantly over the past year.

As of December 31, 2024, we have approximately $9.8 million in cash (a non-GAAP measure), including approximately $3.3 million in unrestricted cash and cash equivalents, $5 million in restricted cash classified as a current asset, and $1.5 million of non-current restricted cash which is not expected to fund Company’s operations beyond the next twelve months from the issuance of these consolidated financial statements This matter raise substantial doubt about the Company’s ability to continue as a going concern. However, as of the issuance date of this Annual Report on Form 10-K, the Company continues to be in the process of an equity raise through a Rights Offering that has included the following:

As of the issuance date of this Annual Report on Form 10-K, we have raised a total of $7.3 million, net of offering fees, through the Rights Offering, and the exercise of the Series A Right Warrants. The equity raises also provided for $5 million of restricted cash to become unrestricted. As a result, our proforma unrestricted cash and cash equivalents, a non-GAAP measure, on December 31, 2024, assuming the net proceeds from the Rights Offering and the Series A Right Warrant exercise had occurred at that date, has increased by $12.3 million to $15.6 million, compared to the as reported amount of $3.3 million

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Our expected future capital requirements may depend on many factors including expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the regulatory approval and introduction of DrugSorb-ATR in the U.S. and Canada which is expected in 2025, and the related opportunity to receive Tranche 2 of Avenue Capital Commitment by December 31, 2025 and extend the principle re-payment terms of the facility beginning in the third quarter of 2026. Additional sources of liquidity available to us include issuance of additional equity securities through the Series B Right Warrant, or other public or private equity offerings, debt financings or from other sources. The sale of additional equity may result in dilution to our shareholders. There is no assurance that we will be able to secure funding on terms acceptable to us, or at all. The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying further regulatory approvals, or reducing headcount. As a result of these additional uncertainties, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company is actively pursuing financing sources, including less or non-dilutive debt financing, additional grant funding, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.

Loan and Security Agreement

On June 28, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement with the Avenue Capital Group. 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 is available to the Company on the Closing Date and $5 million which remained classified as restricted cash through January 10, 2025, when it was released from its restriction as the following conditions were met: (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. A second tranche of up to $5 million, may be disbursed at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application (“Tranche 2” and together with Tranche 1, the “Avenue Capital Commitment”). All unpaid principal and accrued and unpaid interest shall be due and payable in full by the maturity date. If the 2nd tranche is fully funded by December 2025, the maturity date is January 1, 2028; otherwise, the maturity date is July 1, 2027. Commencing on August 1, 2024, the Company shall make monthly interest only payments during the initial 25-month period following the Closing Date, followed by equal monthly installments through the maturity date consisting of principal plus accrued and unpaid interest.

On October 22, 2024, the Company announced that the FDA had accepted its application of for DrugSorb-ATR, which was one of the two conditions required by the restricted cash debt covenant. Proceeds from the Rights Offering on January 10, 2025 satisfied the second condition of the debt covenant which now allows for the $5,000,000 of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

The proceeds from the Avenue Capital Commitment were used to pay off the existing outstanding debt with Bridge Bank and will additionally be used for working capital purposes and to fund general business requirements. Amounts borrowed under the Avenue Capital Commitment shall bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate plus five percent (5.00%) or (B) thirteen and one-half percent (13.50)%.

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

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We believe the following critical accounting policies and estimates have significant effect in the preparation of our consolidated financial statements.

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Revenue Recognition

Revenue is recognized when the Company ships its products to its direct customers and distributors/strategic partners. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for the products shipped or the services provided under their grant contracts. To achieve this core principle, the Company applies the following five steps:

Research and Development, Net of Grant Income

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

Currently, accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from the Company’s expansion or product development, and no products or services are transferred to the grantor. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for profit business entities from government entities, the Company has adjusted its accounting policy for recording grants to analogize the guidance provided by IAS 20. Accordingly, the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses.

Stock Based-Compensation

As discussed in Notes 2 and 11 to the consolidated financial statements, the Company grants stock-based awards including stock options, restricted stock units and performance-based stock awards to their employees as compensation for their service. The Company recorded approximately $3,759,534 of stock-based compensation expense during the year ended December 31, 2024. In 2024, the Company granted 1,214,400 performance awards, and recorded stock-based compensation expense of approximately $208,000 related to these awards. The number of shares awarded are contingent on certain performance metrics, and the quantity of awards received can range based on the level of performance achieved.

