Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 01, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36792 | |
Entity Registrant Name | CYTOSORBENTS CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-0373793 | |
Entity Address, Address Line One | 305 College Road East | |
Entity Address, City or Town | Princeton, | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08540 | |
City Area Code | 732 | |
Local Phone Number | 329-8885 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | CTSO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,954,198 | |
Entity Central Index Key | 0001175151 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 19,048,410 | $ 22,144,567 |
Grants and accounts receivable, net of allowance for doubtful accounts of $46,510 as of March 31, 2023 and $76,041 as of December 31, 2022 | 5,527,715 | 5,664,941 |
Inventories | 1,725,673 | 3,461,586 |
Prepaid expenses and other current assets | 1,863,193 | 2,488,597 |
Total current assets | 28,164,991 | 33,759,691 |
Property and equipment, net | 10,695,013 | 10,743,032 |
Restricted cash | 1,687,459 | 1,687,459 |
Right of use assets | 12,469,905 | 12,603,901 |
Other assets | 4,445,467 | 4,437,447 |
Total Assets | 57,462,835 | 63,231,530 |
Current Liabilities: | ||
Accounts payable | 2,994,903 | 1,655,173 |
Lease liability - current portion | 111,627 | 108,939 |
Accrued expenses and other current liabilities | 7,329,386 | 7,950,440 |
Total current liabilities | 10,435,916 | 9,714,552 |
Lease liability, net of current portion | 13,060,760 | 13,142,005 |
Long-term debt | 5,000,000 | |
Total Liabilities | 28,507,390 | 27,856,557 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Preferred Stock, Par Value $0.001, 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | ||
Common Stock, Par Value $0.001, 100,000,000 shares authorized; 43,851,380 and 43,635,715 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 43,851 | 43,635 |
Additional paid-in capital | 288,514,368 | 287,000,021 |
Accumulated other comprehensive income | 1,720,987 | 2,329,195 |
Accumulated deficit | (261,323,761) | (253,997,878) |
Total stockholders' equity | 28,955,445 | 35,374,973 |
Total Liabilities and Stockholders' Equity | $ 57,462,835 | $ 63,231,530 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 17, 2014 |
CONSOLIDATED BALANCE SHEETS | |||
Grants and accounts receivable, net of allowance for doubtful accounts | $ 46,510 | $ 76,041 | |
Preferred Stock, Par Value | $ 0.001 | $ 0.001 | |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 | |
Preferred Stock, shares issued | 0 | 0 | |
Preferred Stock, shares outstanding | 0 | 0 | |
Common Stock, Par Value | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 | |
Common Stock, shares issued | 43,851,380 | 43,635,715 | |
Common Stock, shares outstanding | 43,851,380 | 43,635,715 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue: | ||
Total revenue | $ 9,449,496 | $ 8,691,424 |
Cost of revenue | 3,994,169 | 2,277,636 |
Gross margin | 5,455,327 | 6,413,788 |
Other expenses: | ||
Research and development | 4,214,415 | 4,243,365 |
Legal, financial and other consulting | 669,233 | 800,735 |
Selling, general and administrative | 8,463,275 | 9,160,823 |
Total expenses | 13,346,923 | 14,204,923 |
Loss from operations | (7,891,596) | (7,791,135) |
Other income (expense): | ||
Interest income (expense), net | (63,170) | 8,027 |
Miscellaneous income/(expense) | (31,798) | 30,000 |
Gain/(Loss) on foreign currency transactions | 660,681 | (1,213,290) |
Total other expense, net | 565,713 | (1,175,263) |
Loss before benefit from income taxes | (7,325,883) | (8,966,398) |
Net loss attributable to common stockholders | $ (7,325,883) | $ (8,966,398) |
Basic net loss per common share | $ (0.17) | $ (0.21) |
Diluted net loss per common share | $ (0.17) | $ (0.21) |
Weighted average number of shares of common stock outstanding, basic | 43,676,435 | 43,487,946 |
Weighted average number of shares of common stock outstanding, diluted | 43,487,946 | |
Comprehensive loss: | ||
Net loss | $ (7,325,883) | $ (8,966,398) |
Other comprehensive income/(loss): | ||
Foreign currency translation adjustment | (608,208) | 962,911 |
Comprehensive loss | (7,934,091) | (8,003,487) |
Total product sales | ||
Revenue: | ||
Total revenue | 7,910,039 | 7,924,457 |
CytoSorb sales | ||
Revenue: | ||
Total revenue | 7,906,269 | 7,866,865 |
Other product sales | ||
Revenue: | ||
Total revenue | 3,770 | 57,592 |
Grant income | ||
Revenue: | ||
Total revenue | $ 1,539,457 | $ 766,967 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 43,478 | $ 283,194,429 | $ 525,585 | $ (221,185,295) | $ 62,578,197 |
Balance (in shares) at Dec. 31, 2021 | 43,478,487 | ||||
Stock-based compensation - employees, consultants and directors | 787,417 | 787,417 | |||
Other comprehensive income (loss), foreign currency translation adjustment | 962,911 | 962,911 | |||
Legal/audit fees related to ATM offering | (40,359) | (40,359) | |||
Issuance of restricted stock units | $ 27 | 106,242 | 106,269 | ||
Issuance of restricted stock units (in shares) | 27,461 | ||||
Net loss | (8,966,398) | (8,966,398) | |||
Balance at Mar. 31, 2022 | $ 43,505 | 284,047,729 | 1,488,496 | (230,151,693) | 55,428,037 |
Balance (in shares) at Mar. 31, 2022 | 43,505,948 | ||||
Balance at Dec. 31, 2022 | $ 43,635 | 287,000,021 | 2,329,195 | (253,997,878) | 35,374,973 |
Balance (in shares) at Dec. 31, 2022 | 43,635,715 | ||||
Stock-based compensation - employees, consultants and directors | 830,280 | 830,280 | |||
Issuance of common stock - offerings, net of fees incurred | $ 198 | 698,237 | 698,435 | ||
Issuance of common stock - offerings, net of fees incurred (in shares) | 197,665 | ||||
Other comprehensive income (loss), foreign currency translation adjustment | (608,208) | (608,208) | |||
Legal/audit fees related to ATM offering | (56,702) | (56,702) | |||
Proceeds from exercise of stock options for cash | $ 18 | 42,532 | 42,550 | ||
Proceeds from exercise of stock options for cash (in shares) | 18,000 | ||||
Net loss | (7,325,883) | (7,325,883) | |||
Balance at Mar. 31, 2023 | $ 43,851 | $ 288,514,368 | $ 1,720,987 | $ (261,323,761) | $ 28,955,445 |
Balance (in shares) at Mar. 31, 2023 | 43,851,380 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (7,325,883) | $ (8,966,398) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Non-cash restricted stock unit compensation | 250,206 | 159,059 |
Depreciation and amortization | 258,631 | 217,565 |
Bad debt expense | 11,887 | 6,936 |
Amortization of right of use asset | 55,439 | 64,523 |
Impairment of patents | 111,224 | 305,505 |
Debt costs | 10,714 | 0 |
Stock-based compensation | 830,280 | 787,417 |
Foreign currency transaction (gain) loss | (660,681) | 1,213,290 |
Changes in operating assets and liabilities: | ||
Grants and accounts receivable | 177,170 | (239,152) |
Inventories | 1,747,144 | (827,351) |
Prepaid expenses and other current assets | 795,775 | 307,097 |
Other assets | 0 | 56,100 |
Accounts payable and accrued expenses | 629,883 | (1,203,761) |
Net cash used in operating activities | (3,108,211) | (8,119,170) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (509,669) | (710,239) |
Payments for patent costs | (173,215) | (137,717) |
Net cash used in investing activities | (682,884) | (847,956) |
Cash flows from financing activities: | ||
Equity contributions - net of fees incurred | 641,733 | (40,359) |
Proceeds from exercise of stock options | 42,550 | 0 |
Net cash (used in) provided by financing activities | 684,283 | (40,359) |
Effect of exchange rates on cash | 10,655 | (107,408) |
Net change in cash, cash equivalents and restricted cash | (3,096,157) | (9,114,893) |
Cash, cash equivalents and restricted cash - beginning of period | 23,832,026 | 53,825,166 |
Cash, cash equivalents and restricted cash - end of period | 20,735,869 | 44,710,273 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 71,112 | 0 |
Supplemental disclosure of non-cash financing activities: | ||
Settlement of accrued bonuses with restricted stock units | 0 | 106,269 |
Capital expenditures included in accounts payable | $ 0 | $ 2,135,537 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The interim consolidated financial statements of CytoSorbents Corporation (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments, for a fair presentation of the Company’s consolidated financial position and results of operations for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2023. The results for the three months ended March 31, 2023 and 2022, are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period. As of March 31, 2023, the Company’s cash, cash equivalents and restricted cash balances were approximately $20.7 million, which the Company expects will fund the Company’s operations beyond twelve months from the issuance of these financial statements. As a result, the Company has determined that the going concern risk has been substantially mitigated. |
PRINCIPAL BUSINESS ACTIVITY AND
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification. The Company, through its subsidiary CytoSorbents Medical, Inc. (formerly known as CytoSorbents, Inc.), is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology. The Company, through its wholly owned European subsidiary, CytoSorbents Europe GmbH, conducts sales and marketing related operations for the CytoSorb device. In March 2016, the Company formed CytoSorbents Switzerland GmbH, a wholly owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the second quarter of 2016, provides marketing and direct sales services in Switzerland. In November 2018, the Company formed CytoSorbents Poland Sp. z.o.o., a wholly owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the first quarter of 2019, provides marketing and direct sales services in Poland. In the third quarter of 2019, the Company formed CytoSorbents UK Limited, a wholly owned subsidiary of CytoSorbents Medical, Inc., which is responsible for the management of the Company’s clinical trial activities in the United Kingdom. In March 2022, the Company formed CytoSorbents Medical UK Limited to provide marketing and direct sales services in the United Kingdom and the Republic of Ireland. In October 2022, the Company formed CytoSorbents France SAS to provide marketing and direct sales services in France. CytoSorb, the Company’s flagship product, was approved in the European Union (“EU”) in March 2011 and is currently being marketed and distributed in more than 75 countries around the world, as an effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” or “cytokine release syndrome” seen in critical illnesses that may result in massive inflammation, organ failure, and patient death. In May 2018, the Company received a label extension for CytoSorb covering use of the device for the removal of bilirubin and myoglobin which allows for the use of the device in the treatment of liver failure and trauma, respectively. CytoSorb is also being used during and after cardiac surgery to remove inflammatory mediators that can lead to post-operative complications, including multiple organ failure. In January 2020, CytoSorb received EU CE Mark label expansion to include the removal of ticagrelor during cardiopulmonary bypass in patients undergoing cardiothoracic surgery. In May 2020, CytoSorb also received EU CE Mark label expansion to include rivaroxaban removal for the same indication. In April 2020, CytoSorb received United States Food and Drug Administration (“FDA”) Emergency Use Authorization (“EUA”) of CytoSorb for use in adult critically-ill COVID-19 patients with imminent or confirmed respiratory failure. The CytoSorb device has neither been cleared nor approved for the indication to treat patients with COVID-19 infection. The EUA will be effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA. In April 2020, the Company also announced that the FDA had granted Breakthrough Designation for its DrugSorb-ATR Antithrombotic Removal System for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery. The Breakthrough Devices Program provides for more effective treatment of life-threatening or irreversibly debilitating disease or conditions, in this case the need to reverse the effects of ticagrelor in emergent or urgent cardiac surgery that can otherwise cause a high risk of serious or life-threatening bleeding. Through Breakthrough Designation, the FDA intends to work with CytoSorbents to expedite the development, assessment, and regulatory review of CytoSorbents’ technology for the removal of ticagrelor, while maintaining statutory standards of regulatory approval (e.g., 510(k), de novo 510(k) or premarket approval) consistent with the FDA’s mission to protect and promote public health. In July 2021, the Company received full approval of its Investigative Device Exemption (“IDE”) to conduct the pivotal STAR-T (Safe and Timely Antithrombotic Removal – Ticagrelor) double-blind randomized control trial (“RCT”) for up to 120 patients in the United States to support FDA marketing approval. In August 2021, the Company announced that it was granted a second Breakthrough Device designation for its DrugSorb-ATR Antithrombotic Removal System by the FDA. This Breakthrough Device designation covers the removal of the Direct Oral Anticoagulants (DOACs) apixaban and rivaroxaban in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiothoracic surgery. In October 2021, the Company also received full FDA approval of an IDE application to conduct a double-blind, randomized, controlled clinical study for up to 120 patients entitled, “Safe and Timely Antithrombotic Removal – Direct Oral Anticoagulants (STAR-D),” in the United States to support FDA marketing approval. If FDA marketing approval is obtained for either the removal of ticagrelor or direct oral anticoagulants indications, the device would be marketed as DrugSorb-ATR in the United States. The DrugSorb-ATR Antithrombotic Removal System is based on the same polymer technology as CytoSorb. In May 2022, the Company announced that the Company entered into a 3-year preferred supplier agreement with Asklepios, making CytoSorb available without restrictions to all of the approximate 170 healthcare