Cytosorbents Annual Report 2019

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FY2019 Annual Report · Cytosorbents

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-K

(Mark One)
☒

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-36792

CYTOSORBENTS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or
organization)

98-0373793
(I.R.S. Employer Identification No.)

7 Deer Park Drive, Suite K
Monmouth Junction, New Jersey 08852
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (732) 329-8885

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol

Name of each exchange on which registered:

Common Stock, $0.001 par value

CTSO

The Nasdaq Stock Market LLC (Nasdaq Capital
Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
þ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files).
þ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in
Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐
Non-accelerated Filer ☐

Accelerated Filer þ
Smaller reporting company þ
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
☐ Yes þ No

The aggregate market value of the common stock of the registrant held by non-affiliates as of June 30, 2019 was approximately $178,694,000 based upon the
closing price reported for such date on the Nasdaq Capital Market. As of March 2, 2020, there were outstanding 35,051,193 shares of the registrant’s common
stock.

Documents incorporated by reference:

Portions of the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the registrant’s fiscal year are
incorporated by reference into Part III of this Form 10-K and certain documents are incorporated by reference into Part IV of this Form 10-K.

CYTOSORBENTS CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

Page

PART I

Item 1. Business.

Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments.

Item 2. Properties.

Item 3. Legal Proceedings.

Item 4. Mine Safety Disclosures.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6. Selected Financial Data.

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

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

Item 8. Financial Statements and Supplementary Data.

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

Item 9A. Controls and Procedures.

Item 9B. Other Information.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

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

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

Item 14. Principal Accounting Fees and Services.

Part IV

Item 15. Exhibits, Financial Statement Schedules.

Item 16. Form 10-K Summary

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. For discussion of factors
that we believe could cause our actual results to differ materially from expected and historical results see “Item 1A — Risk Factors” below.

TRADEMARKS

This Report includes our trademarks and trade names, such as CytoSorb®, BetaSorb™, HemoDefend™, K+ontrolTM and VetResQ™, which are
protected under applicable intellectual property laws and are the property of CytoSorbents Corporation and its subsidiaries. This Report also contains the
trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade
names and service marks referred to in this Report may appear without the ™, ®, or SM symbols, but such references are not intended to indicate, in any way,
that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, trade names and service
marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be
construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Item 1. Business.

Overview

PART I

We are a leader in critical care immunotherapy, investigating and commercializing our CytoSorb blood purification technology to reduce deadly
uncontrolled inflammation in hospitalized patients around the world, with the goal of preventing or treating multiple organ failure in life-threatening illnesses
and cardiac surgery. Organ failure is the cause of nearly half of all deaths in the intensive care unit (“ICU”), with little to improve clinical outcome. CytoSorb,
our flagship product, is approved in the European Union (“EU”) as a safe and effective extracorporeal cytokine filter and is designed to reduce the “cytokine
storm” that could otherwise cause massive inflammation, organ failure and death in common critical illnesses such as sepsis, burn injury, trauma, lung injury,
and pancreatitis. These are conditions where the mortality is extremely high, yet no effective treatments exist. In May 2018, we received a label expansion for
CytoSorb covering use of the device for the removal of bilirubin and myoglobin in the treatment of liver disease and trauma, respectively. In January 2020,
we received a further label expansion for CytoSorb covering the use of the device for the removal of the anti-platelet agent, ticagrelor, in patients undergoing
surgery requiring cardiopulmonary bypass. CytoSorb is used during and after cardiac surgery to remove inflammatory mediators, such as cytokines, activated
compliment and free hemoglobin that can lead to post-operative complications, such as acute kidney injury, lung injury, shock, and stroke. We believe
CytoSorb has the potential to be used in many other inflammatory conditions, including the treatment of autoimmune disease flares, cytokine release
syndrome in cancer immunotherapy, and other applications in cancer, such as cancer cachexia. CytoSorb has been used globally in more than 80,000 human
treatments to date in critical illnesses and in cardiac surgery. Our purification technologies are based on biocompatible, highly porous polymer beads that can
actively remove toxic substances from blood and other bodily fluids by pore capture and surface adsorption. . The technology is protected by 21 issued U.S.
patents and multiple international patents, with applications pending both in the U.S. and internationally. We have numerous product candidates under
development based upon this unique blood purification technology, including HemoDefend, ContrastSorb, DrugSorb, and others.

In March 2011, CytoSorb was “CE Marked” in the EU as an extracorporeal cytokine filter indicated for use in clinical situations where cytokines are
elevated, allowing for commercial marketing. The CE Mark demonstrates that a conformity assessment has been carried out and the product complies with
the Medical Devices Directive. The goal of CytoSorb is to prevent or treat organ failure by reducing cytokine storm and the potentially deadly systemic
inflammatory response syndrome (“SIRS”) in diseases such as sepsis, trauma, burn injury, acute respiratory distress syndrome, pancreatitis, liver failure, and
many others. Organ failure is the leading cause of death in the ICU, and remains a major unmet medical need, with little more than supportive care therapy
(e.g., mechanical ventilation, dialysis, vasopressors, fluid support, etc.) as treatment options. By potentially preventing or treating organ failure, CytoSorb
may improve clinical outcome, including survival, while reducing the need for costly ICU treatment, thereby potentially saving significant healthcare costs.

Our CE Mark enables CytoSorb to be sold throughout the European Union and member states of the European Economic Area. In addition, many
countries outside the EU accept the CE Mark for medical devices, but may also require registration with or without additional clinical studies. The broad
indication for which CytoSorb is CE marked allows it to be used “on-label” in diseases where cytokines are elevated including, but not limited to, critical
illnesses such as those mentioned above, autoimmune disease flares, cancer cachexia, and many other conditions where cytokine-induced inflammation plays
a detrimental role.

Cytokines are small proteins that normally stimulate and regulate the immune response. However, in certain diseases, particularly life-threatening
conditions commonly seen in the ICU, such as sepsis and infection, trauma, acute respiratory distress syndrome (“ARDS”), severe burn injury, liver failure,
and acute pancreatitis, cytokines are often produced in vast excess – a condition often called cytokine storm. Left unchecked, this cytokine storm can lead to a
severe maladaptive SIRS that can then cause cell death, multiple organ dysfunction syndrome, and multiple organ failure. Failure of vital organs such as the
heart, lungs, and kidneys, accounts for nearly half of all deaths in the ICU, despite the wide availability of supportive care therapies, or “life support”, such as
dialysis, mechanical ventilation, extracorporeal membrane oxygenation, and vasopressors. By replacing the function of failed organs, these supportive care
therapies can initially help to keep patients alive, but do not help patients recover faster, and in many cases can increase the risk of dangerous complications.
Unlike these supportive care therapies, the goal of the CytoSorb cytokine filter is to proactively prevent or treat organ failure by reducing cytokine storm and
reducing the maladaptive SIRS response. In doing so, CytoSorb targets the reduction in the severity of patient illness and the need for intensive care, while
potentially improving clinical outcome and saving healthcare costs.

As part of the CE Mark approval process, we completed our randomized, controlled, European Sepsis Trial amongst 14 trial sites in Germany in
2011, with enrollment of 100 patients with sepsis and respiratory failure. The trial established that CytoSorb was sufficiently safe in this critically-ill
population, and that it was able to broadly reduce key cytokines in the blood of these patients. We plan to conduct larger, prospective studies in septic patients
in the future to confirm the European Sepsis Trial findings.

In addition to CE Marking, we also achieved ISO 13485:2003 Full Quality Systems certification, an internationally recognized quality standard
designed to ensure that medical device manufacturers have the necessary comprehensive management systems in place to safely design, develop, manufacture
and distribute medical devices in the EU. We manufacture CytoSorb at our manufacturing facilities in New Jersey for commercial sales abroad and for
additional clinical studies, the expansion of which we officially completed in June 2018. Upon expanding our facility we quadrupled our manufacturing
capacity and completed an audit upgrade from an ISO 13485:2003 certification to an ISO 13485:2016 certification.

In late June 2012, following the establishment of our European subsidiary, CytoSorbents Europe GmbH, a wholly-owned operating subsidiary of
CytoSorbents Corporation, we began the commercial launch of CytoSorb in Germany with the hiring of Dr. Christian Steiner as Vice President of Sales and
Marketing and three additional sales representatives who joined us and completed their sales training during the third quarter of 2012. The fourth quarter of
2012 represented the first quarter of direct sales with the full sales team in place. During this period, we expanded our direct sales efforts to include both
Austria and Switzerland.

Fiscal year 2013 represented the first full year of CytoSorb commercialization. We focused our direct sales efforts in Germany, Austria and
Switzerland with four sales representatives. The focus of the team was to encourage acceptance and usage by key opinion leaders (“KOLs”) throughout these
countries. We believe our relationships with KOLs are essential to drive adoption and recurrent usage of CytoSorb, facilitate purchases by hospital
administration, arrange reimbursement, and generate data for papers and presentations. As of the end of 2019, we had hundreds of KOLs in our
commercialized territories worldwide in critical care, cardiac surgery, and blood purification, who were either using CytoSorb or supporting its use in clinical
practice or clinical trials.

In March 2016, we established CytoSorbents Switzerland GmbH, a wholly-owned subsidiary of CytoSorbents Europe GmbH, to conduct marketing
and direct sales in Switzerland. This subsidiary began operations during the second quarter of 2016. In 2017, we further expanded our direct sales efforts into
Belgium and Luxembourg.

In May 2018, the approved uses of CytoSorb in the E.U. were expanded to include the removal of bilirubin in liver disease, and the removal of

myoglobin in trauma.

On March 5, 2019, the Company announced the expansion of direct sales of CytoSorb for all applications to Poland and the Netherlands, and critical
care applications to Sweden, Denmark and Norway. As part of this effort, the Company established CytoSorbents Poland Sp. z.o.o., a wholly-owned
subsidiary of CytoSorbents Europe GmbH.

In the third quarter of 2019, we established CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc., to manage our

clinical trial activities in the United Kingdom.

In August 2019, we announced that CytoSorb had received renewal of its European Union CE Mark through May 2024 and ISO 13485:2016 Full

Quality Assurance System certification of its manufacturing facility through September 2022.

In addition, we now have more than 50 investigator-initiated studies and additional Company sponsored trials that are currently planned, enrolling or
completed in Europe and elsewhere outside of the United States. We believe that these trials, which are conducted and supported by what we believe to be
well-known university hospitals and KOLs, are the equivalent of Phase 3 and Phase 4 clinical studies. We believe they will provide invaluable information
regarding the success of the device in the treatment of sepsis, cardio-pulmonary bypass surgery, trauma, and many other indications, and if successful, may be
integral in helping to drive additional usage and adoption of CytoSorb.

In January 2020, the Company received CE-Mark label expansion approving the use of CytoSorb to remove the anti-platelet agent, ticagrelor, in

cardiac patients during surgery requiring cardiopulmonary bypass.

As of February 28, 2020, our European commercialization team included 79 people.

We have complemented our direct sales efforts with sales to distributors and/or strategic corporate partners. For more information regarding our

distributors and strategic partners, refer to the Sales and Marketing section in item 1 of this report.

We continuously evaluate other potential distributor and strategic partner networks in other countries where we are approved to market the device.

Overall, we have established either direct sales or distribution (via distributors or strategic partners) of CytoSorb in 58 countries worldwide.
Registration of CytoSorb is typically required in each of these countries prior to active commercialization. With CE Mark approval, this can be typically
achieved within several months in EU countries. Outside of the EU, the process is more variable and can take several months to more than a year due to
different requirements for documentation and clinical data. Variability in the timing of registration affects the initiation of active commercialization in these
countries, which affects the timing of expected CytoSorb sales. We actively support all of our distributors and strategic partners in the product registration
process. We cannot generally predict the timing of these registrations, and there can be no guarantee that we will ultimately achieve registration in countries
where we have established distribution. For example, in August 2014 we announced exclusive distribution of CytoSorb in Taiwan with Hemoscien
Corporation. However, in March 2015, due to the complexity we encountered with Taiwanese product registration, we elected to terminate our agreement
with Hemoscien. Outside of the EU, CytoSorb has distribution in Turkey, India, Sri Lanka, Australia, New Zealand, Russia, Serbia, Norway, Vietnam,
Malaysia, Hong Kong, Chile, Panama, Costa Rica, Colombia, Brazil, Mexico, Iceland, Israel, UAE, Iran, Saudi Arabia and other Middle Eastern countries,
and South Korea. We cannot guarantee that we will generate meaningful sales in the countries where we have established registration, due to other factors
such as market adoption and reimbursement. For example, in December 2019, we discontinued our distributor relationship with Dr. Reddy’s in South Africa.
We continuously evaluate other potential distributor and strategic partner networks in other countries that accept CE Mark approval.

In February 2020, we announced an agreement with China Medical System Holdings Limited (“CMS”), a well-established, innovation-driven
specialty pharma with a focus on sales and marketing in China and Asia, to bring CytoSorb to mainland China to treat critically-ill patients with COVID-19
(fka Wuhan or 2019-nCoV) coronavirus infection. Under the terms of the agreement, CytoSorbents and CMS will partner together to earn regulatory
clearance to import CytoSorb into China under the “fast-track” review process established by the National Medical Products Administration of the People’s
Republic of China (NMPA) to respond to the 2019 novel coronavirus (COVID-19) pandemic. CytoSorbents will donate initial CytoSorb devices and provide
product, training, and support to CMS to introduce CytoSorb initially into four hospitals in the Wuhan, China area. The therapy will be evaluated in severe
COVID-19 coronavirus patients with a systemic inflammatory response who are being treated with either continuous renal replacement therapy (CRRT) or
extracorporeal membrane oxygenation (ECMO). During the initial term of the agreement, CytoSorbents and CMS will explore the possibility for future
commercial collaboration in China. The use of CytoSorb for the treatment of patients with severe COVID-19 coronavirus infection is considered exploratory
in nature, and is currently not yet approved for commercial purposes in mainland China.

In addition to our direct and distributor commercial channels, we have a number of strategic partners to market and distribute CytoSorb. These
partners include Biocon Ltd, Fresenius Medical Care AG, Aferetica s.r.l. and Terumo Cardiovascular Group. For detailed information regarding these
partnerships, see the section entitled “Commercial and Research Partners” in item 1 of this report.

The market focus for CytoSorb is the prevention or treatment of organ failure in life-threatening conditions, including commonly seen illnesses in the
ICU such as infection and sepsis, trauma, burn injury, ARDS, and others. Severe sepsis and septic shock, a potentially life-threatening systemic inflammatory
response to a serious infection, accounts for approximately 10% to 20% of all ICU admissions, and is responsible for an estimated one in every five deaths
worldwide. Sepsis is one of the largest target markets for CytoSorb. Sepsis is a major unmet medical need with no approved products in the U.S. or Europe to
treat it. As with other critical care illnesses, multiple organ failure is the primary cause of death in sepsis. When used with standard of care therapy, that
includes antibiotics, the goal of CytoSorb in sepsis is to reduce excessive levels of cytokines and other inflammatory toxins, to help reduce the SIRS response
and either prevent or treat organ failure.

In addition to the sepsis indication, we intend to conduct or support additional clinical studies in sepsis, cardiac surgery, and other critical care
diseases where CytoSorb could be used, such as ARDS, trauma, severe burn injury, acute pancreatitis, and in other acute conditions that may benefit by the
reduction of cytokines in the bloodstream. Some examples include the prevention of post-operative complications of cardiac surgery (cardiopulmonary bypass
surgery) and damage to organs donated for transplant prior to organ harvest. We intend to generate additional clinical data to expand the scope of clinical
experience for marketing purposes, to increase the number of treated patients, and to support potential future publications and regulatory submissions.

In 2014, we completed a single arm, dose ranging trial in Germany amongst several clinical trial sites to evaluate the safety and efficacy of CytoSorb
when used 24 hours per day for seven days, each day with a new device and are conducting final statistical analysis of the data. These additional dosing data
were used to support the label expansion to increase treatment time from 6 hours, the initial approval, to 24 hours of treatment. This study also provided
additional treatment options for CytoSorb, helped to support the positive clinical data from our first European Sepsis Trial, and helped to shape the trial
protocol for a pivotal sepsis study.

In addition to the dosing study, we plan to use data generated and published in the more than 50 investigator-initiated studies and trials sponsored by
us currently planned, enrolling or completed in Europe and abroad. Approximately 20 of these studies are currently enrolling. These trials, which are funded
and supported by well-known university hospitals and KOLs, are the equivalent of Phase 2 clinical studies. They will provide invaluable information
regarding the success of the device in the treatment of sepsis, cardio-pulmonary bypass surgery, trauma, and many other indications, and if successful, will be
integral in helping to drive additional usage and adoption of CytoSorb.

In addition to sepsis and other critical care applications, cardiac surgery is an important application for CytoSorb in the European market. There are
approximately one million cardiac surgery procedures performed annually in the U.S. and EU combined including, for example, coronary artery bypass graft
surgery, valve replacement surgery, heart and lung transplant, congenital heart defect repair, aortic reconstruction, and left ventricular assist device (“LVAD”)
implantation. Cardiac surgery can result in inflammation and the production of high levels of inflammatory cytokines, as activation of complement, and cause
hemolysis, leading to the release of toxic plasma free hemoglobin. These can lead to post-operative complications such as respiratory failure, circulatory
failure, and acute kidney injury. CytoSorb has a unique competitive advantage as the only cytokine and free hemoglobin removal technology that can be used
during the operative procedure and can be easily installed in a bypass circuit in a heart-lung machine without the need for an additional pump. Direct cytokine
and hemoglobin removal with CytoSorb enables it to replace the existing market for leukoreduction filters in cardiac surgery that attempt to indirectly reduce
cytokines by capturing cytokine-producing leukocytes – an inefficient and suboptimal approach.

The Company is currently conducting the following clinical trials:

Country

United States
Germany
Germany
United Kingdom

Trial Name

REFRESH 2-AKI
REMOVE
CYTORELEASE
TISORB

Indication

Post-Cardiac Surgery AKI
Infective Endocarditis
Cytokine Release Syndrome in CAR-T Cell Treatment
Ticagrelor Removal During Cardiac Surgery

For further detailed information regarding our clinical trial strategy, see the section entitled “Clinical Studies” of this Item 1 of this Report.

Even though we have obtained CE Mark approval for CytoSorb, no guarantee or assurance can be given that our CytoSorb product will work as
intended or that we will be able to obtain FDA approval to sell CytoSorb in the U.S. or approval in any other country or jurisdiction. Because of the limited
studies we have conducted, we are subject to substantial risk that our technology will have little or no effect on the treatment of any indications that we have
targeted.

We have been successful in obtaining technology development contracts from agencies in the U.S. Department of Defense, including the Defense
Advanced Research Projects Agency (“DARPA”), the U.S. Army, the U.S. Air Force, as well as the National Institutes of Health. See the section entitled
“Government Research Grants” of this Item 1 of this Report for information regarding the specific grants.

Corporate History

We were originally organized as a Delaware limited liability company in August 1997 as Advanced Renal Technologies, LLC. We changed our name
to RenalTech International, LLC in November 1998, and to MedaSorb Technologies, LLC in October 2003. In December 2005, MedaSorb Technologies,
LLC converted from a limited liability company to a corporation, called MedaSorb Technologies, Inc. CytoSorbents Corporation was incorporated in Nevada
on April 25, 2002 as Gilder Enterprises, Inc., and was originally engaged in the business of installing and operating computer networks that provided high-
speed access to the Internet. On June 30, 2006, we disposed of our original business, and pursuant to an Agreement and Plan of Merger, acquired all of the
stock of MedaSorb Technologies, Inc., in a merger, and the business of MedaSorb Technologies, Inc. became our business. Following the merger, in July
2006, we changed our name to MedaSorb Technologies Corporation. In November 2008, we changed the name of our operating subsidiary from MedaSorb
Technologies, Inc. to CytoSorbents, Inc. In May 2010, we finalized the name change of MedaSorb Technologies Corporation to CytoSorbents Corporation.
On October 28, 2014, we changed the name of our operating subsidiary from CytoSorbents, Inc. to CytoSorbents Medical, Inc.

On December 3, 2014, we effected a twenty-five-for-one (25:1) reverse split of our common stock. As a result of this reverse stock split, shares of
our common stock outstanding were reduced by approximately 96%. Accordingly, all share, option and warrant information included in this Annual Report
has been retroactively adjusted to reflect the reduced number of shares resulting from this action. Immediately after the reverse stock split, pursuant to an
Agreement and Plan of Merger dated December 3, 2014, we changed our state of incorporation from the State of Nevada to the State of Delaware, whereby
we merged with and into our wholly-owned Delaware subsidiary. At the effective time of the merger, (i) we merged with and into our Delaware subsidiary,
(ii) our separate corporate existence in Nevada ceased to exist, (iii) the Delaware subsidiary became the surviving corporation, (iv) the certificate of
incorporation, as amended and restated, and the bylaws of the Delaware subsidiary became our certificate of incorporation and bylaws, and (v) each share of
our common stock outstanding immediately prior to the effective time was converted into one fully-paid and non-assessable share of our common stock as a
Delaware corporation. The reverse stock split, the merger and the Agreement and Plan of Merger were approved by our Board of Directors and stockholders
representing a majority of our then-outstanding common stock. All references to “us”, “we”, or the Company, on or after December 3, 2014, refer to
CytoSorbents Corporation, a Delaware corporation.

Our executive offices are located at 7 Deer Park Drive, Suite K, Monmouth Junction, New Jersey 08852, and our telephone number is (732) 329-
8885. Our website address is http://www.cytosorbents.com. We have included our website address as an inactive textual reference only. We make available
free of charge through our website our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we
electronically file such material, or furnish it to the SEC. We also similarly make available, free of charge on our website, the reports filed with the SEC by
our executive officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those
filings are provided to us by those persons. We are not including the information contained at http://www.cytosorbents.com, or at any other website address,
as part of, or incorporating it by reference into, this Annual Report on Form 10-K.

We have been engaged in research and development since our inception and have raised approximately $133 million from investors. These proceeds
have been used to fund the development of multiple product applications and to conduct clinical studies, to establish in-house manufacturing capacity to meet
commercial and clinical testing needs, expand our intellectual property through additional patents, and to develop extensive proprietary know-how with
regard to our products.

We have raised funds through various means including convertible note offerings, equity transactions, and term loans. Our most significant financing

transactions are discussed below.

Shelf Registration

On July 26, 2018, the Company filed a registration statement on Form S-3 with the SEC (as amended, the “2018 Shelf”). The 2018 Shelf, which
was declared effective on August 7, 2018, 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.

Termination of Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On May 31, 2019, we delivered to Cantor Fitzgerald & Co. (“Cantor”) written notice of termination (the “Termination Notice”) of the Controlled
Equity Offering Sales Agreement, dated November 4, 2015, by and between us and Cantor, as amended by Amendment No. 1 to Sales Agreement, dated July
26, 2018 (collectively, the “Sales Agreement”). In accordance with Section 13(b) thereof, the Sales Agreement terminated on June 10, 2019, ten (10) days
after the delivery of the Termination Notice. As provided in the Sales Agreement, the Sales Agreement terminated without liability of any party to any other
party, except that certain provisions of the Sales Agreement identified therein shall remain in full force and effect notwithstanding the termination.

Under the Sales Agreement, we sold 2,094,140 shares at an average selling price of $8.72 per share, generating net proceeds of approximately

$17,718,000 from November 4, 2015 through December 31, 2018. We made no sales under the Sales Agreement during the year ended December 31, 2019.

Open Market Sale Agreement with Jefferies LLC and B. Riley FBR, Inc.

On July 9, 2019 we entered into an Open Market Sale Agreement (the “New Sale Agreement”) with Jefferies LLC and B. Riley FBR, Inc. (each an
“Agent” and, together, the “Agents”), pursuant to which we may sell, from time to time, at our option, up to an aggregate proceeds of $25,000,000 from
shares of our common stock through the Agents, as the Company’s sales agents. During the year ended December 31, 2019, we sold 191,244 shares of our
common stock pursuant to the New Sale Agreement, at an average selling price of $4.11 per share, generating net proceeds of approximately $762,000.
During the period from January 1, 2020 through March 2, 2020, we sold an additional 2,435,086 shares pursuant to the New Sale Agreement, at an average
selling price of $5.64 per share, generating net proceeds of approximately $13,322,000. In the aggregate, the Company has sold 2,626,330 shares pursuant to
the New Sale Agreement, at an average selling price of $5.53 per share, generating net proceeds of approximately $14,083,000.

Research and Development

We have been engaged in research and development since inception. Since 2012, we have been awarded an aggregate of approximately $20.0 million
in grants, contracts, and other non-dilutive funding from DARPA ($3.8M over 5 years), the U.S. Army ($100K Phase I SBIR; $50K Phase I option, $803K
Phase II SBIR, $443K Phase II enhancement), the U.S. Air Force $3.0M Rapid Innovation Fund, the Congressionally Directed Medical Research Program
Office, (“CDRMP”, $718K), the National Heart, Lung and Blood Institute and USSOCOM ($203K Phase I SBIR; $1.5M Phase II SBIR; $3.0M Bridge
SBIR), the Joint Program Executive Office – Chemical and Biological Defense, (JPEO-CBD), ($150K Phase I and Phase I option, $1.0M Phase II), the U.S.
Army Peritoneal dialysis/mesh packing for hyperkalemia ($150K Phase I SBIR, $1.0M Phase II), Universal Plasma ($150K Phase I and 1.0M Phase II), New
Jersey Technology Business Tax Certificate Program for research related expenses ($2.9M), and others to further develop our technologies for sepsis, trauma
and burn injury, and blood transfusions, respectively. Some payments are based on achieving certain technology milestones.

Technology, Products and Applications

For approximately the past half-century, the field of blood purification has been focused on hemodialysis, a mature, well-accepted medical technique
primarily used to sustain the lives of patients with permanent or temporary loss of kidney function. It is widely understood by the medical community that
dialysis has inherent limitations in that its ability to remove toxic substances from blood drops precipitously as the size of toxins increases. Our
hemocompatible adsorbent technology helps to address this shortcoming by removing toxins and toxic compounds largely untouched by dialysis technology.

Our polymer adsorbent technology can remove drugs, bioactive lipids, inflammatory mediators such as cytokines, free hemoglobin, toxins, and
immunoglobulin from blood and physiologic fluids depending on the polymer construct. It is believed that the technology may have many applications in the
treatment of common, chronic and acute healthcare conditions including, but not limited to, the adjunctive treatment and/or prevention of sepsis; the treatment
of other critical care illnesses such as severe burn injury, trauma, acute respiratory distress syndrome and pancreatitis; the prevention of post-operative
complications of cardiopulmonary bypass surgery; the treatment of cancer cachexia; the treatment of cytokine release syndrome in cancer immunotherapy, the
prevention of damage to organs donated by brain-dead donors prior to organ harvest; the prevention of transfusion reactions caused by contaminants in
transfused blood products; the prevention of contrast induced nephropathy, the treatment of drug overdose, and the treatment of chronic kidney failure. These
applications vary by cause and complexity as well as by severity but share a common characteristic, i.e., high concentrations of inflammatory mediators and
toxins in the circulating blood.