Lease Commitments

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

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Patents

​

Legal costs incurred to establish patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term. In the event a patent is abandoned, the net book value of the patent is written off.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

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Item 8. Financial Statements and Supplementary Data.

Our Consolidated Financial Statements and notes thereto are included elsewhere in this Annual Report on Form 10-K and incorporated herein by reference. See Item 15 of Part IV.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

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Item 9A. Controls and Procedures

Management’s Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, mean controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company on the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including, our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective due to a material weakness, as further described below.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, errors or fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2024.

Changes in Internal Control Over Financial Reporting

Discussion of Material Weakness

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

In connection with our preparation and the audit of our consolidated financial statements as of and for the year ended December 31, 2024, we identified a material weakness in our internal control over financial reporting related to the accounting for inventory and stock-based compensation corresponding to grants of Restricted Stock Units. Specifically, our controls were not effectively designed or operating to ensure that inventory and restricted stock unit grants or vesting activities were recorded within the proper accounts and at the proper amounts.

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Remediation Activities

We are actively engaged in remediating the identified material weakness. Management has begun implementing measures to strengthen our internal control over financial reporting, including redesigning internal control procedures and enhancing documentation processes related to the accounting for restricted stock unit grant and vesting events. These efforts are intended to ensure accurate and timely reporting in accordance with U.S. GAAP for both interim and annual periods. Key steps in our remediation plan include:

We are committed to completing the remediation of this material weakness as expeditiously as possible and expect these enhancements to be fully implemented during the fiscal year ending December 31, 2025. However, the material weakness will not be considered fully remediated until the new controls have been operational for a sufficient period of time and tested to demonstrate their effectiveness.

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

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Item 9B. Other Information.

None.

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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection.

None.

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PART III

Item 10. Directors, Executive Officers and Control Persons.

Information required by this Item regarding our executive officers, Board of Directors, Section 16(a) compliance, Audit Committee, Audit Committee financial expert, Code of Business Conduct and Ethics, and other corporate governance matters is incorporated by reference from our definitive proxy statement for our 2025 annual meeting of stockholders, scheduled for June 12, 2025. This proxy statement, containing the sections “Officers and Key Employees,” “Nomination and Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Board of Directors and Corporate Governance 1 Matters,” will be filed within 120 days of our fiscal year end

The text of our Code of Business Conduct and Ethics, which applies to our directors and employees (including our principal executive officer, principal financial officer, and principal accounting officer or controller, and persons performing similar functions), is posted in the “Corporate Governance” section of our website, www.cytosorbents.com. A copy of the Code of Business Conduct and Ethics can be obtained free of charge on our website. We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission and The Nasdaq Stock Market.

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

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Item 11. Executive Compensation.

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

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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

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Item 13. Certain Relationships and Related Transactions and Director Independence.

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

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Item 14. Principal Accounting Fees and Services.

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

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) Financial Statements and Schedules:

1. Financial Statements

The following consolidated financial statements and reports of independent registered public accounting firm are included herein:

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets F-4

Consolidated Statements of Operations and Comprehensive Loss F-5

Consolidated Statements of Changes in Stockholders’ Equity F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-8

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2. Financial Statement Schedules

Not applicable.

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3. List of Exhibits

Exhibit

No. Description

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​ ​ ​

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10.2+ Amended and Restated Employment Agreement, dated as of July 30

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10.16 Stipulated Order and Settlement Agreement between Bro-Tech Corporation,

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​ ​ ​

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19.1* ​ Insider Trading Policy.

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23.1* Consent of WithumSmith+Brown, PC.

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​ ​ ​

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* Filed or furnished herewith.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

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Item 16. Form 10-K Summary.

None.

