Cytosorbents : Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

About this update from Cytosorbents Corporation

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, 2025. 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, extracorporeal membrane oxygenation or ECMO, and 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 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 United States 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 United States 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 continues to actively pursue regulatory approval of DrugSorb-ATR with the FDA and expects to pursue regulatory approval in Canada with better visibility from the FDA. 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 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 incorporated into this Quarterly Report on Form 10-Q or other documents we file with or furnish to, the SEC. Upon approval, the Company expects to rapidly commercialize DrugSorb-ATR in the United States 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. DrugSorb-ATR® for Brilinta® In August 2025, we received the FDA's decision on our appeal of the original DrugSorb-ATR application. Importantly, the FDA identified no concerns regarding device safety but upheld the prior denial of the application and requested additional analysis 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 FDA 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 have scheduled a pre-submission meeting with the FDA in August 2026 to discuss the options to generate this additional mechanistic data. Following this meeting, we expect to finalize the testingprotocol, which may require an additional meeting with the FDA. Once finalized, we anticipate completing the required testing and submitting a new De Novo application in 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 FDA. DrugSorb-ATR® for DOACs: Eliquis® and Xarelto® The Company has previously discussed its intention, following anticipated FDA market approval of DrugSorb-ATR for Brilinta®, to expand its device label to include the removal of the direct oral anticoagulants blood thinners (DOACs) such as the market leading Eliquis® (apixaban, Pfizer/BMS) and Xarelto® (rivaroxaban, Bayer/Janssen). At the same time, we continue to observe increasing real-world adoption, clinical use, and published evidence supporting the use of our technology for DOAC removal in cardiac surgery, reinforcing the significant unmet medical need globally. We have scheduled a separate pre-submission meeting with the FDA 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. Having this second shot on goal is aligned with our other FDA Breakthrough Device Designation for DrugSorb-ATR, to remove DOACs during cardiac surgery. Globally, tens of millions of patients are on chronic or life-long DOAC therapy due to atrial fibrillation, deep vein thrombosis, pulmonary embolism, peripheral vascular disease, or post-surgical prophylaxis. An estimated 5-10% of emergent cardiac surgery cases involve patients who are currently therapeutic on a DOAC and risk serious or life-threatening bleeding. 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 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 have included our website address as an inactive textual reference only. The information contained on or accessible through our corporate website is not incorporated by reference in this this Quarterly Report on Form 10-Q and should not be considered part of this report. Summary of Operational and Recent Business Highlights ● Total revenue was $18.5 million for the six months ended June 30, 2026, an increase of $0.2 million, or 0.8%, compared to the prior year. For the three months ended June 30, 2026, total revenue was $9.6 million, an increase of 0.2%. ● Gross profit was $13.2 million for the six months ended June 30, 2026, an increase of $0.2 million, or 1.2%, compared to the prior year. Gross margin was 71.2% for the six months ended June 30, 2026, compared to 71.0% in the prior year. Gross profit for the three months ended June 30, 2026, was $7.0 million, an increase of $0.2 million or 3.4% compared to the prior year. Gross margin was 73.2% for the three months ended June 30, 2026, compared to 70.9% in the prior year. ● Loss from operations improved by 24% to approximately $5.7 million, from $7.5 million for the six months ended June 30, 2026, and 2025, respectively. For the three-month ended June 30, 2026 and 2025, loss from operations improved by 27% to approximately $2.6 million. ● Operating cash burn decreased to $0.4 million for the second quarter and $1.8 million for the six months ended June 30, 2026, compared to $1.4 million and $4.9 million for the three and six months ended June 30, 2025, respectively. The decrease is primarily due to improved operating margins and the impact of our strategic workforce and cost reduction plan. The Company continues to expect to achieve operating cash flow break-even in the second half of 2026. ● The U.S. and Canadian pivotal STAR-T randomized, controlled trial results have now been published in the Journal of Thoracic and Cardiovascular Surgery (2026) - the leading peer-reviewed cardiothoracic surgery journal in the U.S. The authors summarized the results in the graphical abstract and concluded in the central message of the article that, " Intraoperative DrugSorb-ATR use for ticagrelor removal is safe and can reduce the severity of bleeding after isolated CABG in patients operated within 2 days of drug discontinuation. " ● Real-World evidence from the international Safe and Timely AntiThrombotic Removal (STAR) Registry, recently published in Cardio Revascularization Medicine (2026) and the Journal of Cardiothoracic Surgery (2025), demonstrates CytoSorb's ability to perioperative bleeding risk in patients receiving antithrombotic therapies across more than 160 patients undergoing CABG or valve surgery. ● A study titled " Impact of CytoSorb Hemoadsorption Therapy on Cost-Effectiveness and Length of Stay in Critical Care Patients: A Preliminary Study from a Swiss High-Volume Center" , was published in the journal Healthcare . This study provides additional solid real-world evidence for the cost-effectiveness of CytoSorb hemoadsorption in septic shock, showing reduced ICU and hospital length of stay, decreased duration of mechanical ventilation among survivors, and decreased nursing workload, without significantly increasing hospital treatment costs. Results of Operations: Comparison for the six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ 2026 ​ 2025 ​ ​ (unaudited) ​ (unaudited) ​ ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ Amount ​ ​ ​ Revenue ​ ​ ​ Amount ​ ​ ​ Revenue ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ Revenue ​ $ 9,633 ​ 100 % $ 9,617 ​ 100 % Cost of goods sold ​ 2,584 ​ 26.8 % ​ 2,803 ​ 29.1 % Gross profit ​ 7,049 ​ 73.2 % ​ 6,814 ​ 70.9 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 1,453 ​ 15.1 % ​ 1,262 ​ 13.1 % Selling, general and administrative ​ 7,964 ​ 82.7 % ​ 9,167 ​ 95.3 % Restructuring ​ ​ 270 ​ 2.8 % ​ - ​ - ​ Total operating expenses ​ 9,687 ​ 100.6 % ​ 10,429 ​ 108.4 % Loss from operations ​ (2,638) ​ (27.4) % ​ (3,615) ​ (37.6) % Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ (868) ​ (9.0) % ​ (616) ​ (6.4) % Gain (loss) on foreign currency transactions ​ (911) ​ (9.5) % ​ 6,178 ​ 64.2 % Total other income (expense), net ​ (1,779) ​ (18.5) % ​ 5,562 ​ 57.8 % Net income (loss) ​ $ (4,417) ​ (45.9) % $ 1,947 ​ 20.2 % ​ Revenues For the three months ended June 30, 2026, we generated total revenue of approximately $9.6 million, which is in line with revenues for the three months ended June 30, 2025, of $9.6. million. Revenue performance was led by increases in our distributor and strategic partner territories and direct sales outside Germany, but offset by a decline in sales in Germany attributed to a smaller bot more focused sales force. Changes in foreign currency rates positively impact revenue by approximately 4% compared to the prior year. Gross Profit Gross profit was approximately $7.0 million for the three months ended June 30, 2026, an increase of approximately $0.2 million, or 3.4%, as compared to gross profit of $6.8 million for the three months ended June 30, 2025. Gross margins were 73.2% and 70.9% for the three months ended June 30, 2026 and 2025, respectively. The improvement in gross margins reflects the impact of efforts to rebalance production, lower operating costs, and improve efficiencies. Research and Development Expenses Research and development costs were approximately $1.5 million and $1.3 million for the three months ended June 30, 2026 and 2025, respectively, an increase of approximately $0.2 million, or 15.1%. This increase was primarily driven by a charge in the quarter for a certain critical care clinical study. Selling, General and Administrative Expenses Our selling, general and administrative expenses were approximately $8.0 million and $9.2 million for the three months ended June 30, 2026 and 2025, respectively, a decrease of approximately $1.2 million, or 13%. The decrease is primarily due to lower legal, financial and consulting expenses compared to the prior year of approximately of $0.8 million as well as net lower compensation costs in the current year. Gain (Loss) on Foreign Currency Transactions For the six