Our flagship product, CytoSorb, animal-targeted VetResQ, and other product candidates under development, including CytoSorb XL, BetaSorb,
ContrastSorb, and DrugSorb, consist of a cartridge containing adsorbent, porous polymer beads, although the polymers used in these devices are physically
different. The cartridges incorporate industry standard connectors at either end of the device, which connect directly to the extracorporeal circuit (bloodlines)
in series with a dialyzer as a standalone device. The extra-corporeal circuit consists of plastic blood tubing, our blood filtration cartridges containing
adsorbent polymer beads, pressure monitoring gauges, and a blood pump to maintain blood flow. The patient’s blood is accessed through a catheter inserted
into his or her veins. The catheter is connected to the extra-corporeal circuit and the blood pump draws blood from the patient, pumps it through the cartridge
and returns it back to the patient in a closed loop system. All of these devices are expected to be compatible with standard blood pumps or hemodialysis
machines used commonly in hospitals and will therefore not require hospitals to purchase additional expensive equipment, and will require minimal training.

The polymer beads designed for the HemoDefend platform are intended to be used in multiple configurations, including a point-of-transfusion in-
line filter between the blood bag and the patient, as well as a patent-pending “Beads in a Bag” configuration, where the beads are placed directly into a blood
storage bag.

Markets

We are a critical care focused immunotherapy company. Immunotherapy is the ability to control the immune response to fight disease. Critical care
medicine includes the treatment of patients with serious or life-threatening conditions who require comprehensive care in the ICU, with highly-skilled
physicians and nurses and advanced technologies to support critical organ function to keep patients alive. Examples of such conditions include severe sepsis
and septic shock, severe burn injury, trauma, acute respiratory distress syndrome, acute liver disease, and severe acute pancreatitis. In the U.S., an estimated
$110 billion or 0.7% of the U.S. gross domestic product is spent annually on critical care medicine. In larger hospitals, critical care treatment accounts for up
to 20% of a hospital’s overall budget and often results in financial losses for the hospital.

In many critical care illnesses, the mortality is often higher than 30%. A major cause of death is multiple organ failure, where vital organs such as the
lungs, kidneys, heart and liver are damaged and no longer function properly. These patients are kept alive with supportive care therapy, or “life support”, such
as mechanical ventilation, dialysis and vasopressor treatment, that is designed to keep the patient from dying while using careful patient management to tip
the balance towards gradual recovery over time. Unfortunately, most supportive care therapies only help to keep patients alive by supporting organ function
but do not help reverse the underlying causes of organ failure and do not help patients recover more quickly. Because of this, the treatment course is often
poorly defined and highly variable, leading to lengthy ICU stays, a higher risk of adverse outcomes from hospital acquired infections, medical errors, and
other factors, as well as exorbitant costs. There is an urgent need for more effective “active” therapies that can help to reverse or prevent organ failure. Our
main product, CytoSorb, is a unique cytokine filter designed to try to address this void, by reducing “cytokine storm” and working to reduce the subsequent
deadly inflammation that can lead to organ failure and death. In May 2018, the approved indications for use of CytoSorb in the EU were expanded to include
the removal of bilirubin in liver disease, and the removal of myoglobin in trauma. In January 2020, the Company received a CE-Mark label expansion for
CytoSorb to remove the anti-platelet agent, ticagrelor, in patients undergoing surgery requiring cardiopulmonary bypass.

In addition to critical care, CytoSorb is used in many applications related to cardiac surgery. Intra-operatively, CytoSorb is either used to help
stabilize patients with serious conditions such as infective endocarditis, or to prevent post-operative complications such as acute kidney injury, vasoplegia,
respiratory failure, infection, and others. Post-operatively, CytoSorb is used in the intensive care unit to treat the post-operative systemic inflammatory
response syndrome (post-op SIRS), sepsis, and other complications.

Together the total addressable market for these numerous critical care and cardiac surgery applications with CytoSorb is estimated to be in excess of

$20 billion worldwide.

Sepsis

Sepsis is characterized by a systemic inflammatory response triggered by a severe infection. It is commonly seen in the ICU, accounting for
approximately 10% to 20% of all ICU admissions. However, there are currently no approved products that are available to treat sepsis in the U.S. or EU. A
2020 study published in The Lancet estimated that there were 49 million new cases of sepsis globally, killing 11 million people. The researchers estimate that
1 in every 5 deaths worldwide is due to sepsis. , Data released by the Healthcare Cost and Utilization Project (H-CUP) identified approximately 1.6 million
cases of sepsis each year in the U.S. According to the CDC, the incidence of serious infection and sepsis has doubled in the U.S. in the past 10 years. The
main driver of sepsis incidence is the aging demographic, specifically patients who are older than age 65 who are more prone to infection and now account for
two-thirds of patients hospitalized for sepsis and the majority of sepsis deaths. Other factors contributing to the increase in sepsis incidence include the spread
of antibiotic resistant bacteria like methicillin-resistant Staphylococcus aureus (“MRSA”), an increase in co-morbid conditions like HIV, cancer, obesity, and
diabetes that increases the risk of infection, an increasing use of implantable devices like artificial hips and knees that are prone to colonization by bacteria,
and the appearance of new highly virulent or contagious strains of common pathogens such as H3N2 or H1N1 influenza, COVID-19 coronavirus, and others.

There are generally three categories of sepsis, including mild to moderate sepsis, severe sepsis and septic shock. Mild to moderate sepsis typically
occurs with an infection that is responsive to antibiotics or antiviral medication. An example is a patient with self-limiting influenza or a treatable community
acquired pneumonia. Mortality is generally very low. Severe sepsis is sepsis with evidence of organ dysfunction. An example is a patient who develops
respiratory failure due to a severe pneumonia and requires mechanical ventilation in the ICU. Severe sepsis has a mortality rate of approximately 20% to 25%
despite the use of antibiotics and the highest level of available care. Septic shock, or severe sepsis with low blood pressure that is not responsive to fluid
resuscitation, is the most serious form of sepsis with an expected mortality in excess of 40% to 50%, and up to 80-100% if it is refractory to vasopressors and
other therapies.

In sepsis, there are two major problems: the infection and the body’s immune response to the infection. Antibiotics are the main therapy used to treat
the triggering infection, and although antibiotic resistance is growing, the infection is often eventually controlled. However, it is the body’s immune response
to this infection that frequently leads to the most devastating damage. In recognition of this, in 2016 the 3rd International Consensus Definition Task Force re-
defined sepsis as “life-threatening organ dysfunction due to a dysregulated host response to infection.” The body’s immune system normally produces large
amounts of inflammatory mediators called cytokines to help stimulate and regulate the immune response during an infection. In severe infection, however,
many people suffer from a massive, unregulated overproduction of cytokines, often termed “cytokine storm” that can kill cells and damage organs, leading to
multiple organ dysfunction syndrome and multiple organ failure, and in many cases death. Until recently, there have been no available therapies in the U.S. or
EU that can control the aberrant immune response and cytokine storm. Our CytoSorb device is a first-in-class, clinically-proven broad-spectrum
extracorporeal cytokine filter currently approved for sale in the E.U. The goal of CytoSorb is to prevent or treat organ failure by reducing cytokine storm and
controlling a “run-away” immune response, while antibiotics work to control the actual infection. CytoSorb has been evaluated in the randomized, controlled
European Sepsis Trial in 100 patients in Germany with predominantly septic shock and acute respiratory distress syndrome or acute lung injury. The therapy
was safe in more than 300 human treatments and generally well-tolerated. CytoSorb demonstrated the ability to reduce a broad range of cytokines from the
blood of critically-ill patients. In a post-hoc analysis, this was associated with improvements in clinical outcome in two high-risk patient populations – those
with very high cytokine levels and patients 65 years of age and older. We have completed a follow-up dosing study at several clinical trial sites in Germany,
supporting the safety of continuous treatment, exchanging a new device daily for up to 7 days.

The only treatment that had been approved to treat sepsis in the U.S. or EU was Xigris from Eli Lilly. Because of concerns of cost, limited efficacy,
and potentially dangerous side effects including the increased risk of fatal bleeding events such as intracranial bleeding for those at risk, and also because of
problems with reimbursement, worldwide sales of Xigris decreased from $160M in 2009 to $104M in 2010. In October 2011, following its PROWESS
SHOCK trial that demonstrated no benefit in mortality in septic shock patients, Lilly voluntarily withdrew Xigris from all markets worldwide, and is no
longer available as a treatment.

Development of many experimental therapies has been discontinued, including Eritoran from Eisai, CytoFab from BTG/Astra Zeneca, Talactoferrin

from Agennix, tranexemic acid from Leading Biosciences, and others.

For more information regarding our competitor’s clinical trials, see the section entitled “Competition” in Item 1 of this report.

Severe sepsis and septic shock patients are among the most expensive patients to treat in a hospital. Because of this, we believe that cost savings to
hospitals and/or clinical efficacy, rather than the cost of treatment itself, will be the determining factor in the adoption of CytoSorb in the treatment of sepsis.
CytoSorb is approved in the EU and is being sold directly in Germany, Austria, Switzerland, Belgium, Luxembourg, Poland, Norway, Denmark, Sweden, and
the Netherlands with our own direct sales force. In December 2016, we announced the achievement of a permanent, dedicated reimbursement procedure code
for CytoSorb therapy in Germany, providing for specific and enhanced reimbursement in the largest medical device market in Europe. We have established
strategic partnerships with Fresenius Medical Care, the world’s largest dialysis company, for exclusive distribution of CytoSorb for critical care applications
in France, Finland, the Czech Republic, Mexico, and Korea, and Terumo Cardiovascular, the largest cardiac surgery disposables company, for exclusive
distribution of the CytoSorb Cardiopulmonary Bypass Kit in France, Denmark, Sweden, Norway, Finland, and Iceland. We are also partnered with Biocon
Ltd, India’s largest biopharmaceutical company, for exclusive distribution of CytoSorb in India, Sri Lanka, Malaysia, and other select emerging markets. We
have ongoing discussions with potential corporate partners and independent distributors to market CytoSorb in other select EU countries and in other
countries outside the EU that accept CE Mark approval. We have established direct sales or distribution of CytoSorb in 58 countries worldwide.

We estimate that the market potential in Europe for our products is larger than that in the U.S. For example, in the U.S. and Europe, there are an
estimated 1.6 million cases of sepsis, while the European Sepsis Alliance estimates 3.4 million individuals in Europe become septic each year. In Germany
alone, according to the Center of Sepsis Control and Care, there are approximately 175,000 cases of severe sepsis each year. Germany is the largest medical
device market in Europe and the third largest in the world.

Sepsis patients are treated in the ICU for 12 to 18 days on average and for a total of 20 to 25 days in the hospital. A typical severe sepsis or septic
shock patient in the U.S. costs approximately $45,000 to $60,000 to treat without using CytoSorb. CytoSorb therapy for sepsis typically costs in the range of
$1,000 to $5,000, depending on the number of treatments. The goal of therapy is to not only improve clinical outcomes, but to also reduce the severity of
illness and reduce the need for costly ICU care (estimated at approximately $4,300 per day in the ICU in the U.S.). The cost of CytoSorb therapy represents a
fraction of what is currently spent on the treatment of patients with sepsis and would be cost-effective if it decreased ICU stay by one to two days. Based upon
this price point, the total addressable market for CytoSorb for the treatment of sepsis in the U.S. and EU is approximately $6 billion to $8 billion.

Cardiac Surgery

There are approximately 500,000 cardiopulmonary bypass and cardiac surgery procedures performed annually in the U.S., 500,000 in the EU, and
approximately 1.5 million procedures worldwide. These include relatively common procedures including coronary artery bypass graft surgery, valve
replacement surgery, heart and lung transplant, aortic reconstruction, congenital heart defect repair, and LVAD for the treatment of heart failure. Cardiac
surgery can result in inflammation and the production of high levels of inflammatory cytokines, activation of complement, as well as hemolysis, causing the
release of free hemoglobin. These can lead to post-operative complications including infection, pulmonary, renal, and neurological dysfunction.
Complications lead to longer ICU recovery times and hospital stays, increased morbidity and mortality, and higher costs. An average coronary artery bypass
graft procedure already costs approximately $36,000 in the U.S. without complications. According to the National Foundation for Transplants, a heart and
lung transplant and first year expenses costs $1.2 million in the U.S. Valve replacement surgery of infective endocarditis is poorly reimbursed and costs
$150,000-$250,000 in the U.S. The use of CytoSorb to reduce cytokines and other inflammatory mediators during and after the surgical procedure may
prevent or mitigate these post-operative complications. During the procedure, the CytoSorb filter can be incorporated in a bypass circuit in the heart-lung
machine without the need for a separate pump, a unique competitive advantage over other technologies. After the surgery, CytoSorb can be used similarly to
dialysis on patients that develop a severe post-operative inflammatory response. Modified ultrafiltration is sometimes used after termination of
cardiopulmonary bypass in cardiac surgery to remove excess fluid and inflammatory substances, but has had mixed benefit. The peri-procedural total
addressable market for CytoSorb in the U.S. and EU in cardiothoracic surgery procedures is estimated to be $500 million to $1 billion.

Acute Respiratory Distress Syndrome

Acute lung injury (“ALI”) and ARDS are two of the most serious conditions on the continuum of respiratory failure when both lungs are
compromised by inflammation and fluid infiltration, severely compromising the lung’s ability to both oxygenate the blood and rid the blood of carbon dioxide
produced by the body. There are an estimated 165,000 cases of acute respiratory distress syndrome in the U.S. each year, with more cases in the EU. Patients
with ALI and ARDS typically require mechanical ventilation, and sometimes extracorporeal membrane oxygenation therapy, to help achieve adequate
oxygenation of the blood. Patients on mechanical ventilation are at high risk of ongoing ventilator-induced lung injury, oxygen toxicity, barotrauma,
ventilator-acquired pneumonias, and other hospital acquired infections, and outcome is significantly dependent on the presence of other organ dysfunction as
well as co-morbid conditions such as pre-existing lung disease (e.g., emphysema or chronic obstructive pulmonary disease) and age. Because of this,
mortality has been high (16-33%) even with modern medicine and ventilation techniques. ALI and ARDS can be precipitated by a number of conditions
including pneumonia and other infections, burn and smoke inhalation injury, aspiration, reperfusion injury and shock. Cytokine injury plays a major role in
the vascular compromise and cell-mediated damage to the lung through tight junction disruption of respiratory endothelium, leading to capillary leak
syndrome, and other factors. Reduction of cytokine levels may either prevent or mitigate lung injury, enabling patients to wean from mechanical ventilation
faster, potentially reducing numerous sequelae such as infection, pneumothoraces, and respiratory muscle deconditioning, and allow faster ICU discharge,
thereby potentially saving costs. CytoSorb treatment of patients with either ALI or ARDS in the setting of sepsis was the subject of our European Sepsis Trial
where in a post-hoc analysis in patients with very high cytokine levels, we observed faster ventilator weaning in CytoSorb treated patients that showed a
statistical trend to benefit. Future, prospectively defined, larger studies are required to confirm these findings. Although a number of therapies have been tried
such as corticosteroids, nitric oxide, surfactant therapy, and others, there are currently no approved treatments for ARDS. However, techniques to improve
ventilation and reduce ongoing lung injury are being used. For example, low tidal volume ventilation has been demonstrated to improve mortality (31.0% as
compared to 39.8% control) in this patient population in the ARDSNet Trial. Prone positioning, or placing a patient chest-side down, in severe ARDS patients
in order to redistribute gravity-dependent pulmonary edema and allow ventilation of collapsed or atelectatic alveoli, is also used, following studies that
suggest benefit including the PROSEVA trial (16% vs 32.8% in the control). However, even with these interventions, we believe mortality is still
unacceptably high. The total addressable market for CytoSorb to treat ARDS and ALI in the EU is estimated to be between $500 million to $1.25 billion, and
between $1 billion to $2 billion in the U.S .and EU.

Severe Burn Injury

In the U.S., there are approximately 2.4 million burn injuries per year, with 650,000 treated by medical professionals and approximately 75,000
requiring hospitalization. Aggressive modern management of burn injury, including debridement, skin grafts, anti-microbial dressings and mechanical
ventilation for smoke and chemical inhalation injury has led to significant improvements in survival of burn injury to approximately 95% on average in
leading burns centers. However, there remains a need for better therapies to reduce the mortality in those patients with large burns and inhalation injury as
well as to reduce complications of burn injury and hospital length of stay for all patients. According to National Burn Repository Data, the average hospital
stay for burn patients is directly correlated with the percent total body surface area (“TBSA”) burned. Every 1% increase of TBSA burned equates to
approximately 1 additional day in the hospital. A single patient with more than 30% TBSA burned who survives, is hospitalized for an average of 30 days and
costs approximately $200,000 to treat. Major causes of death following severe burn and smoke inhalation injury are multiple organ failure (hemodynamic
shock, respiratory failure, acute renal failure) and sepsis, particularly in patients with greater than 30% TBSA burns. Specifically, burns and inhalation injury
lead to severe systemic and localized lung inflammation, loss of fluid, and cytokine overproduction. This “cytokine storm” causes numerous problems,
including: hypovolemic shock and inadequate oxygen and blood flow to critical organs, acute respiratory distress syndrome preventing adequate oxygenation
of blood, capillary leakage resulting in tissue edema and intravascular depletion, hypermetabolism leading to massive protein degradation and catabolism and
yielding increased risk of infection, impaired healing, severe weakness and delayed recovery, immune dysfunction causing a higher risk of secondary
infections (wound infections, pneumonia) and sepsis, and direct apoptosis and cell-mediated killing of cells, leading to organ damage. Up to a third of severe
hospitalized burn patients develop multiple organ failure and sepsis that can often lead to complicated, extended hospital courses, or death. Broad reduction of
cytokine storm has not been previously feasible and represents a novel approach to limiting or reversing organ failure, potentially enabling more rapid
mechanical ventilation weaning, prevention of shock, reversal of the hypermetabolic state encouraging faster healing and patient recovery, reducing hospital
costs, and potentially improving survival. The total addressable market in the EU for CytoSorb to address burn and smoke inhalation injury is estimated at
$150 million to $350 million and $300 million to $600 million in the U.S. and EU.

Trauma

According to the National Center for Health Statistics, in the U.S., there are more than 31 million visits to hospital emergency rooms, with 1.9
million hospitalizations, and 167,000 deaths every year due to injury. The leading causes of injury are trauma from motor vehicle accidents, being struck by
an object or other person, and falls. Trauma is a well-known trigger of the immune response and a surge of cytokine production or cytokine storm. In trauma,
cytokine storm contributes to a systemic inflammatory response syndrome and a cascade of events that cause cell death, organ damage, organ failure and
often death. Cytokine storm exacerbates physical trauma in many ways. For instance, trauma can cause hypovolemic shock due to blood loss, while cytokine
storm causes capillary leak and intravascular volume loss, and triggers nitric oxide production that causes cardiac depression and peripheral dilation. Shock
can lead to a lack of oxygenated blood flow to vital organs, causing organ injury. Severe systemic inflammation and cytokine storm can lead to acute lung
injury and acute respiratory distress syndrome as is often seen in ischemia and reperfusion injury following severe bleeding injuries. Penetrating wound injury
from bullets, shrapnel and knives, can lead to infection and sepsis, another significant cause of organ failure in trauma. Complicating matters is the
breakdown of damaged skeletal muscle, or rhabdomyolysis, from blunt trauma that can lead to a massive release of myoglobin into the blood that can
crystallize in the kidneys, leading to acute kidney injury and renal failure. Renal failure in trauma is associated with a significant increase in expected
mortality. Cytokine and myoglobin reduction by CytoSorb and related technologies may have benefit in trauma, potentially improving clinical outcome. In
May 2018, the approved indications for use of CytoSorb in the EU were expanded to include the removal of myoglobin in trauma. The total addressable
market for CytoSorb for the treatment of trauma is estimated to be $1.5 billion to $2.0 billion in the U.S. and the EU.

Acute Liver Disease

Chronic liver disease afflicts an estimated 850 million people worldwide, or 11% of the world population, due to the prevalence of viral hepatitis
infection, alcohol abuse, and non-alcoholic steatohepatitis (NASH or “fatty liver”). Chronic liver disease is blamed for nearly one million deaths a year, with
another one million dying of hepatic cancer and acute hepatitis. In the U.S., liver disease is the second leading cause of death from digestive disease, and the
10th leading cause of death amongst men. Many patients with advanced chronic liver disease will develop an acute exacerbation or decompensation (“acute-
on-chronic”) of their disease, with associated inflammation and cytokine elevation, often requiring hospitalization. Also, many patients will present with acute
hepatitis triggered by viral infection or alcohol. A range of symptoms, depending on the severity of illness include jaundice (high bilirubin), variceal
hemorrhage, cognitive dysfunction and hepatic encephalopathy, ascites, coagulopathy, renal failure, liver failure, and others. The extracorporeal blood
purification of liver toxins such as bilirubin has been used to help treat patients and is often called “liver dialysis”. Current liver dialysis therapies include
MARS (Molecular Adsorbent Recirculation System; Baxter), Prometheus (Fresenius), SPAD (single pass albumin dialysis), and others. However, none of
these therapies can remove cytokines, key elements in acute-on-chronic exacerbations and cases of acute hepatitis. CytoSorb represents a potentially superior
liver dialysis therapy, as it can remove both liver toxins such as bilirubin and bile salts, as well as cytokines. In May 2018, the approved indications for use of
CytoSorb in the E.U. were expanded to include the removal of bilirubin in liver disease. The total addressable market for CytoSorb for the treatment of acute-
on-chronic liver disease, acute hepatitis, and acute liver failure is estimated in excess of $15 billion worldwide.

Severe Acute Pancreatitis

Acute pancreatitis is the inflammation of the pancreas that results in the local release of digestive enzymes and chemicals that cause severe
inflammation, necrosis and hemorrhage of the pancreas and local tissues. Approximately 210,000 people in the U.S. are hospitalized each year with acute
pancreatitis with roughly 20% requiring ICU care. It is caused most frequently by a blockage of the pancreatic duct or biliary duct with gallstones, cancer,
hyperlipidemia, or from excessive alcohol use. Severe acute pancreatitis is characterized by severe pain, inflammation, and edema in the abdominal cavity, as
well as progressive systemic inflammation, generalized edema, and multiple organ failure that is correlated with high levels of cytokines and digestive
enzymes in the blood. Little can be done to treat severe acute pancreatitis today, except for pancreatic duct decompression with endoscopic techniques,
supportive care therapy, pain control, enteral tube feeding, and fluid support. ICU stay is frequently measured in weeks and although overall ICU mortality is
approximately 10%, patients with multiple organ failure have a much higher risk of death. CytoSorb may potentially benefit overall outcomes in episodes of
acute pancreatitis by removing a diverse set of toxins from blood. The total addressable market for CytoSorb for the treatment of severe acute pancreatitis in
the U.S. and EU is estimated to be between $400 million to $600 million.

Cancer Cachexia and Cancer Immunotherapy

Cancer cachexia is a progressive wasting syndrome characterized by rapid weight loss, anorexia, and physical debilitation that significantly
contributes to death in the majority of cancer patients. Cancer cachexia is a systemic inflammatory condition, driven by excessive pro-inflammatory cytokines
and other factors, that cripples the patient’s physical and immunologic reserve to fight cancer. Despite afflicting millions of patients worldwide each year,
there are no effective approved treatments for cancer cachexia, with only symptomatic treatments available. CytoSorb blood purification may stop or reverse
cancer cachexia through broad reduction of cytokines and other inflammatory mediators, when treated over time. For example, CytoSorb efficiently removes
TNF-alpha (originally called “cachectin” or “cachexin” when first isolated in cancer cachexia patients) and other major pro-inflammatory cytokines including
IL-1, IL-6, and gamma interferon that can cause cachexia. This broad immunotherapy approach may lead to improved clinical outcomes while reducing
patient suffering.

CytoSorb may also represent a rescue or salvage therapy in activated CAR T-cell cancer immunotherapy, where cytokine release syndrome (i.e. CRS
or cytokine storm) is common, and can lead to organ failure and death in certain patients. In the CRS literature, researchers have drawn parallels to both
macrophage activating syndrome and secondary hemophagocytic lymphohistiocytosis (HLH) which produce a similar clinical picture and cytokine storm
profile. To date, CytoSorb has been used successfully in approximately a dozen cases of secondary HLH. In March 2017, the pioneer of CAR T-cell
immunotherapy, Dr. Carl June at University of Pennsylvania, joined our scientific advisory board. In 2017, both Kymriah from University of Pennsylvania
and Novartis, and Yescarta from Kite Pharma and Gilead Sciences, received FDA approval for the treatment of certain hematologic cancers. In early 2020, the
first two case reports of CRS successfully treated with the adjunctive use of CytoSorb were published.

The total addressable market for CytoSorb for the treatment of cancer cachexia and cancer in the U.S. and EU is estimated to be in excess of $4

billion.

Brain-Dead Organ Donors

There are in excess of 6,000 brain dead organ donors each year in the United States; worldwide, the number of these organ donors is estimated to be
at least double the U.S. brain dead organ donor population. There is a severe shortage of donor organs. Currently, there are more than 100,000 individuals on
transplant waiting lists in the United States. Cytokine storm is common in these organ donors, resulting in reduced viability of potential donor organs. The
potential use of CytoSorb hemoperfusion to control cytokine storm in brain dead organ donors could increase the number of viable organs harvested from the
donor pool and improve the survival of transplanted organs. A proof-of-concept pilot study using our technology in human brain dead donors has been
published. In addition, CytoSorb treatment in a porcine animal model of brain death demonstrated a reduction in cytokines as well as a preservation of cardiac
function compared to untreated controls.

Removal of Ticagrelor in Cardiac Patients During Surgery Requiring Cardiopulmonary Bypass

Ticagrelor (Astra Zeneca - Brilinta®, Brilique®) is one of the most commonly used anti-platelet drugs to reduce the risk of cardiac death, heart
attacks, and strokes in patients with either a history of a heart attack, or those actively undergoing percutaneous coronary intervention (PCI) with stent
placement for acute coronary syndrome or heart attack. However, in patients on the drug requiring urgent or emergent coronary artery bypass graft (CABG)
surgery or other cardiothoracic surgery procedure, the risk of major fatal/life-threatening bleeding has been reported to be as high as 65%. CytoSorb
rapidly removes ticagrelor from blood. The use of CytoSorb during emergency cardiac surgery significantly reduced post-operative bleeding complications in
a landmark observational study and had projected cost savings of approximately $5,000 per patient, including the cost of the device.