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SIGNATURES

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

CYTOSORBENTS CORPORATION

By: /s/ Dr. Phillip P. Chan

Dr. Phillip P. Chan

Chief Executive Officer

​

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Dr. Phillip P. Chan Chief Executive Officer (Principal March 31, 2025

Dr. Phillip P. Chan Executive Officer) and Director ​

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/s/ Peter J. Mariani Chief Financial Officer March 31, 2025

Peter J. Mariani (Principal Financial and Accounting Officer) ​

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/s/ Michael G. Bator Chairman of the Board March 31, 2025

Michael G. Bator ​

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/s/ Alan D. Sobel Director March 31, 2025

Alan D. Sobel ​

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/s/ Edward R. Jones Director March 31, 2025

Edward R. Jones ​

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/s/Jiny Kim Director March 31, 2025

Jiny Kim

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FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets at December 31, 2024 and 2023 F-4

Notes to Consolidated Financial Statements F-8

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F-1

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

CytoSorbents Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CytoSorbents Corporation (the ‘Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholder’s equity, cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

Restatement of the Previously Issued Consolidated Financial Statements

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

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

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

Substantial Doubt Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the entity has suffered recurring losses from operations, has experienced cash used in operations, and has an accumulated deficit, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Evaluation of warrants

Description of the Matter

As described in Note 5 to the consolidated financial statements, the Company entered into a Loan and Security Agreement in June 2024. As additional consideration for the commitment, the Company also issued the lender warrants with a fair value of $690,709 to purchase an aggregate of 1,645,569 shares of the Company’s common stock for cash at the exercise price of $0.79, which expire on June 28, 2029. The Company determined that the warrants met all the criteria for equity classification and recorded them as a component of additional paid-in capital upon the closing of the transaction in July 2024.

The principal considerations for our determination of the financial statement classification of the warrants as a critical audit matter are the existence of complexities in applying the accounting standards related to certain warrant agreement provisions, including settlement provisions and derivative elements. Auditing these elements involved especially complex auditor judgment, specialized knowledge and skills due to the terms of the applicable agreement

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, obtaining an understanding of and evaluating the design and implementation of controls over management’s process for the accounting treatment, reading the agreements, and evaluating the accounting for the warrant issuance. Testing management’s process included (i) evaluating the internal controls and application of the accounting framework used by management; (ii) testing the mathematical accuracy of management’s calculations; (iii) testing the inputs and assumptions used and (iv) testing the completeness and accuracy of the underlying data used in the calculations. Professionals with specialized skill and knowledge were used to assist in (i) evaluating management’s application of the accounting framework and (ii) testing the mathematical accuracy of management’s calculation and evaluating the conclusion related to the accounting classification of the warrant issuance.

/s/ WithumSmith+Brown, PC

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

East Brunswick, New Jersey

March 31, 2025

PCAOB ID Number 100

​

​

​

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CYTOSORBENTS CORPORATION

CONSOLIDATED BALANCE SHEETS

​

​ ​ ​ ​ ​ ​ ​

​ ​ At December 31,

​ ​ ​ As restated

ASSETS ​ ​ ​

Current Assets: ​ ​ ​

Restricted cash, current ​ ​ 5,000,000 ​ ​ —

​ ​ ​ ​ ​

​ ​ ​

LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​

Current Liabilities: ​ ​

Current maturities of long-term debt ​ ​ — ​ ​ 2,500,000

​ ​ ​

Commitments and Contingencies ​ ​ ​ ​

Stockholders’ Equity: ​ ​

​

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

​

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CYTOSORBENTS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

​

​ ​ ​ ​ ​ ​ ​

​ ​ Year ended ​ Year ended

​ ​ December 31, ​ December 31,

​ ​ As restated

Operating expenses: ​ ​ ​ ​ ​

Other income (expense): ​ ​ ​ ​ ​

Gain (loss) on foreign currency transactions ​ ​ (4,224,721) ​ ​ 1,949,257

Miscellaneous income (expense) ​ ​ (30) ​ ​ 96,755

​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Basic and diluted net loss per common share ​ $ (0.38) ​ $ (0.65)

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Comprehensive loss: ​ ​ ​ ​ ​ ​

Other comprehensive income (loss): ​ ​ ​ ​ ​ ​

​

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

​

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CYTOSORBENTS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​

​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’

