CTSO 10-K & 10-Q changes, risk factors and insider trading

We have a history of losses and expect tomay incur substantial future losses.

We have experienced substantial operating losses since inception. As of December 31, 2024,2025, we had an accumulated deficit of approximately $304.0M,$312.2M, which included net losses of approximately $20.7M$8.2M and $29.2M$20.7M for the years ended December 31, 20242025 and 2023,2024, respectively. Our losses have resulted principally from costs incurred in the research and development of our polymer technology, clinical studies and general and administrative expenses. WeThe intendCompany is targeting breakeven through a combination of improved sales (through expanding our customer base in existing markets, launching new products, and achieving additional regulatory approvals to conductenter significantnew additionalmarkets) research, development,manufacturing and clinicaloperating study activities which, together with expenses incurred for the establishment of manufacturing arrangementsefficiencies, and acost marketingreduction and distributionmanagement presence and other general and administrative expenses, are expected to result in continuing net losses for the foreseeable future.programs. The amount of future losses and when, if ever, we will achieve profitability are uncertain. Our ability to achieve profitability will depend, among other things, on continued adoption and usage of our products in the market, obtaining additional regulatory approvals in markets not covered by the CE mark, establishing sales and marketing arrangements with third parties, satisfactory reimbursement in key territories, and raising sufficient funds to finance our activities. No assurance can be given that our product development and commercial efforts will be successful, that our current CE Mark will enable us to achieve profitability, that additional regulatory approvals in other countries will be obtained, that any of our products will be manufactured at a competitive cost and will be of acceptable quality, that reimbursement will be available or satisfactory, that we will be able to achieve profitability or that profitability, if achieved, can be sustained, or our ability to raise additional capital when needed or on terms acceptable to us. Our failure with respect to any or all of these matters would have a material adverse effect on our business, operating results, financial condition and prospects.

As of December 31, 2024,2025, we had current assets of approximately $21.9$20.6 million, including total cash and cash equivalents of $3.3$7.8 million, including restricted cash of $1.5 million and current liabilities of approximately $9.8$9.7 million. For the year ended December 31, 2024,2025, our cash burn, which we define as the total of cash used in operating and investing activities from our statement of cash flows, was approximately $15.1$12.8 million. Our current and historical cash burn is not necessarily indicative of our future use of cash and cash equivalents.

We have an effective shelf registration statement dated September 30, 2024 with the SEC which enables us to raise up to $150 million in one or more offerings, through the issuance and sale of any combination of equity securities, debt securities, warrants and units. Approximately $149.7 million of this amount was available as of December 31, 2024.2025. We have also allocated $25$20 million of our total shelf amount to our ATM facility.facility, Aunder which we are not obligated to make or continue to make any sale of shares of our common stock under the “at-the-market” offerings. During the year ended December 31, 2024,2025, the Company did not sell any shares pursuant to the Sale Agreement (as defined below). At December 31, 2025, approximately $19.4 million was available for use under the ATM facility.facility, subject to certain limitations.

On December 30, 2021, we entered into an Open Market Sale Agreement with Jefferies LLC (the “Sale Agreement”), also referred to herein as our “ATM facility”). Pursuant to the Sale Agreement we may offer to sell, from time to time, shares of our common stock, up to a maximum of $25,000,000.$2.5 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.million. During the year ended December 31, 2024, the Company sold 382,823 shares pursuant to the Sale Agreement, at an average selling price of $1.04 per share, generating net proceeds of approximately $388,000.$0.3 million. During the year ended December 31, 2025, the Company did not sell any shares pursuant to the Sale Agreement.

In June 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 that remained classified as restricted cash through January 10, 2025, when it was released from its restriction. AnotherUnder this initial facility, another tranche of $5 million maywould behave disbursedbeen available at the Company’s request between July 1, 2025 and December 31, 2025, provided that the Company receivesreceived 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.