The majority of ticagrelor usage is in patients with acute coronary syndrome, or a history of heart attack, who have a much higher rate of cardiac
surgery than the general population. Overall, the 1.1 million hospital admissions annually for acute coronary syndrome in the U.S. drives
approximately 400,000 CABG procedures each year. In the European Union, there are approximately 250,000 CABG procedures annually, with nearly
100,000 in Germany alone.

Blood Transfusions

The HemoDefend platform is a development-stage technology designed to be a practical, low cost, and effective way to safeguard the quality and
safety of the blood supply. In the U.S. alone, 15 million packed red blood cell (“pRBC”) transfusions and another 15 million transfusions of other blood
products (e.g., platelet, plasma, and cryoprecipitate) are administered each year with an average of 10% of all U.S. hospital admissions requiring a blood
transfusion. The sheer volume of transfusions, not just in the U.S., but worldwide, complicates an already difficult task of maintaining a safe and reliable
blood supply. Trauma, invasive operative procedures, critical care illnesses, supportive care in cancer, military usage, and inherited blood disorders are just
some of the drivers of the use of transfused blood. In war, hemorrhage from trauma is a leading cause of preventable death, accounting for an estimated 30%
to 40% of all fatalities. For example, in Operation Iraqi Freedom, due to a high rate of penetrating wound injuries, up to 8% of admissions required massive
transfusions, defined as 10 units of blood or more in the first 24 hours. There is a clear need for a stable and safe source of blood products. However, blood
shortages are common and exacerbated by the finite lifespan of blood. According to the Red Cross, pRBC units have a refrigerated life span of 42 days.
However, many medical experts believe there is an increased risk of infection and transfusion reactions once stored blood ages beyond two weeks.
Transfusion-related acute lung injury is the leading cause of non-hemolytic transfusion-related morbidity and mortality, with an incidence of 1 in 2,000-5,000
transfusions and a mortality rate of up to 10%. Fatal cases of transfusion-related acute lung injury have been most closely related to anti-HLA or anti-
granulocyte antibodies found in a donor’s transfused blood. Other early transfusion reactions such as transfusion-associated dyspnea, fever and allergic
reactions occur in 3% to 5% of all transfusions and can vary in severity depending on the patient’s condition. These are caused by cytokines, bioactive lipids,
free hemoglobin, toxins, foreign antigens, certain drugs, and a number of other inflammatory mediators that accumulate in transfused blood products during
storage. Leukoreduction can remove the majority of white cells that can produce new cytokines but cannot eliminate those cytokines already in blood, and
cannot otherwise remove other causative agents such as free hemoglobin and antibodies. Automated washing of pRBC is effective but is impractical due to
the time, cost, and logistics of washing each unit of blood. The HemoDefend platform is a potentially superior alternative to purify blood transfusion products
to these methods. CytoSorbents has also received grant and contract funding to develop the HemoDefend platform to enable both universal plasma and fresh
whole blood transfusions through the reduction of anti-A and anti-B blood group antibodies. Today, plasma and whole blood products must be carefully
blood-type matched to prevent potentially fatal hemolytic transfusion reactions in the recipient, caused by the accidental administration of mismatched blood
products. The reduction of anti-A and anti-B antibodies could potentially reduce or eliminate this risk, allowing for a broader range of available donors and
simplifying the transfusion process. The total addressable market for HemoDefend is more than $500 million for pRBCs alone.

Radiocontrast Removal

ContrastSorb is a development-stage blood purification technology that is being optimized for the removal of IV contrast from blood in order to
prevent CIN. Contrast-induced nephropathy is the acute loss of renal function within the first 48 hours following IV contrast administration. IV contrast is
widely administered to patients undergoing CT scans, to enhance the images and make it easier to identify anatomic structures. IV contrast is also
administered during vascular interventional radiology procedures and angiography of blood vessels in the brain, heart, limbs, and other parts of the body to
diagnose and treat atherosclerosis (narrowing of blood vessels due to cholesterol deposits), vascular injury, aneurysms, etc. For example, an estimated 10
million coronary angiograms are performed worldwide each year to diagnose and treat coronary artery disease by placing coronary stents, performing balloon
angioplasty, or atherectomy (removal of plaque in arteries). Overall, there are an estimated 80 million doses of IV contrast administered worldwide each year,
split between approximately 65 million contrast-enhanced CT scans, 10 million coronary angiograms, and 5 million conventional angiograms. There are an
estimated 30 million doses administered each year in the U.S. alone. The reported risk of CIN in patients undergoing contrast enhanced CT scans has been
reported to be 2% to 13%. For coronary intervention, the risk has been estimated to be as high as 20% to 30% in high risk patients with pre-existing renal
insufficiency, long-term diabetes, hypertension, congestive heart failure, and older age. The use of low osmolar IV contrast, hydration of patients pre-
procedure, orally administration of N-acetylcysteine, and other agents to prevent CIN have demonstrated modest benefit in some clinical studies, but in many
cases, the results across studies have been equivocal and inconsistent. In high risk patients, the direct removal of IV contrast from the blood with ContrastSorb
to prevent CIN represents a potentially more effective alternative. The worldwide market opportunity for ContrastSorb in this high risk group is
approximately $1 billion to $2 billion.

Drug Removal

DrugSorb is a development-stage blood purification technology that is capable of removing a wide variety of drugs and chemicals from blood, as a
potential treatment for drug overdose, drug toxicity, toxic chemical exposure, use in high-dose regional chemotherapy, and other applications. It has
demonstrated extremely high single pass removal efficiency of a number of different drugs that exceeds the extraction capability of hemodialysis or other
filtration technologies. It is similar in action to activated charcoal hemoperfusion cartridges that have been available for many years, but has the advantage of
having inherent biocompatibility and hemocompatibility without coatings, and can be easily customized for specific agents.

Chronic Kidney Failure

The National Kidney Foundation estimates that more than 20 million Americans have chronic kidney disease. Left untreated, chronic kidney disease
can ultimately lead to chronic kidney failure, which requires a kidney transplant or chronic dialysis (generally three times per week) to sustain life. There are
approximately 500,000 patients in the U.S. currently receiving chronic dialysis and more than 3.0 million worldwide. Approximately 66% of patients with
chronic kidney disease are treated with hemodialysis. One of the problems with standard high-flux dialysis is the limited ability to remove certain mid-
molecular weight toxins such as β 2 -microglobulin. Over time, β 2 -microglobulin can accumulate and cause amyloidosis in joints and elsewhere in the
musculoskeletal system, leading to pain and disability. Our BetaSorb device has been designed to remove these mid-molecular weight toxins when used in
conjunction with standard dialysis. Standard dialysis care typically involves three sessions per week, averaging approximately 150 sessions per year.

Products

The polymer adsorbent technology used in our products can remove middle molecular weight toxins, such as cytokines, from blood and physiologic
fluids. All of the potential applications described below (i.e., the adjunctive treatment and/or prevention of sepsis; the adjunctive treatment and/or prevention
of other critical care conditions such as acute respiratory distress syndrome, burn injury, trauma and pancreatitis; the prevention of damage to organs donated
by brain-dead donors prior to organ harvest; the prevention of post-operative complications of cardiopulmonary bypass surgery; the prevention of kidney
injury from IV contrast; and the treatment of chronic kidney failure) share in common high concentrations of toxins in the circulating blood. However,
because of the limited studies we have conducted to date, we are subject to substantial risk that our technology will have little or no effect on the treatment of
any of these indications. In 2011, we completed our European Sepsis Trial of our CytoSorb device. The study was a randomized, open label, controlled
clinical study in 14 sites in Germany of 100 critically ill patients with predominantly septic shock and respiratory failure. The trial successfully demonstrated
the ability of CytoSorb to reduce levels of key cytokines from whole blood in treated patients, and that treatment was safe in these critically-ill patients with
multiple organ failure. We completed the CytoSorb technical file review with our notified body and CytoSorb subsequently received EU regulatory approval
under the CE Mark as an extracorporeal cytokine filter indicated for use in any clinical situation where cytokines are elevated. Given sufficient and timely
financial resources, we intend to continue to commercialize in Europe and conduct additional clinical studies of our products. However, there can be no
assurance that we will ever obtain regulatory approval for any other device, or that the CytoSorb device will be able to generate significant sales.

We manufacture the CytoSorb device at our facility located in Monmouth Junction, New Jersey. We purchase our raw materials from multiple
vendors located primarily in the United States. We believe that our risk of an interruption in the supply of our raw materials is minimal due to the use of
multiple vendors and the availability of alternate vendors. We do not have contractual minimum finished goods inventory requirements, however our practice
is to maintain a minimum inventory level sufficient to provide a supply of products for the next three months.

The CytoSorb Device (Critical Care)

APPLICATION: Adjunctive Therapy in the Treatment of Sepsis

Sepsis is a potentially life-threatening disease defined as “life-threatening organ dysfunction caused by a dysregulated host response to an infection”.
Sepsis is mediated by high levels of inflammatory mediators such as cytokines, which are released into the bloodstream as part of the body’s immune
response to severe infection or injury. Excessive concentrations of these mediators cause severe inflammation and damage healthy tissues, which can lead to
organ dysfunction and failure. Organ failure is the leading cause of death in the ICU. Sepsis is very expensive to treat and has a high mortality rate.

Potential Benefits: To the extent our adsorbent blood purification technology is able to prevent or reduce the accumulation of cytokines, toxins, or
other inflammatory mediators in the circulating blood, we believe our products may be able to prevent or mitigate severe inflammation, organ dysfunction
and failure in sepsis patients. Therapeutic goals as an adjunctive therapy include improved clinical outcome, reduced ICU and total hospitalization time, and
reduced hospital costs.

Background and Rationale: We believe that the effective treatment of sepsis is the most valuable potential application for our technology. Severe
sepsis (sepsis with organ dysfunction) and septic shock (severe sepsis with persistent hypotension despite fluid resuscitation) carries mortality rates of
between 20% and 80%. Death can occur within hours or days, depending on many variables, including cause, severity, patient age and co-morbidities. There
are approximately 1.6 million new cases of sepsis in the U.S. each year; and based on a recent 2020 The Lancet study, the worldwide incidence is estimated to
be 49 million cases annually, accounting for 1 in every 5 deaths globally. The incidence of sepsis is also rising due to:

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an aging population;
increased incidence of antibiotic resistance;
increase in co-morbid conditions like cancer and diabetes; and
increased use of indwelling medical devices that are susceptible to infection.

In the U.S. alone, treatment of sepsis costs nearly $20 billion annually. According to the CDC, sepsis is a top ten cause of death in the U.S. The

incidence of sepsis is believed to be under-reported as the primary infection (i.e., pneumonia, pyelonephritis, etc.) is often cited as the cause of death.

An effective treatment for sepsis has been elusive. Pharmaceutical companies have been trying to develop drug therapies to treat the condition. With
the exception of Xigris® from Eli Lilly, no other products have been approved in either the U.S. or Europe for the treatment of sepsis. In 2011, after
completing a follow up study required by the FDA, it was subsequently determined that Xigris® did not have a statistically significant mortality benefit, and
Eli Lilly withdrew Xigris® from all markets worldwide.

Many medical professionals believe that blood purification for the treatment of sepsis holds tremendous promise. Studies using dialysis and
hemofiltration technology have been encouraging, but have only had limited benefit to sepsis patients. The reason for this appears to be rooted in a primary
limitation of dialysis technology itself: the inability of standard dialysis to effectively and efficiently remove significant quantities of larger toxins such as
cytokines from circulating blood. CytoSorb has demonstrated the ability to safely reduce key cytokines in the blood of septic patients with multiple organ
failure in our European Sepsis Trial.

The ability of CytoSorb to interact safely with blood (hemocompatibility) has been demonstrated through ISO 10993 testing, which includes testing
for hemocompatibility, biocompatibility, cytotoxicity, genotoxicity, acute sensitivity and complement activation. CytoSorb use has been considered safe and
well-tolerated in more than 80,000 human treatments to date.

CytoSorb has been designed to achieve broad-spectrum removal of both pro- and anti-inflammatory cytokines, preventing or reducing the
accumulation of high concentrations in the bloodstream. It also removes a wide range of inflammatory mediators such as activated complement, bacterial
toxins, myoglobin, free hemoglobin, bilirubin, and many others. This approach is intended to modulate the immune response without causing damage to the
immune system. For this reason, researchers have referred to the approach reflected in our technology as “immunomodulatory” therapy.

Projected Timeline: In 2011, the CytoSorb filter received EU regulatory approval under the CE Mark as an extracorporeal cytokine filter to be used
in clinical situations where cytokines are elevated. Our manufacturing facility has also achieved ISO 13485:2003 Full Quality Systems certification, an
internationally recognized quality standard designed to ensure that medical device manufacturers have the necessary comprehensive management systems in
place to safely design, develop, manufacture and distribute medical devices in the EU. We are currently manufacturing our CytoSorb device for commercial
sale in the EU. We are currently selling CytoSorb in Germany, Austria, Switzerland, Belgium, Luxembourg, Poland, Norway, Sweden, Denmark, and the
Netherlands with a direct sales force. Based on its CE Mark approval, CytoSorb can also be sold throughout all 27 countries of the EU, the United Kingdom
and countries outside the EU that will accept European regulatory approval with registration. Overall, we have established either direct sales or distribution
(via distributors or strategic partners) of CytoSorb in 58 countries worldwide. Registration of CytoSorb is typically required in each of these countries prior to
active commercialization. With CE Mark approval, this can be typically achieved within several months in EU countries. Outside of the EU, the process is
more variable and can take months to more than a year due to different requirements for documentation and clinical data. Variability in the timing of
registration affects the initiation of active commercialization in these countries, which affects the timing of expected CytoSorb sales. We actively support all
of our distributors and strategic partners in the product registration process. Outside of the EU, CytoSorb is distributed in Turkey, India, Sri Lanka, Australia,
New Zealand, Russia, South Africa, Serbia, Norway, Vietnam, Malaysia, Hong Kong, Chile, Panama, Costa Rica, Colombia, Brazil, Mexico, Iceland, Israel,
UAE, Iran, Saudi Arabia and other Middle Eastern countries, Mexico and South Korea. We cannot generally predict the timing of these registrations, and
there can be no guarantee that we will ultimately achieve registration in countries where we have established distribution. We also cannot guarantee that we
will generate meaningful sales in the countries where we have established registration, due to other factors such as market adoption and reimbursement. We
are currently actively evaluating other potential distributor and strategic partner networks in other major countries that accept CE Mark approval. With
sufficient resources and continued positive clinical data, assuming availability of adequate and timely funding, and continued positive results from our clinical
studies, we intend to continue our commercialization plans for our product worldwide as well as to pursue U.S. clinical trials to seek FDA regulatory approval
for CytoSorb in the U.S. by 2022.

APPLICATION: Adjunctive Therapy in Other Critical Care Applications

Potential Benefits: Cytokine-mediated organ damage and immune suppression can increase the risk of death and infection in patients with commonly
seen critical care illnesses such as acute respiratory distress syndrome, severe burn injury, trauma and pancreatitis. By reducing both pro- and anti-
inflammatory cytokines, CytoSorb has the potential to reduce the systemic inflammatory response and:

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prevent or mitigate multiple organ dysfunction syndrome (“MODS”) and/or multiple organ failure (“MOF”);
prevent or reduce secondary infections;
reduce the need for expensive life-sparing supportive care therapies such as mechanical ventilation; and
reduce the need for ICU care, freeing expensive critical care resources, and reducing hospital costs and costs to the healthcare system.

Background and Rationale: A shared feature of many life-threatening conditions seen in the ICU is severe inflammation (either sepsis or systemic
inflammatory response syndrome) due to an over-reactive immune system and high levels of cytokines that can cause or contribute to organ dysfunction,
organ failure and patient death. Examples of such conditions include severe burn injury, trauma, acute respiratory distress syndrome and severe acute
pancreatitis. MODS and MOF are common causes of death in these illnesses and mortality is directly correlated with the number of organs involved. There
are currently few active therapies to prevent or treat MODS or MOF. If CytoSorb can reduce direct or indirect cytokine injury of organs, it may mitigate
MODS or MOF, improve overall patient outcome and reduce costs of treatment. In addition, secondary infection, such as ventilator-acquired pneumonia,
urinary tract infections, or catheter-related line infections, are another major cause of morbidity and mortality in all patients treated in the ICU that increase
with longer ICU stay. Prolonged illness, malnutrition, age, multiple interventional procedures, and exposure to antibiotic resistant pathogens are just some of
the many risk factors for functional immune suppression and infection. In sepsis and SIRS, the overexpression of pro-inflammatory cytokines can also cause a
depletion of immune effector cells through apoptosis and other means, and anti-inflammatory cytokines can cause profound immune suppression, both major
risk factors for infection.

Projected Timeline: The EU CE Mark approval for CytoSorb as an extracorporeal cytokine filter and its broad approved indication to be used in any
clinical situation where cytokines are elevated, allows it to be used “on label” in critical care applications such as acute respiratory distress syndrome, severe
burn injury, trauma, liver failure, and pancreatitis, and in other conditions where cytokine storm, sepsis and/or SIRS plays a prominent role in disease
pathology. In addition, the expanded indications for use label now includes reduction of bilirubin and reduction of myoglobin, further strengthens the on-label
use of the technology for the treatment of liver disease, and severe trauma, respectively. Our goal is to stimulate investigator-initiated clinical studies with our
device for these applications. Currently, we have more than 50 investigator initiated or company-sponsored studies being planned, enrolling, or completed.
We have been moving forward in parallel with a program to further understand the potential benefit of CytoSorb hemoperfusion in these conditions through
additional investigational animal studies and potential human pilot studies in the U.S. funded either directly by us, through grants, or through third-parties.
Commencement of these and other formal studies is contingent upon adequate funding and, in the case of U.S. human studies, FDA IDE approval of the
respective human trial protocols.

APPLICATION: Prevention and treatment of post-operative complications of cardiopulmonary bypass surgery

Potential Benefits: If CytoSorb is able to prevent or reduce high levels of cytokines, free hemoglobin, and other inflammatory mediators from
accumulating in the bloodstream during and following cardiac surgery, we anticipate that post-operative complications of cardiopulmonary bypass surgery
may be able to be prevented or mitigated. In addition, CytoSorb can remove certain anti-thrombotics such as ticagrelor and rivaroxaban during
cardiopulmonary bypass in patients requiring urgent or emergent surgery. The primary goals for this application are to:

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reduce ventilator and oxygen therapy requirements;
reduce post-operative complications such as ARDS, acute kidney injury, post-perfusion syndrome, and the SIRS;
reduce length of stay in hospital ICUs;
reduce the total cost of patient care;and
reduce the risk of post-operative bleeding complications such as need for blood and platelet transfusions, rethoracotomy, and death

Background and Rationale: Due to the highly invasive nature of cardiopulmonary bypass surgery, high levels of cytokines are produced by the body,
triggering severe inflammation. In addition, hemolysis of red blood cells frequently occurs, resulting in the release of free hemoglobin into the bloodstream.
These inflammatory mediators can lead to post-operative complications. CytoSorb is the only cytokine reduction technology approved in the EU that can be
used intraoperatively in a bypass circuit in a heart-lung machine during cardiopulmonary bypass without the need for another machine. If our products are
able to prevent or reduce the accumulation of cytokines or free hemoglobin in a patient’s blood stream, we may be able to prevent or mitigate post-operative
complications caused by an excessive or protracted inflammatory response to the surgery. Intra-operative use of CytoSorb on high risk cardiac surgery
patients, where the risk of post-operative complications is the highest, is expected to be the main initial target market. The use of CytoSorb in the post-
operative period to treat post-operative SIRS is another application of the technology.

CytoSorb was recently approved to remove the anti-platelet agent, ticagrelor, during cardiac surgery involving cardiopulmonary bypass via label
expansion of its CE Mark. Ticagrelor (Brilinta®, Astra Zeneca) is a widely-used anti-platelet agent used to decrease cardiovascular risk and risk of stroke in
patients with a known history of heart disease or heart attack. It is also widely used during dual-anti platelet therapy in patients with acute coronary syndrome
undergoing percutaneous coronary intervention and stent placement. However, when patients on ticagrelor require emergent or urgent cardiac surgery, up to
65% of patients will have severe or massive peri-operative bleeding complications that contributes to a high risk of death and major costs to the healthcare
system. CytoSorb has already demonstrated the ability to remove ticagrelor rapidly and efficiently from human blood in vitro. Meanwhile, a retrospective
case series reported by clinicians at Asklepios Klinik St. Georg in Hamburg, Germany on the investigational use of CytoSorb to reverse the effects of
ticagrelor during emergency cardiac surgery demonstrated a greatly reduced risk of bleeding complications and the need for repeat surgery to explore the
source of bleeding, with extrapolations showing projected cost savings of £3,982, or approximately $5,000 USD, per patient in a U.K. based study.

Projected Timeline: Cardiac surgeons, cardiac perfusionists, and cardiothoracic ICU intensivists in Germany, Austria, and other countries have now
used CytoSorb intra-operatively and post-operatively in more than 25,000 treatments in cardiac surgery patients. This application is also the focus of number
of planned and enrolling company-sponsored and investigator-initiated studies in the United States and Europe.

CytoSorb is the subject of a pivotal, 400-patient randomized controlled trial in the United States called the REFRESH 2-AKI trial. Two CytoSorb
cartridges are being used intraoperatively to reduce activated complement, free hemoglobin, and other inflammatory toxins that are generated during valve
replacement surgery as well as aortic reconstruction with hypothermic cardiac arrest, with the goal of reducing the risk of acute kidney injury. Acute kidney
injury following cardiac surgery is associated with an increased risk of death in the first 5 years after surgery. The trial has enrolled more than 150 patients to
date and is currently being voluntarily paused, at the recommendation of the data monitoring committee, as the company transitions to a new contract research
organization and improves data quality and analysis.

The 250-patient randomized controlled REMOVE infective endocarditis trial completed in January 2020. The data is in the process of being

analyzed, with the goal of announcing data in mid-2020.

We are currently conducting the 30-patient, single arm trial in the United Kingdom called the TISORB trial, obtaining more country-specific data to

support the use of CytoSorb to remove ticagrelor in emergent or urgent cardiac surgery to reduce perioperatively bleeding complications.

For further detailed information regarding our clinical trial strategy, see the section entitled “Clinical Studies” of this Item 1 of this Report.

APPLICATION : Prevention and treatment of organ dysfunction in brain-dead organ donors to increase the number and quality of viable organs harvested
from donors

Potential Benefits: If CytoSorb is able to prevent or reduce high-levels of cytokines from accumulating in the bloodstream of brain-dead organ
donors, we believe CytoSorb may be able to mitigate organ dysfunction and failure, which results from severe inflammation following brain-death. The
primary goals for this application are:

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improving the viability of organs which can be harvested from brain-dead organ donors, and
increasing the likelihood of organ survival following transplant.

Background and Rationale: When brain death occurs, the body responds by generating large quantities of inflammatory cytokines. This process is
similar to the systemic inflammatory response syndrome and sepsis. A high percentage of donated organs are never transplanted due to this response, which
damages healthy organs and prevents transplant. In addition, inflammation in the donor may damage organs that are harvested and reduce the probability of
graft survival following transplant. CytoSorb treatment in a porcine animal model of brain death demonstrated a reduction in cytokines as well as a
preservation of cardiac function compared to untreated controls.

There is a shortage of donated organs worldwide, with approximately 100,000 people currently on the waiting list for organ transplants in the U.S.
alone. Because there are an insufficient number of organs donated to satisfy demand, it is vital to maximize the number of viable organs donated, and
optimize the probability of organ survival following transplant.

Projected Timeline: Studies have been conducted under a $1 million grant from the Health Resources and Services Administration (“HRSA”), an
agency of the U.S. Department of Health and Human Services. Researchers at the University of Pittsburgh Medical Center and the University of Texas,
Houston Medical Center have completed the observational and dosing phases of the project. The results were published in Critical Care Medicine, January
2008. The next phase of this study, the treatment phase, would involve viable donors treated with the CytoSorb device. In this phase of the project, viable
donors will be treated and the survival and function of organs in transplant recipients will be tracked and measured. The treatment phase would be contingent
upon further discussion with the FDA and HRSA regarding study design, as well as obtaining additional funding.

The VetResQ Device (Animal Health Critical Care)

APPLICATION: Adjunctive Therapy in the Treatment of Sepsis, Pancreatitis and Other Critical Illnesses in Animals

Potential Benefits and Rationale: In January 2017, the VetResQ device became commercially available for the United States veterinary market.
VetResQ is a broad spectrum blood purification adsorber based upon similar underlying technology to CytoSorb and has been configured in 3 sizes (50, 150
and 300mL sized cartridges) to accommodate treatment of small, medium, and large animals such as cats, dogs, and high-value animals such as foals and
horses. VetResQ is compatible with standard hemodialysis, continuous renal replacement therapy (“CRRT”), and hemoperfusion blood pumps. Like
CytoSorb, VetResQ is designed to help treat (via hemoadsorption of cytokines, bacterial toxins and other inflammatory mediators) deadly inflammation and
toxic injury in animals with critical illnesses such as septic shock, toxic shock syndrome, toxin-mediated diseases, pancreatitis, trauma, liver failure, drug
intoxication, and lung injury. Critical illness in animals is similar to that in humans. Based upon cumulative studies, VetResQ is capable of reducing a broad
range of excessive inflammatory mediators and toxins that could otherwise cause direct tissue injury or serious systemic inflammation that can rapidly lead to
instability, organ failure, and death. VetResQ is available in the U.S. only for veterinary animal usage and is not for human use.

Projected Timeline : VetResQ is available for commercial purchase for animal health applications in the United States. The FDA was notified of the

launch in 2016 and we have provided the FDA with the related instructions for use and a marketing brochure.

The CytoSorb-XL Device (Critical Care)

APPLICATION: Adjunctive Therapy in the Treatment of Sepsis and other critical illnesses

Potential Benefits and Rationale: The CytoSorb-XL device is a next-generation porous polymer under advanced development and targets the same
markets as CytoSorb. Through novel patent-pending chemistry, CytoSorb-XL adds the ability to reduce Gram negative bacterial endotoxin
(lipopolysaccharide) to broad spectrum cytokine, exotoxin, and other inflammatory mediator removal. CytoSorb-XL removed comparable amounts of
endotoxin when compared in vitro against the leading standalone endotoxin filter, Toraymyxin (Toray, Japan). This could potentially increase the
effectiveness of CytoSorb in sepsis and septic shock caused by Gram negative bacteria.

Projected Timeline : CytoSorb-XL is in advanced pre-clinical development as a potential next generation polymer to CytoSorb. It is expected to

follow a similar path to E.U. approval as CytoSorb, expected within 4-5 years.

The HemoDefend Blood Purification Technology Platform (Acute and Critical Care)

APPLICATION: Reduction of contaminants in the blood supply that can cause transfusion reactions or disease when administering blood and blood products
to patients.