​ Shares Par value Capital Income (Loss) Deficit Equity

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Stock-based compensation (as restated) — ​ — ​ 4,155,342 ​ — ​ — ​ 4,155,342

​

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

​

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CYTOSORBENTS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

​

​ ​ ​ ​ ​ ​ ​

​ Year ended Year ended

​ ​ December 31, ​ December 31,

​ ​ ​ ​ As restated

Cash flows from operating activities: ​ ​ ​

Amortization of debt discount ​ ​ 264,702 ​ ​ —

Amortization of loan costs ​ ​ 116,028 ​ ​ —

Foreign currency transaction (gains) losses ​ 4,224,721 ​ ​ (1,949,257)

Changes in operating assets and liabilities: ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Cash flows from investing activities: ​ ​ ​

Purchases of property and equipment ​ (284,343) ​ ​ (538,115)

Net cash used in investing activities ​ (669,430) ​ ​ (936,236)

​ ​ ​ ​ ​ ​ ​

Cash flows from financing activities: ​ ​

Proceeds from long-term debt ​ 15,000,000 ​ —

Repayment of long-term debt ​ (5,000,000) ​ —

Payment of final fee ​ ​ (150,000) ​ ​ —

Payment of loan costs ​ ​ (697,950) ​ ​ —

Proceeds from exercise of stock options ​ — ​ ​ 218,278

Effect of exchange rates on cash ​ (84,676) ​ ​ (99,769)

​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Supplemental disclosure of cash flow information: ​ ​ ​

​ ​ ​ ​ ​ ​ ​

Supplemental disclosure of non-cash financing activities: ​ ​ ​

Warrants issued in connection with long-term debt ​ $ 690,709 ​ $ —

Capital expenditures included in accounts payable ​ $ 7,968 ​ $ —

​

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

​

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CYTOSORBENTS CORPORATION

Notes to Consolidated Financial Statements

December 31, 2024

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements include the results of CytoSorbents Corporation (the “Parent”), CytoSorbents Medical Inc., its wholly owned operating subsidiary (the “Subsidiary”), and CytoSorbents Europe GmbH, its wholly owned European subsidiary (the “European Subsidiary”). In addition, the consolidated financial statements include CytoSorbents Switzerland, CytoSorbents Poland Sp. z.o.o., CytoSorbents Medical UK Limited, and CytoSorbents France SAS, the wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited and CytoSorbents India Private Limited, wholly-owned subsidiaries of CytoSorbents Medical, Inc. These entities are collectively referred to as the “Company”.

As of December 31, 2024, the Company’s total cash and cash equivalents and restricted cash was approximately $9.8 million, with $6.5 million classified as restricted, and $3.3 million as unrestricted and available to fund operations. This matter raises substantial doubt about the Company’s ability to continue as a going concern.

As of the issuance date of this Annual Report on Form 10-K, the Company has raised a total of $7.3 million, net of offering fees, through the Rights Offering (see Note 13 – Subsequent Event), and the exercise of the Series A Right Warrants (see Note 13 – Subsequent Event). The equity raises also provided for $5 million of restricted cash to become unrestricted. As a result, our proforma unrestricted cash and cash equivalents, a non-GAAP measure, on December 31, 2024, assuming the net proceeds from the Rights Offering and the Series A Right Warrant exercise had occurred at that date, has increased by $12.3 million to $15.6 million, compared to the as reported amount of $3.3 million.

Our expected future capital requirements may depend on many factors including expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the regulatory approval and introduction of DrugSorb-ATR in the U.S. and Canada which is expected in 2025, and the related opportunity to receive Tranche 2 of Avenue Capital Commitment (See Note 5. Long-Term Debt) by December 31, 2025 and extend the principal re-payment terms of the facility beginning in the third quarter of 2026. Additional sources of liquidity available to us include issuance of additional equity securities through the Series B Right Warrant, or other public or private equity offerings, debt financings or from other sources. The sale of additional equity may result in dilution to our shareholders. There is no assurance that we will be able to secure funding on terms acceptable to us, or at all. The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying further regulatory approvals, or reducing headcount. As a result of these additional uncertainties, the accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company is actively pursuing financing sources, including less or non-dilutive debt financing, additional grant funding, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.