On January 10, 2025, wethe Company closed the subscription period of its previously announced shareholderrights Rights Offeringoffering (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,stock with an expiration date of February 24, 2025, and one Series B Right Warrant to purchase one share of common stock.stock Thewith Rightan Warrants,expiration asdate discussedof below,April will10, provide2025. additional opportunity to purchase upUp to an additional 6,250,000 shares of common stock.stock may have been issued upon exercise of the Rights Warrants.

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 Millionmillion in aggregate gross proceeds.proceeds ($1.4 million, net of fees). On April 4, 2025, the Board of Directors extended the expiration date of the Series B Right Warrants from April 10, 2025 to June 10, 2025. On June 11, 2025, the 5-day volume weighted average price of Common Stock over the last five-trading days prior to June 10, 2025 was lower than the minimum required price of $2.00 and, as a result, the Series B Right Warrants issued in connection with the previously announced Rights Offering expired worthless pursuant to their terms.

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 reported amount of $3.3 million The Company will continue evaluating various financing alternatives, including debt financing, strategic partnerships and other non-equity financing arrangements, including royalty financing. While there can be no assurance that the Company will be successful in obtaining alternative non-equity financing, if such financing is obtained through arrangements with collaborative partners or other non-dilutive sources, such as royalty financing, the Company may have to relinquish economic and/or proprietary rights to some of its technologies or products under development that it would otherwise seek to develop or commercialize itself. SuchThese events may result in shareholder dilution and a decline in our share price, which could have a material adverse effect on the Company’s business, operating results, financial condition and prospects.

Although historically we have been a research and development company, we are incurrently thecommercializing processsome of commercializing our products. There can be no assurance that we will be successful in developingcontinuing and expanding commercial operations or balancing our research and development activities with our commercialization activities.

As of the issuance date of this Annual Report on Form 10-K, we had 149129 full-time and part-time employees as well as several consultants and temporary employees. Our success will depend to a significant degree upon the continued services of our key management team and advisors, including, Dr. Phillip Chan, our Chief Executive Officer; Peter J. Mariani, our Chief Financial Officer; Vincent Capponi, our President and Chief Operating Officer and Dr. Efthymios Deliargyris, our Chief Medical Officer. On July 30, 2019, we entered into amended and restated executive employment agreements with its principal executives, Dr. Phillip P. Chan, Chief Executive Officer, Vincent Capponi, President and Chief Operating Officer, and Kathleen P. Bloch, Chief Financial Officer. Each agreement had an initial term of three years and were retroactively effective as of January 1, 2019. On April 12, 2020, CytoSorbents Corporation entered into an executive employment agreement with Dr. Efthymios Deliargyris, who began employment as Chief Medical Officer on May 1, 2020, with an initial term that expiresexpired on December 31, 2021. On August 14, 2024, CytoSorbents Corporation entered into an executive employment agreement with Peter J. Mariani, who began employment as Chief Financial Officer on August 14, 2024 following the retirement of former CFO Kathy Bloch, with an initial term that expiresexpired on December 31, 2025. After the expiration of the initial terms, the employment agreements automatically renew for additional terms of one year unless either party provides written notice of non-renewal at least 60 days prior to a renewal. The employment agreements for the Named Executive Officers above have automatically renewed for anothersubsequent one-year term.terms. There can be no assurance that key management personnel or other members of our management team and advisors will continue to provide services to us. In addition, our success will depend on our ability to attract and retain other highly skilled personnel. We may be unable to recruit such personnel on a timely basis, if at all. Management and other employees may voluntarily terminate their employment with us at any time. Additionally, the increasing demand for qualified personnel may make it more difficult for us to attract and retain qualified employees. Changing demographics and labor work force trends may make it difficult for us to replace departing employees at our manufacturing and other facilities and we may experience increased turnover rates. U.S. labor market conditions are currently challengingchallenging, and labor shortages have been exacerbated during and following the COVID-19 pandemic. These conditions are expected to persist into 20252026 and may lead to higher labor costs. If we fail to attract and retain qualified personnel, or if we experience labor shortages, we may experience higher costs and other difficulties. The loss of services of key personnel, or the inability to attract and retain additional qualified personnel, could result in delays in development or approval of our products, loss of sales and diversion of management resources.