Potential Benefits: The HemoDefend RBC blood purification technology platform is designed to reduce contaminants in the blood supply that can
cause transfusion reactions or disease. It is a development stage technology that is not yet approved in any markets, but is comprised of our highly advanced,
biocompatible, polymer bead technology. If this technology is successfully developed and then incorporated into a regulatory approved product, it could have
a number of important benefits, including:

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reduce the risk of transfusion reactions and improve patient outcome;
improve the quality, or extend the shelf life of stored blood products;
improve the availability of blood and reduce blood shortages by reducing the limitations of donors to donate blood; and
allow easier processing of blood.

Background and Rationale: The HemoDefend technology platform was built upon our successes in designing and manufacturing porous polymer
beads that can remove cytokines. We have expanded the technology to be able to remove substances as small as drugs and bioactive lipids, to proteins as large
as antibodies from blood that can cause transfusion reactions and disease. Although the frequency of these reactions are relatively low (approximately 3% to
5%), the sheer number of blood transfusions is so large, that the number of transfusion reactions, ranging from mild to life-threatening, is substantial, ranging
from several hundreds of thousands to millions of reactions each year. In critically-ill patients, the risk of transfusion reactions is significantly higher than in
the general population and can increase the risk of death because their underlying illnesses have depleted protective mechanisms and have primed their bodies
to respond more vigorously to transfusion-associated insults.

A number of retrospective studies have also suggested that administration of older blood leads to increased adverse events and even increased
mortality, compared with blood recently harvested. Biological studies have demonstrated the accumulation of erythrocyte storage lesions that compromise the
function and structural integrity of packed red blood cells and have also demonstrated the accumulation of substances during blood storage that can lead to
transfusion reactions. Three adult, prospective, randomized, controlled studies, RECESS (completed), ABLE (completed), and TRANSFUSE (completed)
were designed to evaluate the morbidity and mortality in cardiovascular surgery patients (RECESS) and critically ill patients (ABLE and TRANSFUSE),
treated with either “new or fresh” or “older” blood. The RECESS Trial was a randomized, controlled trial in a total of 1,098 evaluable patients undergoing
complex cardiac surgery given fresh blood (≤10 days old) as compared to older blood (≥21 days old). The overall conclusion was that the age of blood had no
statistically significant impact on the progression to organ dysfunction (as measured by the multiple organ dysfunction syndrome score) or death. However, a
statistically significant increase in hepatobiliary-related serious adverse events (5% fresh vs 9% older, p=0.02) was related to hyperbilirubinemia, possibly
caused by hemolysis and release of free hemoglobin in old blood. The serious adverse event rate in both new and old blood groups was approximately 50%,
which is considered high for this group of patients. There are many details and subgroup analyses that were not discussed, particularly an analysis of those
patients receiving more units of blood than average, as the risk of adverse events is cumulative. The ABLE Trial was a randomized, controlled trial in 2,430
critically-ill patients receiving either fresh (≤ 7 days) or standard issue blood. There was no difference in 90-day mortality between the two groups. The
TRANSFUSE Trial was a large scale RCT in Australia evaluating the impact of age of leukodepleted pRBCs (short-term storage: 11.8 days mean, N=2,457,
mean 4.1 units transfused; long-term storage: 22.4 days mean, N=2,462, m) on 90-day mortality in critically-ill patients. There was no significant difference
in 90-day mortality (24.8% mortality short-term storage vs 24.1% long-term storage) though there were statistically more febrile non-hemolytic transfusion
reactions (n=123; 5% short-term storage vs n=88; 3.6% long-term storage). Also, patients who had short-term storage blood with APACHE III > 21.5%
(median risk), demonstrated higher mortality (37.7% vs 34% long-term storage , p=0.05). The outcomes of these trials do not alter the current pressing need
for better solutions to purify transfused blood products in order to reduce transfusion-related adverse events and improve clinical outcome, but suggest that
age of blood is not the critical factor.

Projected Timeline: The HemoDefend platform is a development stage product based on our advanced polymer technology. The base polymer is ISO
10993 biocompatible, meeting standards for biocompatibility, hemocompatibility, cytotoxicity, genotoxicity, acute sensitivity and complement activation.
HemoDefend has demonstrated the in vitro removal of many different substances from blood such as antibodies, free hemoglobin, cytokines and bioactive
lipids. We have also prototyped a number of different implementations of the HemoDefend technology, including the “Beads in a Bag” blood treatment blood
storage bag, and standard in-line blood filters. The technology has been supported by the NHLBI, a division of the National Institute of Health, under a Phase
I SBIR, an awarded $1.5M Phase II SBIR contract (funded by NHLBI and U.S. Special Operations Command (USSOCOM)), and more recently under a $3M
multi-year Phase IIB bridge contract funded by NHLBI. We expect to advance the in-line filter to human testing, expected in the second half of 2020. We
intend to out-license this technology to a strategic partner in the transfusion medicine space, but may elect to continue our development in parallel with out-
licensing efforts.

APPLICATION: Removal of anti-A and anti-B blood group antibodies from fresh whole blood and plasma

Potential Benefits: The HemoDefend-BGA blood purification technology platform is designed to reduce anti-A and anti-B antibodies in plasma and
whole blood. The goal is to either enable the production of universal plasma, or enable fresh warm whole blood transfusions. If this technology is successfully
developed and then incorporated into a regulatory approved product, it could have a number of important benefits, including:

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reduce the risk of transfusion reactions and improve patient outcome;
eliminate the need to blood-type plasma, improving its availability
enable the use of low titer whole blood, ideal for trauma resuscitation; and
easier processing of blood products.

Background and Rationale: Plasma is the straw-colored, cell-free portion of whole blood. It contains a wide range of important substances such as
electrolytes, hormones, proteins such as albumin, clotting factors, and antibodies. The transfusion of plasma, or plasma-derived products, is used widely to
help save the lives of trauma and bleeding victims, septic and other critically-ill patients, and patients with life-threatening blood coagulation and autoimmune
disorders. In 2008, more than 4.5 million units of plasma were transfused in the United States alone. With the exception of the relatively uncommon Type AB,
or “universal” plasma, most plasma contains blood-type specific antibodies and must be cross-matched with the intended recipient ahead of time or risk
serious transfusion reactions. By reducing these blood-type specific antibodies, the goal is to create a cost-effective, reliable, and expanded source of
“universal” plasma that can be administered immediately, without blood-typing, in a wide range of emergent and non-emergent situations.

Projected Timeline: The HemoDefend-BGA platform is a development stage product based on our advanced blood purification technology.
Prototype filtration devices have been evaluated by a government agency, resulting in excellent depletion of both anti-A and anti-B antibodies. Work is
continuing to advance these prototypes to commercial-ready devices. This work has received $1.15 million in Phase I and II Small Business Technology
Transfer (STTR) funding by the U.S. Army Medical Research Acquisition Activity (USAMRAA), U.S. Army Medical Research and Materiel Command
(USAMRMC), Fort Detrick, MD.

K+ontrol (Acute and Critical Care)

APPLICATION: Treatment of severe hyperkalemia that can occur in patients with life-threatening conditions such as trauma, burn injury, kidney failure,
tumor lysis syndrome, and those with no access to dialysis

Potential Benefits: K+ontrol was developed to rapidly treat severe hyperkalemia by reducing potassium in the blood. Although hemodialysis remains

the definitive treatment for severe hyperkalemia, K+ontrol represents a simpler, and more flexible alternative. The primary goals for this application are to:

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Enable the rapid treatment of deadly hyperkalemia without the need for hemodialysis
Prevent potentially fatal cardiac arrhythmias following severe injury
Improve survival in victims in remote areas and during prolonged field care in combat

Background and Rationale: Potassium is an important electrolyte in the body that is present inside cells at high concentrations, with the amount in
blood tightly regulated. Following injury to cells by, for example, trauma, burn injury, ischemia, or cytotoxic drugs, such cells will continuously leak high
levels of potassium into the blood, resulting in hyperkalemia. The kidneys normally excrete excess potassium from the blood, but when compromised, as in
critically-ill patients suffering from kidney failure or in chronic dialysis patients with end-stage kidney disease, the levels of blood potassium can rapidly rise
unabated. When the potassium level in the blood exceeds a concentration of 6.0 mmol/L (normal 3.6 - 5.2 mmol/L), the risk of heart arrhythmias and sudden
cardiac death increases significantly. Orally administered potassium sorbents such as Kayexalate® (Sanofi-Aventis) and Veltassa® (Relypsa) are only
recommended for the non-emergent lowering of mild to moderate hyperkalemia, while the use of insulin and glucose to drive potassium into cells in severe
hyperkalemia is only a temporary strategy. Dialysis has been the definitive treatment of severe hyperkalemia, but requires a large dialysis machine, electricity,
bags of dialysate, a skilled technician, and prolonged treatment times that are not practical in certain situations such as in remote locations, during prolonged
field care in combat, in areas that lack modern medical facilities, or in situations where the numbers of victims outstrip available dialysis equipment and
supplies. Because of this, there is a major need for simple, but effective ways to rapidly treat severe hyperkalemia.

Hyperkalemia is a common problem and has been reported to occur in 1.7-5.2% of hospitalized patients in a number of studies. It has also been
recognized as a serious complication of combat injury since World War II, when hyperkalemia and acute kidney injury was associated with a mortality rate of
90%, and was a leading cause of post-traumatic death in the Korean War, until the advent of dialysis therapy. In the wars in Iraq and Afghanistan, an
estimated 5.8% of all combat casualties developed hyperkalemia within 48 hours of injury. Even in non-crush traumatic injury, severe hyperkalemia (>6
mmol/L) occurred in approximately 20% of patients. Hyperkalemia was also observed in approximately 16% of victims of natural disasters such as
earthquakes, where crush injury is common.

Projected Timeline: K+ontrol has demonstrated the ability to reduce potassium in several animal models of hyperkalemia and is currently being
optimized with funding support from the US Army and Defense Health Agency under under a Phase I and Phase II SBIR contract for a total of $1.15 million
and a $3 million Rapid Innovation Fund (RIF) award from the U.S. Air Force Materiel Command. We plan to move forward with clinical development of this
product, pending the successful outcome of these animal studies.

ContrastSorb (Radiology and Interventional Radiology)

APPLICATION: Removal of IV contrast in blood administered during CT imaging, an angiogram, or during a vascular interventional radiology procedure,
in order to reduce the risk of contrast-induced nephropathy.

Potential Benefits: IV contrast can lead to CIN, in susceptible patients. Risk factors include chronic kidney disease and renal insufficiency caused by
age, diabetes, congestive heart failure, long-standing hypertension, and others co-morbid illnesses. CIN can lead to increased risk of patient morbidity and
mortality. Removal of IV contrast by ContrastSorb may:

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reduce the risk of acute kidney injury
improve the safety of these procedures and reduce the risk of morbidity and mortality

Background and Rationale: Contrast-induced nephropathy is the acute loss of renal function within the first 48 hours following IV contrast
administration. IV contrast is widely administered to patients undergoing CT scans, to enhance the images and make it easier to identify anatomic structures.
IV contrast is also administered during vascular interventional radiology procedures and angiography of blood vessels in the brain, heart, limbs, and other
parts of the body to diagnose and treat atherosclerosis (narrowing of blood vessels due to cholesterol deposits), vascular injury, aneurysms, etc. The reported
risk of CIN undergoing contrast enhanced CT scans has been reported to be 2% to 13%. For coronary intervention, the risk has been estimated to be as high
as 20% to 30% in high risk patients with pre-existing renal insufficiency, and other risk factors. The use of low osmolar IV contrast, hydration of patients pre-
procedure, orally administration of N-acetylcysteine, and other agents to prevent CIN have demonstrated modest benefit in some clinical studies, but in many
cases, the results across studies have been equivocal and inconsistent. In high risk patients, the direct removal of IV contrast from the blood with ContrastSorb
to prevent CIN represents a potentially more effective alternative.

Projected Timeline: ContrastSorb has demonstrated the high efficiency single pass removal of IV contrast and is in the process of optimization. The
underlying polymer is made of the same ISO 10993 biocompatible polymer as CytoSorb, but with different structural characteristics. The ContrastSorb device
is a hemoperfusion device similar in construction to CytoSorb and BetaSorb. Assuming successful optimization of the ContrastSorb polymer, safety and
efficacy of IV contrast removal will need to be established in human clinical studies. We seek to out-license this technology to a potential strategic partner.

The BetaSorb Device (Chronic Care)

APPLICATION: Prevention and treatment of health complications caused by the accumulation of metabolic toxins in patients with chronic renal failure

Potential Benefits: If BetaSorb is able to prevent or reduce high levels of metabolic waste products from accumulating in the blood and tissues of
long-term dialysis patients, we anticipate that certain health complications characteristic to these patients can be prevented or mitigated. The primary goals for
this application are to:

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improve and maintain the general health of dialysis patients;
reduce disability and improve the quality of life of these patients
reduce the total cost of patient care; and
increase life expectancy.

Background and Rationale: Our BetaSorb device is intended for use on patients suffering from chronic kidney failure who rely on long-term dialysis
therapy to sustain life. Due to the widely recognized inability of dialysis to remove larger proteins from blood, metabolic waste products, such as beta2-
microglobulin, accumulate to toxic levels and are deposited in the joints and tissues of patients. Specific toxins known to accumulate in these patients have
been linked to their severe health complications, increased healthcare costs, and reduced quality of life.

Researchers also believe that the accumulation of toxins may play an important role in the significantly reduced life expectancy experienced by
dialysis patients. In the U.S., the average life expectancy of a dialysis patient is five years. Industry research has identified links between many of these toxins
and poor patient outcomes. If our BetaSorb device is able to routinely remove these toxins during dialysis and prevent or reduce their accumulation, we
expect our BetaSorb device to maintain or improve patient health in the long-term. We believe that by reducing the incidence of health complications, the
annual cost of patient care will be reduced and life expectancy increased.

The poor health experienced by beta2-microglobulin patients is illustrated by the fact that in the U.S. alone, more than $33 billion is spent annually

caring for this patient population according to the United States Renal Data System, at a cost of approximately $88,000 per patient annually.

Projected Timeline: We have collected a significant amount of empirical data for the development of this application. As the developer of this
technology, we had to undertake extensive research, as no comparable technology was available for reference purposes. We have completed four human pilot
studies, including a clinical pilot of six patients in California for up to 24 weeks in which our BetaSorb device removed the targeted toxin, beta2-
microglobulin, as expected. In total, we have sponsored clinical studies utilizing our BetaSorb device on 20 patients involving approximately 345 total
treatments. Each study was conducted by a clinic or hospital personnel with us providing technical assistance as requested.

As discussed above, due to practical and economic considerations, we are focusing our efforts and resources on commercializing our CytoSorb
device for critical care and cardiac surgery applications. Following commercial introduction of the CytoSorb device, and with sufficient additional resources,
we may continue development of the BetaSorb resin and may conduct additional clinical studies using the BetaSorb device in the treatment of end stage renal
disease patients.

Commercial and Research Partners

Biocon Ltd

In September 2013, we entered into a distribution agreement with Biocon Ltd. (“Biocon”), India’s largest biopharmaceuticals company, under which
Biocon was granted exclusive commercialization rights to the CytoSorb therapy in India and select emerging markets, initially focused on sepsis. Biocon
committed to annual minimum purchases to maintain exclusivity. In October 2014, the Biocon partnership was expanded to include all critical care
applications and cardiac surgery. In addition, Biocon committed to higher annual minimum purchases of CytoSorb to maintain distribution exclusivity and
committed to conduct and publish results from multiple investigator initiated studies and patient case studies. Under the terms of the expanded partnership,
the term of the distribution agreement was extended to December 2022.

Fresenius Medical Care AG

In December 2014, we entered into a multi-country strategic partnership with Fresenius Medical Care AG & Co KGaA (together with its affiliates,
as appropriate, “Fresenius”) to commercialize the CytoSorb therapy. Under the agreement reflecting the terms of the partnership, Fresenius was granted
exclusive rights to distribute CytoSorb for critical care applications in France, Poland, Sweden, Denmark, Norway, and Finland. The partnership allows
Fresenius to offer an innovative and easy way to use blood purification therapy for removing cytokines in patients that are treated in the ICU. To promote the
success of CytoSorb, Fresenius agreed to also engage in the ongoing clinical development of the product. This includes the support and publication of a
number of small case series and patient case reports as well as the potential for future larger, clinical collaborations. In May 2016, Fresenius launched the
product in the six countries for which it was granted exclusive distribution rights. In January 2017, the Fresenius partnership was expanded pursuant to a
revised three-year agreement. The terms of the revised agreement extended Fresenius’ exclusive distributorship of CytoSorb for all critical care applications
in their existing territories through 2019 and include guaranteed minimum quarterly orders and payments, evaluable every one and a half years.

At the same time, we entered into a comprehensive co-marketing agreement with Fresenius. Under the terms of the co-marketing agreement,
CytoSorbents and Fresenius agreed to jointly market CytoSorb to Fresenius’ critical care customer base in all countries where CytoSorb is being actively
commercialized. CytoSorb continues to be sold by our direct sales force or through our international network of distributors and partners, while Fresenius
sells all ancillary products to their customers. Fresenius further provides written endorsements of CytoSorb for use with their multiFiltrate and
multiFiltratePRO acute care dialysis machines that can be used by us and our distribution partners to promote CytoSorb worldwide. Training and preparation
for this co-marketing program began in five initial countries in 2017 and is continuing, with implementation of the co-marketing program in additional
countries planned for the future.

In December 2018, the Fresenius agreement signed in December 2014 was amended, to grant Fresenius exclusive distribution rights for the Czech
Republic and Finland and all critical care medicine and ICU applications on dialysis or ECMO machines for France. In addition, in 2019, Poland, Sweden,
Denmark, and Norway were transitioned into the co-marketing program. Finally, the guaranteed minimum quarterly purchases and payments requirements
were removed for 2019.

In addition, also in December 2018, we entered into agreements to expand the partnership with Fresenius into South Korea and Mexico. Under the
terms of these agreements, Fresenius has exclusive rights to distribute CytoSorb for acute care and other hospital applications in Korea and Mexico.
Commercial sales of CytoSorb are expected to commence after securing market registration clearance from the South Korean and Mexican health authorities.
These multi-year agreements include an initial stocking order and are subject to annual minimum purchases of CytoSorb to maintain exclusivity. These
agreements, which commenced on January 1, 2019, have an initial term of three years and will automatically renew for an additional two years unless
terminated by either party.

Aferetica s.r.l.

In 2015, we entered into a distribution agreement with Aferetica s.r.l., a distributor based in Bologna, Italy that specializes in the sale of certain
medical products and devices, specifically extracorporeal therapies, in the critical care, cardiac surgery and liver disease markets (“Aferetica”). Under the
terms of the agreement, we granted Aferetica the exclusive right to distribute CytoSorb in Italy, San Marino and the Vatican for application in CRRT
(Continuous Renal Replacement Therapies), dialysis and hemoperfusion machine run treatments, as described in the agreement. In connection with the grant
of distribution rights, Aferetica agreed to certain minimum purchase and inventory requirements. Aferetica further agreed not to market or sell products
competitive with CytoSorb in Italy, San Marino and the Vatican. The agreement expired by its terms on December 31, 2019. We are currently negotiating a
new multi-year agreement with Aferetica and they are continuing to act as our exclusive distributor in Italy.

In addition, in September 2017, we announced a partnership with Aferetica to provide dedicated, branded sorbent cartridges for use with Aferetica’s
proprietary PerLife™ ex-vivo organ perfusion system, with the goal of rehabilitating or preserving the function solid organs destined for eventual transplant.
In July 2018, Aferetica and CytoSorbents debuted the PerLife™ system for organ preservation at the 27th International Congress of the Transplantation
Society. Aferetica is currently seeking CE Mark registration of the system.

Terumo Cardiovascular Group

In September 2016, we entered into a multi-country strategic partnership with Terumo Cardiovascular Group (“Terumo”) to commercialize CytoSorb
for cardiac surgery applications. Under the terms of the agreement, Terumo has exclusive rights to distribute the CytoSorb CPB procedure pack for intra-
operative use during cardiac surgery in France, Sweden, Denmark, Norway, Finland and Iceland. Terumo launched CytoSorb in its six exclusive countries in
December 2016.

University of Pittsburgh Medical Center

Two government research grants by the National Institutes of Health (“NIH”) and the U.S. Department of Health and Human Services were awarded
to investigators at the University of Pittsburgh to explore the use of adsorbent polymers in the treatment of sepsis and organ transplant preservation. Under
“Sub Award Agreements” with the University of Pittsburgh, we developed polymers for use in these studies.

A grant of $1 million was awarded to the University of Pittsburgh Medical Center in 2003. The project sought to improve the quantity and viability
of organs donated for transplant by using CytoSorb to detoxify the donor’s blood. The observational and dosing phases of the study, involving 30 viable
donors and eight non-viable donors, respectively, have been completed. The next phase of this study, the treatment phase, was planned to involve viable
donors. However, we are not currently focusing our efforts on the commercialization of CytoSorb for application in organ donors.

In September 2005, the University of Pittsburgh Medical Center was awarded a grant of approximately $7 million from NIH entitled “Systems
Engineering of a Pheresis Intervention for Sepsis (SEPsIS)” to study the use of adsorbent polymer technology in the treatment of severe sepsis. The study,
which lasted for a total of five years, commenced in September 2005. Under a SubAward Agreement, we worked with researchers at the University of
Pittsburgh - Critical Care Medicine Department. We believe that the only polymers used in this study were polymers we have developed specifically for use
in the study, which are similar to the polymers used in our devices. Under the SubAward Agreement, for our efforts in support of the grant during 2006
through 2010, we received approximately $402,000.

These grants represent a substantial research cost savings to us and demonstrate the strong interest of the medical and scientific communities in our

technology.

Researchers at UPMC have participated in nearly every major clinical study of potential sepsis intervention during the past twenty years. Drs. Derek
Angus and John Kellum were investigators for Eli Lilly’s sepsis drug, Xigris®. Dr. Kellum, a member of the UPMC faculty since 1994, is the Chairman of
our Sepsis Advisory Board. Dr. Kellum’s research interests span various aspects of Critical Care Medicine, but center on critical care nephrology (including
acid-base, and renal replacement therapy), sepsis and multiple organ failure, and clinical epidemiology. He is Professor and Vice Chair for Research in the
Critical Care department, and Director of the Center for Critical Care Nephrology(“CRISMA”) at the University of Pittsburgh Medical Center and has
authored more than 400 publications and has received numerous research grants from foundations and industry.

Advisory Boards

From time to time our management meets with scientific advisors who sit on our Scientific Advisory Board, our Medical Advisory Board – Critical

Care Medicine, our Medical Advisory Board – Chronic Kidney Failure / Dialysis and our Scientific Advisory Board – Cardiac Surgery.

Our Scientific Advisory Board consists of three scientists with expertise in the fields of fundamental chemical research, and polymer research and

development.

Our Medical Advisory Board-Critical Care Medicine consists of four medical doctors, one of whom is affiliated with UPMC, with expertise in
critical care medicine, sepsis, multiple organ failure and related clinical study design. One of our advisors is the pioneer of CAR T-cell immunotherapy from
University of Pennsylvania.

Our Trauma Advisory Board consists of four medical doctors with expertise in trauma, burn injury and critical care medicine.

Our Cardiac Surgery Advisory Board consists of six medical doctors with experience in cardiac surgery and complications caused by inflammation

generated by the surgery.

We compensate members of our Advisory Boards at the rate of $2,000 for each full-day meeting they attend in person; $1,200 if attendance is by
telephone. When we consult with members of our Advisory Board (whether in person or by telephone) for a period of less than one day, we compensate them
at the rate of $200 per hour. We also reimburse members of our Advisory Boards for their travel expenses for attending our meetings.

Royalty Agreements

With Principal Stockholder

In August 2003, in order to induce Guillermina Vega Montiel, a principal member of RenalTech International, LLC at the time, to make a $4 million
investment in RenalTech International, LLC, Ms. Montiel was granted a perpetual royalty (the “Royalty”) equal to three percent of all gross revenues received
by us from sales of CytoSorb in the applications of sepsis, cardiopulmonary bypass surgery, organ donor, chemotherapy and inflammation control. In
addition, for her investment, Ms. Montiel received 1,230,770 membership units of RenalTech International, LLC. Such membership units ultimately were
converted into and became 7,420 shares of our common stock following our June 30, 2006 merger. In February 2017, all rights, title and interest to the
Royalty was assigned to The Robert Shipley Living Trust. For the year ended December 31, 2019 we have recorded royalty costs of approximately $675,000.

With Purolite

In 2003, Purolite filed a lawsuit against us asserting, among other things, co-ownership and co-inventorship of certain of our patents. On September
1, 2006, the United States District Court for the Eastern District of Pennsylvania approved a Stipulated Order and Settlement Agreement under which we and
Purolite agreed to the settlement of the action. The Settlement Agreement provides us with the exclusive right to use our patented technology and proprietary
know how relating to adsorbent polymers for a period of 18 years. In particular, the Settlement Agreement relates to several of our issued patents and several
of our pending patent applications covering our biocompatible polymeric resins, our methods of producing these polymers, and the methods of using the
polymers to remove impurities from physiological fluids, such as blood.

Under the terms of the Settlement Agreement, we have agreed to pay Purolite royalties of 2.5% to 5% on the sale of those of our products, if and
when those products are sold commercially, that are used in direct contact with blood or, in certain cases, in direct contact with a physiological fluid other
than blood. The royalty payments provided for under the Settlement Agreement would apply to our currently envisioned CytoSorb, VetResQ, and BetaSorb
products. For the year ended December 31, 2019 per the terms of the license agreement we have recorded royalty costs of approximately $1,125,000.

Following the expiration of the 18-year term of the Settlement Agreement, the patents and patent applications that are the subject of the Settlement
Agreement should have expired under current patent laws, and the technology claimed in them will be available to the public. However, following such time,
we would continue to exclusively own any confidential and proprietary know how.

Product Payment & Reimbursement

CytoSorb

Germany

Effective January 1, 2017, we achieved a dedicated reimbursement code in Germany that provides for specific and enhanced reimbursement for our
CytoSorb device. We believe in most cases that this dedicated reimbursement code provides our customers in Germany with reimbursement that not only
covers the cost of the device, but the procedural costs as well. Reimbursement can also be covered by the standard “diagnosis related group” (“DRG”) acute
care reimbursement. Under this system, hospitals would purchase CytoSorb and subtract the cost from a pre-determined lump-sum payment made by the
payor to the hospital based on the patient’s diagnosis.

Switzerland

In 2019, CytoSorb was assigned two specific procedure codes from the Swiss Federal Statistical Office, a division of the Federal Department of
Home Affairs in Switzerland. With cost data related to use of the CytoSorb device, a prerequisite for receiving reimbursement from the Swiss DRG system,
we expect to receive a response soon regarding reimbursement levels.