​

​

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​

2. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification. The Company through its subsidiary CytoSorbents Medical, Inc 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.

Basis of Consolidation and Foreign Currency Translation

The consolidated financial statements include the accounts of CytoSorbents Corporation and its wholly owned subsidiaries, CytoSorbents Medical, Inc. and CytoSorbents Europe GmbH. In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o., CytoSorbents Medical UK Limited and CytoSorbents France SAS, wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited and CytoSorbents India Private Limited, wholly-owned subsidiaries of CytoSorbents Medical, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

Sales and expenses denominated in foreign currencies are translated at average exchange rates in effect throughout the year. Assets and liabilities of foreign operations are translated at period-end exchange rates with the impacts of foreign currency translation recorded in cumulative translation adjustment, a component of accumulated other comprehensive income. Foreign currency transactions gains and losses are included in other income (loss), net in the consolidated statements of operations and other comprehensive loss.

Segment Information

The Company manages its operations and allocates resources as a single operating segment. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer (“CEO”) who makes operating decisions, assesses financial performance and allocates resources based on consolidated financial information. As such, the Company has determined that it operates in one reportable segment.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company’s restricted includes amounts held as collateral for a letter of credit with Bridge Bank, securing the College Road facility lease.

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

​

​ ​ ​ ​ ​ ​ ​

​ December 31,

Restricted cash, current ​ ​ 5,000,000 ​ ​ —

Total cash, cash equivalents and restricted cash* ​ $ 9,763,884 ​ $ 15,615,095

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

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

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

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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 financial statements as a whole for the year ended December 31, 2024.

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.

U.S. 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

Inventories are valued at the lower of cost or net realizable value. Cost is determined using a first-in first-out (“FIFO”) basis. Devices used in clinical trials or for research and development purposes are removed from inventory and charged to research and development expenses at the time of their use. Donated devices are removed from inventory and charged to selling, general and administrative expenses.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of their economic useful lives or the term of the related leases. Gains and losses on depreciable assets retired or sold are recognized in the statements of operations in the year of disposal. Repairs and maintenance expenditures are expensed as incurred.

Patents

Legal costs incurred to establish patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term. In the event a patent is abandoned, the net book value of the patent is written off.

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

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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.

Leases

The Company accounts for leases in accordance with FASB Accounting Standards Update (“ASU”) 2016-02, Leases, Topic 842 (“ASC 842”). Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The Company determines if a contract contains a lease at the inception date and determines the lease classification, recognition, and measurement at commencement date. ROU assets also include adjustments related to prepaid or deferred lease payments. As the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise such options. Certain of the Company’s lease agreements include provisions for the Company to pay the lessor for common area maintenance, real estate taxes, and insurance, which the Company accounts for as variable lease costs.

Revenue Recognition

Revenue is recognized when the Company ships its products to its direct customers and distributors/strategic partners. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for the products shipped or the services provided under their grant contracts. To achieve this core principle, the Company applies the following five steps:

Research and Development, Net of Grant Income

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

Currently, accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from the Company’s expansion or product development, and no products or services are transferred to the grantor. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for profit business entities from government entities, the Company has adjusted its accounting policy for recording grants to analogize the guidance provided by International Accounting Standard 20 (“IAS 20”). Accordingly, the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses.

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Research and Development

All research and development costs, payments to laboratories, research consultants and costs related to clinical trials and studies are expensed when incurred. Grant income, net of expenses, is presented as a reduction of research and development expenses.

Advertising Expenses

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

Income Taxes

Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized. Under Section 382 of the Internal Revenue Code, the net operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership. Additionally, net operating losses generated subsequent to the reverse merger may be limited in the event of changes in ownership.

The Company follows the accounting standards associated with uncertain tax provisions. The Company is accounting for an uncertain tax position of approximate $2.2 and $2.1 million for the years ended December 31, 2024 and 2023, respectively. The Company had no unrecognized tax benefits as of December 31, 2024 and 2023. The Company files tax returns in the U.S. federal and state jurisdictions.

The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss tax carryforwards and Research and Development credits to an industrial company.