facilities across 14 states throughout Germany at which Asklepios operates. This includes Asklepios Klinik St. Georg in Hamburg, Germany, which pioneered the use of CytoSorb to remove antithrombotic drugs during cardiothoracic surgery and is well-known for their seminal publication on CytoSorb use for this application during emergency cardiac surgery in patients at high risk of bleeding. In June 2022, the Company announced that, following a successful pilot program in three countries, the Company signed an expanded non-exclusive agreement with Nikkiso Europe GmbH (“Nikkiso”) to distribute Nikkiso’s PureADJUST stand-alone hemoperfusion pump and accessories in a total of 14 countries. In addition to securing the rights to sell Nikkiso’s stand-alone pump and accessories in Germany, Austria, and Luxembourg, the Company entered into an expanded multi-country reseller agreement with Nikkiso covering the following countries: Belgium, Bosnia and Herzegovina, Croatia, Finland, France, Iceland, Lichtenstein, Poland, Serbia, Slovenia and Switzerland. The Company will also be able to provide field support services in these countries. In August 2022, the Company entered into a Marketing Agreement (the “Marketing Agreement”) with Fresenius Medical Care Deutschland GmbH (“Fresenius”), which expands the Company’s strategic partnership with Fresenius by establishing a multi-stage global collaboration to combat life-threatening diseases in critical care. The Marketing Agreement provides for the combined marketing and promotion of CytoSorb with Fresenius’ critical care products by Fresenius’ marketing organization worldwide, excluding the United States. The Marketing Agreement has an initial term of three years, with an automatic renewal for an additional two years at the end of such initial term, subject to earlier termination by either of the parties (the “Term”). Compared to the prior co-marketing agreement between the parties, the Marketing Agreement intends to increase the commitments from both parties and to ensure an ongoing and consistent level of marketing and promotional activity specifically focused around CytoSorb, where Fresenius will actively market and promote CytoSorb as the featured blood purification therapy for removal of cytokines, bilirubin, and myoglobin on its critical care platforms. Specifically, the Marketing Agreement provides that various Fresenius-led in-person, virtual, social media, and web-based marketing programs and events will feature the CytoSorb therapy and highlight the cooperation between the two companies in the field of critical care during the Term. To help support the increased marketing and promotional efforts of the expanded collaboration, CytoSorbents has agreed to subsidize a portion of the marketing costs through a royalty payment to Fresenius Medical Care based on CytoSorb sales in the intensive care unit on Fresenius Medical Care platforms, excluding the United States. In addition to strengthening and expanding the global marketing of CytoSorb, the Company and Fresenius also plan to work together to bring new innovative solutions to the market. The Marketing Agreement also includes the certification of compatibility of CytoSorb for usage on Fresenius’ current critical care platforms. The launch of this program is expected to occur sometime in 2023. The technology is based upon biocompatible, highly porous polymer sorbent beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. The Company has numerous products under development based upon this unique blood purification technology, which is protected by 19 issued U.S. patents and multiple international patents, with applications pending both in the U.S. and internationally, including HemoDefend, ContrastSorb, DrugSorb, DrugSorb-ATR and others. These patents and patent applications are directed to various compositions and methods of use related to the Company’s blood purification technologies and are expected to expire between 2023 and 2038, absent any patent term extensions. Management believes that any near-term expiring patents will not have a significant impact on the Company’s ongoing business. Stock Market Listing On December 17, 2014, the Company’s common stock, par value $0.001 per share, was approved for listing on the Nasdaq Capital Market (“Nasdaq”), and it began trading on Nasdaq on December 23, 2014, under the symbol “CTSO.” Previously, the Company’s common stock traded in the over-the-counter-market on the OTC Bulletin Board. Basis of Consolidation and Foreign Currency Translation The consolidated financial statements include the accounts of CytoSorbents Corporation and its wholly owned subsidiaries, CytoSorbents Medical, Inc. and CytoSorbents Europe GmbH. In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o., CytoSorbents Medical UK Limited and CytoSorbents France SAS, wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly owned subsidiary of CytoSorbents Medical, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. Translation gains and losses resulting from the process of remeasuring into the United States Dollar, the foreign currency financial statements of the European subsidiary are included in operations. The Euro is the functional currency of the European Subsidiary. Foreign currency transaction gain (loss) included in net loss amounted to approximately $661,000 and $(1,213,000) for the three months ended March 31, 2023 and 2022, respectively. The Company translates assets and liabilities of all of its foreign subsidiaries at the exchange rate in effect at the consolidated balance sheet date. The Company translates revenue and expenses at the daily average exchange rates. The Company includes accumulated net translation adjustments in accumulated other comprehensive income as a component of stockholders’ equity. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The following table provides a summary of cash and cash equivalents and restricted cash to amounts shown in the consolidated balance sheets: March 31, 2023 December 31, 2022 Cash and cash equivalents $ 19,048,410 $ 22,144,567 Restricted cash 1,687,459 1,687,459 Total cash, cash equivalents and restricted cash $ 20,735,869 $ 23,832,026 Restricted Cash The Company’s total restricted cash in the amount of $1,687,459 consists of cash of $1,467,459 that the Company is obligated to maintain as collateral for the outstanding letter of credit with Bridge Bank that was provided to the landlord of the College Road facility as security and cash of $220,000 that the Company is obligated to maintain as collateral for the credit limit on the Company’s credit card accounts. Grants and Accounts Receivable Grants receivable represent amounts due from U.S. government agencies and are included in Grants and Accounts Receivable. Accounts receivable are unsecured, non-interest bearing customer obligations due under normal trade terms. The Company sells its devices to various hospitals and distributors. The Company performs ongoing credit evaluations of its customers’ financial conditions. Management reviews accounts receivable periodically to determine collectability. Balances that are determined to be uncollectible are written off to the allowance for doubtful accounts. The allowance for doubtful accounts amounted to approximately $47,000 and $76,000 at March 31, 2023 and December 31, 2022, respectively. Inventories Inventories are valued at the lower of cost or net realizable value under the first in, first out (FIFO) method. At March 31, 2023 and December 31, 2022, the Company’s inventory was comprised of finished goods, which amounted to $839,033 and $1,567,871, respectively; work in process which amounted to $289,123 and $1,280,368, respectively; and raw materials, which amounted to $597,517 and $613,347, respectively. Devices used in clinical trials or for research and development purposes are removed from inventory and charged to research and development expenses at the time of their use. Donated devices are removed from inventory and charged to selling, general and administrative expenses. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of their economic useful lives or the term of the related leases. Gains and losses on depreciable assets retired or sold are recognized in the consolidated statements of operations and comprehensive loss in the year of disposal. Repairs and maintenance expenditures are expensed as incurred. Patents Legal costs incurred to establish and successfully defend patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term. In the event a patent is abandoned, the net book value of the patent is written off. Impairment or Disposal of Long-Lived Assets The Company assesses the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. There was no impairment recorded during the three months ended March 31, 2023. During the three months ended March 31, 2023 and 2022, the Company recorded an impairment charge of approximately $111,000 and $306,000, respectively, related to certain patent costs. This charge is included in legal, financial and other consulting in the consolidated statements of operations and comprehensive loss. Revenue Recognition Product Sales Grant Revenue Research and Development All research and development costs, payments to laboratories and research consultants are expensed when incurred. Advertising Expenses Advertising expenses are charged to activities when incurred. Advertising expenses amounted to approximately $55,000 and $81,000 for the three months ended March 31, 2023 and 2022, respectively, and are included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss. Income Taxes Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized. The Company has provided a valuation allowance against all deferred tax assets. Under Section 382 of the Internal Revenue Code, the net operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership. Additionally, net operating losses generated subsequent to the reverse merger may be limited in the event of changes in ownership. The Company follows accounting standards associated with uncertain tax positions. The Company had no unrecognized tax benefits at March 31, 2023 or December 31, 2022. The Company files tax returns in the U.S. federal and state jurisdictions. The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss carryforwards to an industrial company. CytoSorbents Europe GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o., CytoSorbents UK Limited, CytoSorbents Medical UK Limited and CytoSorbents France file an annual corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland, France and the United Kingdom, respectively. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets, liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The valuation of options granted, allowance for doubtful accounts and recoverability of patents are significant estimates in these consolidated financial statements. Concentration of Credit Risk The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning in April of 2023, the Company joined the IntraFi network, and established an Insured Cash Sweep (“ICS”) account whereby all cash that was previously held in the Company’s money market account at Bridge Bank is swept daily in increments of less than $250,000 and deposited in a number of IntraFi’s 4,000 member banks. This arrangement provides FDIC insurance coverage for all of the cash balances previously held in the money market account, which represents all of the cash and cash equivalents held at Bridge Bank. This arrangement excludes the restricted cash balances. Management monitors the soundness of these institutions in an effort to minimize its collection risk of these balances. A significant portion of the Company's revenues are from product sales in Germany. Substantially all of the Company's grant and other income are from government agencies in the United States. (See Note 4 for further information relating to the Company’s revenue.) As of March 31, 2023, two distributors accounted for approximately 30% of outstanding grants and accounts receivable. As of December 31, 2022, two distributors accounted for approximately 27% of outstanding grants and accounts receivable. For the three months ended March 31, 2023, one distributor accounted for approximately 11% of the Company’s total revenue and for the three months ended March 31, 2022, no customer accounted for more than 10% of the Company’s total revenue. Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term nature. Net Loss Per Common Share Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed using the treasury stock method on the basis of the weighted-average number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock options and restricted shares. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings (see Note 8). Stock-Based Compensation The Company accounts for its stock-based compensation under the recognition requirements of accounting standards for accounting for stock-based compensation, for employees and directors whereby each option granted is valued at fair market value on the date of grant. Under these accounting standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. The Company also follows the guidance of accounting standards for accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services for equity instruments issued to consultants. Shipping and Handling Costs The cost of shipping product to customers and distributors is typically borne by the customer or distributor. The Company records other shipping and handling costs in cost of revenue. Total freight costs amounted to approximately $78,000 and $68,000, respectively, for the three months ended March 31, 2023 and 2022. Effect of Recent Accounting Pronouncements In June 2016, the FASB, issued ASU No. 2016-13 entitled, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU provides guidance on the calculation of credit losses, which includes the allowance for doubtful accounts on trade accounts receivable. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2022. The Company implemented the updated guidance during the three months ended March 31, 2023 and this did not have significant impact on its consolidated financial statements. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 3. STOCKHOLDERS’ EQUITY Preferred Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board of Directors. Common Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation increased the number of shares of common stock authorized for issuance from 50,000,000 shares to 100,000,000 shares. Shelf Registration On July 14, 2021, the Company filed a registration statement on Form S-3 with the SEC, which was amended on July 20, 2021 and declared effective by the SEC on July 27, 2021 (as amended, the “2021 Shelf”). The 2021 Shelf enables the Company to offer and sell, in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $150 million. Open Market Sale Agreement with Jefferies LLC On December 30, 2021, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (the “Agent”), pursuant to which the Company could sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $25 million through the Agent, as the Company’s sales agent. All shares of the Company’s common stock offered and sold, or to be offered and sold under the Sale Agreement would have been issued and sold pursuant to the Company’s 2021 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions. Subject to the terms of the Sales Agreement, the Agent is required to use their commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company is required to pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of the shares of the Company’s common stock sold thereunder, if any. There were no sales pursuant to the Sale Agreement during the year ended December 31, 2022. During the three months ended March 31, 2023, the Company sold 197,665 shares of its common stock, generating net proceeds of approximately $698,000. In addition, during the year ended December 31, 2022 and during the three months ended March 31, 2023, the Company paid approximately $90,000 and $57,000, respectively, in expenses related to the Sale Agreement. Stock-Based Compensation The summary of the stock option activity for the three months ended March 31, 2023, is as follows: Weighted Weighted Average Average Remaining Exercise Price Contractual Shares per Share Life (Years) Outstanding, December 31, 2022 8,109,824 $ 5.11 6.91 Granted 100,000 $ 2.65 — Forfeited (326,539) $ 2.40 — Expired (186,309) $ 4.75 — Exercised (18,000) $ 2.36 — Outstanding, March 31, 2023 7,678,976 $ 5.21 6.60 The fair value of each stock option was estimated using the Black Scholes pricing model, which takes into account as of the grant date the exercise price (ranging from $1.55 to $3.50 per share) and expected life of the stock option (6 years), the current price of the underlying stock and its expected volatility (70.4%), expected dividends (-0- percent) on the stock and the risk free interest rate (ranging from 3.54 to 4.22%) for the expected term of the stock option. The intrinsic value is calculated as the difference between the market value of the shares as of March 31, 2023, of $3.37 and the exercise price of the shares. Options Outstanding Number Weighted Weighted Range of Outstanding at Average Average Aggregate Exercise March 31, Exercise Remaining Intrinsic Price 2023 Price Life (Years) Value $1.11 - $13.20 7,678,976 $ 5.21 6.60 $ 3,340,513 Options Exercisable Number Weighted Exercisable at Average Aggregate March 31, Exercise Intrinsic 2023 Price Value 5,306,799 $ 6.03 $ 851,555 The summary of the status of the Company’s non-vested options for the three months ended March 31, 2023, is as follows: Weighted Average Grant Date Shares Fair Value Non-vested, December 31, 2022 3,486,739 $ 2.10 Granted 100,000 $ 1.73 Forfeited (326,539) $ 1.44 Vested (888,023) $ 2.55 Non-vested, March 31, 2023 2,372,177 $ 2.00 As of March 31, 2023, the Company had approximately $3,781,000 of total unrecognized compensation cost related to stock options which will be amortized over approximately 47 months. On August 10, 2022, the Board of Directors granted options to purchase 1,365,000 shares of common stock to certain senior managers of the Company which will only vest upon the achievement of certain specific, predetermined milestones related to the Company’s long-term performance goals. The grant date fair value of these unvested options amounted to approximately $1,620,000. As of March 31, 2023, none of these milestones has been met. Accordingly, no charge for these options has been recorded in the consolidated statements of operations and comprehensive loss for the quarter ended March 31, 2023. Change in Control-Based Awards of Restricted Stock Units: The Board of Directors has granted restricted stock units to members of the Board of Directors, to the Company’s executive officers, and to employees of the Company. These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Amended and Restated CytoSorbents Corporation 2014 Long-Term Incentive Plan. The following table is a summary of these restricted stock units: Restricted Stock Units Board of Executive Other Directors Management Employees Total Intrinsic Value December 31, 2022 346,500 779,500 1,764,500 2,890,500 $ 4,480,275 Granted — — 58,000 58,000 Forfeited — — (114,250) (114,250) March 31, 2023 346,500 779,500 1,708,250 2,834,250 $ 9,551,423 Due to the uncertainty over whether these restricted stock units will vest, which only happens upon a Change in Control, no charge for these restricted stock units has been recorded in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022. Other Awards of Restricted Stock Units: On February 28, 2020, certain named executive officers and senior managers were granted 168,100 restricted stock units. These awards were valued at approximately $1,014,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant. For the three months ended March 31, 2023 and 2022, the Company recorded a charge of approximately $0 and a reduction of expense of approximately $(65,000), respectively, related to these restricted stock unit awards. On April 12, 2021, certain named executive officers and senior managers were granted 235,765 restricted stock units. These awards were valued at approximately $2,120,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vest one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant. For the three months ended March 31, 2023 and 2022, the Company recorded a charge of approximately $177,000 and $177,000, respectively, related to these restricted stock unit awards. On August 10, 2022, certain named executive officers and senior managers were granted 288,500 restricted stock units. These awards were valued at approximately $563,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested (or will vest) one third on the date of the grant, one third on the first anniversary of the date of the grant, and one third on the second anniversary of the date of the grant. For the three months ended March 31, 2023 and 2022, the Company recorded a charge of approximately $47,000 and $0, respectively, related to these restricted stock unit awards. Additionally, in 2021 certain employees were offered 91,750 restricted stock units and in 2022 certain employees were offered 30,000 restricted stock units, as a condition of their employment. These awards were valued at approximately $778,068 at the date of issuance. 45,000 of the restricted stock units valued at $375,750 were forfeited in 2022. 46,750 of these restricted stock units vest upon the earlier of a Change in Control or one- one- one- The following table outlines the restricted stock unit activity for the three months ended March 31, 2023: Weighted Average Grant Date Shares Fair Value Non-vested, December 31, 2022 312,092 $ 4.42 Granted 30,000 $ 2.14 Non-vested, March 31, 2023 342,092 $ 4.22 |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE | |
REVENUE | 4. REVENUE The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended March 31, 2023: United States Distributors/ Government Direct Strategic Partners Agencies Total Product sales: United States $ 3,770 $ — $ — $ 3,770 Germany 3,337,904 — — 3,337,904 All other countries 1,502,599 3,065,766 — 4,568,365 Total product revenue 4,844,273 3,065,766 — 7,910,039 Grant and other income: United States — — 1,539,457 1,539,457 Total revenue $ 4,844,273 $ 3,065,766 $ 1,539,457 $ 9,449,496 The following table disaggregates the Company's revenue by customer type and geographic area for the three months ended March 31, 2022: United States Distributors/ Government Direct Strategic Partners Agencies Total Product sales: United States $ 57,592 $ 154,750 $ — $ 212,342 Germany 3,783,526 — — 3,783,526 All other countries 1,204,932 2,723,657 — 3,928,589 Total product revenue 5,046,050 2,878,407 — 7,924,457 Grant and other income: United States — — 766,967 766,967 Total revenue $ 5,046,050 $ 2,878,407 $ 766,967 $ 8,691,424 The Company has two primary revenue streams: (1) sales of the CytoSorb device and related device accessories and (2) grant income from contracts with various agencies of the United States government. The following is a brief description of each revenue stream. CytoSorb Sales The Company sells its CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners. The majority of sales of the device are outside the United States, as CytoSorb is not yet approved for commercial sale in the United States. However, in April 2020, the Company was granted U.S. Emergency Use Authorization (“EUA”) of CytoSorb for use in critically-ill patients infected with COVID-19 with imminent or confirmed respiratory failure by the United States Food and Drug Administration (the “FDA”). Direct sales outside the United States relate to sales to hospitals located in Germany, Switzerland, Austria, Belgium, Luxembourg, Poland, the Netherlands, Sweden, Denmark, Norway and the United Kingdom. Direct sales are fulfilled from the Company's warehouse facility in Berlin, Germany. There are no formal sales contracts with any direct customers relating to product price or minimum purchase requirements. However, there are agreements in place with certain direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels. The Company records the value of these items earned as a reduction of revenue. These customers submit purchase orders and the order is fulfilled and shipped directly to the customer. Prices to all direct customers are based on a standard price list based on the packaged quantity (6 packs versus 12 packs). Distributor and strategic partner sales make up the remaining product sales. These distributors are located in various countries throughout the world. The Company has a formal written contract with each distributor/strategic partner. These contracts have terms ranging from 1-5 years in length, with three years being the typical term. In addition, certain distributors are eligible for volume discount pricing if their unit sales are in excess of the base amount in the contract. Most distributor’s/strategic partner’s contracts have minimum annual purchase requirements in order to maintain exclusivity in their respective territories. There is no additional consideration or monetary penalty that would be required to be paid to CytoSorbents if a distributor does not meet the minimum purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met. Government Grants The Company has been the recipient of various grant contracts from various agencies of the United States government, primarily the Department of Defense, to perform various research and development activities. These contracts fall into one of the following categories: 1. Fixed price – the Company invoices the contract amount in equal installments over the term of the contract without regard to the timing of the costs incurred related to this contract. If billings on fixed price contracts exceed the costs incurred, revenue will be deferred to the extent of the excess billings. 2. Cost reimbursement – the Company submits monthly invoices during the term of the contract for the amount of direct costs incurred during that month plus an agreed upon percentage that relates to allowable overhead and general and administrative expenses. Cumulative amounts invoiced may not exceed the maximum amount of funding stipulated in the contract. 3. Cost plus – this type of contract is similar to a cost reimbursement contract but this type also allows for the Company to additionally invoice for a fee amount that is included in the contract. 4. Performance based – the Company submits invoices only upon the achievement of the milestones listed in the contract. The amount to be invoiced for each milestone is documented in the contract. These government contracts have terms ranging from three months to four years. The Company may apply for an extension of the term of the contract in order to complete its research and development activities but would not receive additional funding during the extension period in excess of the original contract. See Note 2 regarding the accounting policies related to these contracts. In summary, the contracts the Company has with customers are the distributor/strategic partner contracts related to CytoSorb product sales, agreements with direct customers related to free-of-charge product and credit rebates based upon achieving minimum purchase levels, and contracts with various government agencies related to the Company’s grants. The Company does not currently incur any outside/third party incremental costs to obtain any of these contracts. The Company does incur internal costs, primarily salary related costs, to obtain the contracts related to the grants. Company employees spend time reviewing the program requirements and developing the budget and related proposal to submit to the grantor agency. There may additionally be travel expenditures involved with meeting with government agency officials during the negotiation of the contract. These internal costs are expensed as incurred. The following table provides information about receivables and contract liabilities from contracts with customers: March 31, 2023 December 31, 2022 Contract receivables, which are included in grants and accounts receivable $ 4,005,019 $ 3,822,452 Contract liabilities, which are included in accrued expenses and other current liabilities $ 1,617,195 $ 1,682,837 Contract receivables represent balances due from product sales to distributors amounting to $3,329,854 and $2,944,031 at March 31, 2023 and December 31, 2022, respectively, and billed and unbilled amounts due on government contracts amounting to $675,165 and $878,421 at March 31, 2023 and December 31, 2022, respectively. Contract liabilities represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements, which amounted to $176,647 and $166,065 at March 31, 2023 and December 31, 2022, respectively, and deferred grant revenue related to the billing on fixed price government contracts in excess of costs incurred, which amounted to $1,440,548 and $1,516,772 at March 31, 2023 and December 31, 2022, respectively. |