Our future financial performance will depend, at least in part, upon the introductionintroduction, and customer and healthcare community acceptance of our products. Even with CEcurrent markor approvalfuture regulatory or marketing approvals for our CytoSorbCytoSorb, deviceECOS-300CY, asand aPuriFi cytokinepump adsorber,devices, ourother products like VetResQ, and product candidates such as DrugSorb-ATR, these products may not achieve market acceptance in the countries thatwhere recognizethey andare accept the CE mark. Additional approvals from other regulatory authorities (such as the FDA) will be required before we can market our device in countries not covered by the CE mark.sold. There is no guarantee that we will be able to achieve additional regulatory approvals, and even if we do, our products may not achieve market acceptance in the countries covered by such approvals. The degree of market acceptance will depend upon a number of factors, including:

Physicians, patients, payers or the medical community in general may be unwilling to accept, utilize or recommend any of our products. ApprovalFor example, the approval of our CytoSorb device as a cytokine adsorber as well as the data we have gathered in our clinical studies to support device usage in this indication may not be sufficient for market acceptance in the medical community. We may also need to conduct additional clinical studies to gather additional data for marketing purposes. If we are unable to obtain regulatory approval or commercialize and market our products when planned, we may not achieve any market acceptance or generate revenue.

We may face litigation from third parties claiming that our products infringe on their intellectual property rights,rights or seek to challenge the validity of our patents.

We have commencedreceived theand processcontinue ofto seekingseek additional regulatory approvals of our products and product candidates, but the approval process involves lengthy and costly clinical studies and is, in large part, not in our control. The failure to obtain government approvals, internationally or domestically, for our products and product candidates, or to comply with ongoing governmental regulations could prevent, delay or limit introduction or sale of our products and result in the failure to achieve revenues or maintain our operations.

Our products are subject to international regulation as medical devices under the Medical Devices Directive and, once our CE Mark under MDD expires in December 2028 will be subject to the new European Union Medical Device Regulation (“MDR”). In Europe, which we expect to provide the initial market for our products, the notified body and Competent Authority govern, where applicable, development, clinical studies, labeling, manufacturing, registration, notification, clearance or approval, marketing, distribution, record keeping, and reporting requirements for medical devices. Different regulatory requirements may apply to our products depending on how they are categorized by the notified body under these laws. Current international regulations classify our CytoSorb device as a Class IIb device. Even though we have received CE mark certification of the CytoSorb device, there can be no assurance that we will be able to continue to comply with the required annual auditing requirements or other international regulatory requirements that may be applicable. In addition, there can be no assurance that government regulations applicable to our products or the interpretation of those regulations will not change. The extent of potentially adverse government regulation that might arise from future legislation or administrative action cannot be predicted. There can be no assurances that reimbursement will be granted or that additional clinical data will be required to establish reimbursement.

We may pursue various indications for our product candidates, and they may be subject to different FDA regulatory pathways for marketing authorization, and under the jurisdiction of different FDA review divisions within the FDA’s Office of Device Evaluation.FDA.

As we seek to determine commercially viable indications for our product candidates, we may consider pursuing a variety of indications that may be approved through one of several different FDA regulatory clearance or approval pathways, and under the jurisdiction of different FDA review divisions within the FDA’s Office of Device Evaluation.FDA. We expect the pathways available to us will be impacted by the FDA regulatory history of the category of “sorbent hemoperfusion systems” and our options may also be impacted by the FDA’s interpretations and application of these and other regulatory standards to our product candidates. The regulatory pathways available to us may impact the level and type of data necessary to support our applications, and the post-marketing requirements to which we and our products will be subject.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and medical devices to be reviewed and/or approved by necessary government agencies as well as affect whether we receive timely payment of amounts awarded to us under grants and contracts with government agencies which would adversely affect our business. For example, over the last several years, including from December 22, 2018 until January 25, 2019, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations. Additionally, proposals to reduce or eliminate budgetary deficits have sometimes included reduced allocations to U.S. government agencies that fund research and development activities.

WeAlthough we have limitedsignificant manufacturing experience and capabilities, we may not be able to manufacture sufficient quantities at an acceptable cost or quality, or without shut-downs or delays.

Our ability to manufacture and distribute products is dependent, in part, upon availability and quality of chemicals, raw materials, molded parts and other components supplied by third parties. Any disruption in the supply of these ingredients or components or any problems in their standard of quality could materially affect our ability to manufacture and distribute our products, maintain sufficient inventory levels or otherwise meet customer demand, and could result in legal liabilities that could materially affect our ability to realize profits or otherwise harm our business, financial, and operating results. We primarily source the raw materials for our products from domestic suppliers but may be required to source from international suppliers if our domestic suppliers are unable to meet our supply requirements. Generally, we qualifytypically only a singlesecond source and validate the quality of reagentschemicals, raw materials, and molded partsparts. forWe usedo innot eachhave productany duesignificant concentration of risk with respect to theany costone andparticular time required to validate and qualify a second source of supply.supplier. If we were to change the supplier of a raw material for a product, the cost for the material could be greater than the amount we paid with the previous supplier. Changes in suppliers are rare but could occur as a result of a supplier’s business failing, an issue arising from an FDA inspection, failure to maintain our required standards of quality, or a force majeure event. As a result, we carefully select suppliers, based on various factors including quality, reliability of supply, and long-term financial stability. From time to time, we may experience temporary or long-term disruptions in the supply of certain of our raw materials that could have a material adverse effect on our business, financial condition and results of operations.

Due to our limited resources for marketing, sales and distributiondistribution, experience,and our reliance on many different distributors, we may be unsuccessful in our efforts to sellsuccessfully commercialize our products.products in one or more countries.

SignificantEconomic economic downturns ordownturns, international trade disruptionsdisruptions, orwars, disputesterrorism, and geopolitical conflicts could materially and adversely affect our business and operating results.

In the ordinary course of our business, we generate, collectcollect, and store proprietary information, including intellectual property andproperty, business information, as well asand employee personal data.data, Theand the secure storage, maintenance, and transmission oftransmission, and access to this information isare importantcritical to our operations our day-to-day business and our reputation. SecurityCybersecurity breachesincidents have become moreincreasingly common across industries.industries, Computerand hackerswe face risks from hackers, employees, contractors, and other third parties who may attempt to penetrategain unauthorized access to, misappropriate, or inadvertently expose our computer systems and, if successful, misappropriate our proprietary and confidential informationinformation, including e-mailsthrough and other electronic communications, as well as our intellectual property and business data. In addition, an employee, contractor,phishing or other third-partysophisticated withattacks, whom we do business may attempt to obtain such information, and may purposefully or inadvertently cause a breach involving such information. Further, while many of our employees and certain suppliers with whom we do business operateparticularly in a remote working environment during the COVID-19 pandemic, the risk of cybersecurity attacks, particularly through phishing, are increased.environments. We have recently experienced multipleprevious attempts by third parties to penetrate our computersystems systems.and, Whilealthough we havemaintain certain safeguards in place to reduce the risk of and detect cyber-attacks, as well as limit the potential exposure of proprietary and confidential information, including multi-layermulti-layered security protections,safeguards, our information technology networks and infrastructure may beremain vulnerable to unpermittedevolving accessthreats, bytechnological hackers or other breaches powered by newadvances, and sophisticated technologies, or employeehuman error or malfeasance. Further, weWe may not bedetect immediately aware of any unpermittedunauthorized access by hackerpromptly or otherbe able to remediate breaches and we may be unable to quickly and effectively remediate any such breaches.effectively. Any such compromise of our data security andor unauthorized access to, or public disclosure or loss of, confidential business or proprietary information could disrupt our operations, damageharm our reputation, provide our competitors with valuable information, andresult subject us toin additional costscosts, whichand couldmaterially and adversely affect our business.

In the U.S. and Canada, CytoSorbents is developing the DrugSorb®™-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.

The currentrecent 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 as 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 and other costs in the future.

For the year ended December 31, 2024,2025, we generated total revenue of approximately $35.6$37.1 million as compared to revenues of approximately $31.1$35.6 million for the year ended December 31, 2023,2024, an increase of approximately $4.5$1.5 million, or 15%.4.1%, Theand increasedown 0.4% on a constant currency basis. Revenue growth was led by strength in revenuesour relateddistributor toand increasesstrategic inpartner sales and direct sales outside of Germany, partially offset by lower revenue in our direct German market. The Company began a proactive reorganization and distributorstrategic realignment of our German commercial team and sales approach in the first quarter of $1.72025. millionWe orare 9%,making progress with this important initiative, and $2.7remain millionconfident orit 22%,will respectively, during the year ended December 31, 2024, as comparedlead to thestronger yearexecution endedand Decemberimproved 31, 2023.performance.

Gross profit was approximately $25.1$26.5 million for the year ended December 31, 2024,2025, an increase of approximately $3.2$1.6 million or 14%,6.4%, as compared to gross profit of $22.0$24.9 million for the year ended December 31, 2023.2024. Product grossGross margins were 71%71.5% and 71%69.9% for the years ended December 31, 20242025 and 2023,2024, respectively.

Our research and development costs were approximately $6.9$5.1 million and $15.6$7.6 million for the years ended December 31, 20242025 and 2023,2024, respectively, a decrease of approximately $8.7$2.5 million, or 56%.33.2%. This decrease was driven by a decrease in our clinical trial costs due primarily to the completion of the STAR-T clinical trialtrial, inlower Decembergrant 2023.funded Clinicalprojects, expensesas excludingwell compensationas wereother approximately $2.8 millionclinical and $9.2 million for the years ended December 31, 2024 and 2023, respectively, a decrease of approximately $6.4 million. In addition, research andproduct development compensationprogram 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.reductions.

Our loss from operations (including the impact of the $0.5 million restructuring charge) decreased by 47%10.4% to approximately $16.8$14.7 million, from $31.9$16.5 million for the years ended December 31, 20242025 and 20232024 respectively. This improvement was the result of revenue growth,growth and agross 22%margin reduction in total operating expense.improvement.

For the year ended December 31, 2024,2025, Interestnet expense,interest net,expense was approximately $1.4$2.6 million, as compared to $0.2$1.4 million for the year ended December 31, 2023.2024. The increase was due to interest incurred on theour Avenuecredit Capitalfacility Group debt that was closed duringfor the secondfull year of 2025, which began in the third quarter of 2024. ThisAdditionally, financingwe amended our credit facility which increased the principal amountbalance ofoutstanding ourunder debtthe tocredit $15facility by $2.5 million fromeffective $5November million13, and the interest rate increased to 13.5% from 8%.2025.

For the year ended December 31, 2024,2025, the lossgain on foreign currency transactions was approximately $4.2$9.3 million, as compared to a gainloss on foreign currency transactions of approximately $1.9$4.2 million for the year ended December 31, 2023.2024. The lossgain was directly related to the decreaseincrease in the spot exchange rate of the Euro to the U.S. dollar as of December 31, 2025, as compared to December 31, 2024. The exchange rate of the Euro to the U.S. dollar was $1.17 per Euro as of December 31, 2025, as compared to $1.03 per Euro at December 31, 2024. The 2024 loss is directly related to the decrease of the exchange rate of the Euro 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, 2022.2023.

Our benefit from income taxes was approximately $1.7$0.4 million and $0.8$1.7 million for the years ended December 31, 2024,2025, and 2023,2024, 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 and R&D credits to a third party.

Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of December 31, 2024,2025, we had current assets of approximately $21.6$20.6 million and current liabilities of approximately $9.9$9.7 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.

As of December 31, 2024,2025, we have approximately $9.8$7.8 million in cash (a non-GAAP measure), including approximately $3.3$6.3 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 ismay not expectedbe sufficient to fund the Company’s operations beyond the next twelve months from the issuance of these consolidated financial statementsstatements. ThisThese mattercash raiseand restricted cash balances considered with our historical cash used in operations, notwithstanding our Strategic Workforce and Cost Reduction Plan and the impact of the Amended Loan and Security Agreement, raises substantial doubt about the Company’s ability to continue as a going concern.concern However,within astwelve ofmonths after the issuance date of this Annual Report on Form 10-K,that the Companyaccompanying continuesconsolidated tofinancial bestatements inare the process of an equity raise through a Rights Offering that has included the following:issued.

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 Our expected future capital requirements may depend on many factorsfactors, 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 potential regulatory approval and introduction of DrugSorb-ATR in the U.S. and Canada which iswould expectedallow in 2025, andfor the related opportunity to receive Tranche 2 of Avenue Capital Commitment by December 31, 2025 and extend the principle re-payment terms2b of the facilityAmended beginningCredit inFacility, and receive an additional 6-month extension of the thirdinterest-only quarterperiod ofon 2026.the credit facility. Additional sources of liquidity available to us include issuance of additional equity securities through the Series2024 B Right Warrant, orShelf, other public or private equity offerings, debt financingsfinancing 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. TheAlthough increasingthe Company has taken actions to achieve cash flow breakeven, if it does not achieve this goal, the potential increased 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, theThe 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 isroutinely activelyevaluates pursuingother 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.

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$5.0 million of restricted cash on the Company’s consolidated balance sheets to become unrestricted, and available for use.

For further discussion regarding the Loan Agreement please see Note 5, Long Term Debt noteDebt, 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.

ThereExcept for the additional risk factor set forth below, there have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2025. For a discussion of risks that affect the Company’s business, please refer to Part I, Item IA,1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. In addition to the other information set forth in this Quarterly Report on Form 10-Q, including the additional risk factor described below, please carefully consider the factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The risks described therein and below are not the only risks facing us. Additional risks and uncertainties are not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition, and/or operatingresults results.of operations.

The Company has numerous marketed products and products under development based upon this unique blood purification technology protected by many issued United States and international patents and registered trademarks, and multiple patent applications pending, including ECOS-300CY®, CytoSorb-XL™, HemoDefend-RBC™, HemoDefend-BGA™, VetResQ®, K+ontrol™, DrugSorb™, ContrastSorb, PuriFi®, HotSwap™ and others. While not our primary means of communication, investors can learn more about us by visiting our social media channels. We encourage investors, the media, and others interested in us to review the information posted on our Facebook site and our X account, where investors, the media, and other interested parties can subscribe. The information contained in our social media accounts is not incorporated into this Quarterly Report on Form 10-Q or other documents we file with or furnish to, the SEC.

In August 2025, we received the FDA’s decision on our appeal of the original DrugSorb-ATR application. Importantly, the AgencyFDA identified no concerns regarding device safety but upheld the prior denial of the application and requested additional informationanalysis of real-world evidence to support the proposed indication for reducing the severity of perioperative bleeding in patients undergoing CABG surgery while on Brilinta® (ticagrelor, AstraZeneca).

Following the appeal decision and based upon feedback from FDA, we announced our intention to submit a new De Novo application incorporating additional supporting information, primarily based on real-world evidence and clinical outcomes generated through routine clinical use of the device. As part of this process, we held a formal pre-submission meeting with the FDA in late January 2026 and have continued to engage with the AgencyFDA to clarify the requirements for the new De Novo submission, including whether certain information could potentially be submitted as a post-marketing requirement rather than as part of the initial application. Based on these interactions, the FDA has requested additional mechanistic data to be included alongside the real-world evidence within the new De Novo submission.

We arehave currentlyscheduled evaluating options to generate the additional mechanistic data on an expedited basis and expect to schedule an additionala pre-submission meeting with the FDA,FDA ifin needed,August 2026 to discuss andthe alignoptions to generate this additional mechanistic data. Following this meeting, we expect to finalize the proposedtestingprotocol, approach.which may require an additional meeting with the FDA. Once alignment is achieved,finalized, we anticipate completing the required worktesting and submitting a new De Novo application in late 2026 or early 2027. Following submission, a regulatory decision would generally be expected within the FDA’s targeted 150-day MDUFA review timeline, although the actual review period may be shorter or longer depending on the nature and extent of interactive review questions from the Agency.FDA.