Europe (excluding Germany and Switzerland)

Payment for our CytoSorb device for the removal of cytokines in patients with life-threatening illnesses is country dependent in Europe. We are
pursuing reimbursement of CytoSorb in other major territories, with our partners, such as France, England, Italy and Spain, representing the other four
economic leaders in Europe. There can be no assurances that reimbursement will be granted. Additional clinical data may be required to establish
reimbursement.

United States

Critical care applications such as those targeted by our CytoSorb device involve a high mortality rate and extended hospitalization, coupled with
extremely expensive ICU time. In view of these high costs and high mortality rates, we believe acceptance of our proprietary technology by critical care
practitioners and hospital administrators will primarily depend on safety and efficacy factors rather than solely based on cost.

CytoSorb is not yet approved in the U.S., and we have not fully assessed the potential for reimbursement for the device. Payment for our CytoSorb
device in the U.S. for the treatment and prevention of sepsis and other related acute care applications is anticipated to fall under the DRG prospective
repayment system, which is currently the predominant inpatient hospital reimbursement methodology in the U.S. Under this system, hospital reimbursement
is generally based upon pre-determined amounts payable for specific diagnoses (e.g. septic shock with respiratory failure), regardless of the number of
services provided during the patient’s stay. If CytoSorb can improve outcomes and reduce the costs of ICU treatment and hospital length of stay, it could
potentially save hospitals a significant amount of money.

Competition

General

We believe that our products represent a unique approach to disease states and health complications associated with the presence of larger toxins
(often referred to as middle molecular weight toxins) in the bloodstream, including sepsis, acute respiratory distress syndrome, trauma, severe burn injury,
pancreatitis, post-operative complications of cardiac surgery, damage to organs donated for transplant prior to organ harvest, and renal disease. Researchers
have explored the potential of using existing membrane-based dialysis technology to treat patients suffering from sepsis. These techniques are unable to
effectively remove the middle molecular weight toxins. We have demonstrated the ability of CytoSorb to reduce key cytokines in the blood of human patients
with predominantly septic shock and acute respiratory distress syndrome. In a post-hoc subgroup analysis of our European Sepsis Trial, we have also
demonstrated statistically significant improvements in mortality in patients at high risk of death, including patients with either very high cytokine levels or
patients older than age 65, both of which have a high predicted mortality. Larger studies are needed to confirm these preliminary data.

The CytoSorb, VetResQ, CytoSorb XL, DrugSorb, ContrastSorb, and BetaSorb devices consist of a cartridge containing adsorbent polymer beads.
The cartridge incorporates industry standard connectors at either end of the device which connect directly to an extra-corporeal circuit (bloodlines) on a
standalone basis. The extra-corporeal circuit consists of plastic tubing through which the blood flows, our cartridge containing our adsorbent polymer beads,
pressure monitoring gauges, and a blood pump to maintain blood flow. The patient’s blood is accessed through a catheter inserted into his or her veins. The
catheter is connected to the extra-corporeal circuit and the blood pump draws blood from the patient, pumps it through the cartridge and returns it back to the
patient in a closed loop system. As blood passes over the polymer beads in the cartridge, toxins are adsorbed from the blood, without removing any fluids
from the blood or the need for replacement fluid or dialysate.

There are three common forms of blood purification, including hemodialysis, hemofiltration, and hemoperfusion. All modes are generally supported
by standard hemodialysis machines. All take blood out of the body to remove toxins and unwanted substances from blood, and utilize extracorporeal circuits
and blood pumps. Dialysis and hemofiltration remove substances from blood by diffusion and ultrafiltration, respectively, through a semi-permeable
membrane, allowing the passage of certain sized molecules across the membrane, but preventing the passage of other, larger molecules. Hemoperfusion
utilizes solid or porous sorbents to remove substances based on pore capture and surface adsorption, not filtration.

CytoSorb is a hemoperfusion cartridge, using an adsorbent of specified pore size, which controls the size of the molecules which can pass into the
adsorbent and vastly increases the area available for surface adsorption. As blood flows over our polymer adsorbent, middle molecules such as cytokines flow
into the polymer adsorbent and are adsorbed. Our devices do not use semipermeable membranes or dialysate. In addition, our devices do not remove fluids
from the blood like hemodialysis or hemofiltration. Accordingly, we believe that our technology has significant advantages as compared to traditional dialysis
techniques, including ease of use.

Our HemoDefend platform is a development-stage technology utilizing a mixture of proprietary porous polymer beads that target the removal of
contaminants that can cause transfusion reactions or cause disease in patients receiving transfused blood products. The HemoDefend beads can be used in
multiple configurations, including the common in-line filter between the blood bag and the patient as well as a unique, patent-pending “Beads in a Bag”
treatment configuration, where the beads are placed directly into a blood storage bag.

Sepsis

Researchers have explored the potential of using existing membrane-based dialysis technologies to treat patients suffering from sepsis. These
techniques are unable to effectively remove middle molecular weight toxins, which leading researchers have shown to cause and complicate sepsis. The same
experts believe that a blood purification technique that efficiently removes, or significantly reduces, the circulating concentrations of such toxins might
represent a successful therapeutic option. CytoSorb has demonstrated the ability to remove middle molecular weight toxins, such as cytokines, from
circulating blood in a statistically significant manner.

Medical research during the past two decades has focused on drug interventions aimed at chemically blocking or suppressing the function of one or
two inflammatory agents. In hindsight, some researchers now believe this approach has little chance of significantly improving patient outcomes because of
the complex pathways and multiple chemical factors at play. Clinical studies of these drug therapies have been largely unsuccessful. An Eli Lilly drug,
Xigris®, cleared by the FDA in November 2001, is the first and only drug to be approved for the treatment of severe sepsis. Clinical studies demonstrated that
use of Xigris® resulted in an average absolute 6% reduction in 28-day mortality, and an absolute 13% reduction in 28-day mortality in the most severe sepsis
patients. The drug remains controversial and is considered expensive when compared to the percentage of patients who benefit. In 2011, after completing a
follow up study required by the FDA, it was subsequently determined that Xigris® did not have a statistically significant mortality benefit, and in October
2011, Eli Lilly withdrew Xigris® from all markets worldwide.

Development of many experimental therapies has been discontinued, including Eritoran from Eisai, CytoFab from BTG/Astra Zeneca, Talactoferrin

from Agennix, tranexemic acid from Leading Biosciences, selective cytapheresis from CytoPheryx, and others.

Since January 1, 2013, there have been three Phase 1, one Phase 1/2, nine Phase 2, four Phase 2/3, three Phase 3, and five Phase 4 interventional
drug trials posted on clinicaltrials.gov for sepsis-related indications (sepsis, late-onset sepsis, severe sepsis, septic shock, systemic inflammatory response). Of
these studies, three are not yet recruiting, nine are currently recruiting, five have been completed, and five have been terminated. Three additional studies
were scheduled to be completed at this time, but their current status is unknown.

The sponsors for these studies include the following industry and academic organizations:

Asahi Kasei Pharma America Corporation
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Baxter Healthcare Corporation
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Bristol-Myers Squibb
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Exponential Biotherapies Inc.
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Ferring Pharmaceuticals
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Fresenius Kabi
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Hamad Medical Corporation
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HK Surgical, Inc.
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Jafron
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Inotrem
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Kaneka Pharma America LLC
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Leading BioSciences, Inc
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· Merck Sharp & Dohme Corp.
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Octapharma
Pfizer
PRA Health Sciences
Revimmune
Sanofi
SciClone Pharmaceuticals
Shionogi, Shionogi Inc.
Techpool Bio-Pharma Co., Ltd.
Tianjin Chasesun Pharmaceutical Co., LTD
Yuria-Pharm

Primary outcomes of the investigational drug trials include safety and pharmacokinetic/pharmacodynamic primary outcome measures such as

adverse event rates, maximum tolerated dose, clearance rates, and distribution. Additional primary outcomes for these trials include:

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number of days alive without CV, renal, or pulmonary organ support
number of days free of treatment with vasopressors
28-day survival and all-cause mortality
60-day hospital mortality
reduction rate of IL-6 serum concentration
change in biomarkers indicative of endothelial activation and damage
change in microvascular perfusion
hemodynamic effects
immune reconstitution of lymphocytopenic sepsis patients
immunomodulatory effect (IL6/IL10 ratio)
lymphocyte counts and percentage
post-operative sepsis
reduction in Sequential Organ Failure Assessment score (SOFA)

Notable active Phase III trials in sepsis include the following:

Initiated in November 2012, the 800 patient Phase III randomized controlled SCARLET study began for Recomodulin (ART 123, Artisan/Asahi
Kasei), a recombinant human thrombomodulin, for the treatment of septic patients with coagulopathy. In 2019, the results of the study were published in
JAMA, demonstrating no benefit in 28-day all-cause mortality. The 800 patient Phase III SCARLET-2 randomized, controlled trial, evaluating Recomodulin
in patients with sepsis and coagulopathy, was scheduled to begin in July 2019, but was withdrawn to be amended following the results of the SCARLET trial.
The status of the trial is unknown.

Another study is being conducted by Atox Bio, a development stage company in clinical studies with peptide therapeutics that are designed to
prevent superactivation of the immune response by certain toxins such as toxic shock syndrome toxin. It is currently focused on necrotizing soft tissue
infections. The investigational peptide, AB103 or Reltecimod, binds to the CD28 co-stimulatory receptor to attempt to restore the host’s appropriate immune
response to severe infections and is being evaluated in the ACCUTE Trial, a Phase III randomized controlled trial in 60 investigative sites in the U.S in 290
patients with necrotizing soft tissue infections. Primary outcomes include 28-day survival, amputation, and reduction in the modified sequential organ failure
assessment score. According to clinicaltrials.gov, the estimated study completion date was November 2019, with results of the study expected to be presented
at a medical meeting in the first half of 2020. The company also expects to report interim results of another study called the REAKT (Reltecimod Efficacy for
Acute Kidney Injury Trial) in patients with abdominal sepsis induced AKI in the first half of 2020.

Spectral Medical, Inc. collaborated with Toray on the EUPHRATES trial, combining an endotoxin assay with extracorporeal endotoxin removal by
Toraymyxin, a polymyxin-B immobilized polystyrene fiber cartridge. The study began in June 2010 and completed enrollment in June 2016. Endotoxemia is
a result of Gram negative sepsis, which only accounts for 45% of cases of sepsis. It is a potent stimulator of cytokine storm. However, all anti-endotoxin
strategies have failed pivotal studies to date, believed to be the result of intervening too late in the sepsis cascade. The original trial was designed as a
randomized control trial in 360 patients with septic shock and high endotoxin levels (≥ 0.60 EAA units) as confirmed by Spectral’s Endotoxin Activity Assay
(“EAA”). In a second interim analysis finalized in April 2014, following the enrollment of 184 patients with 28-day follow-up, the DSMB recommended that
the trial continue. However, the expected trial size was increased to 650 patients and the exclusion criteria was modified to only accept sicker patients with a
multiple organ dysfunction syndrome score greater than 9. In September 2015, Spectral reported that the composite mortality in the new subgroup had risen to
~50%, from ~30% previously. New statistical analysis on patients in the new subgroup, and comparable patients in a European treatment registry, led to a
sample size recalculation of 446 evaluable patients. Spectral announced in June 2016 that they had completed enrollment for the EUPHRATES trial. In
October 2016, Spectral announced top-line results that the trial did not meet the main goal of absolute reduction in 28-day all-cause mortality, but reiterated
safety of treatment and potential benefit in the sickest group of patients (multiple organ dysfunction score > 9). A secondary analysis of the sub-population of
patients with septic shock and high circulating endotoxin activity also failed to demonstrate a beneficial effect of Toraymyxin on 28-day mortality in sepsis,
however, an exploratory post-hoc analysis of the suggested trends toward improvements in changes in mean arterial pressure and ventilator-free days. In
February 2019, Spectral announced an amendment of the original EUPHRATES trial to enroll an additional 150 septic shock patients under the TIGRIS
expansion, in patients with a MODS score > 9 and an EAA level between 0.60 and 0.90, and will analyze the combined data from these two trials using a
Bayesian statistical approach. Based on the the 179 patients from the EUPHRATES trial, treated patients had a mortality of 38% (N=90) compared to 485
mortality in the control (N=89), but not statistically significant. The TIGRIS study will be in US sites only, randomized (2:1), open label trial, with an
additional 150 new patients (100 treated, 50 control) to be added. Projected trial completion at 8-10 active sites is Q3 2021.

Enlivex has developed an investigational cell-based therapy called Allocetra that is an infusion of donor mononuclear cells that have been
chemically induced to be apoptotic. Once infused, the patient’s macrophages and dendritic cells phagocytose these apoptotic cells which purportedly then
causes them to reduce inflammatory signals that results in immune modulation. Phase I data from 6 treated patients with sepsis, compared with matched
historical controls with sepsis, will be published soon.

In 2017, a single center, retrospective, non-randomized, unblinded before-after clinical study evaluating the effect of hydrocortisone, intravenous
Vitamin C, and thiamine in a total of 94 patients with severe sepsis and septic shock was published suggesting a significant decrease in hospital mortality of
8.5% (4 of 47 treated) versus mortality of 40.4% (19 of 47 control), p<0.001. Mechanistically, Vitamin C is an antioxidant that scavenges free oxygen
radicals, and plays a role in preserving endothelial function and microcirculatory flow. Thiamine is a co-factor of pyruvate dehydrogenase that is a key step in
the conversion of lactate to pyruvate to acetyl-CoA, then to the Krebs cycle, leading to a consumption of lactate. Steroids are anti-inflammatory. Vitamin C or
steroids alone have not demonstrated a significant benefit in patients with severe sepsis and septic shock in large scale clinical trials. Observational studies in
septic patients have demonstrated a deficiency in Vitamin C and thiamine. Critics of this study cite weaknesses in the study design, and confounders such as
the significantly higher incidence of renal replacement therapy in the control arm (33% vs 10% treatment, p=0.02), that is an independent and significant risk
factor for mortality in sepsis. Many compare it to another well-known single center trial in 2001 in 263 patients that suggested a significant reduction in
hospital mortality (30.5%, N=130 treatment versus 46.5%, N=133 control) due to early goal directed therapy (EGDT), which protocolized resuscitation,
oxygenation, and hemodynamic targets in the emergency room for patients with severe sepsis or septic shock prior to being admitted to the ICU. Three
subsequent large scale randomized controlled trials failed to demonstrate any benefit. Regardless, the results of the Vitamin C, thiamine and steroid single
center trial have spawned a number of randomized controlled clinical trials evaluating this therapeutic strategy, including VICTAS, VITAMINS, ACTS, and
others. The largest of these studies is VICTAS, a 2,000 patient U.S. multi-center randomized controlled trial that started in August 2018 comparing
intravenous Vitamin C, thiamine, and hydrocortisone for 4 days or until ICU discharge versus placebo and standard of care in patients with suspected or
confirmed infection and either respiratory dysfunction requiring mechanical support or shock of less than 24 hours from enrollment. The primary outcome is
vasopressor and ventilator-free days at 30 days. The trial is expected to conclude in October 2021. The ACTS trial is a 200 patient U.S. multicenter study that
started in February 2018 comparing 4 days of treatment with intravenous Vitamin C (6g/d), thiamine (400 mg/d), and hydrocortisone (50 mg every 6 hours)
versus saline placebo in patients having suspected or confirmed infection, requiring vasopressors. The primary endpoint is change in SOFA score in 72 hours.
Expected study completion is was February 28, 2020. The VITAMINS RCT began in Australia and New Zealand in November 2017, comparing the effect of
Vitamin C (6g/d), thiamine (400 mg/d) and hydrocortisone (50mg every 6 hours) versus hydrocortisone (50mg every 6 hours) alone, in 216 patients with
septic shock and a blood lactate > 2 mmol/L, with a primary endpoint of time alive and free of vasopressors at day 7 after randomization. The results of the
VITAMINS trial were published in JAMA in January 2020, concluding that treatment with vitamin C, hydrocortisone, and thiamine, compared with
intravenous hydrocortisone alone, did not significantly improve the duration of time alive and free of vasopressor administration over 7 days, and does not
lead to a more rapid resolution of septic shock compared with intravenous hydrocortisone alone. Ninety-day mortality was 28.6% in the treatment group, and
24.5% in the control group.

Four Phase 1 trials and three Phase 2 trials have been posted for interventional biologics with sepsis-related indications. Sponsors of the
interventional biologic studies include Adrenomed AG, Biomedizinische Forschungs gmbH, Medical University of Vienna, Bristol-Myers Squibb, Central
Hospital, Nancy, France, Diagnostica Stago; Hospices Civils de Lyon, Bioaster, BioMérieux, Sanofi, InflaRx GmbH, Intron Biotechnology, Inc., Enlivex,
Revimmune, Washington University School of Medicine, University Hospital, Limoges, and George Clinical Pty Ltd.

Of the registered studies, one is not yet recruiting, one is currently recruiting, four have been completed, and one has been terminated. Primary
outcomes of the investigational biologic trials include safety and pharmacokinetic/pharmacodynamic primary outcome measures such as adverse event rates,
maximum tolerated dose, clearance rates, and distribution. Additional primary outcomes for these trials include:

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90-day all-cause mortality
90-day mortality related to intervention
clinical laboratory abnormalities
ECG findings
interruption of infusion due to intolerability
lymphocyte reconstitution
presence of antibodies to biologic intervention, and
vital signs

Additionally, seven interventional device studies for sepsis-related indications have been registered since January 2013. Sponsors for these studies
include ExThera Medical Corporation, Cheetah Medical Inc., Alteco Medical AB, TFS Trial Form Support, Uppsala University, Mespere Lifesciences Inc.,
Wayne State University, Magnolia Medical Technologies, Inc., PRo-IV, and Bait Balev Hospital. Of the interventional device studies, one is currently
recruiting participants, two have been completed, two were terminated, and two are of unknown status. Primary outcomes of the interventional device studies
include:

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safety/AEs
fluid balance at 72 hours or ICU discharge
30-day readmission
rate of blood culture contamination, and
successful operation of device.

Using a medical device to treat sepsis remains a relatively novel treatment approach. Toray Industries currently markets an endotoxin removal
cartridge called Toraymyxin™ for the treatment of sepsis in Europe, Japan, and 16 other countries, but is not yet approved in the United States. To date, it has
been used in more than 100,000 treatments since 1994. Toraymyxin does not directly reduce cytokines. Spectral Medical Inc. has obtained exclusive
development and commercial rights in the U.S. for Toraymyxin, with plans to combine the use of its endotoxin activity assay to create a theranostic product.
Spectral collaborated with Toray on the EUPHRATES trial, combining an endotoxin assay with extracorporeal endotoxin removal by Toraymyxin, a
polymyxin-B immobilized polystyrene fiber cartridge. As noted above, the EUPHRATES trial failed to demonstrate its primary endpoint. Spectral is now
pursuing an amendment to the EUPHRATES trial, called TIGRIS. There have been now several large scale studies failing to demonstrate a benefit of
Toraymyxin on 28-day mortality in sepsis. Toraymyxin represents a competitive, although potentially complementary, therapeutic approach to CytoSorb.

In September 2017, Baxter re-launched oXiris in the E.U., a hollow-fiber acrylonitrile and methalylsulfonate (AN69) membrane hemofilter coated
with polyethyleneimine (PEI) that was originally launched by Gambro in 2009 for use in hemodialysis as a strategy to treat acute kidney injury and gram
negative septic shock while reducing endotoxin. The filter itself has not changed. However, Baxter has expanded the label to now include reduction of
cytokines based on a set of in vitro experiments evaluating cytokine reduction from recirculating plasma over two hours. In December 2018, Baxter began a
40 patient randomized, controlled trial, called ECRO, evaluating the effect of endotoxin and cytokine (IL-6) removal during continuous hemofiltration with
oXiris in patients with septic shock due to peritonitis, as compared to a standard polysulfone filter. The estimated study completion date is March 2022. In
addition, Baxter also launched the Theranova mid-molecular weight cutoff or high retention onset (HRO) hemodialysis membrane to improve the efficiency
of hemodialysis, claiming improved mid-molecular weight substance removal. Neither oXiris nor Theranova are approved in the U.S.

Each of the following technologies claims to remove inflammatory mediators such as cytokines, or to treat sepsis, and represents a potential
competitive alternative to CytoSorb. However, to our knowledge, none of these technologies are approved in the U.S. and, with the exception of oXiris, none
are approved in the European Union to reduce cytokines.

Toray markets its Hemofeel CH1.0 polymethylmethacrylate membrane (“PMMA”) in Japan and it has been used in several non-controlled, or
historically controlled, clinical or case studies treating patients with sepsis, acute respiratory distress syndrome and pancreatitis. We are not aware of any
prospective, randomized controlled studies using this PMMA hemofilter in patients with sepsis. Without such studies, it is difficult to assess the true impact of
this technology in these conditions. Gambro AB launched its Prismaflex eXeed system in August 2009 and introduced the SepteX high molecular weight
cutoff hemodialyzer in Europe, intended to treat patients with acute renal failure and the removal of inflammatory mediators from blood. Gambro also
launched the oXiris dialyzer, based upon the AN69 CRRT membrane, to bind endotoxin. To our knowledge, neither are specifically approved for the
treatment of sepsis. Fresenius had launched a high molecular weight cut off filter in response to SepteX called the Ultraflux EMiC2. To our knowledge, there
has been a lack of published data on the treatment of sepsis with these devices. Bellco S.R.L, acquired by Medtronic in February 2016, also sells the CPFA
(coupled plasma filtration and adsorption) system in Europe. This uses a sorbent cartridge to remove cytokines from plasma. However, because the sorbent
cannot treat blood directly, it requires the cost and complexity of an additional plasma separator to treat blood. In April 2018, Medtronic issued a field safety
notice informing all users of CPFA that the COMPACT-2 study using CPFA in septic shock patients was terminated early due to observed higher mortality
rates in septic shock patients receiving CPFA therapy compared to patients receiving standard care. The CPFA system is similar to the I.M.P.A.C.T. System
that was commercialized outside of the U.S. by Hemolife Medical Inc. that requires a three-cartridge system and a proprietary blood pump. In 2018, Hemolife
Medical filed for Chapter 11 bankruptcy. We believe that CytoSorb, which can treat whole blood directly, and which works with standard hemodialysis pumps
already found in hospitals worldwide, has significant competitive advantages compared to these multi-cartridge sorbent systems.

Kaneka Corporation currently markets Lixelle™, a modified porous cellulosic bead, for the removal of beta2–microglobulin during hemodialysis in
Japan. Lixelle has been used in several small human pilot studies including a 5 patient pilot study in 2002 and a 4 patient pilot study in 2009. Though these
studies correlate Lixelle use with cytokine reduction, they are not randomized, controlled studies and so do not control for natural cytokine clearance. To our
knowledge, no large, randomized, controlled trials have been conducted with Lixelle as a treatment for sepsis. Kaneka obtained U.S. humanitarian device
exemption for Lixelle in March 2015, but is restricted to treating amyloidosis in chronic dialysis patients. Kaneka has since developed a modified cellulosic
resin called CTR that can also remove cytokines from experimental pre-clinical systems. In 2009, CTR was used in an 18-patient randomized, controlled trial
in patients with septic shock with undisclosed improvements in APACHE II scores and IL-6 and IL-8. To our knowledge, Kaneka has not conducted or
published any other study using CTR to treat human sepsis patients since then. To our knowledge, none of the following technologies are approved in the U.S.
and none are approved for cytokine reduction or as a therapy to treat sepsis in the EU. Jafron Biomedical is an integrated dialysis public company in China
selling dialysis machines and hemodialysis and hemoperfusion cartridges containing a neutral microporous adsorption resin to purify blood of toxins in liver
failure, critical illness, poisoning, and autoimmune diseases. Jafron is currently recruiting a 144 patient efficacy and safety study in China using its CA330
cartridge to reduce IL-6 in septic patients. The estimated study completion date is October 2020. Foshan Biosun Medical Technology Co, Ltd, and Baihe
Medical Technology Co, market hemoperfusion cartridges under the BioSky brand name, including the MG series claiming cytokine reduction, and the DX
series for bilirubin reduction. Ube Industries, Ltd was currently developing an adsorbent resin called CF-X for the removal of cytokines. To our knowledge,
Ube has not published any study using CF-X to treat human sepsis patients. CytoPherx Inc., had developed an extracorporeal system based on selective
cytapheresis, or the inactivation or removal of activated leukocytes. It was enrolling a 344 patient pivotal trial that began in August 2011 and was expected to
be completed by December 2014 in patients with acute kidney injury with or without severe sepsis, on continuous renal replacement therapy with the goal of
reducing mortality. This system does not remove cytokines directly, but attempts to reduce the numbers of activated white blood cells that can produce
cytokines or cause cell-mediated injury. The company appears to no longer be in business. ExThera Medical Corporation is a privately held company that has
developed its Seraph™ (Selective Removal by Apheresis) platform that consists of heparin coated, solid polyurethane beads. Heparin has the ability to bind
some, but not all viruses, bacteria, toxins and cytokines. In in vitro studies using 1 mL of human septic blood, there was no statistically different change in IL-
6 or Interferon-gamma compared to control, but effected a ~50% reduction in TNF-alpha. This inability to remove a broad range of cytokines will likely limit
its efficacy as a treatment in sepsis. It has repositioned Seraph™ as a pathogen removal technology, and has completed a 15 patient CE Mark registration trial
in Germany evaluating the safety and efficacy of bacterial removal from blood Received EU CE-Mark approval in July 2019, and established distribution in
Germany, Italy and Benelux.. In addition, in 2013, it partnered with BioBridge Global to apply its technology to pathogen reduction in transfused blood
products. Seraph was recently designated by FDA for inclusion into the Expedited Access Pathway (EAP) Program for the specific application of removing
drug resistant pathogens from whole blood. We believe our CytoSorb cartridge has significant competitive, technological, and/or economic advantages over
systems by these other companies.

Acute Respiratory Distress Syndrome

Treatment of ARDS is predominantly supportive care using supplemental oxygen, careful fluid management, multiple modes of ventilation
incorporating the concepts of low tidal volume, prone ventilation, and extracorporeal membrane oxygenation (“ECMO”). Corticosteroids, nitric oxide, statins,
non-steroidal anti-inflammatory drugs, and surfactant therapy have been tried, but are not indicated for the treatment of ARDS. We are not aware of any
specific products approved to treat ARDS.

Severe Burn Injury

Modern management of severe burn injury patients involves a combination of therapies. From a burn standpoint, patients undergo active
escharotomy and debridement of burns, the use of skin grafts and substitutes, anti-microbial dressings and negative pressure dressings. Tight fluid control,
nutrition, prevention of hypothermia and infection are also priorities. Smoke and chemical inhalation injury in burn victims is also common and increasing as
a cause of death in severe burn injury. Carbon monoxide and cyanide poisoning is also an issue. Supplemental oxygen, mechanical ventilation, and ECMO are
often required and are the mainstay of supportive care treatment. Recently continuous renal replacement therapy has been used to treat patients with acute
kidney injury with an improvement in survival compared to a historical control cohort. We believe CytoSorb therapy may yield improved results. We are not
aware of any specific products approved to directly address inhalational lung injury or multiple organ failure in severe burn injury.