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

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets, liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The valuation of options granted, allowance for credit losses and recoverability of patents are significant estimates in these consolidated financial statements.

Concentration of Credit Risk

The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation. Beginning in April of 2023, the Company joined the IntraFi network, and established an Insured CashSweep (“ICS”) account whereby all cash that was previously held in the Company’s money market account at Bridge Bank is swept daily in increments of less than $250,000 and deposited in a number of IntraFi’s 4,000 member banks. This arrangement provides FDIC insurance coverage for all of the cash balances previously held in the money market account, which represents all of the cash and cash equivalents held at Bridge Bank. 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. (See Note 3 for further information relating to the Company’s revenue.)

As of December 31, 2024, and 2023 one distributor accounted for approximately 19% of outstanding grants and accounts receivables. For the years ended December 31, 2024 and 2023, one distributor accounted for 11% and 10%, respectively, of the Company’s total revenue.

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Financial Instruments

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

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815 “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. 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 December 31, 2024 and December 31, 2023.

Stock-Based Compensation

The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, including stock options, restricted shares (“RSUs”), based on estimated fair values at the award grant date. The fair value of stock-based awards is amortized over the vesting period of the award using a straight-line method.

Stock-based compensation expense for awards with performance conditions is recognized when it is probable that the performance condition will be achieved and is then recognized over the requisite service period. Any changes in the probability assessment are accounted for as a cumulative true up to the current period compensation cost.

To estimate the fair value of an award, the Company uses the Black-Scholes option pricing model. This model requires inputs such as expected life, expected volatility, expected dividend yield of stock and risk-free interest rate. These inputs are subjective and generally require significant analysis and judgment to develop. While estimates of expected life and volatility are derived primarily from the Company’s historical data, the risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected life assumption. The Company accounts for forfeitures in the period they occur.

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

Net Loss per Common Share

Basic net loss per share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the treasury stock method on the basis of the weighted-average number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period. Dilutive potential common shares include outstanding warrants, stock options and restricted shares. The computation of diluted net loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings.

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The following table presents the calculation of net loss per share:

​

​ ​ ​ ​ ​ ​ ​

​ Years Ended December 31,

Basic and Diluted: ​ ​ ​ As Restated*

Numerator: ​ ​

Denominator: ​ ​

​ ​ ​ ​ ​ ​ ​

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

​

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

​

​ ​ ​ ​ ​

​ ​ As of December 31,

*Total number of RSUs include 2,809,500 units with a Change in Control-Based performance condition.

​

Shipping and Handling Costs

The cost of shipping products to customers and distributors is typically borne by the customer or distributor. The Company records shipping and handling costs in cost of goods sold. Total freight costs amounted to approximately $409,273 and $464,324 for the years ended December 31, 2024 and 2023, respectively.

Effect of Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company implemented the updated guidance as of January 1, 2024, and this did not have an impact on its consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (Topic 280), which will require public companies to provide more transparency in both quarterly and annual reports about the expenses they incur from revenue generating reportable business segments. In addition, the ASU requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker, an amount for other segment items by reportable business segment, including a description of its composition, and the primary measures of a business segment’s profit or loss in assessing segment performance. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company implemented the updated guidance as of December 31, 2024, which resulted in the addition of new segments disclosures (see Note 11). Also, the implementation of ASU 2023-07, did not have an impact on other disclosures to the consolidated financial statements.

In December 2023, the FASB issued ASU No. 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.

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On November 19, 2024, the Financial Accounting Standards Board (the “FASB”) issued a proposed Accounting Standards Update to establish authoritative guidance for the accounting and reporting of government grants received by business entities. The FASB has decided to pursue an International Accounting Standards 20 (“IAS 20”) accounting model. Under IAS 20, a grant relating to income may be reported separately as ‘other income’ or deducted from the related expense. The Company has evaluated its accounting and reporting policy for government grants relative to this project and the requirements of IAS 20. Currently, accounting for grants does not fall under ASC 606, as the grantor will not benefit directly from the Company’s expansion or product development, and no products or services are transferred to the grantor. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for profit business entities from government entities, the Company has adjusted its accounting policy for recording grants to analogize the guidance provided by IAS 20. Accordingly, the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses.