months ended June 30, 2026, the loss on foreign currency transactions was approximately $0.9 million, as compared to a gain on foreign currency transactions of approximately $6.2 million for the three months ended June 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 June 30, 2026, to $1.1414 per Euro from $1.1498 per Euro as of March 31, 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 June 30, 2025, to $1.1789 per Euro from $1.0349 per Euro as of December 31, 2024. Restructuring During the fourth quarter of 2025 and through the second quarter of fiscal 2026, the Company initiated a strategic workforce and cost reduction plan (the "Strategic Workforce and Cost Reduction Plan") to reduce costs, optimize operations, and accelerate a path to cash-flow profitability. Our restructuring expenses were approximately $0.3 million for the three months ended June 30, 2026. These costs included cash-based severance and related workforce reduction charges of $0.3 million. There were no charges for the three months ended June 30, 2025. Loss From Operations Our loss from operations improved by 27% to approximately $2.6 million, from $3.6 million for the three months ended June 30, 2026, and 2025, respectively. This improvement was primarily the result of improved gross margins and a 7.1% reduction in total operating expenses quarter over quarter resulting from. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2026 ​ 2025 ​ ​ (unaudited) ​ (unaudited) ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount ​ Revenue ​ Amount ​ Revenue ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ Revenue ​ $ 18,497 100 % $ 18,344 100 % Cost of goods sold ​ 5,318 28.8 % 5,323 29.0 % Gross profit ​ 13,179 71.2 % 13,021 71.0 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development ​ 2,478 13.4 % 2,924 15.9 % Selling, general and administrative ​ 16,073 86.9 % 17,599 95.9 % Restructuring ​ ​ 310 ​ 1.7 % ​ - ​ - ​ Total operating expenses ​ 18,861 102.0 % 20,523 111.9 % Loss from operations ​ (5,682) (30.7) % (7,502) (40.9) % Other income (expense): ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ (1,726) (9.3) % (1,221) (6.7) % Gain (loss) on foreign currency transactions ​ (2,139) (11.6) % 9,192 50.1 % Total other income (expense), net ​ (3,865) (20.9) % 7,971 43.5 % Net income (loss) ​ $ (9,547) (51.6) % $ 469 2.6 % ​ Revenues For the six months ended June 30, 2026, we generated total revenue of approximately $18.5 million, an increase of approximately $0.2 million, or 1%, compared to revenues of approximately $18.3 million for the six months ended June 30, 2025. Revenue growth was led by strength in our distributor and strategic partner territories and direct sales outside Germany, offset by a reduction in sales in Germany. We continue to see signs of improved sale processes, account targeting and customer engagement with a smaller and more focused team in Germany and remain confident these improvements will lead to stronger execution and improved performance. Meanwhile, we expect to add bak 3-4 additional sales representatives in Germany in the second half of 2026. Changes in foreign currency rates positively impact revenue by approximately 6% compared to the prior year. Gross Profit Gross profit was approximately $13.2 million for the three months ended June 30, 2026, an increase of approximately $0.2 million, or 1.2%, as compared to gross profit of $13.0 million for the six months ended June 30, 2025. Gross margins were 71.2% and 71.0% for the six months ended June 30, 2026 and 2025, respectively. Research and Development Expenses Research and development costs were approximately $2.5 million and $2.9 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of approximately $0.4 million, or 15.3%. This decrease was driven by a decrease in our clinical trial costs and lower grant funded projects, as well as other clinical and product development program reductions, including lower compensation costs. Restructuring During the fourth quarter of 2025 and into the second quarter of fiscal 2026, the Company initiated a strategic workforce and cost reduction plan (the "Strategic Workforce and Cost Reduction Plan") to reduce costs, optimize operations, and accelerate a path to cash-flow profitability. Our restructuring expenses were approximately $0.3 million for the six months ended June 30, 2026. These costs included cash-based severance and related workforce reduction charges of $0.3 million. There were no charges for the six months ended June 30, 2025. Selling, General and Administrative Expenses Our selling, general and administrative expenses were approximately $16.1 million and $17.6 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of