Trauma

Trauma management initially involves respiratory, hemodynamic and physical stabilization of the patient. However, in the days to weeks that ensue,
the focus shifts to preventing or treating organ failure and preventing or treating infection. We are not aware of any specific therapies to prevent or treat
multiple organ dysfunction or multiple organ failure in trauma. Rhabdomyolysis, or the breakdown of muscle fibers due to crush injury or other means, occurs
in trauma and can lead to acute kidney injury or renal failure. Aggressive hydration, urine alkalinization, and forced diuresis are the main therapies to prevent
renal injury. Continuous hemodiafiltration with super-high-flux membranes has demonstrated modest myoglobin clearance but was associated with albumin
loss. In general, however, most extracorporeal therapies are not well-suited to remove myoglobin. CytoSorb reduces myoglobin, and other polymers under
development, reduces myoglobin, some without significant losses of albumin.

Severe Acute Pancreatitis

Treatment of severe acute pancreatitis is predominantly supportive care focused on aggressive hydration, enteral nutrition and pain control.
Mechanical ventilation, hemodialysis and vasopressor use is common in cases of multiple organ failure. In cases where cholelithiasis or other obstruction is
the underlying cause of the pancreatitis, endoscopic retrograde cholangiopancreatography and/or stent placement can be used to relieve the obstruction.
Antibiotics are often instituted to prevent or treat infection. Surgery is sometimes indicated to remove or drain necrotic or infected portions of the pancreas.
To our knowledge, there are no other specific treatments approved to treat severe acute pancreatitis or multiple organ failure that is caused by systemic
inflammation in this disease.

Cardiopulmonary Bypass Surgery

There is currently a pre-existing market for the use of leukocyte reduction filters sold by Pall Corporation, Terumo Medical Corporation and others
in the cardiopulmonary bypass circuit. The purpose of these devices is to reduce cytokine-producing white blood cells from blood. They do not remove
cytokines, free hemoglobin, or activated complement directly and are not considered by many to be an effective solution for the reduction of these substances.
Other than blood compatible sorbent technologies, we are not aware of any practical competitive approaches for removing cytokines, free hemoglobin,
activated complement, and a broad range of other inflammatory mediators in patients undergoing cardiopulmonary bypass during cardiac surgery. To our
knowledge, CytoSorb is the leading cytokine reduction therapy capable of being placed directly into a bypass circuit in the heart-lung machine and used
during cardiopulmonary bypass without the need for another pump. Modified ultrafiltration is sometimes used after termination of cardiopulmonary bypass in
cardiac surgery to remove excess fluid and inflammatory substances, but has had mixed benefit. Cell saver machines that collect and wash pericardial shed
blood is one potential alternative, but is typically done in batches and not a real-time filter during surgery. Alternative therapies such as “off-pump” surgeries
are available but “post-bypass” syndrome and cytokine production still remain a problem in this less invasive, but more technically challenging procedure. If
successful, CytoSorb is expected to be useful in both on-pump and off-pump procedures. CytoSorb is also being used with a dialysis machine to treat the
development of a post-cardiac surgery systemic inflammatory response syndrome, a deadly complication of open-heart surgery that if left untreated, can lead
to multiple organ dysfunction syndrome, multiple organ failure, and potentially death.

Radiocontrast Removal

ContrastSorb has demonstrated the rapid, high efficiency single pass removal of IV contrast. The use of low osmolar IV contrast, oral administration
of N-acetylcysteine, and other agents to prevent CIN have demonstrated modest benefit in some clinical studies, but in many cases, the results across studies
have been equivocal and inconsistent. Hydration of high risk patients pre-procedure is standard of care but has limited efficacy. PLC Medical Systems, Inc.,
now Renalguard Solutions, received CE Mark approval for its RenalGuard system in 2007. RenalGuard encourages excretion of IV contrast and a reduction
of CIN, by administering IV hydration that matches urine output in patients receiving a loop diuretic. Hemodialysis can remove IV contrast, but is relatively
slow (46% at 1 hour, 65% at 2 hours, and 75% at 3 hours) in chronic renal failure patients who lack normal renal clearance. In high risk patients, the rapid and
direct removal of IV contrast from the blood with ContrastSorb to prevent CIN represents a potentially more effective alternative.

Drug Removal

Treatment of patients suffering from drug overdose often involves a number of pharmacological treatments and mechanical interventions to detoxify
and stabilize the patient. Mechanical interventions include procedures such as orogastric lavage, activated charcoal, whole bowel irrigation and extracorporeal
blood purification. Each method has its own limitations, many of which are associated with the timing of administration following overdose. Blood
purification with high flux dialyzers or with activated charcoal cartridges by Gambro, Fresenius, Nephros and others are typically efficient at removing
hydrophilic drugs that are not protein bound. However, they are inefficient at removing drugs that have a large volume of distribution, or drugs that are
hydrophobic or lipophilic. Many drugs of overdose fall into this category. The administration of lipid emulsions, such as Intralipid, have been used with some
success to create a depot for lipophilic drugs. Resin based hemoperfusion devices have been used to remove lipophilic drugs that are protein bound, but have
historically had issues of biocompatibility. DrugSorb is a highly biocompatible resin-based hemoperfusion device that can remove a wide range of drugs of
overdose in vitro very rapidly, with high single pass removal.

Chronic Dialysis

Although standard dialysis treatment effectively removes urea and creatinine from the blood stream (which are normally filtered by functioning
kidneys), standard dialysis has not been effective in removing beta2 -microglobulin toxins from the blood of patients suffering from chronic kidney failure.
High flux dialyzers by Gambro, Fresenius, Nephros and others are capable of removing some beta2-microglobulin. However, we believe our technology
would significantly improve clearance of this and other toxins. Kaneka markets Lixelle™, a cellulosic resin, outside the US to remove beta2-microglobulin in
dialysis patients. In March 2015, Lixelle received Humanitarian Device Exemption (“HDE”) approval in the U.S. for the treatment of beta-amyloidosis and
removal of beta2–microglobulin , a complication of chronic dialysis. HDE approval applies to the treatment of diseases with an incidence of less than 8,000
cases a year in the U.S. annually. Other than blood compatible sorbents, we know of no other device, medication or therapy considered directly competitive
with our technology.

Treatment of Organ Dysfunction in Brain-Dead Organ Donors

We are not aware of any directly competitive products to address the application of our technology for the mitigation of organ dysfunction and

failure resulting from severe inflammation following brain-death.

Removal of Anti-thrombotics such as Ticagrelor in Cardiac Patients During Surgery Requiring Cardiopulmonary Bypass

There are more than $20 billion in annual worldwide sales of anti-thrombotic drugs such as the P2Y12 platelet inhibitors (e.g. clopidogrel, ticagrelor,
prasugrel), thrombin inhibitors (dabigatran), and the Factor Xa inhibitors (e.g. apixaban, rivaroxaban). These are generally used to reduce thromboembolic
events in a wide range of applications, including dual anti-platelet therapy in percutaneous coronary intervention and stent placement, myocardial infarction,
stroke, peripheral artery disease, atrial fibrillation, deep vein thrombosis, pulmonary embolus, and others. For example, ticagrelor (Brilinta®, Astra Zeneca) is
a widely-used anti-platelet agent used to decrease cardiovascular risk and risk of stroke in patients with a known history of heart disease or heart attack. It is
also widely used during dual-anti platelet therapy in patients with acute coronary syndrome undergoing percutaneous coronary intervention and stent
placement. However, when patients on ticagrelor require emergent or urgent cardiac surgery, up to 65% of patients will have severe or massive peri-operative
bleeding complications, based on the PLATO Trial, that contributes to a high risk of morbidity and death and major costs to the healthcare system. CytoSorb
has already demonstrated the ability to remove ticagrelor rapidly and efficiently from human blood in vitro. Meanwhile, a retrospective case series reported
by clinicians at Asklepios Klinik St. Georg in Hamburg, Germany on the investigational use of CytoSorb to reverse the effects of ticagrelor and the Factor Xa
inhibitor, rivaroxaban, during emergency cardiac surgery demonstrated a greatly reduced risk of bleeding complications and the need for repeat surgery to
explore the source of bleeding, with extrapolations showing projected cost savings of £3,982, or approximately $5,000 USD, per patient in a U.K. based
study. CytoSorb recently received E.U. CE Mark label expansion to remove ticagrelor during cardiac surgery involving cardiopulmonary bypass via label
expansion of its CE Mark. We are currently conducting the 30-patient, single arm trial in the United Kingdom called the TISORB trial, obtaining more
country-specific data to support the use of CytoSorb to remove ticagrelor in emergent or urgent cardiac surgery to reduce perioperatively bleeding
complications.

Of the anti-platelet agents, only ticagrelor is technically reversible. Other than CytoSorb, there is no approved reversal agent for ticagrelor in the
European Union. However, PhaseBio, a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies to
treat orphan diseases, has licensed an intravenously administered Fab antibody fragment with high affinity for ticagrelor called PB2452 from Medimmune, a
division of AstraZeneca. The company paid AstraZeneca $100,000 upfront, with $68 million in potential future milestones. AstraZeneca owns approximately
5% of PhaseBio’s stock.PB2452 is a novel reversal agent for the antiplatelet drug ticagrelor, which was developed for the treatment of patients on ticagrelor
who are experiencing a major bleeding event or those who require urgent surgery. PhaseBio is seeking US FDA approval of PB2452 in the United States
through an accelerated approval process. In its Phase 1 clinical trial of PB2452, PhaseBio observed immediate and complete reversal of ticagrelor’s
antiplatelet activity within five minutes following initiation of infusion and sustained reversal for over 20 hours in dosing cohorts in which they administered
PB2452 over an extended infusion period.

PhaseBio recently completed a Phase 2a clinical trial of PB2452 in older and elderly subjects dosed with ticagrelor and aspirin and in healthy
younger subjects on supratherapeutic doses of ticagrelor where they observed a statistically significant reversal of ticagrelor within 5 minutes of initiation of
PB2452 infusion, that was sustained for over 20 hours. Platelet function was normalized by 15 minutes (30 minutes for the supratherapeutic ticagrelor-dose
cohort) following initiation of PB2452 infusion and remained normal for over 20 hours. PB2452 was generally well-tolerated, with only minor adverse events
reported. These results are consistent with results observed in healthy younger subjects treated with ticagrelor in the Phase 1 trial. The older and elderly
subjects in the Phase 2a trial resemble the patient population most likely to be treated with ticagrelor and to potentially benefit from PB2452, if approved. The
company is currently conducting a U.S. Phase 2b clinical study evaluating the safety and efficacy of PB2452 in approximately 200 healthy volunteers aged
50-80. Patients will receive loading with dual anti-platelet therapy consisting of aspirin and ticagrelor in the U.S. and will be evaluated on the ability of
PB2452 to reverse platelet dysfunction.

The FDA granted Breakthrough Therapy designation for PB2452 in April 2019. Based on feedback from the FDA, PhaseBio intends to submit a
Biologics License Application, or BLA, for potential accelerated approval based on an interim analysis of the first approximately 100 patients treated in their
Phase 3 trial, with approximately 50 subjects from each of the major bleeding and surgical populations. They expect to initiate a Phase 3 trial in the first
quarter of 2020. Based on an 18-month estimated enrollment timeline for the first 100 patients in the Phase 3 trial, PhaseBio expects to submit a BLA for
PB2452 in the second half of 2022. To support full approval for patients with major bleeding or requiring urgent surgery, the FDA recommended enrollment
of 200 total patients in the Phase 3 trial. For post-approval commitments, the FDA recommended the completion of the remaining portions of the Phase 3 trial
and the establishment of post-approval registry.

Meanwhile, Portola Pharmaceuticals is currently commercializing the biologic Andexxa, as a reversal agent for Factor Xa inhibitors. Andexxa
generated more than $110 million in sales in 2019. Andexxa is a Factor Xa analog that competes for binding to Factor Xa inhibitors. Due to the short duration
of action, pro-thrombotic effect, and very high cost, it is not ideally suited to reduce the risk of perioperative bleeding in cardiac surgery. CytoSorb has
demonstrated the ability to rapidly remove both rivaroxaban (Xarelto®; Bayer, Janssen) and apixaban (Eliquis®, Bristol-Myers Squibb) from whole blood.

We believe that CytoSorb represents a more cost-effective, readily available, and easy to implement solution for ticagrelor or Factor Xa inhibitor

reversal in cardiac surgery than these biologic alternatives.

HemoDefend Purification Technology Platform for Transfused Blood Products

There are only a few directly competitive approved products to address the removal of substances from blood and blood products that can cause
transfusion reactions. Leukoreduction (Haemonetics, Terumo-BCT, Hemerus Corporation, others) is widely used in transfusion medicine and can remove the
majority of white cells that can produce new cytokines but cannot eliminate those cytokines already in blood, and cannot otherwise remove other causative
agents. Automated washing of pRBC is very effective at cleansing contaminants from blood, but is impractical due to the time, cost, materials, and logistics
of washing each unit of blood and is not widely used. Blood filters that utilize affinity technologies are in development to remove certain substances such as
antibodies from blood, but have other issues, such as cost and concern about the stability or leachability of the affinity technology. The HemoDefend platform
represents a potentially superior alternative to these methods, as it can provide comprehensive removal of a wide variety of contaminants that can trigger
transfusion reactions without washing blood, requires no additional equipment, energy source, or manipulation, and can be incorporated directly into the
blood storage bag or used as an in-line blood filter.

Clinical Studies

Our first clinical studies were conducted in patients with chronic renal failure. The health of these patients is challenged by high levels of toxins
circulating in their blood but, unlike sepsis patients, they are not at imminent risk of death. The toxins involved in chronic renal failure are generally different
from those involved in sepsis, eroding health gradually over time. The treatment of patients with chronic renal failure is a significant target market for us,
although not the current focus of our efforts and resources. Our clinical studies and product development work in this application functioned to obtain safety
and instrument data without the need to put the patient at additional risk (e.g. placing a new temporary dialysis catheter), with direct benefit to the
development of the critical care applications on which we are now focusing our efforts.

We are focusing our research efforts on critical care and cardiac surgery applications of our technology.

Sepsis

In 2011, the CytoSorb filter received EU regulatory approval under the CE Mark as an extracorporeal cytokine filter to be used in clinical situations
where cytokines are elevated. As part of the CE Mark process, in 2011 we completed our randomized, controlled, European Sepsis Trial amongst 14 trial sites
in Germany, with enrollment of 100 patients with sepsis and respiratory failure. The trial established that CytoSorb was sufficiently safe in this critically-ill
population to support the CE mark and published in PLOS ONE. In the European Sepsis Trial, the treatment was well-tolerated with no serious device related
adverse events reported. The trial also demonstrated the ability of CytoSorb to reduce cytokines such as IL-6 from the blood of septic patients. The trial was
not powered to demonstrate significant reduction in other clinical endpoints such as mortality.

Cardiac Surgery

In February 2015, the U.S. Food and Drug Administration (the “FDA”) approved our Investigational Device Exemption (“IDE”) application to
commence a planned U.S. cardiac surgery feasibility study called REFRESH I (REduction of FREe Hemoglobin) amongst 20 patients and three U.S. clinical
sites. The FDA subsequently approved an amendment to the protocol, expanding the study to a 40 patient randomized controlled study (20 treatment, 20
control) in eight clinical centers. REFRESH I represented the first part of a larger clinical trial strategy intended to support the approval of CytoSorb in the
U.S. for intra-operative use during cardiac surgery.

The REFRESH I study was designed to evaluate the safety and feasibility of CytoSorb when used intra-operatively with a heart-lung machine to
reduce plasma free hemoglobin (pfHb) and cytokines in patients undergoing complex cardiac surgery. The study was not powered to measure effect on
clinical outcomes. The length, complexity and invasiveness of these procedures cause hemolysis and inflammation, leading to high levels of plasma free
hemoglobin, cytokines, activated complement, and other substances. These inflammatory mediators are correlated with the incidence of serious post-
operative complications such as kidney injury, renal failure and other organ dysfunction. The goal of CytoSorb is to actively remove these inflammatory and
toxic substances as they are being generated during the surgery and reduce complications. Enrollment was completed with 46 patients. A total of 38 patients
were evaluable for pfHb and completed all aspects of the study.

The primary safety and efficacy endpoints of the study were the assessment of serious device related adverse events and the change in plasma free
hemoglobin levels, respectively. On October 5, 2016, we announced positive top-line safety data. In addition, following a detailed review of all reported
adverse events in a total of 46 enrolled patients, the independent Data Safety Monitoring Board (“DSMB”) found no serious device related adverse events
with the CytoSorb device, achieving the primary safety endpoint of the study. In addition, the therapy was well-tolerated and technically feasible,
implementing easily into the cardiopulmonary bypass circuit without the need for an additional external blood pump. The REFRESH I study represented the
first randomized controlled study demonstrating the safety of intra-operative CytoSorb use in patients undergoing high risk cardiac operations.

Investigators of the REFRESH I study submitted an abstract with data, including free hemoglobin data, from the REFRESH I study which was
selected for a podium presentation at the American Association of Thoracic Surgery conference on May 1, 2017. On May 5, 2017, we announced additional
REFRESH I data, including data from the study on the reduction of pfHb and activated complement, and in May 2019, the manuscript of the REFRESH I
study was electronically published in the journal, Seminars in Thoracic and Cardiovascular Surgery.

In December 2017, the FDA approved our IDE application for our REFRESH 2-AKI study, permitting us to conduct this pivotal study designed to
provide the key safety and efficacy data needed to support United States regulatory approval for CytoSorb in cardiac surgery, which we plan to pursue via the
premarket approval (PMA) pathway. The REFRESH 2-AKI study is a randomized, controlled, multi-center, clinical study designed to evaluate intraoperative
CytoSorb use as a therapy to reduce the incidence and severity of AKI, as measured by Kidney Disease Improving Global Outcomes (KDIGO) criteria,
following complex cardiac surgery. Postoperative AKI following cardiac surgery is common and is associated with 1-5 year mortality, and is a risk factor for
developing chronic kidney disease requiring hemodialysis in the future. The study will enroll up to 400 patients at increased risk of cardiovascular surgery-
associated AKI, undergoing elective, non-emergent open-heart surgery for either valve replacement, or aortic reconstruction with hypothermic cardiac arrest.
In April 2018, we announced the first patient enrollment into the pivotal U.S. REFRESH 2-AKI study. Based on the recommendations of key clinical
advisors, a protocol amendment was submitted to the FDA on July 19, 2018 to improve operational aspects of the patient screening process and expand the
inclusion criteria. It was the preference of clinical trial sites to defer enrollment until the amendment was approved by the FDA, announced in September
2018. On November 25, 2019 the Company announced a pause in enrollment for the REFRESH 2-AKI study. The study’s Data Monitoring Committee (the
“DMC”) recommended this pause following a blinded, interim, milestone review of clinical study data. The DMC requested that additional clinical data and
data analysis, not pre-specified in the current version of the protocol, be provided by Company. In addition, the Company appointed NAMSA as the new
contract research organization (“CRO”) for the study to improve the monitoring of patient safety endpoints. As of November 25, 2019, the study had enrolled
153 patients at 25 initiated sites. Assuming a timely restart of the study expected by mid-year 2020, we anticipate progressing to a pre-specified interim
analysis at 200 patients enrolled, where the DMC will evaluate the trial for safety and futility, by Q4 2020-Q1 2021. Assuming no changes to the trial by the
DMC, we expect to complete enrollment in the REFRESH 2-AKI study by the end of 2021. However, there can be no assurance the study will be restarted or
will enroll patients in a timely manner. We cannot predict the outcome of a DMC-led interim analysis, which could have a number of different outcomes such
as: 1) continuation of the trial unchanged 2) continuation of trial but with modifications such as an expansion of the study or a change in the protocol 3)
discontinuation of the study due to futility 4) termination of the study by the FDA or DMC due to potential new safety signals, or 5) other outcomes. These
outcomes may trigger business and/or clinical decisions on the trial based on factors such as the cost, timing, probability of success of the study, and other
factors. Because of this, there can be no assurances that trial will continue or have a positive outcome. However, if the study is successful, we plan to submit a
PMA application to the FDA in 2022 for U.S. regulatory approval.

The German government, via the German Federal Ministry of Education and Research, is funding a 250 patient, multi-center randomized, controlled
study (“REMOVE”) using CytoSorb during valve replacement open heart surgery in patients with infective endocarditis. The study enrolled its first patient in
January 2018. An interim analysis of the first 50 patients has been completed. On February 4, 2019, Prof. Dr. med. Frank Brunkhorst, Director of the Center
for Clinical Studies at Jena University Hospital, who is providing management and oversight to the REMOVE study, and Prof. Dr. med. Torsten Doenst,
Director of the Clinic for Cardiac and Thoracic Surgery at the University of Jena, provided the following joint statement, “The Scientific Advisory Board
(SAB) of the Center of Sepsis Control and Care (CSCC) and the Data Safety Monitoring Board (DSMB) of the REMOVE study recommended continuation
of the study, based upon results of a pre-specified interim analysis that analyzed cytokine and vasoactive mediator levels as an indicator of the mechanistic
mode of action of the device in 28 CytoSorb-treated patients and 22 control patients. There were no device-associated adverse events in the CytoSorb group.”
As of January 31, 2020, enrollment of the study was complete with 288 patients enrolled. Analysis of the study data and issuance of the study report is
anticipated to be completed by the mid-2020.

In September 2019, we announced that Hannover Medical School in Germany will begin the first clinical study, called CYTORELEASE, evaluating
the use of CytoSorb in treating CRS and inflammation of the brain called CAR-related Encephalopathy Syndrome (“CRES”), following CAR-T cell
immunotherapy. The CYTORELEASE trial, entitled “Effectivity of Extracorporeal Cytokine Adsorption (CytoSorb) as Additive Treatment of CAR-T Cell
Associated Cytokine Release Syndrome (“CRS”) and Encephalopathy Syndrome (“CRES”),” is a randomized, controlled pilot study in 34 cancer patients
who have received CAR-T cell immunotherapy and who have developed either severe CRS or CRES for a duration less than 6 hours. Patients will receive
either standard of care therapy versus standard of care therapy plus CytoSorb hemoadsorption. The primary endpoint of the study is a plasma reduction of the
pro-inflammatory cytokine interleukin-6 (IL-6). Secondary and exploratory endpoints will examine other potential clinical benefits such as improvements in
CRES, shock, and other organ injury. The trial has been approved by the Hannover Medical School ethics committee and has been screening patients for
enrollment.

In September 2019, a new publication entitled, "Hemoadsorption with CytoSorb showed a decreased observed versus expected 28-day all-cause
mortality in ICU patients with septic shock: a propensity-score-weighted retrospective study," in the journal Critical Care. In this study, clinical researchers at
Maasstad Hospital and at Erasmus University Medical Center in Rotterdam, Netherlands conducted a retrospective evaluation of 116 patients with septic
shock, who required vasopressors to increase their blood pressure, and renal replacement therapy (RRT) due to kidney failure. Of these, 49 patients received
standard of care therapy, and 67 were treated with standard of care plus CytoSorb. Both groups were compared by stabilized Inverse Probability of Treatment
Weights (sIPTW) to overcome baseline differences in the type of sepsis, age, comorbidities, surgery vs no surgery, Sequential Organ Failure Assessment
(SOFA) score, use of the vasopressor noradrenaline, and lactate levels. Patients treated with standard of care and CytoSorb had a statistically significant
reduction in 28-day all-cause mortality compared to standard of care alone (53% vs 72% control, p<0.04), based on the sIPTW analysis. In addition, observed
28-day all-cause mortality in the CytoSorb treatment group was significantly lower than the predicted mortality (48% observed vs 75% predicted, p<0.001),
based on SOFA score.

In October 2019, CytoSorbents initiated TISORB (Ticagrelor CytoSorb Hemoadsorption), a Company-sponsored, multicenter study in the United
Kingdom to prospectively evaluate the removal of ticagrelor during cardiopulmonary bypass in patients on ticagrelor undergoing emergent cardiothoracic
surgery. Ticagrelor (Brilinta®, Astra Zeneca) is a potent platelet inhibitor and antithrombotic therapy and recognized as standard of care to reduce the risk of
heart attacks and strokes in patients with advanced cardiovascular disease. Unfortunately, given the absence of an approved treatment to reverse the
antithrombotic effects of ticagrelor, the approximately 4% of patients requiring emergency cardiothoracic surgery experience an upto 65% risk of severe or
massive perioperative bleeding with potential negative clinical outcomes or death, with significantly increased costs to the hospital and healthcare system. On
October 5, 2019, we presented data showing the cost effectiveness of CytoSorb when used intraoperatively to remove ticagrelor in patients undergoing
emergency open heart surgery at the 33rd Annual Meeting of the European Association for Cardio-Thoracic Surgery (EACTS). This study predicts an
average cost savings of £3,982 per patient (approximately $5,000 USD per patient), including the cost of the CytoSorb adsorber. The primary endpoint of the
TISORB study is the change in platelet reactivity and ticagrelor blood concentration before and after cardiopulmonary bypass for patients undergoing
CytoSorb hemoadsorption removal of ticagrelor from their blood. A protocol amendment was submitted to expand the population of eligible patients to now
include patients requiring urgent cardiac surgery, and third-party consent. These changes were approved by the UK Medicines and Healthcare products
Regulatory Agency (MHRA) at the end of February, with approvals pending from the key regional ethics committees (RECs). We intend to enroll thirty
patients who will have received ticagrelor within 48 hours of undergoing emergent or urgent cardiothoracic surgery with cardiopulmonary bypass. As of
March 5, 2020, the Company has initiated six sites and one patient has been enrolled. Once we receive REC approvals, enrollment is expected to accelerate
and be complete in the second half of 2020. In January 2020, CytoSorb received E.U. CE Mark label expansion to include the removal of ticagrelor.

Government Research Grants

We have historically been successful in obtaining technology development contracts from governmental agencies such as the National Institutes of
Health and the U.S. Department of Defense, including the Defense Advanced Research Projects Agency (“DARPA”), the U.S. Army, U.S. Special Operations
Command (“USSOCOM”), the U.S. Air Force, Air Force Material Command (“USAF/AFMC”) and others. Currently, we have ongoing projects funded, in
part, by the U.S. Army Medical Research Acquisition Activity (“USAMRAA”), the NHLBI, and the USAF/AFMC.

In August 2012, we were awarded a $3.8 million, five-year contract by DARPA for our “Dialysis-Like Therapeutics” (“DLT”) program to treat
sepsis. DARPA has been instrumental in funding many of the major technological and medical advances since its inception in 1958, including development of
the Internet, development of GPS, and robotic surgery. The DLT program in sepsis sought to develop a therapeutic blood purification device that was capable
of identifying the cause of sepsis (e.g., cytokines, toxins, pathogens, activated cells) and remove these substances in an intelligent, automated, and efficient
manner. Our contract was for advanced technology development of our hemocompatible porous polymer technologies to remove cytokines and a number of
pathogen and biowarfare toxins from blood. We have completed our work under the contract with DARPA and SSC Pacific under Contract No. N66001-12-
C-4199, that provided for maximum funding of approximately $3,825,000. We received approximately $3,825,000 in funding under this contract and no
funding remains. Our performance under this contract has been completed.

In September 2012, we were awarded a Phase II SBIR contract by the U.S. Army Medical Research and Material Command to evaluate our
technology for the treatment of trauma and burn injury in large animal models. In 2013, we finalized the Phase II SBIR contract which provided for a
maximum funding of approximately $803,000 with the granting agency. This work is supported by the U.S. Army Medical Research and Material Command
under an amendment to Contract W81XWH-12-C-0038. In June 2016, this contract was further amended to increase the maximum funding by $443,000 to
approximately $1,246,000. We received approximately $1,246,000 in funding under this contract and no funding remains. Our performance under this
contract has been completed.

In September 2013, the National Heart Lung and Blood Institute (“NHLBI”) awarded us a Phase I Small Business Innovation Research (“SBIR”)
contract, (number HHSN-268201-300044C), valued at $203,351, to further advance our HemoDefend blood purification technology for pRBC transfusions.
The University of Dartmouth collaborated with us as a subcontractor on the project, entitled “Elimination of blood contaminants from pRBCs using
HemoDefend hemocompatible porous polymer beads.” The overall goal of this program was to reduce the risk of potential side effects of blood transfusions,
and help to extend the useful life of pRBCs. Our performance under this contract has been completed.

In October 2015, we were awarded a Phase II SBIR contract by the NHLBI and USSOCOM to help advance our HemoDefend blood purification
technology towards commercialization for the purification of pRBC transfusions. The contract, entitled “pRBCs Contaminant Removal with Porous Polymer
Beads”, (contract number HHSN-268201-600006C), provided for maximum funding of approximately $1,524,000 over a two-year period. We received
approximately $1,524,000 under this contract and no funding remains. Our performance under this contract has been completed.

In March 2016, we were awarded a Phase I SBIR contract for a development program entitled “Mycotoxin Adsorption with Hemocompatible Porous
Polymer Beads.” The purpose of this contract was to develop effective blood purification countermeasures for weaponized mycotoxins that can be easily
disseminated in water, food and air. This work was funded by the U.S. Joint Program Executive Office for Chemical and Biological Defense, or JPEO-CBD,
under contract number W911QY-16-P-0048 and provided for maximum funding of $150,000. We received approximately $150,000 and no funding remains
under this contract. Our performance under this contract has been completed.

In June 2016, we were awarded a Phase I Small Business Technology Transfer (“STTR”) contract for its development program entitled “Use of
Highly Porous Polymer Beads to Remove Anti-A and Anti-B antibodies from Plasma for Transfusion”. The purpose of this contract was to develop our
HemoDefend blood purification technology to potentially enable universal plasma. This work was funded by the USAMRAA under contract W81XWH-16-
C-0025 and provided for maximum funding of $150,000. We received approximately $150,000 and no funding remains under this contract. Our performance
under this contract has been completed.

In July 2016, we were awarded a Phase I SBIR contract for its development program entitled “Investigation of a sorbent-based potassium adsorber
for the treatment of hyperkalemia induced by traumatic injury and acute kidney injury in austere conditions”. The objective of this Phase I project was to
develop two novel and distinct treatment options for life-threatening hyperkalemia. This work was funded by the U.S. Army Medical Research Acquisition
Activity (“USAMRAA”) under contract W81XWH-16-C-0080 and provided for maximum funding of approximately $150,000. We received approximately
$150,000 and no funding remains under this contract. Our performance under this contract has been completed.

In January 2017, we were awarded a Phase II SBIR contract to continue development of CytoSorb for fungal mycotoxin blood purification. This
program focused on demonstrating the ability of CytoSorb to adsorb mycotoxins in vivo and improve survival in animals. This contract, W911QY-17-C-0007,
provided for maximum funding of $999,996 over two years. This program was funded by the Joint Program Executive Office - Chemical and Biological
Defense (“CBD”) SBIR program. As of December 31, 2019, we received approximately $999,996 in funding under this contract and no further funding
remains under this contract. Our performance under this contract has been completed.

In May 2017, we were awarded a Phase II STTR contract entitled “Use of Highly Porous Polymer Beads to Remove Anti-A and Anti-B Antibiotics
from Plasma Transfusion”. The purpose of this contract is to continue development of our HemoDefend blood purification technology to potentially enable
universal plasma. We collaborate with researchers at Penn State University on this project. This contract provides for maximum funding of $999,070 over two
years. This work is being funded by the USAMRAA under contract number W81XWH-17-C-0053. As of December 31, 2019, we received approximately
$999,070 and no further funding remaining under this contract. Our performance under this contract has been completed.

In May 2017, the Company was awarded a Congressionally Directed Medical Research Program (“CDMRP”) Phase I contract to improve delayed
evacuation and prolonged field care for severe burn injury via novel hemoadsorptive and hydration therapies. This work is being funded by the USAMRAA
under contract number W81WH-17-2-0013. This contract provides for maximum funding of $719,000 over four years. As of December 31, 2019, we
received approximately $507,000 and have approximately $212,000 remaining under this contract.

In September 2017, the Company was awarded a Phase II SBIR contract for its development program entitled “Investigation of a sorbent-based
potassium adsorber for the treatment of hyperkalemia induced by traumatic injury and acute kidney injury”. The purpose of this contract is to continue
development of two novel and distinct treatment options for life-threatening hyperkalemia. This work is being funded by the USAMRAA under contract
W81XWH-17-C-0142 and provides for maximum funding of approximately $999,871. As of December 31, 2019, we received approximately $873,000 and
have approximately $127,000 remaining under this contract.

In August 2018, the Company was awarded a Phase IIB Bridge SBIR contract by the NHLBI to facilitate and accelerate the commercialization of
our HemoDefend blood purification technology for the purification of pRBC transfusions. The contract, entitled “pRBCs Contaminant Removal with
Hemocompatible Porous Polymer Beads” (award number 2R44HL141928-03), provides for maximum funding of approximately $2,971,000 over a three-year
period. As of December 31, 2019, we received approximately $1,222,000 in funding under this contract and have approximately $1,749,000 remaining under
this contract. Under the terms of this contract, we must make a matching contribution equal to the funds awarded thereunder.

In September 2019, the Company was awarded a Rapid Innovation Fund contract by the USAF/AFMC to develop a simple, easy-to-use renal
support system to treat severe hyperkalemia. The contract, entitled “K+ontrol Renal Support System for Reduction of Hyperkalemia” (award number
FA8650-19-C-6065), provides for maximum funding of approximately $2,960,000 over a two-year period. As of December 31, 2019, we received
approximately $174,000 funding under this contract and have approximately $2,786,000 remaining under this contract.

Our business could be adversely impacted by automatic cuts in Federal spending. The American Taxpayer Relief Act (“ATRA”) of 2012, referred to
generally as the fiscal cliff deal, that went into effect on March 1, 2013, enacted automatic spending cuts of nearly $1 trillion over the next 10 years
(commonly known as sequestration) that were included under the Budget Control Act of 2011. Sequestration may delay payments under the SBIR grant
agreements, although no material delays have occurred to date. The short term and long-term economic impact of the sequestration will not be known until
the actual spending cuts are implemented and the economic impact of the changes in the budget and taxes are known. It will take an extended number of years
to understand the impact of any changes brought about from the sequester.

These grants represent a substantial research cost savings to us and we believe demonstrate the strong interest of the medical and scientific
communities in our technology. We are also exploring potential eligibility in several other government-sponsored grant programs which could, if approved,
represent a future source of non-dilutive funds for our research programs.

Regulation

The medical devices that we manufacture are subject to regulation by numerous regulatory bodies, including the FDA and comparable international
regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing the development,
testing, manufacturing, labeling, marketing and distribution of medical devices. Devices are generally subject to varying levels of regulatory control, the most
comprehensive of which requires that a clinical evaluation program be conducted before a device receives approval for commercial distribution.

In the EU, medical devices that we manufacture are (until May 26, 2022) required to comply with the Medical Devices Directive 93/42/EC
(“MDD”) (one of the three medical device directives with the other two covering active implantable medical devices and in vetro diagnostic devices,
respectively) and obtain CE Mark certification in order to market medical devices. The CE Mark certification, granted following approval from an
independent notified body, is an EU-wide international symbol evidencing adherence to quality assurance standards and compliance with the MDD or other
applicable European Medical Devices Directives. Distributors of medical devices may also be required to comply with other foreign regulations such as
Ministry of Health Labor and Welfare approval in Japan. The time required to obtain these foreign approvals to market our products may be longer or shorter
than that required in the U.S., and requirements for those approvals may differ from those required by the FDA. In Europe, our devices are classified as Class
IIb, and conform to the MDD. As of May 27, 2020, devices that have not received CE Mark renewal under the MDD or where existing device or processes
are substantially amended, certification would be required in accordance with the new European Union Medical Device Regulation (“MDR”) in order to
maintain CE Mark approval. However, devices already certified under the MDD can continue to use the CE Mark under the MDD until the expiry of those
MDD CE Marks and in August of 2019, we announced that CytoSorb received of its E.U. CE Mark through May 2024.

In March 2011, we successfully completed our technical file review with our notified body, and received approval to apply the CE Mark to the
CytoSorb device as an extracorporeal cytokine filter. We also achieved ISO 13485:2003 Full Quality Systems certification, an internationally recognized
quality standard designed to ensure that medical device manufacturers have the necessary comprehensive management systems in place to safely design,
develop, manufacture and distribute medical devices in the EU. In February 2015, we extended the coverage of our ISO 13485 Certificate with the inclusion
of Canadian Quality Systems requirements. This additional level of certification will allow us to apply for product approvals in Canada in the future.

In June 2016, we successfully completed an ISO 13485:2003 annual surveillance audit maintaining our good standing with our notified body. In
September 2016, we were granted a two-year renewal for the CytoSorb CE Mark. In June 2018, we received clearance from our notified body to begin
production in our new manufacturing facility. In July 2018, we successfully completed an audit upgrade from an ISO 13485:2003 certification to an ISO
13485:2016 certification, which is valid through September 2022.

In the U.S., specific permission from FDA to distribute a new device is usually required (that is, other than in the case of very low risk devices), and
we expect that some form of marketing authorization will be necessary for our devices. Marketing authorization is generally sought and obtained in one of
three ways. The first process requires that a pre-market notification (510(k) Submission) be made to the FDA to demonstrate that the device is as safe and
effective as, or “substantially equivalent” to, a legally marketed device that is not subject to pre-market approval (“PMA”). A legally marketed device is a
device that (i) was legally marketed prior to May 28, 1976, (ii) has been reclassified from Class III to Class II or I, or (iii) has been found to be substantially
equivalent to another legally marketed device following a 510(k) Submission. The legally marketed device to which equivalence is drawn is known as the
“predicate” device. Applicants must submit descriptive data and, when necessary, performance data to establish that the device is substantially equivalent to a
predicate device. In some instances, data from human clinical studies must also be submitted in support of a 510(k) Submission. If so, these data must be
collected in a manner that conforms with specific requirements in accordance with federal regulations including the Investigational Device Exemption (IDE)
and human subjects protections or “Good Clinical Practice” regulations. After the 510(k) application is submitted, the applicant cannot market the device
unless FDA issues “510(k) clearance” deeming the device substantially equivalent. The FDA’s 510(k) review process usually takes from three to six months,
but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. After
an applicant has obtained clearance, the changes to existing devices covered by a 510(k) Submission which do not significantly affect safety or effectiveness
can generally be made without additional 510(k) Submissions, but evaluation of whether a new 510(k) is needed is a complex regulatory issue, and changes
must be evaluated on an ongoing basis to determine whether a proposed change triggers the need for a new 510(k), or even PMA (pr de novo). The 510(k)
clearance pathway is not available for all devices: whether it is a suitable path to market depends on several factors, including regulatory classifications, the
intended use of the device, and technical and risk-related issues for the device. Should a suitable predicate device not be available, the second pathway is the
de novo request pathway. The de novo pathway is available for novel device technologies, including novel device changes, that have not been previously
classified by FDA and for which there is no suitable predicate device. To obtain marketing authorization via the de novo pathway, the applicant must show
that the subject device can be reclassified as Class I or Class II. The de novo request pathway typically requires additional testing data, which may include
clinical data.

The third, more rigorous, process requires that an application for PMA be made to the FDA to demonstrate that the device is safe and effective for its
intended use as manufactured. This approval process applies to most Class III devices. A PMA submission is the most burdensome FDA premarket
submission type for devices and includes data regarding design, materials, bench and animal testing, and human clinical data for the medical device. Again,
clinical trials are subject to extensive FDA regulation.

Following completion of clinical trials, an applicant will submit a PMA with the required data. Within 45 days after a PMA is received by the FDA,
the agency will notify the applicant whether the application has been “filed” (a threshold determination that the application is sufficiently complete to begin
an in-depth review), then a substantive review period begins on the date of filing. Although the stated regulatory timeframe for the FDA’s review of PMAs is
180 days, FDA does not meet this goal for all applications; review often takes at least one year and may take significantly longer. During this review period,
the FDA may request additional information or clarification of information already provided. Also during the review period, an advisory panel of experts
from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA. In addition, the FDA will conduct a
pre-approval inspection of the manufacturing facilities to evaluate compliance with the FDA’s Quality System Regulation (“OSR”), which requires
manufacturers to implement and follow design, testing, control, documentation and other quality assurance and good manufacturing practice procedures.

Following review of a PMA, the FDA will authorize commercial distribution if it determines there is reasonable assurance that the medical device is
safe and effective for its intended purpose. This determination is based on the benefit outweighing the risk for the population intended to be treated with the
device. Alternatively the agency may issue an “approvable letter” or “not approvable letter” identifying deficiencies of varying degrees, or issue an order
denying approval. The PMA process is much more detailed, time-consuming, and expensive than the 510(k) process. Also, FDA may impose a variety of
conditions on the approval of a PMA.

In the U.S., we believe that our potential devices, if we were to pursue marketing authorization, would likely fall under the classification for
“Sorbent Hemoperfusion Systems” (21 C.F.R. § 876.5870). This category of device is Class II (subject to a 510(k) and special controls) when the device is
intended for the treatment of poisoning and drug overdose, and Class III (subject to PMA) when the device is intended for the treatment of sepsis, hepatic
coma and metabolic disturbances or other life-threatening illnesses.

Both before and after a device for the U.S. market is commercially released, we would have ongoing responsibilities under FDA regulations. The
FDA reviews design and manufacturing practices, labeling and record keeping, complaint handling, and manufacturers’ required reports of adverse events
and device malfunctions and other information to identify potential problems with marketed medical devices. We would also be subject to periodic inspection
by the FDA for compliance with the FDA’s QSR requirements, as mentioned above. In addition, the FDA and other U.S. regulatory bodies (including the
Federal Trade Commission, the Office of the Inspector General of the Department of Health and Human Services, the Department of Justice (DOJ), and
various state Attorneys General) monitor the manner in which we promote and advertise our products. Although physicians are permitted to use their medical
judgment to employ medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting products for such
“off-label” uses, and can only market our products for cleared or approved uses. If the FDA were to conclude that we are not in compliance with applicable
laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could require us to notify health
professionals and others that the devices present unreasonable risks of substantial harm to the public health; order a recall, repair, replacement, or refund of
such devices, detain or seize adulterated or misbranded medical devices; or ban such medical devices. The FDA may also impose operating restrictions,
enjoin and/or restrain certain conduct resulting in violations of applicable law pertaining to medical devices, including a hold on approving new devices until
issues are resolved to its satisfaction, and work with the DOJ to assess civil or criminal penalties against our officers, employees, or us. Conduct giving rise to
civil or criminal penalties may also form the basis for private civil litigation by third-party payers or other persons allegedly harmed by our conduct.

The delivery of our devices in the U.S. market would be subject to regulation by the U.S. Department of Health and Human Services and comparable
state agencies responsible for reimbursement and regulation of health care items and services. U.S. laws and regulations are imposed primarily in connection
with the Medicare and Medicaid programs, as well as the government’s interest in regulating the quality and cost of health care.

Federal health care laws apply when we or customers submit claims for items or services that are reimbursed under Medicare, Medicaid, or other
federally-funded health care programs. The principal federal laws include: (1) the False Claims Act which prohibits the submission of false or otherwise
improper claims for payment to a federally-funded health care program; (2) the Anti-Kickback Statute which prohibits offers to pay or receive remuneration
of any kind for the purpose of inducing or rewarding referrals of items or services reimbursable by a Federal health care program; (3) the Stark law which
prohibits physicians from referring Medicare or Medicaid patients to a provider that bills these programs for the provision of certain designated health
services if the physician (or a member of the physician’s immediate family) has a financial relationship with that provider; and (4) health care fraud statutes
that prohibit false statements and improper claims to any third-party payer. There are often similar state false claims, anti-kickback, and anti-self referral and
insurance laws that apply to state-funded Medicaid and other health care programs and private third-party payers and some state laws apply regardless of
payor (i.e., even in self-pay scenarios). These and other laws (including, for example, the Physician Payment Sunshine Act and state transparency and
compliance laws) will become increasingly important as we progress toward commercialization in the U.S. In addition, the U.S. Foreign Corrupt Practices
Act can be used to prosecute companies in the U.S. for arrangements with physicians, or other parties outside the U.S. if the physician or party is a
government official of another country and the arrangement violates the law of that country.

The laws applicable to us are subject to change, and subject to evolving interpretations. If a governmental authority were to conclude that we are not
in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and civil penalties including
substantial fines and damages, and exclusion from participation as a supplier of product to beneficiaries covered by Medicare or Medicaid.

The process of obtaining clearance or approval to market products is costly and time-consuming in virtually all of the major markets in which we
expect to sell products and may delay the marketing and sale of our products. Countries around the world have recently adopted more stringent regulatory
requirements, which are expected to add to the delays and uncertainties associated with new product releases, as well as the clinical and regulatory costs of
supporting those releases. No assurance can be given that any of our other medical devices will be approved on a timely basis, if at all, or that our CytoSorb®
device will be approved for CE Mark labeling under the MDR in other potential medical applications or that it will be approved for cytokine filtration in
markets not covered by the CE Mark on a timely basis, or at all. In addition, regulations regarding the development, manufacture and sale of medical devices
are subject to future change. We cannot predict what impact, if any, those changes might have on our business. Failure to comply with regulatory
requirements could have a material adverse effect on our business, financial condition and results of operations.

Pertaining to our VetResQ™ device (offered for veterinary use only), in the U.S., the FDA does not require submission of a 510(k), PMA, or any
other pre-market review application for devices used in veterinary medicine. Device manufacturers who exclusively manufacture or distribute veterinary
devices are not required to register their establishments and list veterinary devices and are exempt from post-marketing reporting. FDA does have regulatory
oversight over veterinary devices and can take appropriate regulatory action if a veterinary device is misbranded or adulterated. It is the responsibility of the
manufacturer and/or distributor of these articles to assure that these animal devices are safe, effective, and properly labeled.

Exported devices are subject to the regulatory requirements of each country to which the device is exported. Some countries do not have medical
device regulations, but in most foreign countries medical devices are regulated. Frequently, device companies may choose to seek and obtain regulatory
approval of a device in a foreign country prior to application in the U.S., as we have done, given the differing regulatory requirements. However, this does not
ensure approval of a device in the U.S.

Sales and Marketing

In 2012, we established our European subsidiary, CytoSorbents Europe GmbH, a wholly-owned subsidiary of CytoSorbents Corporation. Following
the completion of a controlled market release in late June 2012, CytoSorb was formally launched in Germany with reimbursement established at more than
$500 per cartridge. We recruited Dr. Christian Steiner, MD as our Vice President of Sales and Marketing and hired three additional sales representatives. The
fourth quarter of 2012 was the first full quarter of direct CytoSorb sales with our sales force in place. We began expansion into Austria, where reimbursement
for CytoSorb is now available, and Switzerland. In March 2016, we established CytoSorbents Switzerland GmbH, a wholly-owned subsidiary of
CytoSorbents Europe GmbH, to conduct marketing and direct sales in Switzerland. This subsidiary began operations during the second quarter of 2016. In
2017 we began direct sales in Belgium and Luxembourg. On March 5, 2019, the Company announced the expansion of direct sales of CytoSorb for all
applications to Poland and the Netherlands, and critical care applications to Sweden, Denmark and Norway. As part of this effort, the Company established
CytoSorbents Poland Sp. z.o.o., a wholly-owned subsidiary of CytoSorbents Europe GmbH. From the beginning of the controlled market release in the fourth
quarter of 2011 through December 31, 2019, we achieved cumulative sales of CytoSorb of approximately $72,339,000. During this time period, the CytoSorb
device represented substantially all of our product sales. At the end of 2019, we had hundreds of KOLs worldwide who are either using CytoSorb or
supporting its use in clinical practice and/or in clinical studies. These relationships with KOLs were an essential step in our initial goal of driving usage,
adoption and reorders of CytoSorb as they facilitate ordering and reimbursement within the hospital, have a strong influential role within their department and
amongst their peers and colleagues outside the hospital, and have the ability to conduct studies and generate data, papers and conference presentations that
could drive awareness and demand.

We are approved to sell CytoSorb in all 27 countries in the EU, including Germany, Italy, France and Spain as well as the United Kingdom, and
currently have either direct sales or distributor or strategic partnership in 58 countries worldwide. We plan to expand to other countries in the EU, and with
registration, other countries outside the EU that will accept CE Mark approval with a mixed direct and independent distributor strategy, that can be augmented
through strategic partnerships.

We have complemented our direct sales efforts with sales to distributors and/or corporate partners. In 2013, we reached agreement with distributors
in the United Kingdom, Ireland, the Netherlands, Russia and Turkey. In December 2014, we entered into an exclusive agreement with Smart Medical
Solutions S.R.L., to distribute CytoSorb for critical care applications in Romania and the neighboring Republic of Moldova. In 2015, we announced
exclusive distribution agreements with Aferetica s.r.l. to distribute CytoSorb in Italy, AlphaMedix Ltd. to distribute CytoSorb in Israel, TekMed Pty Ltd. to
distribute CytoSorb in Australia and New Zealand, and Hoang Long Pharma to distribute CytoSorb in Vietnam. In June 2016, we announced an exclusive
distribution agreement with Palex Medical SA to distribute CytoSorb in Spain and Portugal. In September 2016, we announced an exclusive agreement with
Armaghan Salamat Kish Group (Arsak) to distribute CytoSorb in Iran. In April 2017, we entered into a distribution agreement with KRA Technical Services
to distribute CytoSorb in Qatar. In July 2017, we announced an exclusive agreement with Droguería, Ramón, González, Revilla (DRGR) S.A. to distribute
CytoSorb in Panama. In April 2018, we entered into exclusive agreements with Pharmaworld and Chong Lap (H.K.) Co. Ltd. to distribute CytoSorb in
Lebanon and Hong Kong, respectively. As of the third quarter of 2018, we had expanded distribution to include Bosnia, Herzegovina, and Croatia with
Medis, d.o.o.; Estonia, Latvia, and Lithuania with SIA Scanmed; and Montenegro and Serbia with Mar Medica, d.o.o. and Cardiotec Vascular Ltda., in Chile.
In March 2019, we announced the registration of CytoSorb in Israel and the change to Gad Medical as the distributor in Israel. As of July 2019, we expanded
distribution to include a new distributor in Saudi Arabia with Al Mofadaly Trading Est. In August 2019, we announced expanded distribution in Latin
America with the addition of Conatti Medical in Brazil, Service & Medical Columbia in Columbia and Nutricare Costa Rica in Costa Rica.

A significant portion of our revenues are from product sales in Germany. Substantially all of our grant and other income are from grant agencies in

the United States.

During the years ended 2019, 2018 and 2017, no agency, distributor or direct customer represented more than 10 percent of the Company’s total

revenue.

Orders received for product from both direct customers and distributors are fulfilled upon receipt. Accordingly, we have no significant sales backlog.

Intellectual Property and Patent Litigation

The medical device market in which we primarily participate is in large part technology driven. As a result, intellectual property rights, particularly
patents and trade secrets, play a significant role in product development and differentiation. However, intellectual property litigation to defend or create
market advantage is inherently complex, unpredictable and is expensive to pursue. Litigation often is not ultimately resolved until an appeal process is
completed and appellate courts frequently overturn lower court patent decisions.

Moreover, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to
balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or
litigate multiple features of a single class of devices. These forces frequently drive settlement not only of individual cases, but also of a series of pending and
potentially related and unrelated cases. In addition, although monetary and injunctive relief is typically sought, remedies are generally not determined until
the conclusion of the proceedings, and are frequently modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or
quantify and are often dependent upon the outcomes of other cases in other forums, both domestic and international.

We rely on a combination of patents, trademarks, trade secrets and non-disclosure agreements to protect our intellectual property. As of February 28,
2020, our patent portfolio includes 21 issued United States patents as well as multiple issued foreign patents and pending patent applications both in the U.S.
and internationally, directed to various compositions and methods of use related to our blood purification technologies, which are expected to expire between
2020 and 2035, absent any patent term extensions. Management believes that any near-term expiring patents will not have a significant impact on our ongoing
business. The following table provides a brief description of our patents that have been issued in the U.S.:

Product
Group
CytoSorb Perfusion Device Combining Adsorbing Material and Hollow Fibers to Filter and Recombine

Description/Indications

Plasma

CytoSorb Method of Peritoneal Dialysis
CytoSorb Material and Method of Producing: Biocompatible Polymeric Adsorbents Using a One-Pot

Process
CytoSorb Protective clothing
CytoSorb Method of Introducing Fluids into a Patient’s Body
CytoSorb Devices, systems, and methods for reducing levels of pro-inflammatory or anti-inflammatory

stimulators or mediators in the blood

CytoSorb Method of Producing Devices
CytoSorb Hemocompatible Coated Polymer and Related One-Step Methods
CytoSorb Hemocompatible Coated Polymer and Related Methods
CytoSorb Hemocompatible Coated Polymer and Related One-Step Methods
CytoSorb Hemocompatible Polymer Systems and Related Devices
CytoSorb Size-Selective Hemoperfusion Polymeric Adsorbents
CytoSorb Size-Selective Hemoperfusion Polymeric Adsorbents
CytoSorb Size-Selective Hemoperfusion Polymeric Adsorbents
CytoSorb Method of Treating Inflammation
CytoSorb Polymer Modification
CytoSorb Method of Treating Acute Radiation Syndrome
CytoSorb Method of Treating Inflammation
CytoSorb Method of Removal of Impurities from Whole Blood
CytoSorb Use of Gastrointestinally Administered Porous Sorbent Polymers
CytoSorb Use of Polymeric Sorbent Polymers

Patent
Term

Patent
Expiration

Patent
Type

20 Years
20 Years

4/17/2020
4/27/2020

Standard
Standard

20 Years
20 Years
20 Years

10/10/2020
1/15/2021
2/17/2021

Standard
Standard
Standard

20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years
20 Years

4/10/2021
4/25/2021
10/18/2022
10/18/2022
10/18/2022
7/6/2023
11/20/2026
11/20/2026
11/20/2026
4/30/2031
12/31/2031
10/22/2035
3/31/2031
1/6/2032
10/22/2035
8/10/2032

Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard
Standard

In addition to the above, we have received notice from the U.S. Patent Office that two of our patent applications have been allowed and we are

awaiting the issuance of the formal patent number.