LONG-TERM DEBT, NET
LONG-TERM DEBT, NET | 3 Months Ended |
Mar. 31, 2023 | |
LONG-TERM DEBT, NET | |
LONG-TERM DEBT, NET | 5. LONG-TERM DEBT, NET On June 30, 2016, the Company and its wholly owned subsidiary, CytoSorbents Medical, Inc. (together, the “Borrower”), entered into a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, (the “Bank”), pursuant to which the Company borrowed $10 million in two equal tranches of $5 million (the “Original Term Loans”). On March 29, 2018, the Original Term Loans were refinanced with the Bank pursuant to an Amended and Restated Loan and Security Agreement by and between the Bank and the Borrower (the “Amended and Restated Loan and Security Agreement”), under which the Bank agreed to loan the Borrower up to an aggregate of $15 million to be disbursed in two tranches (1) one tranche of $10 million (the “Term A Loan”), which was funded on the Closing Date and used to refinance the Original Term Loans, and (2) a second tranche of $5 million which may be disbursed at the Borrower’s sole request prior to March 31, 2019 provided certain conditions are met (the “Term B Loan” and together with the Term A Loan, the “Term Loans”). On July 31, 2019, the Borrower entered into the First Amendment to the Amended and Restated Loan and Security Agreement (the “First Amendment”) with the Bank, which amended certain provisions of the Amended and Restated Loan and Security Agreement and the 2018 Success Fee Letter (the “2018 Letter”). In connection with the execution of the First Amendment, the draw period for the Term B Loan was extended to August 15, 2019 and the Company drew down the full $5.0 million Term B Loan on the Settlement Date, bringing the total outstanding debt to $15 million at July 31, 2019. The proceeds of Term Loans were used for general business requirements in accordance with the Amended and Restated Loan and Security Agreement. On December 4, 2020 (the “Third Amendment Closing Date”), the Company closed on the Third Amendment (the “Third Amendment”) of its Amended Loan and Security Agreement with Bridge Bank. Under the terms of the Amendment, the Company repaid the outstanding principal balance of its existing $15 million term loans and simultaneously received a commitment from Bridge Bank to provide a new term loan of $15 million, if needed. On January 19, 2022 (the “Fourth Amendment Closing Date”), the Company closed on the Fourth Amendment (the “Fourth Amendment”) of its Amended Loan and Security Agreement with Bridge Bank. Under the terms of the Amendment, the Company received a commitment from Bridge Bank to provide a new term loan of up to $15 million, if needed and entered into the Fourth Amendment Success Fee Letter (the “2022 Success Fee Letter”). On December 28, 2022 (the "Fifth Amendment Date"), the Company entered into the Fifth Amendment of its Amended Loan and Security Agreement with Bridge Bank. The Fifth Amendment extends the draw period under the Fourth Amendment to the earlier of (i) March 1, 2023 and (ii) the occurrence of an Event of Default. On March 9, 2023, the Company entered into the Sixth Amendment of its Amended Loan and Security Agreement. The Sixth Amendment further extended the draw period to March 24, 2023. Therefore, no further draws are available as of the date of this filing. The Fourth Amendment provides a tranche of term loans (the “Term C Loans”) in the aggregate amount of $15 million, which are available for the Company to draw down at its sole discretion in three tranches of $5 million each at any time during the period commencing on the Fourth Amendment Date and ending on the earlier of (i) December 31, 2022 and (ii) the occurrence of an Event of Default (as defined in the Amended Loan and Security Agreement). The Term C Loans shall bear interest at the Index Rate (defined in the Amendment as the greater of 3.25% or the Prime Rate as published by the Wall Street Journal on the last business date of the month immediately preceding the month in which the interest will accrue) plus 1.25%. Pursuant to the Fourth Amendment, interest on the Term C Loans is subject to an interest rate cap of 8.00%. On December 27, 2022, the Company drew down the first $5 million tranche of the Term C loans available under the terms of the Fourth Amendment. Under the terms of the Fourth Amendment, commencing on February 1, 2023, the Company is required to make monthly payments of interest only through December 2023. The interest-only period will be further extended through June 2024 provided the Company has met both the required reserves test and the seventy-five percent test, as set forth in the Fourth Amendment, as of November 30, 2023. Commencing on January 1, 2024, if the Company does not meet both the required reserves test and the 75% test, the Company shall make equal monthly payments of principal of $208,333, together with accrued and unpaid interest. Commencing on July 1, 2024, if the Company meets both the required reserves test and the 75% test, the Company shall make equal monthly payments of principal of $277,778, together with accrued and unpaid interest. In either event, all unpaid principal and accrued and unpaid interest shall be due and payable in full on December 1, 2025. On the Fourth Amendment Closing Date, the Company was required to pay a non-refundable closing fee of approximately $18,750, which was amortized as a monthly charge to interest expense. On the Third Amendment Closing Date, the Company paid a non-refundable closing fee of $75,000, which was amortized as a charge to interest expense. In addition, the Amended and Restated Loan and Security Agreement requires the Company to pay a non-refundable final fee equal to 2.5% of the principal amount of the Term Loan funded upon the earlier of the (i) the maturity date or (ii) termination of the Term Loans via acceleration or prepayment. This final fee is being accrued and charged to interest expense over the term of the loan. For the three months ended March 31, 2023, the Company recorded interest expense of approximately $10,714 related to the final fee. The Term Loans are evidenced by a secured promissory note issued to the Bank by the Company. If the Company elects to prepay the Term Loans pursuant to the terms of the Amended and Restated Loan and Security Agreement, it will owe a prepayment fee to the Bank, as follows: (1) for a prepayment made on or after the funding date of a Term Loan through and including the first anniversary of such funding date, an amount equal to 2.0% of the principal amount of such Term Loan prepaid; (2) for a prepayment made after the first anniversary of the funding date of a Term Loan through and including the second anniversary of such funding date, an amount equal to 1.5% of the principal amount of such Term Loan prepaid; and (3) for a prepayment made after the second anniversary of the funding date of a Term Loan, an amount equal to 1.0% of the principal amount of such Term Loan prepaid. The Company’s and CytoSorbents Medical, Inc.’s obligations under the Amended and Restated Loan and Security Agreement are joint and severable and are secured by a first priority security interest in favor of the Bank with respect to the Company’s Shares (as defined in the Amended and Restated Loan and Security Agreement) and the Borrower’s Collateral (as defined in the Amended and Restated Loan and Security Agreement, which definition excludes the Borrower’s intellectual property and other customary exceptions). 2018 Success Fee Letter: Pursuant to the amended 2018 Letter, the Borrower shall pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Term B Loan (as defined in the Restated Loan and Security Agreement) (the “Success Fee”) upon the first occurrence of any of the following events: (a) a sale or other disposition by the Borrower of all or substantially all of its assets; (b) a merger or consolidation of the Borrower into or with another person or entity, where the holders of the Borrower’s outstanding voting equity securities as of immediately prior to such merger or consolidation hold less than a majority of the issued and outstanding voting equity securities of the successor or surviving person or entity as of immediately following the consummation of such merger or consolidation; (c) a transaction or a series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of the Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of the Borrower, who did not have such power before such transaction; or (d) the closing price per share for the Company’s common stock on the Nasdaq Capital Market being the greater of (i) 70% or more over $7.05, the closing price of the Company’s common stock on March 29, 2018 (after giving effect to any stock splits or consolidations effected after the date thereof) for five 2022 Success Fee Letter: Pursuant to the 2022 Success Fee Letter, the Borrower will pay to the Bank a success fee equal to (i) 1% of $5 million if the Company draws down the first tranche of the Term C Loan and is payable only if the Company’s stock price equals or exceeds $8 for five five five Long-term debt consists of the following as of March 31, 2023: Principal amount $ 5,000,000 Accrued final fee 10,714 Subtotal 5,010,714 Less Current maturities — Long-term debt net of current maturities $ 5,010,714 Principal payments of long-term debt are due as follows during the periods ending March 31: 2024 $ — 2025 2,500,000 2026 2,500,000 Total $ 5,000,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES Payroll Tax Examination In December 2021, the Company was notified that its European subsidiary, CytoSorbents Europe GmbH, would be subject to an audit of their payroll tax and social cost filings for the four-year period from 2018 through 2021. The Company has determined that payroll taxes and social costs were not paid on certain employee expense reimbursements as is required by German tax rules. Accordingly, the Company accrued approximately $598,000 as an estimate of this liability as of December 31, 2021. In January 2023, the Company received an assessment from the German tax authorities for the payroll tax audit of approximately $90,000. In addition, it was determined that the Company would owe additional social security and VAT taxes related to this matter of approximately $83,000. Accordingly, the Company has adjusted its accrual related to this payroll tax audit to approximately $173,000 as of December 31, 2022. As of March 31, 2023, approximately $83,000 remains accrued. This liability is included in accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2022 and March 31, 2023. The expense related to this examination was included in selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss. Employment Agreements On July 30, 2019, CytoSorbents Corporation 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, the Company’s former Chief Financial Officer. Each of the agreements has an initial term of three years and was 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 expired on December 31, 2021. After the expiration of the initial terms, the employment agreements will 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. In January 2023, these employment agreements automatically renewed for an additional one year. The foregoing employment agreements each provide for base salary and other customary benefits which include participation in group insurance plans, paid time off and reimbursement of certain business-related expenses, including travel and continuing educational expenses, as well as bonus and/or equity awards at the discretion of the Board of Directors. In addition, the agreements provide for certain termination benefits in the event of termination without “Cause” or voluntary termination of employment for “Good Reason”, as defined in each agreement. The agreements also provide for certain benefits in the event of a “Change of Control” of the Company, as defined in each agreement. Effective March 31, 2023, Ms. Bloch retired from her role as Chief Financial Officer of the Company. Ms. Bloch’s employment agreement expired on March 31, 2023, upon her retirement from the Company. In connection with Ms. Bloch’s retirement, the Company and Ms. Bloch entered into a Consulting Agreement, dated as of March 31, 2023 (the “Consulting Agreement”), pursuant to which Ms. Bloch will serve as a consultant to the Company and as the Company’s Interim Chief Financial Officer. In accordance with the terms of the Consulting Agreement, Ms. Bloch will continue to provide services to the Company which are customary in scope to those typically provided by a public company Chief Financial Officer. Unless terminated earlier by Ms. Bloch or by the Company upon fourteen days written notice, the Consulting Agreement will remain in effect until December 31, 2025, and thereafter as mutually agreed between the Company and Ms. Bloch. Litigation The Company is, from time to time, subject to claims and litigation arising in the ordinary course of business. The Company intends to defend vigorously against any future claims and litigation. The Company is not currently a party to any legal proceedings. Royalty Agreements Pursuant to an agreement dated August 11, 2003, an existing investor agreed to make a $4 million equity investment in the Company. These amounts were received by the Company in 2003. In connection with this agreement the Company granted the investor a perpetual royalty of 3% on all gross revenues received by the Company from the sale of its CytoSorb device which such rights were assigned to an existing investor in 2017. For the three months ended March 31, 2023 and 2022, the Company recorded royalty expenses of approximately $234,000 and $232,000, respectively. These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. On August 1, 2022, the Company entered into the Marketing Agreement with Fresenius, which expands the Company’s strategic partnership with Fresenius by establishing a multi-stage global collaboration to combat life-threatening diseases in critical care. The Marketing Agreement has an initial term of three years, with an automatic renewal for an additional two years at the end of such initial term, subject to earlier termination by either of the parties (the “Term”). To help support the increased marketing and promotional efforts of the expanded collaboration, CytoSorbents has agreed to subsidize a portion of the marketing costs through a royalty payment to Fresenius Medical Care based on CytoSorb sales in the intensive care unit on Fresenius Medical Care platforms, excluding the United States. To help support the increased marketing and promotional efforts of the expanded collaboration, the Company has agreed to subsidize a portion of the marketing costs through royalty payments to Fresenius. Initially, the Marketing Agreement provides for royalty payments equal to 0.9% of the Company’s net sales of CytoSorb products made during the Term (excluding net sales in the United States). This initial royalty rate was determined based on certain assumptions regarding the percentage of the Company’s sale of CytoSorb products that are used with the Fresenius critical care platforms in the intensive care unit outside of the United States but is subject to adjustment if the Company determines that the underlying assumptions have changed significantly. For the three months ended March 31, 2023, the Company did not record any expense related to this agreement as Fresenius did not commence any marketing activities as defined by the agreement. License Agreement In an agreement dated September 1, 2006, the Company entered into a license agreement which provides the Company the exclusive right to use its patented technology and proprietary know how relating to adsorbent polymers for a period of 18 years. Under the terms of the agreement, the Company has agreed to pay license fees of 2.5% to 5% on the sale of certain of its products if and when those products are sold commercially for a term not greater than 18 years commencing with the first sale of such product. For the three months ended March 31, 2023 and 2022 per the terms of the license agreement, the Company recorded licensing expenses of approximately $390,000 and $387,000, respectively. These expenses are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
LEASES | 7. LEASES The Company leases its operating facilities in both the United States and Germany under operating lease agreements. In March 2021, CytoSorbents Medical Inc. entered into a lease agreement for a new operating facility at 305 College Road East, Princeton, New Jersey, which contains office, laboratory, manufacturing and warehouse space. The lease commenced on June 1, 2021. The Early Term commenced on June 1, 2021 and lasted until September 30, 2021. The lease also contains two five-year renewal options; however, the Company has determined that it is not likely that they will exercise these options. Commencing on September 30, 2021, the remaining lease term will last for 15.5 years. The lease requires monthly rental payments of $25,208 for the Initial Early Term, $88,254 for the Early Term and initial monthly payments of approximately $111,171 in the first year of the remaining term. Following the first year of the remaining term, the annual base rent will increase by approximately 2.75% annually over the remaining term. The lease also contains six months of rent abatement (months 1, 2, 3, 25, 26 and 27 of the remaining lease term). In addition to the base rent, payments of operating expenses and real estate taxes will be required. These payments are to be based on actual amounts incurred during 2021 multiplied by the Company’s share of the total building space (92.3%). The landlord will also provide an allowance of approximately $1,455,000 related to certain building improvements as outlined in the lease. In April 2021, the Company provided the landlord with a letter of credit in the amount of approximately $1,467,000 as security. The Company has determined that this lease should be treated as an operating lease in accordance with the provisions of Accounting Standards Codification (“ASC”) 842. On April 1, 2021, the Company recorded a Right-of-Use asset and related lease liability In September 2021, the Company extended its two operating leases for its office facility in Germany. These leases require combined base rent payments amounting to approximately $12,100 per month. The initial lease term of both leases ends August 31, 2026. In addition, the Company is obligated to monthly operating expenses of approximately $3,000 per month. Both leases have a five-year option to renew that would extend the lease term to August 31, 2031. There are no provisions in the leases to increase the base rent during the renewal period. There were no lease incentives and no initial direct costs were incurred related to these leases. In January 2021, CytoSorbents Europe GmbH entered into a lease for 1,068 square meters of additional warehouse space. The lease commenced on April 1, 2021 and requires monthly payments of base rent of $7,784 and other costs of approximately $239 and has a term of five years. The lease also has an option to extend liability Right-Of-Use Asset and Lease Liability: The Company’s consolidated balance sheets reflect the value of the right-of-use asset and related lease liability. This value was calculated based on the present value of the remaining base rent lease payments. The remaining lease payments include the renewal periods for both facilities as the Company has determined that it is probable that the renewal options will be exercised under each of the lease agreements. The discount rate used was the Company’s incremental borrowing rate, which is 9.8%, as the Company could not determine the rate implicit in the lease. As a result, the value of the right-of- use asset and related lease liability is as follows: March 31, December 31, 2023 2022 Right-of-use asset $ 12,469,905 $ 12,603,901 Total lease liability $ 13,172,387 $ 13,250,944 Less current portion (111,627) (108,939) Lease liability, net of current portion $ 13,060,760 $ 13,142,005 The maturities of the lease liabilities are as follows as of March 31, 2023: 2024 $ 1,275,860 2025 1,666,361 2026 1,705,626 2027 1,745,970 2028 1,787,423 Thereafter 16,780,192 Total lease payments 24,961,432 Present value discount (11,789,045) Total $ 13,172,387 For the three months ended March 31, 2023 and 2022, operating cash flows paid in connection with operating leases amounted to approximately $633,000 and $713,000, respectively. As of March 31, 2023 and December 31, 2022, the weighted average remaining lease term was 13.4 years and 13.6 years, respectively. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | 8. NET LOSS PER SHARE Basic loss per share and diluted loss per share for the three months ended March 31, 2023 and 2022 have been computed by dividing the net loss for each respective period by the weighted average number of shares outstanding during that period. All outstanding options and restricted stock awards representing approximately 10,855,000 and 8,825,000 incremental shares as of March 31, 2023 and 2022, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive. |
PRINCIPAL BUSINESS ACTIVITY A_2
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business The Company is a leader in the treatment of life-threatening conditions in intensive care and cardiac surgery using blood purification. The Company, through its subsidiary CytoSorbents Medical, Inc. (formerly known as CytoSorbents, Inc.), is engaged in the research, development and commercialization of medical devices with its blood purification technology platform which incorporates a proprietary adsorbent, porous polymer technology. The Company, through its wholly owned European subsidiary, CytoSorbents Europe GmbH, conducts sales and marketing related operations for the CytoSorb device. In March 2016, the Company formed CytoSorbents Switzerland GmbH, a wholly owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the second quarter of 2016, provides marketing and direct sales services in Switzerland. In November 2018, the Company formed CytoSorbents Poland Sp. z.o.o., a wholly owned subsidiary of CytoSorbents Europe GmbH. This subsidiary, which began operations during the first quarter of 2019, provides marketing and direct sales services in Poland. In the third quarter of 2019, the Company formed CytoSorbents UK Limited, a wholly owned subsidiary of CytoSorbents Medical, Inc., which is responsible for the management of the Company’s clinical trial activities in the United Kingdom. In March 2022, the Company formed CytoSorbents Medical UK Limited to provide marketing and direct sales services in the United Kingdom and the Republic of Ireland. In October 2022, the Company formed CytoSorbents France SAS to provide marketing and direct sales services in France. CytoSorb, the Company’s flagship product, was approved in the European Union (“EU”) in March 2011 and is currently being marketed and distributed in more than 75 countries around the world, as an effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” or “cytokine release syndrome” seen in critical illnesses that may result in massive inflammation, organ failure, and patient death. In May 2018, the Company received a label extension for CytoSorb covering use of the device for the removal of bilirubin and myoglobin which allows for the use of the device in the treatment of liver failure and trauma, respectively. CytoSorb is also being used during and after cardiac surgery to remove inflammatory mediators that can lead to post-operative complications, including multiple organ failure. In January 2020, CytoSorb received EU CE Mark label expansion to include the removal of ticagrelor during cardiopulmonary bypass in patients undergoing cardiothoracic surgery. In May 2020, CytoSorb also received EU CE Mark label expansion to include rivaroxaban removal for the same indication. In April 2020, CytoSorb received United States Food and Drug Administration (“FDA”) Emergency Use Authorization (“EUA”) of CytoSorb for use in adult critically-ill COVID-19 patients with imminent or confirmed respiratory failure. The CytoSorb device has neither been cleared nor approved for the indication to treat patients with COVID-19 infection. The EUA will be effective until a declaration is made that the circumstances justifying the EUA have terminated or until revoked by the FDA. In April 2020, the Company also announced that the FDA had granted Breakthrough Designation for its DrugSorb-ATR Antithrombotic Removal System for the removal of ticagrelor in a cardiopulmonary bypass circuit during emergent and urgent cardiothoracic surgery. The Breakthrough Devices Program provides for more effective treatment of life-threatening or irreversibly debilitating disease or conditions, in this case the need to reverse the effects of ticagrelor in emergent or urgent cardiac surgery that can otherwise cause a high risk of serious or life-threatening bleeding. Through Breakthrough Designation, the FDA intends to work with CytoSorbents to expedite the development, assessment, and regulatory review of CytoSorbents’ technology for the removal of ticagrelor, while maintaining statutory standards of regulatory approval (e.g., 510(k), de novo 510(k) or premarket approval) consistent with the FDA’s mission to protect and promote public health. In July 2021, the Company received full approval of its Investigative Device Exemption (“IDE”) to conduct the pivotal STAR-T (Safe and Timely Antithrombotic Removal – Ticagrelor) double-blind randomized control trial (“RCT”) for up to 120 patients in the United States to support FDA marketing approval. In August 2021, the Company announced that it was granted a second Breakthrough Device designation for its DrugSorb-ATR Antithrombotic Removal System by the FDA. This Breakthrough Device designation covers the removal of the Direct Oral Anticoagulants (DOACs) apixaban and rivaroxaban in a cardiopulmonary bypass circuit to reduce the likelihood of serious perioperative bleeding during urgent cardiothoracic surgery. In October 2021, the Company also received full FDA approval of an IDE application to conduct a double-blind, randomized, controlled clinical study for up to 120 patients entitled, “Safe and Timely Antithrombotic Removal – Direct Oral Anticoagulants (STAR-D),” in the United States to support FDA marketing approval. If FDA marketing approval is obtained for either the removal of ticagrelor or direct oral anticoagulants indications, the device would be marketed as DrugSorb-ATR in the United States. The DrugSorb-ATR Antithrombotic Removal System is based on the same polymer technology as CytoSorb. In May 2022, the Company announced that the Company entered into a 3-year preferred supplier agreement with Asklepios, making CytoSorb available without restrictions to all of the approximate 170 healthcare facilities across 14 states throughout Germany at which Asklepios operates. This includes Asklepios Klinik St. Georg in Hamburg, Germany, which pioneered the use of CytoSorb to remove antithrombotic drugs during cardiothoracic surgery and is well-known for their seminal publication on CytoSorb use for this application during emergency cardiac surgery in patients at high risk of bleeding. In June 2022, the Company announced that, following a successful pilot program in three countries, the Company signed an expanded non-exclusive agreement with Nikkiso Europe GmbH (“Nikkiso”) to distribute Nikkiso’s PureADJUST stand-alone hemoperfusion pump and accessories in a total of 14 countries. In addition to securing the rights to sell Nikkiso’s stand-alone pump and accessories in Germany, Austria, and Luxembourg, the Company entered into an expanded multi-country reseller agreement with Nikkiso covering the following countries: Belgium, Bosnia and Herzegovina, Croatia, Finland, France, Iceland, Lichtenstein, Poland, Serbia, Slovenia and Switzerland. The Company will also be able to provide field support services in these countries. In August 2022, the Company entered into a Marketing Agreement (the “Marketing Agreement”) with Fresenius Medical Care Deutschland GmbH (“Fresenius”), which expands the Company’s strategic partnership with Fresenius by establishing a multi-stage global collaboration to combat life-threatening diseases in critical care. The Marketing Agreement provides for the combined marketing and promotion of CytoSorb with Fresenius’ critical care products by Fresenius’ marketing organization worldwide, excluding the United States. The Marketing Agreement has an initial term of three years, with an automatic renewal for an additional two years at the end of such initial term, subject to earlier termination by either of the parties (the “Term”). Compared to the prior co-marketing agreement between the parties, the Marketing Agreement intends to increase the commitments from both parties and to ensure an ongoing and consistent level of marketing and promotional activity specifically focused around CytoSorb, where Fresenius will actively market and promote CytoSorb as the featured blood purification therapy for removal of cytokines, bilirubin, and myoglobin on its critical care platforms. Specifically, the Marketing Agreement provides that various Fresenius-led in-person, virtual, social media, and web-based marketing programs and events will feature the CytoSorb therapy and highlight the cooperation between the two companies in the field of critical care during the Term. To help support the increased marketing and promotional efforts of the expanded collaboration, CytoSorbents has agreed to subsidize a portion of the marketing costs through a royalty payment to Fresenius Medical Care based on CytoSorb sales in the intensive care unit on Fresenius Medical Care platforms, excluding the United States. In addition to strengthening and expanding the global marketing of CytoSorb, the Company and Fresenius also plan to work together to bring new innovative solutions to the market. The Marketing Agreement also includes the certification of compatibility of CytoSorb for usage on Fresenius’ current critical care platforms. The launch of this program is expected to occur sometime in 2023. The technology is based upon biocompatible, highly porous polymer sorbent beads that can actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. The Company has numerous products under development based upon this unique blood purification technology, which is protected by 19 issued U.S. patents and multiple international patents, with applications pending both in the U.S. and internationally, including HemoDefend, ContrastSorb, DrugSorb, DrugSorb-ATR and others. These patents and patent applications are directed to various compositions and methods of use related to the Company’s blood purification technologies and are expected to expire between 2023 and 2038, absent any patent term extensions. Management believes that any near-term expiring patents will not have a significant impact on the Company’s ongoing business. |
Stock Market Listing | Stock Market Listing On December 17, 2014, the Company’s common stock, par value $0.001 per share, was approved for listing on the Nasdaq Capital Market (“Nasdaq”), and it began trading on Nasdaq on December 23, 2014, under the symbol “CTSO.” Previously, the Company’s common stock traded in the over-the-counter-market on the OTC Bulletin Board. |
Basis of Consolidation and Foreign Currency Translation | Basis of Consolidation and Foreign Currency Translation The consolidated financial statements include the accounts of CytoSorbents Corporation and its wholly owned subsidiaries, CytoSorbents Medical, Inc. and CytoSorbents Europe GmbH. In addition, the consolidated financial statements include CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o., CytoSorbents Medical UK Limited and CytoSorbents France SAS, wholly owned subsidiaries of CytoSorbents Europe GmbH, and CytoSorbents UK Limited, a wholly owned subsidiary of CytoSorbents Medical, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. Translation gains and losses resulting from the process of remeasuring into the United States Dollar, the foreign currency financial statements of the European subsidiary are included in operations. The Euro is the functional currency of the European Subsidiary. Foreign currency transaction gain (loss) included in net loss amounted to approximately $661,000 and $(1,213,000) for the three months ended March 31, 2023 and 2022, respectively. The Company translates assets and liabilities of all of its foreign subsidiaries at the exchange rate in effect at the consolidated balance sheet date. The Company translates revenue and expenses at the daily average exchange rates. The Company includes accumulated net translation adjustments in accumulated other comprehensive income as a component of stockholders’ equity. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The following table provides a summary of cash and cash equivalents and restricted cash to amounts shown in the consolidated balance sheets: March 31, 2023 December 31, 2022 Cash and cash equivalents $ 19,048,410 $ 22,144,567 Restricted cash 1,687,459 1,687,459 Total cash, cash equivalents and restricted cash $ 20,735,869 $ 23,832,026 |
Restricted Cash | Restricted Cash The Company’s total restricted cash in the amount of $1,687,459 consists of cash of $1,467,459 that the Company is obligated to maintain as collateral for the outstanding letter of credit with Bridge Bank that was provided to the landlord of the College Road facility as security and cash of $220,000 that the Company is obligated to maintain as collateral for the credit limit on the Company’s credit card accounts. |
Grants and Accounts Receivable | Grants and Accounts Receivable Grants receivable represent amounts due from U.S. government agencies and are included in Grants and Accounts Receivable. Accounts receivable are unsecured, non-interest bearing customer obligations due under normal trade terms. The Company sells its devices to various hospitals and distributors. The Company performs ongoing credit evaluations of its customers’ financial conditions. Management reviews accounts receivable periodically to determine collectability. Balances that are determined to be uncollectible are written off to the allowance for doubtful accounts. The allowance for doubtful accounts amounted to approximately $47,000 and $76,000 at March 31, 2023 and December 31, 2022, respectively. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value under the first in, first out (FIFO) method. At March 31, 2023 and December 31, 2022, the Company’s inventory was comprised of finished goods, which amounted to $839,033 and $1,567,871, respectively; work in process which amounted to $289,123 and $1,280,368, respectively; and raw materials, which amounted to $597,517 and $613,347, respectively. Devices used in clinical trials or for research and development purposes are removed from inventory and charged to research and development expenses at the time of their use. Donated devices are removed from inventory and charged to selling, general and administrative expenses. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation of property and equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of their economic useful lives or the term of the related leases. Gains and losses on depreciable assets retired or sold are recognized in the consolidated statements of operations and comprehensive loss in the year of disposal. Repairs and maintenance expenditures are expensed as incurred. |
Patents | Patents Legal costs incurred to establish and successfully defend patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the related patent term. In the event a patent is abandoned, the net book value of the patent is written off. |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets The Company assesses the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. There was no impairment recorded during the three months ended March 31, 2023. During the three months ended March 31, 2023 and 2022, the Company recorded an impairment charge of approximately $111,000 and $306,000, respectively, related to certain patent costs. This charge is included in legal, financial and other consulting in the consolidated statements of operations and comprehensive loss. |
Revenue Recognition | Revenue Recognition Product Sales Grant Revenue |
Research and Development | Research and Development All research and development costs, payments to laboratories and research consultants are expensed when incurred. |
Advertising Expenses | Advertising Expenses Advertising expenses are charged to activities when incurred. Advertising expenses amounted to approximately $55,000 and $81,000 for the three months ended March 31, 2023 and 2022, respectively, and are included in selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized. The Company has provided a valuation allowance against all deferred tax assets. Under Section 382 of the Internal Revenue Code, the net operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership. Additionally, net operating losses generated subsequent to the reverse merger may be limited in the event of changes in ownership. The Company follows accounting standards associated with uncertain tax positions. The Company had no unrecognized tax benefits at March 31, 2023 or December 31, 2022. The Company files tax returns in the U.S. federal and state jurisdictions. The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss carryforwards to an industrial company. CytoSorbents Europe GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o., CytoSorbents UK Limited, CytoSorbents Medical UK Limited and CytoSorbents France file an annual corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland, France and the United Kingdom, respectively. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets, liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The valuation of options granted, allowance for doubtful accounts and recoverability of patents are significant estimates in these consolidated financial statements. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). Beginning in April of 2023, the Company joined the IntraFi network, and established an Insured Cash Sweep (“ICS”) account whereby all cash that was previously held in the Company’s money market account at Bridge Bank is swept daily in increments of less than $250,000 and deposited in a number of IntraFi’s 4,000 member banks. This arrangement provides FDIC insurance coverage for all of the cash balances previously held in the money market account, which represents all of the cash and cash equivalents held at Bridge Bank. This arrangement excludes the restricted cash balances. Management monitors the soundness of these institutions in an effort to minimize its collection risk of these balances. A significant portion of the Company's revenues are from product sales in Germany. Substantially all of the Company's grant and other income are from government agencies in the United States. (See Note 4 for further information relating to the Company’s revenue.) As of March 31, 2023, two distributors accounted for approximately 30% of outstanding grants and accounts receivable. As of December 31, 2022, two distributors accounted for approximately 27% of outstanding grants and accounts receivable. For the three months ended March 31, 2023, one distributor accounted for approximately 11% of the Company’s total revenue and for the three months ended March 31, 2022, no customer accounted for more than 10% of the Company’s total revenue. |
Financial Instruments | Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term nature. |
Net Loss Per Common Share | Net Loss Per Common Share Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed using the treasury stock method on the basis of the weighted-average number of shares of common stock plus the dilutive effect of potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock options and restricted shares. The computation of diluted loss per share does not assume conversion, exercise or contingent exercise of securities that would have an anti-dilutive effect on earnings (see Note 8). |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based compensation under the recognition requirements of accounting standards for accounting for stock-based compensation, for employees and directors whereby each option granted is valued at fair market value on the date of grant. Under these accounting standards, the fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. The Company also follows the guidance of accounting standards for accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services for equity instruments issued to consultants. |
Shipping and Handling Costs | Shipping and Handling Costs The cost of shipping product to customers and distributors is typically borne by the customer or distributor. The Company records other shipping and handling costs in cost of revenue. Total freight costs amounted to approximately $78,000 and $68,000, respectively, for the three months ended March 31, 2023 and 2022. |
Effect of Recent Accounting Pronouncements | Effect of Recent Accounting Pronouncements In June 2016, the FASB, issued ASU No. 2016-13 entitled, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU provides guidance on the calculation of credit losses, which includes the allowance for doubtful accounts on trade accounts receivable. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2022. The Company implemented the updated guidance during the three months ended March 31, 2023 and this did not have significant impact on its consolidated financial statements. |
PRINCIPAL BUSINESS ACTIVITY A_3
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of reconciliation of cash and cash equivalents and restricted cash and cash equivalents | March 31, 2023 December 31, 2022 Cash and cash equivalents $ 19,048,410 $ 22,144,567 Restricted cash 1,687,459 1,687,459 Total cash, cash equivalents and restricted cash $ 20,735,869 $ 23,832,026 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
Schedule of stock options activity | The summary of the stock option activity for the three months ended March 31, 2023, is as follows: Weighted Weighted Average Average Remaining Exercise Price Contractual Shares per Share Life (Years) Outstanding, December 31, 2022 8,109,824 $ 5.11 6.91 Granted 100,000 $ 2.65 — Forfeited (326,539) $ 2.40 — Expired (186,309) $ 4.75 — Exercised (18,000) $ 2.36 — Outstanding, March 31, 2023 7,678,976 $ 5.21 6.60 |
Schedule of intrinsic value | The intrinsic value is calculated as the difference between the market value of the shares as of March 31, 2023, of $3.37 and the exercise price of the shares. Options Outstanding Number Weighted Weighted Range of Outstanding at Average Average Aggregate Exercise March 31, Exercise Remaining Intrinsic Price 2023 Price Life (Years) Value $1.11 - $13.20 7,678,976 $ 5.21 6.60 $ 3,340,513 Options Exercisable Number Weighted Exercisable at Average Aggregate March 31, Exercise Intrinsic 2023 Price Value 5,306,799 $ 6.03 $ 851,555 |
Schedule of Company's non-vested options | The summary of the status of the Company’s non-vested options for the three months ended March 31, 2023, is as follows: Weighted Average Grant Date Shares Fair Value Non-vested, December 31, 2022 3,486,739 $ 2.10 Granted 100,000 $ 1.73 Forfeited (326,539) $ 1.44 Vested (888,023) $ 2.55 Non-vested, March 31, 2023 2,372,177 $ 2.00 |
Schedule of restricted stock unit | Restricted Stock Units Board of Executive Other Directors Management Employees Total Intrinsic Value December 31, 2022 346,500 779,500 1,764,500 2,890,500 $ 4,480,275 Granted — — 58,000 58,000 Forfeited — — (114,250) (114,250) March 31, 2023 346,500 779,500 1,708,250 2,834,250 $ 9,551,423 |
Schedule of the restricted stock unit activity | Weighted Average Grant Date Shares Fair Value Non-vested, December 31, 2022 312,092 $ 4.42 Granted 30,000 $ 2.14 Non-vested, March 31, 2023 342,092 $ 4.22 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE | |
Schedule of disaggregation of Revenue | The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended March 31, 2023: United States Distributors/ Government Direct Strategic Partners Agencies Total Product sales: United States $ 3,770 $ — $ — $ 3,770 Germany 3,337,904 — — 3,337,904 All other countries 1,502,599 3,065,766 — 4,568,365 Total product revenue 4,844,273 3,065,766 — 7,910,039 Grant and other income: United States — — 1,539,457 1,539,457 Total revenue $ 4,844,273 $ 3,065,766 $ 1,539,457 $ 9,449,496 The following table disaggregates the Company's revenue by customer type and geographic area for the three months ended March 31, 2022: United States Distributors/ Government Direct Strategic Partners Agencies Total Product sales: United States $ 57,592 $ 154,750 $ — $ 212,342 Germany 3,783,526 — — 3,783,526 All other countries 1,204,932 2,723,657 — 3,928,589 Total product revenue 5,046,050 2,878,407 — 7,924,457 Grant and other income: United States — — 766,967 766,967 Total revenue $ 5,046,050 $ 2,878,407 $ 766,967 $ 8,691,424 |
Schedule of receivables and contract liabilities from contracts with customers | March 31, 2023 December 31, 2022 Contract receivables, which are included in grants and accounts receivable $ 4,005,019 $ 3,822,452 Contract liabilities, which are included in accrued expenses and other current liabilities $ 1,617,195 $ 1,682,837 |
LONG-TERM DEBT, NET (Tables)
LONG-TERM DEBT, NET (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LONG-TERM DEBT, NET | |
Schedule of Long-term debt | Long-term debt consists of the following as of March 31, 2023: Principal amount $ 5,000,000 Accrued final fee 10,714 Subtotal 5,010,714 Less Current maturities — Long-term debt net of current maturities $ 5,010,714 |
Schedule of Principal payments of long-term debt | Principal payments of long-term debt are due as follows during the periods ending March 31: 2024 $ — 2025 2,500,000 2026 2,500,000 Total $ 5,000,000 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
Schedule of right-of- use asset and related lease liability | March 31, December 31, 2023 2022 Right-of-use asset $ 12,469,905 $ 12,603,901 Total lease liability $ 13,172,387 $ 13,250,944 Less current portion (111,627) (108,939) Lease liability, net of current portion $ 13,060,760 $ 13,142,005 |
Schedule of maturities of the lease liabilities | The maturities of the lease liabilities are as follows as of March 31, 2023: 2024 $ 1,275,860 2025 1,666,361 2026 1,705,626 2027 1,745,970 2028 1,787,423 Thereafter 16,780,192 Total lease payments 24,961,432 Present value discount (11,789,045) Total $ 13,172,387 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
BASIS OF PRESENTATION | ||||
Cash and cash equivalents balances | $ 20,735,869 | $ 23,832,026 | $ 44,710,273 | $ 53,825,166 |
PRINCIPAL BUSINESS ACTIVITY A_4
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
May 31, 2022 Institution state | Mar. 31, 2023 USD ($) country patent item | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Mar. 31, 2023 USN ($) patent | |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Number of countries where the entity's flagship product is marketed and distributed | country | 75 | ||||
Preferred supplier agreement term | 3 years | ||||
Number of healthcare facilities | Institution | 170 | ||||
Number of states healthcare facilities across throughout Germany | state | 14 | ||||
Number of patents | patent | 19 | 19 | |||
Foreign currency transaction gain (loss) | $ 661,000 | $ (1,213,000) | |||
Restricted cash | 1,687,459 | $ 1,687,459 | |||
Allowance for doubtful accounts | 47,000 | 76,000 | |||
Inventory - finished goods | 839,033 | 1,567,871 | |||
Inventory - work in process | 1,280,368 | $ 289,123 | |||
Inventory - raw materials | 597,517 | 613,347 | |||
Impairment charges | 111,000 | 306,000 | |||
Impairment charges for long live assets | 0 | ||||
Advertising expenses | 55,000 | $ 81,000 | |||
Unrecognized tax benefits | $ 0 | $ 0 | |||
Concentration risk | 11% | 10% | |||
Cost of revenue | $ 3,994,169 | $ 2,277,636 | |||
Number of member bank | item | 4,000 | ||||
Maximum | |||||
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cash, FDIC insured amount | $ 250,000 | ||||
Letter of credit | |||||
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cash collateral | 1,467,459 | ||||
Credit Card | |||||
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cash collateral | 220,000 | ||||
Cargo and Freight | |||||
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Cost of revenue | $ 78,000 | $ 68,000 | |||
Accounts Receivable | One Distributor/strategic partner | |||||
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Concentration risk | 30% | 27% |
PRINCIPAL BUSINESS ACTIVITY A_5
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and cash equivalents (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Cash and cash equivalents | $ 19,048,410 | $ 22,144,567 | ||
Restricted cash | 1,687,459 | 1,687,459 | ||
Total cash, cash equivalents and restricted cash | $ 20,735,869 | $ 23,832,026 | $ 44,710,273 | $ 53,825,166 |
STOCKHOLDERS' EQUITY - Stock op
STOCKHOLDERS' EQUITY - Stock option activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Shares | ||
Outstanding, beginning of the year | 8,109,824 | |
Granted | 100,000 | |
Forfeited | (326,539) | |
Expired | (186,309) | |
Exercised | (18,000) | |
Outstanding, end of the year | 7,678,976 | 8,109,824 |
Weighted Average Exercise Price per Share | ||
Outstanding, beginning of the year | $ 5.11 | |
Granted | 2.65 | |
Forfeited | 2.40 | |
Expired | 4.75 | |
Exercised | 2.36 | |
Outstanding, end of the year | $ 5.21 | $ 5.11 |
Weighted Average Remaining Contractual Life (Years) | ||
Outstanding, beginning of the year | 6 years 10 months 28 days | |
Granted | 0 years | |
Forfeited | 0 years | |
Expired | 0 years | |
Exercised | 0 years | |
Outstanding, end of the year | 6 years 7 months 6 days |
STOCKHOLDERS' EQUITY - Intrinsi
STOCKHOLDERS' EQUITY - Intrinsic value (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Options Exercisable | |
Number Exercisable at December 31, 2022 | shares | 5,306,799 |
Weighted Average Exercise Price | $ 6.03 |
Aggregate Intrinsic Value | $ | $ 851,555 |
Exercise Price Range One | |
Options Outstanding | |
Range of Exercise Price, Lower Range Limit | $ 1.11 |
Range of Exercise Price, Upper Range Limit | $ 13.20 |
Number Outstanding at December 31, 2022 | shares | 7,678,976 |
Weighted Average Exercise Price | $ 5.21 |
Weighted Average Remaining Life (Years) | 6 years 7 months 6 days |
Aggregate Intrinsic Value | $ | $ 3,340,513 |
STOCKHOLDERS' EQUITY - Non-vest
STOCKHOLDERS' EQUITY - Non-vested options (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Shares | |
Non-vested, January 1, 2022 | shares | 3,486,739 |
Granted | shares | 100,000 |
Forfeited | shares | (326,539) |
Vested | shares | (888,023) |
Non-vested, December 31, 2022 | shares | 2,372,177 |
Weighted Average Grant Date Fair Value | |
Non-vested, January 1, 2022 | $ / shares | $ 2.10 |
Granted | $ / shares | 1.73 |
Forfeited | $ / shares | 1.44 |
Vested | $ / shares | 2.55 |
Non-vested, December 31, 2022 | $ / shares | $ 2 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted stock unit (Details) - Restricted stock | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
STOCKHOLDERS' EQUITY | |
Restricted Stock Units, Beginning Balance | 2,890,500 |
Restricted Stock Units, Intrinsic Value Beginning Balance | $ | $ 4,480,275 |
Granted | 58,000 |
Forfeited | (114,250) |
Restricted Stock Units, Ending Balance | 2,834,250 |
Restricted Stock Units, Intrinsic Value Ending Balance | $ | $ 9,551,423 |
Non-vested, December 1, 2022 | 312,092 |
Non-vested, March 31, 2023 | $ / shares | $ 4.22 |
Board of directors | |
STOCKHOLDERS' EQUITY | |
Restricted Stock Units, Beginning Balance | 346,500 |
Granted | 0 |
Forfeited | 0 |
Restricted Stock Units, Ending Balance | 346,500 |
Management [Member] | |
STOCKHOLDERS' EQUITY | |
Restricted Stock Units, Beginning Balance | 779,500 |
Granted | 0 |
Forfeited | 0 |
Restricted Stock Units, Ending Balance | 779,500 |
Other Employees | |
STOCKHOLDERS' EQUITY | |
Restricted Stock Units, Beginning Balance | 1,764,500 |
Granted | 58,000 |
Forfeited | (114,250) |
Restricted Stock Units, Ending Balance | 1,708,250 |
STOCKHOLDERS' EQUITY - Restri_2
STOCKHOLDERS' EQUITY - Restricted stock unit activity (Details) - Restricted stock | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Shares | |
Non-vested, December 1, 2022 | shares | 312,092 |
Granted | shares | 30,000 |
Non-vested, December 31, 2022 | shares | 342,092 |
Weighted Average Grant Date Fair Value | |
Non-vested, January 1, 2022 | $ / shares | $ 4.42 |
Granted | $ / shares | 2.14 |
Non-vested, March 31, 2023 | $ / shares | $ 4.22 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Aug. 10, 2022 | Dec. 30, 2021 | Apr. 12, 2021 | Feb. 28, 2020 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 14, 2021 | Jun. 30, 2019 | |
STOCKHOLDERS' EQUITY | ||||||||||
Number of preferred stock authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||||
Common Stock, shares authorized | 100,000,000 | 100,000,000 | ||||||||
Aggregate registered amount for offerings | $ 150,000,000 | |||||||||
Number of option granted | 100,000 | |||||||||
Allocated share-based compensation expense | $ 830,000 | $ 787,000 | ||||||||
Grant date exercise price range | $ 3.37 | |||||||||
Expected life of the stock option | 6 years | |||||||||
Current price of the underlying stock and its expected volatility range | 70.40% | |||||||||
Expected dividends | 0% | |||||||||
Total unrecognized compensation cost related to stock options | $ 3,781,000 | |||||||||
Amortized period | 47 months | |||||||||
Vested | (888,023) | |||||||||
Issuance of restricted stock units | 106,269 | |||||||||
Outstanding | 7,678,976 | 8,109,824 | ||||||||
Forfeited | 326,539 | |||||||||
Maximum | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Common Stock, shares authorized | 100,000,000 | |||||||||
Minimum | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Common Stock, shares authorized | 50,000,000 | |||||||||
Restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 30,000 | 91,750 | ||||||||
Stock issued during period, value, restricted stock sward, gross | $ 563,000 | $ 778,068 | ||||||||
Vesting period | 4 years | |||||||||
Issuance of restricted stock units | $ 27,000 | $ 47,000 | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Aggregate Intrinsic Value, Forfeited | $ 375,750 | |||||||||
Restricted stock | First 30,000 restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 30,000 | |||||||||
Restricted stock | Second 45,000 restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 45,000 | |||||||||
Restricted stock | First anniversary of the date of the grant | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 46,750 | |||||||||
Restricted stock | Second anniversary of the date of the grant | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Vesting percentage | 33% | |||||||||
Restricted stock | Third anniversary of the date of the grant | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Vesting percentage | 33% | |||||||||
Restricted stock | Fourth anniversary of the date of the grant | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Vesting percentage | 33% | |||||||||
Senior manager two | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Aggregate Intrinsic Value | 1,620,000 | |||||||||
Grant date fair value of these unvested options | 1,620,000 | |||||||||
Senior manager two | Employee stock options | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Number of option granted | 1,365,000 | |||||||||
July 22, 2019 performance-based award | Restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 288,500 | |||||||||
Issuance of restricted stock units | 0 | |||||||||
February 28 2020 performance based award | Restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 168,100 | |||||||||
Stock issued during period, value, restricted stock sward, gross | $ 1,014,000 | |||||||||
Issuance of restricted stock units | $ 65,000 | |||||||||
April 12, 2021 performance based award | Restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Stock issued during period, shares, restricted stock award, gross | 235,765 | |||||||||
Stock issued during period, value, restricted stock sward, gross | $ 2,120,000 | |||||||||
Issuance of restricted stock units | 177,000 | 177,000 | ||||||||
August 12, 2022 Performance Based Award | Restricted stock | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Issuance of restricted stock units | $ 47,000 | $ 0 | ||||||||
Jefferies LLC and B. Riley FBR, Inc | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Issuance of common stock | 197,665 | |||||||||
Net proceeds | $ 698,000 | |||||||||
Aggregate offering price | $ 25,000,000 | |||||||||
Net proceeds from issuance of stock | $ 57,000 | $ 90,000 | ||||||||
Commission rate (as a percent) | 3% | |||||||||
Exercise Price Ranging From 1.52 To 2.52 | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Risk Free Interest Rate, minimum | 3.54% | |||||||||
Risk Free Interest Rate Range | 4.22% | |||||||||
Exercise price ranging from 1.11 to 3.91 | Maximum | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Grant date exercise price range | $ 3.50 | |||||||||
Exercise price ranging from 1.11 to 3.91 | Minimum | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Grant date exercise price range | $ 1.55 |
REVENUE - Revenue by customer t
REVENUE - Revenue by customer type and geographic area (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Product sales: | ||
Total revenue | $ 9,449,496 | $ 8,691,424 |
Total product sales | ||
Product sales: | ||
Total revenue | 7,910,039 | 7,924,457 |
Grant income | ||
Product sales: | ||
Total revenue | 1,539,457 | 766,967 |
United States | ||
Product sales: | ||
Total revenue | 212,342 | |
United States | Total product sales | ||
Product sales: | ||
Total revenue | 3,770 | |
United States | Grant income | ||
Product sales: | ||
Total revenue | 1,539,457 | 766,967 |
Germany | ||
Product sales: | ||
Total revenue | 3,783,526 | |
Germany | Total product sales | ||
Product sales: | ||
Total revenue | 3,337,904 | |
All other countries | ||
Product sales: | ||
Total revenue | 3,928,589 | |
All other countries | Total product sales | ||
Product sales: | ||
Total revenue | 4,568,365 | |
Direct | ||
Product sales: | ||
Total revenue | 4,844,273 | 5,046,050 |
Direct | Total product sales | ||
Product sales: | ||
Total revenue | 4,844,273 | 5,046,050 |
Direct | United States | ||
Product sales: | ||
Total revenue | 57,592 | |
Direct | United States | Total product sales | ||
Product sales: | ||
Total revenue | 3,770 | |
Direct | Germany | ||
Product sales: | ||
Total revenue | 3,783,526 | |
Direct | Germany | Total product sales | ||
Product sales: | ||
Total revenue | 3,337,904 | |
Direct | All other countries | ||
Product sales: | ||
Total revenue | 1,204,932 | |
Direct | All other countries | Total product sales | ||
Product sales: | ||
Total revenue | 1,502,599 | |
Distributors/Strategic Partners | ||
Product sales: | ||
Total revenue | 3,065,766 | 2,878,407 |
Distributors/Strategic Partners | Total product sales | ||
Product sales: | ||
Total revenue | 3,065,766 | 2,878,407 |
Distributors/Strategic Partners | United States | ||
Product sales: | ||
Total revenue | 154,750 | |
Distributors/Strategic Partners | All other countries | ||
Product sales: | ||
Total revenue | 2,723,657 | |
Distributors/Strategic Partners | All other countries | Total product sales | ||
Product sales: | ||
Total revenue | 3,065,766 | |
United States Government Agencies | ||
Product sales: | ||
Total revenue | 1,539,457 | 766,967 |
United States Government Agencies | United States | Grant income | ||
Product sales: | ||
Total revenue | $ 1,539,457 | $ 766,967 |
REVENUE - Receivables and contr
REVENUE - Receivables and contract liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
REVENUE | ||
Contract receivables, which are included in grants and accounts receivable | $ 4,005,019 | $ 3,822,452 |
Contract liabilities, which are included in accrued expenses and other current liabilities | $ 1,617,195 | $ 1,682,837 |
REVENUE - Additional informatio
REVENUE - Additional information (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | |
REVENUE | ||
Number of primary revenue streams | segment | 2 | |
Term of customer contracts | 3 years | |
Value of free of charge goods and credit rebates | $ 176,647 | $ 166,065 |
Contract liabilities net of Value of free of charge goods and credit rebates | 1,440,548 | 1,516,772 |
Contract receivables, which are included in grants and accounts receivable | 4,005,019 | 3,822,452 |
Product sales | ||
REVENUE | ||
Contract receivables, which are included in grants and accounts receivable | 3,329,854 | 2,944,031 |
Government grants | ||
REVENUE | ||
Contract receivables, which are included in grants and accounts receivable | $ 675,165 | $ 878,421 |
Maximum | ||
REVENUE | ||
Term of customer contracts | 5 years | |
Minimum | ||
REVENUE | ||
Term of customer contracts | 1 year |
LONG-TERM DEBT, NET - Additiona
LONG-TERM DEBT, NET - Additional information (Details) - USD ($) | 3 Months Ended | ||||||||
Jul. 01, 2024 | Jan. 01, 2024 | Dec. 27, 2022 | Dec. 04, 2020 | Jul. 31, 2019 | Mar. 31, 2023 | Jan. 19, 2022 | Mar. 29, 2018 | Jun. 30, 2016 | |
LONG-TERM DEBT | |||||||||
Long-term debt | $ 5,010,714 | ||||||||
Non-refundable fee percent | 2.50% | ||||||||
First Anniversary | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of debt instrument principal amount | 2% | ||||||||
Second Anniversary | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of debt instrument principal amount | 1.50% | ||||||||
Subsequent to second anniversary | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of debt instrument principal amount | 1% | ||||||||
Term C Loan | |||||||||
LONG-TERM DEBT | |||||||||
Interest rate cap | 3.25% | ||||||||
Amount drawn down | $ 5,000,000 | ||||||||
Non refundable Closing Fee | |||||||||
LONG-TERM DEBT | |||||||||
Debt issuance costs | $ 18,750 | ||||||||
2022 Success Fee Letter | First Tranche | |||||||||
LONG-TERM DEBT | |||||||||
Maximum borrowing capacity | $ 5,000,000 | ||||||||
Percentage of success fee | 1% | ||||||||
Average selling price | $ 8 | ||||||||
Number of days for stock price threshold set in success fee letter | 5 days | ||||||||
2022 Success Fee Letter | Second Tranche | |||||||||
LONG-TERM DEBT | |||||||||
Maximum borrowing capacity | $ 5,000,000 | ||||||||
Percentage of success fee | 1.50% | ||||||||
Average selling price | $ 10 | ||||||||
Number of days for stock price threshold set in success fee letter | 5 days | ||||||||
2022 Success Fee Letter | Third Tranche | |||||||||
LONG-TERM DEBT | |||||||||
Maximum borrowing capacity | $ 5,000,000 | ||||||||
Percentage of success fee | 2% | ||||||||
Average selling price | $ 12 | ||||||||
Number of days for stock price threshold set in success fee letter | 5 days | ||||||||
Western Alliance Bank | |||||||||
LONG-TERM DEBT | |||||||||
Debt instrument , Face amount | $ 15,000,000 | $ 10,000,000 | |||||||
Repayments of debt | $ 15,000,000 | ||||||||
Western Alliance Bank | Forecast | |||||||||
LONG-TERM DEBT | |||||||||
Equal monthly payments of principal with accrued and unpaid interest payable | $ 277,778 | $ 208,333 | |||||||
Western Alliance Bank | Closing Fee | |||||||||
LONG-TERM DEBT | |||||||||
Debt issuance costs | $ 75,000 | ||||||||
Western Alliance Bank | Final Fee | |||||||||
LONG-TERM DEBT | |||||||||
Debt issuance costs | $ 10,714 | ||||||||
Western Alliance Bank | New Term Loan | |||||||||
LONG-TERM DEBT | |||||||||
Debt instrument , Face amount | 15,000,000 | $ 15,000,000 | $ 5,000,000 | ||||||
Rate of interest added to reference rate as per debt agreement | 1.25% | ||||||||
Western Alliance Bank | Term A Loan | |||||||||
LONG-TERM DEBT | |||||||||
Debt instrument , Face amount | 10,000,000 | ||||||||
Western Alliance Bank | Term B Loan | |||||||||
LONG-TERM DEBT | |||||||||
Debt instrument , Face amount | $ 5,000,000 | ||||||||
Repayments of debt | $ 5,000,000 | ||||||||
Long-term debt | $ 15,000,000 | ||||||||
Western Alliance Bank | Term C Loan | |||||||||
LONG-TERM DEBT | |||||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||||
Current borrowing capacity | $ 5,000,000 | ||||||||
Interest rate cap | 8% | ||||||||
Western Alliance Bank | 2018 Success Fee Letter | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of success fee | 6.37% | ||||||||
Average selling price | $ 7.05 | ||||||||
Number of days for stock price threshold set in success fee letter | 5 days | ||||||||
Western Alliance Bank | 2018 Success Fee Letter | Minimum | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of closing price on common stock | 26.13% | ||||||||
Western Alliance Bank | 2018 Success Fee Letter | Maximum | |||||||||
LONG-TERM DEBT | |||||||||
Percentage of closing price on common stock | 70% |
LONG-TERM DEBT, NET (Details)
LONG-TERM DEBT, NET (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
LONG-TERM DEBT, NET | ||
Principal amount | $ 5,000,000 | |
Accrued final fee | 10,714 | |
Subtotal | $ 5,010,714 | |
Long-term debt net of current maturities | $ 5,000,000 |
LONG-TERM DEBT, NET - Principal
LONG-TERM DEBT, NET - Principal payments (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
LONG-TERM DEBT, NET | ||
2025 | $ 2,500,000 | |
2026 | $ 2,500,000 | |
Total | $ 5,000,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | |||||
Aug. 11, 2003 | Mar. 31, 2023 | Mar. 31, 2022 | Jan. 01, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||||||
Accrued tax liability | $ 598,000 | |||||
Initial term (in years) | 3 years | |||||
Automatic renewal period for employment agreements | 1 year | |||||
Additional automatic renewed period for employment agreements | 1 year | |||||
Percentage of royalty | 0.90% | |||||
Payroll Tax Audit | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Accrued tax liability | $ 90,000 | $ 173,000 | ||||
Additional Social Security and VAT Taxes | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Accrued tax liability | $ 83,000 | |||||
Royalty Agreements | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Equity investment by an existing investor | $ 4,000,000 | |||||
Future royalty payment percentage on gross revenue | 3% | |||||
Royalty cost | $ 234,000 | $ 232,000 | ||||
License Agreement | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Royalty cost | $ 390,000 | $ 387,000 | ||||
Term of license agreement | 18 years | |||||
Royalty rate, lower limit | 2.50% | |||||
Royalty rate, upper limit | 5% |
LEASES (Details)
LEASES (Details) | 1 Months Ended | 3 Months Ended | ||||||
Sep. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) item | Jan. 31, 2021 USD ($) m² | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | Apr. 30, 2021 USD ($) | Apr. 01, 2021 USD ($) | |
LEASES: | ||||||||
Operating lease lability | $ 13,172,387 | $ 13,250,944 | ||||||
Right of use asset | $ 12,469,905 | $ 12,603,901 | ||||||
Incremental borrowing rate | 9.80% | |||||||
Operating lease paid | $ 633,000 | $ 713,000 | ||||||
Weighted average remaining lease term | 13 years 4 months 24 days | 13 years 7 months 6 days | ||||||
CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Number of times lease renewal options available | item | 2 | |||||||
Renewal term | 5 years | |||||||
Rent abatement term | 6 months | |||||||
CytoSorbents Europe GmbH | ||||||||
LEASES: | ||||||||
Monthly payments of base rent and other costs | $ 7,784 | |||||||
Operating lease lability | $ 594,000 | |||||||
Right of use asset | 594,000 | |||||||
Area of Land | m² | 1,068 | |||||||
Other costs | $ 239 | |||||||
Lease term | 5 years | |||||||
Existence of option to extend | true | |||||||
Additional lessee operating lease term of contract option to extend | 5 years | |||||||
United States | CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Remaining lease term | 15 years 6 months | |||||||
Annual rent expense increment rate | 2.75% | |||||||
Percentage of total building space occupied | 92.30% | |||||||
Allowance for building improvement | $ 1,455,000 | |||||||
Operating lease lability | 11,600,000 | |||||||
Right of use asset | $ 11,600,000 | |||||||
Incremental borrowing rate | 9.80% | |||||||
United States | Letter of credit | CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Security amount | $ 1,467,000 | |||||||
United States | Initial early term | CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Monthly payments of base rent and other costs | 25,208 | |||||||
United States | Early term | CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Monthly payments of base rent and other costs | 88,254 | |||||||
United States | Early term | CytoSorbents Medical, Inc | ||||||||
LEASES: | ||||||||
Monthly payments of base rent and other costs | $ 111,171 | |||||||
Germany | ||||||||
LEASES: | ||||||||
Monthly payments of base rent and other costs | $ 12,100 | |||||||
Additional operating leases rent expense | $ 3,000 |
LEASES - Right-of- use asset an
LEASES - Right-of- use asset and related lease liability (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
Right-of-use asset | $ 12,469,905 | $ 12,603,901 |
Total lease liability | 13,172,387 | 13,250,944 |
Less current portion | (111,627) | (108,939) |
Lease liability, net of current portion | $ 13,060,760 | $ 13,142,005 |
LEASES - Maturities of the leas
LEASES - Maturities of the lease liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
2024 | $ 1,275,860 | |
2025 | 1,666,361 | |
2026 | 1,705,626 | |
2027 | 1,745,970 | |
2028 | 1,787,423 | |
Thereafter | 16,780,192 | |
Total lease payments | 24,961,432 | |
Present value discount | (11,789,045) | |
Total lease liability | $ 13,172,387 | $ 13,250,944 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock options and warrants | ||
NET LOSS PER SHARE | ||
Antidilutive securities excluded from computation of earnings per share | 10,855,000 | 8,825,000 |