Reclassification of Grant Income and Operating Expenses

As noted above on Effect of Recent Accounting Pronouncements the Company has retroactively, as of January 1, 2023, reclassified grant income, net of expenses, as a reduction of research and development expenses. For the years ended December 31, 2024 and 2023, Grant Income and the related expenses were as follows:

​

​ ​ ​ ​ ​ ​ ​

​

In addition, the Company changed its accounting policy to report legal, financial and other consulting costs, which was previously its own separate line item within the Operating Expenses section of the Consolidated Statements of Operations and Comprehensive Loss to now being merged into the Selling, General and Administrative Expenses line item. These expenses previously presented within legal, financial and other consulting costs are general and administrative in nature; accordingly, the updated presentation would provide the user of the Consolidated Financial Statements a better picture of the purpose of those expenses. For the years ended December 31, 2024 and 2023, the total amount of expenses that would have been reported as Legal, financial and other consulting costs under the previous accounting policy amounted to $3,199,357 and $4,272,296, respectively.

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ As Previously Reported Adjustments As Reclassified*

Legal, financial and other consulting ​ $ (4,272,296) ​ $ 4,272,296 ​ $ — ​

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

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

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ As Previously Reported Adjustments As Reclassified*

* See Note 12 – Restatement to Previously Issued Financial Information for further adjustments to these line items. * These reclassification adjustments reflected in these consolidated cash flows statements line items also reflect the restatement adjustments applicable to the statements of changes to stockholders’ equity.

​

​

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3. REVENUE

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

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Distributors/ ​ ​ ​

​ Direct Strategic Partners Total

Product revenue: ​ ​ ​

​ ​ ​ ​ ​ ​ ​

​

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2023:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Distributors/ ​ ​ ​

​ Direct Strategic Partners Total

Product revenue: ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​

​

CytoSorb Sales

The Company sells its CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners. The majority of sales of the device are outside the United States, as CytoSorb is not yet approved for commercial sale in the United States. However, in April 2020, the Company was granted 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 are fulfilled from the Company’s warehouse facility in Berlin, Germany. There are no formal sales contracts with any direct customers relating to product price or minimum purchase requirements. However, there are agreements in place with certain direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels. The Company records the value of these items earned as a reduction of revenue. These customers submit purchase orders and the order is fulfilled and shipped directly to the customer. Prices to all direct customers are based on a standard price list based on the packaged quantity (6 packs versus 12 packs).

Distributor and strategic partner sales make up the remaining product sales. These distributors are located in various countries throughout the world. The Company has a formal written contract with each distributor/strategic partner. These contracts have terms ranging from 1-5 years in length, with three years being the typical term. In addition, certain distributors are eligible for volume discount pricing if their unit sales are in excess of the base amount in the contract.

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

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.

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. The Company does not currently incur any outside/third-party incremental costs to obtain any of these contracts.

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

​

​ ​ ​ ​ ​ ​ ​

​

Contract receivables represent balances due from product sales to distributors amounting to $4,233,888 and $3,270,724 at December 31, 2024 and 2023, respectively, and billed and unbilled amounts due on government contracts amounting to $193,002 and $575,547 at December 31, 2024 and 2023, respectively. Contract receivable amounted to $3,822,452 as of January 1, 2023.

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

​

4. BALANCE SHEET COMPONENTS

Inventories

The Company had the following major classes of inventory:

​

​ ​ ​ ​ ​ ​ ​

​ December 31,

​ ​ ​ As Restated*

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

​

Property and equipment - net

​

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

​

​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ Depreciation/

​ ​ December 31 ​ Amortization

​ ​ ​ ​ ​ ​ ​ ​ ​

​

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

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Other assets

​

Other assets consist of the following:

​

​ ​ ​ ​ ​ ​ ​

​ ​ December 31,

​ ​ ​ ​ ​ ​ ​

Less accumulated amortization of patents issued ​ (1,254,850) ​ (1,021,233)

​

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

​

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

​

​ ​ ​ ​

Scheduled amortization of patents issued ​ $ 2,135,918

​

Accrued expenses and other current liabilities

​

Accrued expenses and other current liabilities consist of the following: