Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Notes Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this Report, contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as "anticipate," "believe," "estimate," "intend," "could," "should," "would," "may," "seek," "plan," "might," "will," "expect," "predict," "project," "forecast," "potential," "continue," negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results, and any other statements that are not historical facts. Unless otherwise indicated, the terms "CytoSorbents," "Company," "we," "us" and "our" refer to CytoSorbents Corporation.

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-K and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the applicable Report or public statement. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report or public statement and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see "Item 1A - Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

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, continuous renal replacement therapy or CRRT, extracorporeal membrane oxygenation or ECMO, and heart-lung machines), where blood is repeatedly recirculated outside the body, through our cartridges where toxic substances are removed, and then back into the body. CytoSorbents' technologies are used in a number of broad applications. Specifically, two important applications are 1) the removal of blood thinners during and after cardiothoracic surgery to reduce the risk of severe bleeding, and 2) the removal of inflammatory agents and toxins in common critical illnesses that can lead to massive inflammation, organ failure and patient death. The breadth of these critical illnesses include, for example, sepsis, burn injury, trauma, lung injury, liver failure, cytokine release syndrome, and pancreatitis as well as the removal of liver toxins that accumulate in acute liver dysfunction or failure 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 nearly 300,000 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.

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 U.S. Food and Drug Administration ("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 Company is actively pursuing regulatory approval of DrugSorb-ATR with the FDA and will pursue regulatory approval with Health Canada with better visibility from the FDA. DrugSorb-ATR is not yet granted or approved in either the U.S. or Canada.

Upon approval, the Company expects to rapidly commercialize DrugSorb-ATR in the U.S. and Canada to address this large unmet medical need, with an initial estimated total addressable market of $300 million today to over $1 billion over time as we pursue additional indications for DrugSorb-ATR to remove additional classes of blood thinners and expansion of the antithrombotic removal application beyond cardiac surgery and across other surgical specialties. We believe that DrugSorb-ATR has the potential to become an "all-in-one" countermeasure for these agents.

Our executive offices are located at 305 College Road East, Princeton, New Jersey 08540, and our telephone number is (732) 329-8885. Our website address is http://www.cytosorbents.com. We have included our website address as an inactive textual reference only. We make available free of charge through our website our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material, or furnish it to the SEC. We also similarly make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons. We are not including the information contained at http://www.cytosorbents.com, or at any other website address, as part of, or incorporating it by reference into, this Quarterly Report on Form 10-Q.

Summary of Operational and Recent Business Highlights

Results of Operations:

Comparison for the three months ended September 30, 2025 and 2024:

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Revenues

For the three months ended September 30, 2025, we generated total revenue of approximately $9.5 million, an increase of approximately $0.9 million, or 10.1%, and 3.8% on a constant currency basis, as compared to revenues of approximately $8.6 million for the three months ended September 30, 2024. Revenue growth was led by strength in our distributor and strategic partner sales and direct sales outside of Germany, partially offset by lower revenue in our direct German market. The Company began a proactive reorganization and strategic realignment of our German commercial team and sales approach in the first quarter of 2025. We are making steady progress with this important initiative and are tracking to expectations through the third quarter of 2025, and remain confident it will lead to stronger execution and improved performance in Germany and our financial results overall into next year.

Gross Profit

Gross profit was approximately $6.7 million for the three months ended September 30, 2025, an increase of approximately $1.4 million, or 26.8%, as compared to gross profit of $5.2 million for the three months ended September 30, 2024. Gross margins were 70.3% and 61.0% for the three months ended September 30, 2025 and 2024, respectively. Prior year gross margins were negatively impacted by a planned reduction in units production to rebalance inventory levels, coupled with a short-term manufacturing issue which was resolved in the third quarter of last year and resulted in significantly lower number of CytoSorb devices produced in the quarter.

Research and Development Expenses

Our research and development costs were approximately $0.9 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively, a decrease of approximately $0.9 million, or 49.7%. This decrease was driven by a decrease in our clinical trial costs due to the completion of the STAR-T clinical trial, the reduction of grant funded projects, and other payroll and project-related cost reductions.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $8.6 million and $8.3 million for the three months ended September 30, 2025 and 2024, respectively, an increase of approximately $0.3 million, or 4.2%. The increase is primarily due to costs associated with the regulatory submission and anticipated commercial approval and launch of DrugSorb-ATR in North America, partially offset by lower non-cash stock comp and other compensation costs, and lower royalty expense as a result of the expiration of a 4% royalty in August of 2024.

Gain (Loss) on Foreign Currency Transactions

For the three months ended September 30, 2025, the loss on foreign currency transactions was approximately $0.1 million, as compared to a gain on foreign currency transactions of approximately $2.7 million for the three months ended September 30, 2024. The loss was directly related to the slight decrease in the spot exchange rate of the Euro to the U.S. dollar as of September 30, 2025 compared to June 30, 2025. 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 September 30, 2024, to $1.11 per Euro from $1.07 per Euro at June 30, 2024.

Loss From Operations

Our loss from operations decreased by 40.7% to approximately $2.9 million, from $4.8 million for the nine months ended September 30, 2025, and 2024, respectively. This improvement was primarily the result of a 5.5% reduction in operating expenses year over year, and the increase in gross profit.

Comparison for the nine months ended September 30, 2025 and 2024:

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Revenues

For the nine months ended September 30, 2025, we generated total revenue of approximately $27.8 million, an increase of approximately $1.4 million, or 5.2%, and 2.2% on a constant currency basis, as compared to revenues of approximately $26.4 million for the nine months ended September 30, 2024. Revenue growth was led by strength in our other direct European territories, and distributors and strategic partner sales, and partially offset by a decrease in revenue in our direct German market. The Company began a proactive reorganization and strategic realignment of our German commercial team and sales approach in the first quarter of 2025. We are making steady progress with this important initiative and are tracking to expectations through the third quarter of 2025, and remain confident it will lead to stronger execution and improved performance in Germany and our financial results overall into next year.

Gross Profit

Gross profit was approximately $19.7 million for the nine months ended September 30, 2025, an increase of approximately $1.1 million, or 5.7%, as compared to gross profit of $18.6 million for the nine months ended September 30, 2024. Gross margins were 70.7% and 70.5% for the nine months ended September 30, 2025 and 2024, respectively.

Research and Development Expenses

Our research and development costs were approximately $3.8 million and $5.6 million for the nine months ended September 30, 2025 and 2024, respectively, a decrease of approximately $1.8 million, or 31.3%. This decrease was driven by a decrease in our clinical trial

costs due to the completion of the STAR-T clinical trial, lower grant funded projects, and other payroll and project-related cost reductions.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses were approximately $26.2 million and $26.1 for the nine months ended September 30, 2025 and 2024, respectively, an increase of approximately $0.1 million, or 0.4%. This increase was mainly due to increases in legal, regulatory, financial and consulting costs including costs associated with our 2024 audited financial statements, as well as regulatory filings and initial costs associated with the anticipated approval and commercial launch of DrugSorb-ATR in North America, partially offset by decreases in stock-based compensation expense, and royalty expenses. The decrease in stock-based compensation expense was primarily related to the full vesting of certain stock options in earlier periods and the decrease in royalty expense was the result of the expiration of a 4% royalty in August of 2024.

Gain (Loss) on Foreign Currency Transactions

For the nine months ended September 30, 2025, the gain on foreign currency transactions was approximately $9.1 million, as compared to a gain on foreign currency transactions of approximately $0.7 million for the nine months ended September 30, 2024. The gain was directly related to the increase in the spot exchange rate of the Euro to the U.S. dollar as of September 30, 2025 to $1.17 per Euro from $1.03 per Euro at December 31, 2024. 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 September 30, 2024, to $1.11 per Euro from $1.10 per Euro at December 31, 2023.

Loss From Operations

Our loss from operations decreased by 20.6% to approximately $10.4 million, from $13.1 million for the nine months ended September 30, 2025, and 2024, respectively. This improvement was primarily the result of a 5.2% reduction in operating expenses year over year, and the increase in gross profit.

Liquidity and Capital Resources

Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of September 30, 2025, we had current assets of approximately $21.3 million and current liabilities of approximately $12.6 million.

Effective Shelf Registration

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 September 30, 2025. We have also allocated $20 million of our total shelf amount to our ATM facility. At September 30, 2025, approximately $19.4 million was available for use under the ATM facility. During the nine months ended September 30, 2025, we did not raise any proceeds under the ATM facility.

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 ("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"), consists of $10.0 million which was available to the Company on the Closing Date and $5.0 million constitutes restricted cash, which was released from its restriction on January 10, 2025, as the following conditions were achieved: (i) the FDA has accepted Company's application for review with respect to DrugSorb-ATR De Novo 510(k) and (ii) the Company has received a minimum of $3.0 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") consists of $5.0 million, which may be disbursed at the Company's request between July 1, 2025 and December 31, 2025, provided that the Company receives FDA marketing approval of its DrugSorb-ATR application. 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%). The loan requires interest-only payments for the first 24 months through July 1, 2026, followed by equal monthly

installments of principal plus accrued and unpaid interest until maturity, on July 1, 2027; provided, however that if the Company draws the full amount of Tranche 2 by December 31, 2025, and achieves for the trailing six month period ended June 30, 2026, at least $25 million of revenue, (the Interest only Milestone as defined in the Loan), the Interest only Period will be extended by six months to January 1, 2027, followed by equal monthly installments of principal plus accrued and unpaid interest through January 1, 2028.

On November 13, 2025, the Company and Avenue Capital Group entered into the Amended Loan and Security Agreement, amending the Company's Loan and Security Agreement, dated June 28, 2024, as supplemented. The Amended Loan and Security Agreement provides for access to an additional aggregate $2.5 million ("Tranche 2a") from Avenue Capital Group in November 2025 and for the extension of the interest only period from July 1, 2026 to December 31, 2026, followed by equal monthly installments of principal plus accrued and unpaid interest until maturity on July 1, 2027. The Company will have access to an additional aggregate $2.5 million ("Tranche 2b") from Avenue Capital Group, subject to FDA approval of DrugSorb-ATR, between January 1, 2026 and December 31, 2026. Tranche 2a and Tranche 2b, in the aggregate, replace Tranche 2 of the Avenue Capital Commitment. The Amended Loan and Security Agreement requires that the Company maintain certain operating cash burn targets (as defined in the Amended Loan and Security Agreement) prior to FDA approval of DrugSorb-ATR and also provides for a further six-month extension of the interest only period to the July 1, 2027 maturity date upon FDA approval of DrugSorb-ATR.

On October 22, 2024, the Company announced that the FDA had accepted its application of DrugSorb-ATR, which was one of the two conditions required by the restricted cash debt covenant. Proceeds from the Rights Offering on January 10, 2025 satisfied the second condition of the debt covenant which now allows for the $5.0 million of restricted cash on the Company's consolidated balance sheets to become unrestricted, and available for use.

Rights Offering

On January 10, 2025, the Company closed the subscription period of its previously announced rights offering (the "Rights Offering"), raising aggregate gross proceeds of $6.25 million ($5.4 million net of fees) from the sale of all 6.25 million Units reserved for the Rights Offering. Participants in the Rights Offering received Units, each Unit comprising of one share of common stock of the Company, one Series A Right Warrant to purchase one share of common stock with an expiration date of February 24, 2025, and one Series B Right Warrant to purchase one share of common stock with an expiration date of April 10, 2025. Up to an additional 6.25 million shares of common stock may be issued upon exercise of the Right Warrants. Proceeds from the closing of the subscription period satisfy a debt covenant which allowed for $5 million of restricted cash on the Company's consolidated balance sheets to now become unrestricted, and available for use. On February 24, 2025, approximately 1.4 million Series A Right Warrants were exercised by holders, including members of management and the Board of Directors, at an exercise price of $1.13 per warrant, providing an additional $1.6 million in aggregate gross proceeds ($1.4 million net of fees). 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.

Resource Allocation and Path to Cash-Flow Profitability

We proactively manage 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. We have instituted and continue to maintain tight control over expenditures and have lowered our spending over the past year. Further, on November 13, 2025, 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. This initiative follows a comprehensive review of the Company's cost structure and operating model. As part of the Strategic Workforce and Cost Reduction Plan, the Company reduced its workforce by approximately 10%, reduced and realigned operating and production expenses, and now expects that the Company will reach operating cash flow break-even in the first quarter of 2026. The Company expects to record a charge of up to $0.9 million that will include severance and other cash and non-cash charges related to the restructuring. The estimated costs that we expect to incur, and the timing thereof, are subject to a number of assumptions, and actual amounts may differ materially.

As of September 30, 2025, we had approximately $9.1 million in cash, including approximately $7.6 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash. These cash and 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 both of which were announced on November 13, 2025, 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.

On a proforma-basis, giving effect to the impact of receiving the additional $2.5 million from Tranche 2(a) of the Amended Loan and Security Agreement, as if it had occurred on September 30, 2025, our total cash balance would have been $11.6 million, including $10.1 million in unrestricted cash and cash equivalents and $1.5 million of non-current restricted cash.

As of September 30, 2025, the total amount of debt drawn under our Loan and Security Agreement was $15.0 million. On a proforma basis, giving effect to the impact of receiving the additional $2.5 million from Tranche 2 (a) of the Amended Loan and Security Agreement, as if it had occurred on September 30, 2025, our total debt drawn would have been $17.5 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 potential regulatory approval and introduction of DrugSorb-ATR in the U.S. which decision is now expected in mid-2026, and the related opportunity to receive Tranche 2b of the Amended Avenue Capital Commitment by December 31, 2026. 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. As a result of these additional uncertainties, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company routinely evaluates 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.

On September 16, 2025, the Company announced that it would file a new De Novo application for DrugSorb-ATR with the FDA. This decision followed an appeal meeting and decision by the FDA to uphold its previous denial of the Company's original DrugSorb-ATR application, but affirmed that there were no safety related issues with the device, and requested additional information to support the Company's desired label indication. As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA on November 7, 2025. A formal meeting with the FDA is anticipated in either late fourth quarter of 2025, or early 2026 to confirm the requirements for the new De Novo submission. A standard regulatory decision is expected in mid-2026 following a typical 150-day review process.

For further discussion regarding the Loan and Security Agreement, and Amended Load and Security Agreement please see Note 6, "Long Term Debt" and Note 10, "Subsequent Events" to our Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to "Critical Accounting Estimates" contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for a complete discussion of our critical accounting estimates. There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2024.

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