WithinWe thehave next 30 days, we plan to submitscheduled a separate pre-submission requestmeeting towith the AgencyFDA to review the data currently available for the DOAC indication that include drug removal data from benchtop testing and data from real-world use and determine what, if any, additional information may be required to support a parallel De Novo submission for DOAC removal.

Comparison for the threesix months ended MarchJune 31,30, 2026 and 2025:

Gross profit was approximately $6.1$7.0 million for the three months ended MarchJune 31,30, 2026, aan decreaseincrease of approximately $0.1$0.2 million, or 1.2%,3.4%, as compared to gross profit of $6.2$6.8 million for the three months ended MarchJune 31,30, 2025. Gross margins were 69.2%73.2% and 71.1%70.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The improvement in gross margins reflects the impact of efforts to rebalance production, lower operating costs, and improve efficiencies.

Our researchResearch and development costs were approximately $1.0$1.5 million and $1.7$1.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, aan decreaseincrease of approximately $0.7$0.2 million, or 38.4%.15.1%. This decreaseincrease was primarily driven by a decreasecharge in ourthe quarter for a certain critical care clinical trial costs due primarily to the completion of the STAR-T clinical trial, lower grant funded projects, as well as other clinical and product development program reductions.study.

Our selling, general and administrative expenses were approximately $8.1$8.0 million and $8.4$9.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, a decrease of approximately $0.3$1.2 million, or 3.5%.13%. The decrease is primarily due to decreaseslower inlegal, stock-based compensation expense of $0.2 millionfinancial and aconsulting decreaseexpenses in salaries and compensation expense of $0.2 million, partially offset by a reduction in benefits from government grants of $0.1 million. The decrease in stock-based compensation expense was primarily relatedcompared to the fullprior vestingyear of certainapproximately stockof options$0.8 inmillion earlieras periods.well Theas decreasenet in salaries andlower compensation was primarily related to our strategic workforce and cost reduction program initiatedcosts in the fourthcurrent quarter of 2025 which reduced our workforce by approximately 10%.year.

For the threesix months ended MarchJune 31,30, 2026, the loss on foreign currency transactions was approximately $1.2$0.9 million, as compared to a gain on foreign currency transactions of approximately $3.0$6.2 million for the three months ended MarchJune 31,30, 2025. The current quarter loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar as of MarchJune 31,30, 2026 compared2026, to December$1.1414 31, 2025. The current year loss was directly related to the decrease in the spot exchange rate of theper Euro tofrom the$1.1498 U.S.per dollarEuro as of March 31, 2026, to $1.15 per Euro from $1.17 per Euro at December 31, 2025.2026. The prior year gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar as of MarchJune 31,30, 2025, to $1.08$1.1789 per Euro from $1.03$1.0349 per Euro atas of December 31, 2024.

Our loss from operations decreasedimproved by 21.7%27% to approximately $3.0$2.6 million, from $3.9$3.6 million for the three months ended MarchJune 31,30, 2026, and 2025, respectively. This improvement was primarily the result of improved gross margins and a 9.1%7.1% reduction in total operating expenses yearquarter over year.quarter resulting from.

Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of MarchJune 31,30, 2026, we had current assets of approximately $17.8$15.7 million and current liabilities of approximately $16.3$24.0 million.

We have an effective shelf registration statement dated September 30, 2024 (the “Shelf”) with the SEC which enables us to raise up to $150 million in one or more offerings, through the issuance and sale of any combination of equity securities, debt securities, warrants and units. Approximately $149.7 million of this amount was available as of MarchJune 31,30, 2026; howeverhowever, the use of the Shelf is subject to a limitation of one-third of our public float in any rolling twelve-month period, when our public float is below $75 million, which is referred to as the “baby shelf” rules. We have also allocated $20 million of our total shelf amount to our ATM facility. AtAs Marchof 31,June 30, 2026, approximately $19.4 million was available for use under the ATM facility, subject to certain limitations. During the threesix months ended MarchJune 31,30, 2026, we did not raise any proceeds under the ATM facility.

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 (the “Avenue Capital Commitment”), to be disbursed in two tranches. The first tranche of $15.0 million (“Tranche 1”), consisted of $10.0 million which was available to the Company on the Closing Date and $5.0 million constituted 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 received a minimum of $3.0 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 $3.0 million and $5.0 million. The second tranche (“Tranche 2”) consisted of $5.0 million, which would have been disbursed at the Company’s request between July 1, 2025 and December 31, 2025, if the Company receivesreceived FDA marketing approval of its DrugSorb-ATR application, which it did not. The proceeds from the Avenue Capital Commitment were used to pay off the existing outstanding debt with Bridge Bank and were additionally be used for working capital purposes and to fund general business requirements. Amounts borrowed under the Avenue Capital Commitment bear interest at a variable rate per annum equal to the greater of (A) the Prime Rate plus five percent (5.00%) or (B) thirteen and one-half percent (13.50%). The loan required interest-only payments for the first 24 months through July 1, 2026, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity, on July 1, 2027; provided, however that if the Company had drawn the full amount of Tranche 2 by December 31, 2025, and achieved for the trailing six month period ended June 30, 2026, at least $25 million of revenue, (the Interest only Milestone as defined in the Loan), the Interest only Period would have been extended by six months to January 1, 2027, followed by equal monthly installments of principal plus accrued and unpaid interest through January 1, 2028.

For further discussion regarding the Loan Agreement please see Note 6, Long“Long-Term Term Debt,Debt”, to our Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report on Form 10-Q.

We proactivelyhave managestrategically managed our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR to the FDA and Health Canada and the development of clinical data.data, Wewhile havealso instituteddriving improved efficiencies and continueoperating tomargins. maintainFurther, tightduring controlthe overfourth expendituresquarter of 2025 and have lowered our spending overinto the pastsecond year.quarter Further,of onfiscal November 13, 2025,2026, the Company announced it initiated a Strategic Workforce and Cost Reduction Plan”) to reduce costs, optimize operations, and accelerate a path to cash-flow profitability. ThisThese initiativeinitiatives followsfollowed a comprehensive review of the Company’s cost structure and operating model. As parta result of the Strategic Workforce and Cost Reduction Plan,Plan and attrition, the Company has reduced its workforce by approximately 10%,23%, and reduced and realigned operating and production expensesexpenses. inAs a result, the fourthCompany quarterhas ofdecreased 2025,its continuedoperating cash burn to makeapproximately additional$0.4 reductionsmillion infor the firstthree quartermonths ofended 2026,June 30, 2026 and remains committed to bringing the Company to operating cash flow break-even in the second half of 2026. The Company recorded a charge of $0.5 million in 2025 that includes severance and other cash and non-cash charges related to the restructuring.

As of MarchJune 31,30, 2026, we had approximately $6.3$5.9 million in cash, including approximately $4.8$4.4 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash which may not be sufficient to fund the Company’s operations beyond the next twelve months from the issuance of these condensed consolidated financial statements. These cash and restricted cash balances considered with our historical and expected future cash used in operations, notwithstanding our Strategic Workforce and Cost Reduction Plan and the impact of the Amended Loan and Security Agreement, raises substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the accompanying condensed consolidated financial statements are issued.

Our expected future capital requirements may depend on many factors, including the ability to continue to reduce cash burn and achieve operating cash flow breakeven in the second half of 2026, expanding our customer base and sales force, the timing and extent of spending in obtaining regulatory approval and introduction of new products, including the potential regulatory approval and introduction of DrugSorb-ATR in the United States. Additional sources of liquidity available to us include the 2024 Shelf, other public or private equity offerings, debt financing 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. Although the Company has taken actions to achieve cash flow breakeven, if it does not achieve this goal, the potential increased 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. 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 other financing sources, including less or non-dilutive debt financing, additional grant funding, royalty financing, strategic or direct investments, equity financing, and/or combinations thereof. There can be no assurance that management will be successful in these endeavors.