approximately $1.5 million, or 8.5%. The decrease is primarily due to decreases in legal, financial and consulting expenses of $0.5 million, total compensation expense of $0.8 million, and a decrease in selling expenses of $0.2 million. Gain (Loss) on Foreign Currency Transactions For the six months ended June 30, 2026, the loss on foreign currency transactions was approximately $2.1 million, as compared to a gain on foreign currency transactions of approximately $9.2 million for the six months ended June 30, 2025. The current year loss was directly related to the decrease in the spot exchange rate of the Euro to the U.S. dollar as of June 30, 2026, to $1.1414 per Euro from $1.1750 per Euro as of December 31, 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 June 30, 2025, to $1.1789 per Euro from $1.0349 per Euro as of December 31, 2024. Loss From Operations Our loss from operations decreased by 24.3% to approximately $5.7 million, from $7.5 million for the six months ended June 30, 2026, and 2025, respectively. This improvement was primarily the result of an 8.1% reduction in operating expenses compared to the prior year, resulting from our efforts to lower costs and improve operating margins and efficiencies including the Company's Strategic Workforce and Cost Reduction Plan, which are all consistent with our goal to achieve cash flow breakeven in the second half of 2026. Liquidity and Capital Resources Since inception, our operations have been primarily financed through the issuance of debt and equity securities. As of June 30, 2026, we had current assets of approximately $15.7 million and current liabilities of approximately $24.0 million. Net change in cash, cash equivalents and restricted cash The following summary presents the sources and uses of cash in our operating, investing, and financing activities, and the related effect of exchange rates on cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ ​ ​ ​ ​Six Months Ended June 30, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Change ($) ​ ​ ​ Change (%) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Change ($) ​ ​ ​ Change (%) ​ ​ (amounts, in thousands) ​ (amounts, in thousands) Net cash used in operating activities ​ $ (583) ​ $ (1,509) ​ $ 926 ​ (61) % $ (1,745) ​ $ (4,975) ​ $ 3,230 ​ (65) % Net cash provided by (used in) investing activities ​ $ 7 ​ $ (132) ​ $ 139 ​ (105) % $ (39) ​ $ (179) ​ $ 140 ​ (78) % Net cash provided by financing activities ​ $ - ​ $ - ​ $ - ​ - ​ $ - ​ $ 6,831 ​ $ (6,831) ​ (100) % Effect of exchange rates on cash ​ $ 176 ​ $ 257 ​ $ (81) ​ (32) % $ (52) ​ $ 285 ​ $ (337) ​ (118) % Net change in cash, cash equivalents, and restricted cash ​ $ (400) ​ $ (1,384) ​ $ 984 ​ (71) % $ (1,836) ​ $ 1,962 ​ $ (3,798) ​ (194) % ​ The reduction in net cash used in operating activities during the three and six months ended June 30, 2026, compared to the same periods in the prior year, of $0.9 million and $3.2 million, respectively, was primarily attributable to the initial benefits of the Company's Strategic Workforce and Cost Reduction Plans, which are further discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations under "Resource Allocation and Path to Cash-Flow Profitability". Nasdaq Listing Compliance On October 2, 2025, the Company received notice from the Staff Nasdaq that it was not in compliance with the Minimum Bid Price Requirement. The Company did not regain compliance during the initial 180-day period ended March 31, 2026, and on April 1, 2026 the Staff granted a second 180-day compliance period, until September 28, 2026, to regain compliance with the Minimum Bid Price Requirement in accordance with Nasdaq Listing Rule 5810(c)(3)(A). To regain compliance, the closing bid price of the Company's common stock must be at least $1.00 per share for a minimum of 10 consecutive trading days prior to September 28, 2026. On June 29, 2026, the Company received a letter from the Staff of Nasdaq that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(2) because the Company's minimum Market Value of Listed Securities was below the minimum of $35 million required for continued listing on the Nasdaq Capital Market (the "MVLS Requirement"). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq has provided the Company with 180 calendar days, or until December 28, 2026, to regain compliance with the MVLS Requirement. Management's plans with respect to the Company's continued listing requirements include actively monitoring the bid price and market value of the Company's common stock, pursuing potential capital-raising transactions, and, if necessary, effecting a reverse stock split to regain compliance with the minimum bid price requirement. The Company may also seek to satisfy an alternative continued listing standard, such as by increasing its stockholders' equity to at least $2.5 million. There can be no assurance that the Company will regain compliance with the applicable Nasdaq continued listing requirements, that any such actions will result in a sustained increase in the Company's stock price or market value of listed securities, or that the Company's common stock will continue to be listed on Nasdaq. As of the date these financial statements are issued, the Company has not regained compliance with either requirement. The Company's common stock continues to trade on The Nasdaq Capital Market under the symbol "CTSO." If the Company does not regain compliance by the applicable compliance dates, Nasdaq will notify the Company that its securities are subject to delisting, and the Company may appeal such determination to a Nasdaq Hearings Panel. Effective Shelf Registration 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 June 30, 2026; however, 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. As of June 30, 2026, approximately $19.4 million was available for use under the ATM facility, subject to certain limitations. During the six months ended June 30, 2026, 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"), 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 received 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 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. 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 funded an additional aggregate $2.5 million ("Tranche 2a") from Avenue Capital Group in November 2025 and provided an 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 would have access to an additional aggregate $2.5 million ("Tranche 2b") from Avenue Capital Group and receive a further six-month extension of the interest-only period to the July 1, 2027 maturity date subject to FDA approval of DrugSorb-ATR prior to December 31, 2026, which approval is now expected beyond this time frame. 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. Under the terms of the Amended Loan and Security Agreement, we issued additional warrants to Avenue Capital Group to purchase 1,428,571 shares of the Company's common stock for cash at the exercise price of $0.70, which expire on November 13, 2030. The number of warrants and exercise price are fixed. For further discussion regarding the Loan Agreement please see Note 6, "Long-Term Debt", to our Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report on Form 10-Q. 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 were available for issuance upon exercise of the Right Warrants. Proceeds from the closing of the subscription period satisfied a debt covenant which allowed for $5 million of restricted cash on the Company's consolidated balance sheets to 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. Technology Business Tax Certificate Program In March 2026, we further supplemented our cash balance with the receipt of $0.4 million from the sale of our 2024 Net Operating Loss (NOL) and R&D tax credits from the Technology Business Tax Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority (NJEDA). Resource Allocation and Path to Cash-Flow Profitability We have strategically managed our resources with a focus on driving commercial success, investing in key areas such as our regulatory submissions of DrugSorb-ATR and the development of clinical data, while also driving improved efficiencies and operating margins. Further, during the fourth quarter of 2025 and into the second quarter of fiscal 2026, the Company initiated a Strategic Workforce and Cost Reduction Plan") to reduce costs, optimize operations, and accelerate a path to cash-flow profitability. These initiatives followed a comprehensive review of the Company's cost structure and operating model. As a result of the Strategic Workforce and Cost Reduction Plan and attrition, the Company has reduced its workforce by approximately 23%, and reduced and realigned operating and production expenses. As a result, the Company has decreased its operating cash burn to approximately $0.4 million for the three months ended June 30, 2026 and remains committed to bringing the Company to operating cash flow break-even in the second half of 2026. As of June 30, 2026, we had approximately $5.9 million in cash, including approximately $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. Critical Accounting 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, 2025 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, 2025. ​

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