There can be no assurance that pending patent applications will result in issued patents, that patents issued to us will not be challenged or
circumvented by competitors, or that such patents will be found to be valid or sufficiently broad to protect our technology or to provide us with a competitive
advantage. Certain of these patents also have foreign counterparts.

We also rely on non-disclosure and non-competition agreements with employees, consultants and other parties to protect, in part, trade secrets and
other proprietary technology. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that
others will not independently develop equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets and
proprietary knowledge.

We may find it necessary to initiate litigation to enforce our patent rights, to protect our trade secrets or know-how and to determine the scope and
validity of the proprietary rights of others. Patent litigation can be costly and time-consuming, and there can be no assurance that our litigation expenses will
not be significant in the future or that the outcome of litigation will be favorable to us. Accordingly, we may seek to settle some or all of our pending litigation
described below. Settlement may include cross-licensing of the patents which are the subject of the litigation as well as our other intellectual property and
may involve monetary payments to or from third parties.

We currently hold multiple trademarks including CytoSorb®, HemoDefend™, BetaSorb™, K+ontrolTM, and VetResQ™. We have spent
considerable resources registering the trademark and building brand awareness and equity of the CytoSorb® tradename, which has been used in commerce
since 2006. We expect to maintain and defend our various trademarks to the fullest extent possible.

Environmental Matters

We believe that there are no compliance issues associated with applicable environmental laws and regulations that would have a material adverse
effect on us or our business. We incur waste removal costs in connection with both our solid and liquid wastes which are byproducts of our manufacturing
process. We utilize the services of various qualified contractors to dispose of these waste products. These waste removal costs amounted to approximately
$274,000 for the year ended December 31, 2019.

Employees

As of February 10, 2020, we had 153 full-time and part-time employees. We also utilize consultants and temporary service providers who are not our
employees, as necessary. None of our employees are represented by a labor union or are subject to collective-bargaining agreements and we believe we have
good relationships with our employees.

Item 1A.

Risk Factors

Risks Related to our Business and our Industry

We have a history of losses and expect to incur substantial future losses, and the report of our auditor on our consolidated financial statements expresses
substantial doubt about our ability to continue as a going concern.

We have experienced substantial operating losses since inception. As of December 31, 2019, we had an accumulated deficit of approximately
$188,789,000, which included net losses of approximately $19,266,000, $17,211,000 and $8,461,000 for the years ended December 31, 2019, 2018 and 2017,
respectively. Due in part to these losses, our audited consolidated financial statements have been prepared assuming we will continue as a going concern, and
the auditors’ report on those financial statements express substantial doubt about our ability to continue as a going concern. Our losses have resulted
principally from costs incurred in the research and development of our polymer technology, clinical studies and general and administrative expenses. We
intend to conduct significant additional research, development, and clinical study activities which, together with expenses incurred for the establishment of
manufacturing arrangements and a marketing and distribution presence and other general and administrative expenses, are expected to result in continuing net
losses for the foreseeable future. The amount of future losses and when, if ever, we will achieve profitability are uncertain. Our ability to achieve profitability
will depend, among other things, on continued adoption and usage of our products in the market, obtaining additional regulatory approvals in markets not
covered by the CE mark, establishing sales and marketing arrangements with third parties, satisfactory reimbursement in key territories, and raising sufficient
funds to finance our activities. No assurance can be given that our product development efforts will be successful, that our current CE Mark will enable us to
achieve profitability, that additional regulatory approvals in other countries will be obtained, that any of our products will be manufactured at a competitive
cost and will be of acceptable quality, that reimbursement will be available or satisfactory, that we will be able to achieve profitability or that profitability, if
achieved, can be sustained, or our ability to raise additional capital when needed or on terms acceptable to us. Our failure with respect to any or all of these
matters would have a material adverse effect on our business, operating results, financial condition and prospects.

We will require additional capital in the future to fund our operations.

As of December 31, 2019, we had current assets of approximately $20,902,000, including cash on hand of approximately $12,232,000 and current
liabilities of approximately $9,936,000. For the year ended December 31, 2019, our cash burn was approximately $10,136,000. Our current and historical
cash burn is not necessarily indicative of our future use of cash and cash equivalents.

We will require additional financing in the future in order to complete additional clinical studies and to support the commercialization of our
proposed products. There can be no assurance that we will be successful in our capital raising efforts. The amount of long-term capital needed is expected to
depend on many factors, including:

·
··
·
·
·

·
·
·
·

rate of sales growth and adoption of our products in the marketplace;
product gross margin;
continued progress and cost of our research and development programs;
progress and costs associated with pre-clinical studies and clinical studies;
the time and costs involved in obtaining regulatory clearance in other countries and/or for other
indications;
costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;
costs of developing sales, marketing and distribution channels;
market acceptance and reimbursement of our products; and
cost for training physicians and other health care personnel.

We have an effective shelf registration statement with the SEC which enables us to raise up to $150 million in one or more offerings, through the

issuance and sale of any combination of equity securities, debt securities, warrants and units.

On July 9, 2019 we entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC and B. Riley FBR, Inc., pursuant to
which we may offer to sell, from time to time shares of our common stock, up to a maximum of $25,000,000. During the year ended December 31, 2019, we
sold 191,244 shares of our common stock pursuant to the Sale Agreement, at an average selling price of $4.11 per share, generating net proceeds of
approximately $762,000. During the period from January 1, 2020 through March 2, 2020, we sold 2,435,086 shares of our common stock pursuant to the Sale
Agreement, at an average selling price of $5.64 per share, generating net proceeds of approximately $13,322,000.

On July 31, 2019 (the “Settlement Date”) we entered into the First Amendment to the Amended and Restated Loan and Security Agreement (the
“First Amendment”) with Bridge Bank, which amended certain provisions of the Amended and Restated Loan and Security Agreement (the “Restated Loan
and Security Agreement”) and the 2018 Success Fee Letter, each previously entered into by and among us and Bridge Bank on March 28, 2018. In connection
with the execution of the First Amendment, the draw period for the Term B Loan (as defined therein) was extended to August 15, 2019 and we drew down the
full $5.0 million Term B Loan on the Settlement Date, bringing the total outstanding debt to $15,000,000 at July 31, 2019.

Despite the foregoing, we expect we will require additional financing in the future. Should the financing we require be unavailable to us, or on terms
unacceptable to us when we require it, the consequences could have a material adverse effect on our business, operating results, financial condition and
prospects.

In addition, in the event that additional funds are obtained through arrangements with collaborative partners or other non-dilutive sources, we may
have to relinquish economic and/or proprietary rights to some of our technologies or products under development that we would otherwise seek to develop or
commercialize by ourselves. Such events may have a material adverse effect on our business, operating results, financial condition and prospects.

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

We have historically been engaged primarily in research and development activities and have generated limited revenues to date. With the launch of
our CytoSorb product in the EU and elsewhere, there can be no assurance that we will be able to successfully manage the balance of our research and
development operations with our planned commercial enterprise. Potential investors should be aware of the problems, delays, expenses and difficulties
frequently encountered by an enterprise in balancing development, which include unanticipated problems relating to testing, product registration, regulatory
compliance and manufacturing, with commercialization, which includes problems with market adoption, reimbursement, marketing problems and additional
costs. Our products and product candidates will require significant additional research and testing, and we will need to overcome significant regulatory
burdens prior to commercialization in other countries, such as the U.S., and for ongoing compliance for our CE Mark. We will also need to raise additional
funds to complete additional clinical studies and obtain regulatory approvals in other countries before we can begin selling our products in markets not
covered by our CE Mark. In addition, we may be required to spend significant funds on building out our commercial operations. There can be no assurance
that after the expenditure of substantial funds and efforts, we will successfully develop and commercialize any products, generate any significant revenues or
ever achieve and maintain a substantial level of sales of our products.

If users of our products are unable to obtain adequate reimbursement from third-party payers, or if reimbursement is not available in specific countries,
or if new restrictive legislation is adopted, market acceptance of our products may be limited and we may not achieve anticipated revenues.

The continuing efforts of government and insurance companies, health maintenance organizations and other payers of healthcare costs to contain or
reduce costs of health care may affect our future revenues and profitability, the future revenues and profitability of our potential customers, suppliers and
collaborative partners, and the availability of capital. For example, in certain foreign markets, pricing or profitability of medical devices is subject to
government control. In the United States, given recent federal and state government initiatives directed at lowering the total cost of health care, the U.S.
Congress and state legislatures will likely continue to focus on health care reform, the cost of medical devices and on the reform of the Medicare and
Medicaid systems. While we cannot predict whether any such legislative or regulatory proposals will be adopted, the announcement or adoption of these
proposals could materially harm our business, financial condition and results of operations.

Our ability to commercialize our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products
and related treatment are obtained by governmental authorities, private health insurers and other organizations, such as health maintenance organizations
(“HMOs”). Third-party payers are increasingly challenging the prices charged for medical care. Also, the trend toward managed health care in the United
States and the concurrent growth of organizations such as HMOs, which could control or significantly influence the purchase of health care services and
medical devices, as well as legislative proposals to reform health care or reduce government insurance programs, may all result in lower prices for our
products. The cost containment measures that health care payers and providers are instituting and the effect of any health care reform could materially harm
our ability to operate profitably.

Outside of the United States, reimbursement systems vary significantly by country. Many foreign markets often have a combination of government-
managed and privately-managed healthcare systems that govern reimbursement for medical devices and related procedures. Socialized medicine is common
in the EU, and reimbursement and the pricing of medical devices is generally subject to governmental control. Application for reimbursement, subsequent
approvals, if any, and pricing negotiations with governmental authorities can take considerable time after a device has been CE marked. Private insurance has
similar challenges. CytoSorb is currently reimbursed in Germany under government-funded insurance, and in other countries may be covered under the
diagnosis-related group (“DRG”), or “lump sum payment” reimbursement, or other generalized reimbursement for acute care medical products. We are
continuously working to obtain or improve upon the type and amount of reimbursement available to us in countries where CytoSorb is available, and as we
attempt to move from an existing reimbursement platform to a new reimbursement platform, we may experience interruptions and/or reductions in the amount
available for reimbursement. Because of this, there can be no assurance that new reimbursement will be obtained or that existing reimbursement will continue
or that such reimbursement will be sufficient to adequately cover the cost of the device or treatment. As a result, our future revenues, profitability and access
to capital may be negatively affected by any interruption or reduction in amounts of reimbursement. We plan to seek reimbursement for our product in other
EU and non-EU countries to help further adoption. There can be no assurance when, or if, this additional reimbursement might be approved.

We depend upon key personnel who may terminate their employment with us at any time.

As of February 28, 2020, we had 153 full-time and part-time employees as well as several consultants and temporary employees. Our success will
depend to a significant degree upon the continued services of our key management team and advisors, including, Dr. Phillip Chan, our Chief Executive
Officer; Kathleen P. Bloch, our Chief Financial Officer; and Vincent Capponi, our Chief Operating Officer. On July 30, 2019, we entered into amended and
restated employment agreements with Dr. Chan, Mr. Capponi, and Ms. Bloch that expire on December 31, 2021, and provide thereafter for annual renewals of
the contract, unless either party provides written notice of non-renewal at least 60 days prior to renewal. There can be no assurance that key management
personnel or other members of our management team and advisors will continue to provide services to us. In addition, our success will depend on our ability
to attract and retain other highly skilled personnel. We may be unable to recruit such personnel on a timely basis, if at all. Management and other employees
may voluntarily terminate their employment with us at any time. The loss of services of key personnel, or the inability to attract and retain additional qualified
personnel, could result in delays in development or approval of our products, loss of sales and diversion of management resources.

Acceptance of our medical devices in the marketplace is uncertain, and failure to achieve market acceptance will prevent or delay our ability to generate
revenues.

Our future financial performance will depend, at least in part, upon the introduction and customer acceptance of our products. Even with CE mark
approval for our CytoSorb device as a cytokine filter, our products and product candidates may not achieve market acceptance in the countries that recognize
and accept the CE mark. Additional approvals from other regulatory authorities (such as the FDA) will be required before we can market our device in
countries not covered by the CE mark. There is no guarantee that we will be able to achieve additional regulatory approvals, and even if we do, our products
may not achieve market acceptance in the countries covered by such approvals. The degree of market acceptance will depend upon a number of factors,
including:

·
·
·

the receipt of regulatory clearance of marketing claims for the uses that we are developing;
the establishment and demonstration of the advantages, safety and efficacy of our polymer technology;
pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and
other health plan administrators;
the development by our competitors of products or product candidates that are similar or identical to ours;
our ability to attract corporate partners, including medical device companies, to assist in commercializing our products; and
our ability to effectively market our products.

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

If we are unable to obtain and maintain patent protection for our products and product candidates, or if the scope of the patent protection obtained is not
sufficiently broad, our competitors could develop and commercialize products and product candidates similar or identical to ours, and our ability to
successfully commercialize our products and product candidates may be adversely affected.

Our commercial success will depend, in part, on our ability to obtain and maintain patent protection in the United States and other countries with
respect to our products and product candidates. We seek to protect our proprietary position by filing patent applications in the United States and abroad
related to our products and product candidates that are important to our business. We cannot be certain that patents will be issued or granted with respect to
applications that are currently pending or that we apply for in the future with respect to one or more of our products and product candidates, or that issued or
granted patents will not later be found to be invalid and/or unenforceable.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent
applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development
output before it is too late to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to
patentable aspects of our research and development output, such as our employees, distribution partners, consultants, advisors and other third parties, any of
these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent
protection.

The patent position of medical device companies generally is highly uncertain, involves complex legal and factual questions and has in recent years
been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.
Our pending and future patent applications may not result in patents being issued, and even if issued, the patents may not meaningfully protect our products or
product candidates, effectively prevent competitors and third parties from commercializing competitive products or otherwise provide us with any
competitive advantage. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative products in a non-
infringing manner.

Changes in the patent laws, implementing regulations or interpretation of the patent laws in the United States and other countries may also diminish
the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws
of the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions.

We cannot be certain that our patents and patent rights will be effective in protecting our products, product candidates and technologies. In addition,
our existing patents are scheduled to expire between 2020 and 2035. Failure to protect such assets may have a material adverse effect on our business,
operations, financial condition and prospects.

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

Our future success is also dependent in part on the strength of our intellectual property, trade secrets and know-how, which have been developed
from years of research and development. In addition to the “Purolite” litigation discussed below, we may be exposed to additional future litigation by third
parties seeking to challenge the validity of our rights based on claims that our technologies, products or activities infringe the intellectual property rights of
others or are invalid, or that we have misappropriated the trade secrets of others.

Since our inception, we have sought to contract with large, established manufacturers to supply commercial quantities of our adsorbent polymers. As
a result, we have disclosed, under confidentiality agreements, various aspects of our technology with potential manufacturers. We believe that these
disclosures, while necessary for our business, have resulted in the attempt by potential suppliers to improperly assert ownership claims to our technology in
an attempt to gain an advantage in negotiating manufacturing rights.

We previously engaged in discussions with the Brotech Corporation and its affiliate, Purolite International, Inc. (collectively referred to as
“Purolite”), which had demonstrated a strong interest in being our polymer manufacturer. For a period of time beginning in December 1998, Purolite engaged
in efforts to develop and optimize the manufacturing process needed to produce our polymer products on a commercial scale. However, the parties eventually
decided not to proceed. In 2003, Purolite filed a lawsuit against us asserting, among other things, co-ownership and co-inventorship of certain of our patents.
On September 1, 2006, the United States District Court for the Eastern District of Pennsylvania approved a Stipulated Order and Settlement Agreement under
which we and Purolite agreed to the settlement of the action. The Settlement Agreement provides us with the exclusive right to use our patented technology
and proprietary know how relating to adsorbent polymers for a period of 18 years. Under the terms of the Settlement Agreement, we have agreed to pay
Purolite royalties of 2.5% to 5% on the sale of certain of our products through 2029, after which time no royalties will be due under this settlement agreement.

The expiration or loss of patent protection may adversely affect our future revenues and operating earnings.

We rely on patent, trademark, trade secret and other intellectual property protection in the discovery, development, manufacturing, and sale of our
products and product candidates. In particular, patent protection is important in the development and eventual commercialization of our products and product
candidates. Patents covering our products and product candidates normally provide market exclusivity, which is important in order for our products and
product candidates to become profitable.

Our existing patents are scheduled to expire between 2020 and 2035. While we are seeking additional patent coverage which may protect the
technology underlying these patents, there can be no assurances that such additional patent protection will be granted, or if granted, that these patents will not
be infringed upon or otherwise held enforceable. Even if we are successful in obtaining a patent, patents have a limited lifespan. In the United States, the
natural expiration of a utility patent typically is generally 20 years after it is filed. Various extensions may be available; however, the life of a patent, and the
protection it affords, is limited. Without patent protection for our products and product candidates, we may be open to competition from generic versions of
such methods and devices.

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

CytoSorb has already achieved marketing authorization in the EU under the CE marking process and the Medical Devices Directive. It is
manufactured at our manufacturing facility in New Jersey under ISO 13485 Full Quality Systems certification. The manufacturing and marketing of our
products will be subject to extensive and rigorous government regulation in the EU, as well as in the U.S. and in other countries. In the U.S. and other
countries, the process of obtaining and maintaining required regulatory approvals is lengthy, expensive, and uncertain. There can be no assurance that we will
ever obtain the necessary additional approvals to sell our products in the United States or other non-EU countries. Even if we do ultimately receive FDA
approval or clearance for any of our products, we will be subject to extensive ongoing regulation. While we have received approval from our notified body to
apply the CE mark to our CytoSorb device, we will be subject to extensive ongoing regulation and auditing requirements to maintain the CE mark.

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

If we fail to maintain the CE Mark in the European Union, we will not be able to commercially sell and market CytoSorb.

In March 2011, CytoSorb, was “CE marked” in the EU as an extracorporeal cytokine filter indicated for use in clinical situations where cytokines are
elevated, allowing for commercial marketing. The CE Mark demonstrates that a conformity assessment has been carried out and the product complies with
the Medical Devices Directive. A re-certification audit was conducted in April 2019. The successful completion of this audit CE-certifies CytoSorb under the
current Medical Device Directive (93/42/EEC) until May 2024. Prior to the expiration of such certificate, we will apply for certification under the new
Medical Devices Regulation. Failure to certify CytoSorb under the Medical Devices Regulation will prevent us from using the CE mark for commercial
distribution of CytoSorb in the European Union. Any new product that we submit for the CE Mark after August 2019 must be approved under the new
Medical Devices Regulation.

Furthermore, if:

we are not able to obtain re-certification for CytoSorb’s current use;

we are not able to do so in time before the existing certificate expires;

CytoSorb does not meet the new (and more stringent) requirements under the Medical Devices Regulation; or

any variation in the uses for which the CE Mark has been affixed CytoSorb requires us to perform further research or to modify the
technical documentation required to affix the CE Mark, our revenues and operating results could be adversely affected and our reputation
could be harmed.

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

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

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other
personnel, prevent new products and services from being developed or commercialized in a timely manner, affect whether government agencies promptly
pay amounts awarded under grants from such agencies, or otherwise prevent those agencies from performing normal business functions on which the
operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new drugs and medical devices can be affected by a variety of factors, including government budget
and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review
times at the FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our
operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and
unpredictable.

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

We have conducted limited clinical studies of our CytoSorb device. Clinical and pre-clinical data is susceptible to varying interpretations, which could
delay, limit or prevent additional regulatory clearances.

To date, we have conducted limited clinical studies on our CytoSorb product. There can be no assurance that we will successfully complete
additional clinical studies necessary to receive additional regulatory approvals in markets not covered by the CE Mark. While studies conducted by us and
others have produced results we believe to be encouraging and indicative of the potential efficacy of our products and technology, data already obtained, or in
the future obtained, from pre-clinical studies and clinical studies do not necessarily predict the results that will be obtained from later pre-clinical studies and
clinical studies. Moreover, pre-clinical and clinical data are susceptible to varying interpretations, which could delay, limit or prevent additional regulatory
approvals. A number of companies in the medical device and pharmaceutical industries have suffered significant setbacks in advanced clinical studies, even
after promising results in earlier studies. The failure to adequately demonstrate the safety and effectiveness of an intended product under development could
delay or prevent regulatory clearance of the device, resulting in delays to commercialization, and could materially harm our business. Even though we have
received approval to apply the CE Mark to our CytoSorb device as a cytokine adsorber, there can be no assurance that we will be able to receive approval
under the MDR for other potential applications of CytoSorb, or that we will receive regulatory clearance from other targeted regions or countries.

We rely extensively on research and testing facilities at various universities and institutions, which could adversely affect us should we lose access to those
facilities. At the same time, relationships with these individuals and entities are the subject of heightened scrutiny and may present the potential for future
healthcare enforcement risk.

Although we have our own research laboratories and clinical facilities, we collaborate with numerous institutions, universities and commercial
entities to conduct research and studies of our products. We currently maintain a good working relationship with these parties. However, should the situation
change, the cost and time to establish or locate alternative research and development facilities could be substantial and delay gaining CE Mark for other
potential applications of our products, our other product candidates or technologies, and/or FDA approval and commercializing our products. In addition, our
interactions, communications, and financial relationships with these individuals and entities present future healthcare enforcement risks.

We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us
should we be sued.

Our business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing and marketing of medical
devices. We cannot be sure that claims will not be asserted against us. A successful liability claim or series of claims brought against us could have a material
adverse effect on our business, financial condition and results of operations.

We cannot give assurances that we will be able to continue to obtain or maintain adequate product liability insurance on acceptable terms, if at all, or
that such insurance will provide adequate coverage against potential liabilities. Claims or losses in excess of any product liability insurance coverage that we
may obtain could have a material adverse effect on our business, financial condition and results of operations.

Certain university and other relationships are important to our business and may potentially result in conflicts of interests.

Dr. John Kellum and others are critical care advisors and consultants of ours and are associated with institutions such as the University of Pittsburgh
Medical Center. Their association with these institutions may currently or in the future involve conflicting interests in the event they or these institutions enter
into consulting or other arrangements with competitors of ours.

We have limited manufacturing experience, and once our products are approved, we may not be able to manufacture sufficient quantities at an acceptable
cost, or without shut-downs or delays.

In March 2011, we received approval from our notified body to apply the CE Mark to our CytoSorb device for commercial sale as a cytokine filter.
We also achieved ISO 13485:2003 Full Quality Systems certification, and have since upgraded to ISO 13485:2016 Full Quality Systems certification, an
internationally recognized quality standard designed to ensure that medical device manufacturers have the necessary comprehensive management systems in
place to safely design, develop, manufacture and distribute medical devices in the EU. We manufacture CytoSorb at our manufacturing facilities in New
Jersey for sale in the EU and for additional clinical studies. Manufacturers and manufacturers’ facilities are required to comply with extensive FDA
requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices (“cGMP”) for medical
devices, as set forth in the QSR. As such, we are subject to continual review and periodic inspections to assess compliance with cGMP/QSR requirements as
required by our International notified body and those FDA regulations governing companies that export medical products for sale outside the United States.
Accordingly, we must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality
control. We have limited experience in establishing, supervising and conducting commercial manufacturing. If we or the third-party manufacturers of our
products fail to adequately establish, supervise and conduct all aspects of the manufacturing processes, we may not be able to commercialize our products.

In the second quarter of 2018 we quadrupled our manufacturing capabilities upon the official completion of the expansion of our CytoSorb
manufacturing facility in New Jersey. While we currently believe we have established sufficient production capacity to supply potential near-term demand for
the CytoSorb device, we will likely need to scale up and increase our manufacturing capabilities in the future. In the event of any unforeseen increase in
short- or long-term demand for CytoSorb or any of our other products, our commercial distributions could be delayed significantly as we establish alternative
supply sources within our budget. No assurance can be given that we will be able to successfully scale up our manufacturing capabilities or that we will have
sufficient financial or technical resources to do so on a timely basis or at all.

Due to our limited marketing, sales and distribution experience, we may be unsuccessful in our efforts to sell our products.

We expect to enter into agreements with third parties for the commercial marketing, and distribution of our products. There can be no assurance that

parties we may engage to market and distribute our products will:

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satisfy their financial or contractual obligations to us;
adequately market our products; or
not offer, design, manufacture or promote competing products.

If for any reason any party we engage is unable or chooses not to perform its obligations under our marketing and distribution agreement, we would

experience delays in product sales and incur increased costs, which would harm our business and financial results.

Our results of operations can be significantly affected by foreign currency fluctuations and regulations.

A significant portion of our revenues is currently derived in the local currencies of the foreign jurisdictions in which our products are sold.
Accordingly, we are subject to risks relating to fluctuations in currency exchange rates. In the future, and especially as we further expand our sales efforts in
international markets, our customers will increasingly make payments in non-U.S. currencies. Fluctuations in foreign currency exchange rates could affect our
revenues, operating costs and operating margins. In addition, currency devaluation can result in a loss to us if we hold deposits of that currency or if it reduces
the cost-competitiveness of our products. We cannot predict the effect of future exchange rate fluctuations on our operating results.

If we are unable to convince physicians and other health care providers as to the benefits of our products, we may incur delays or additional expense in
our attempt to establish market acceptance.

Broad use of our products may require physicians and other health care providers to be informed about our products and their intended benefits. The
time and cost of such an educational process may be substantial. Inability to successfully carry out this education process may adversely affect market
acceptance of our products. We may be unable to educate physicians regarding our products in sufficient numbers or in a timely manner to achieve our
marketing plans or to achieve product acceptance. Any delay in physician education may materially delay or reduce demand for our products. In addition, we
may expend significant funds towards physician education before any acceptance or demand for our products is created, if at all.

The market for our products is rapidly changing and competitive, and new devices and drugs, which may be developed by others, could impair our ability
to maintain and grow our business and remain competitive.

The medical device and pharmaceutical industries are subject to rapid and substantial technological change. Developments by others may render our
technologies and products noncompetitive or obsolete. We also may be unable to keep pace with technological developments and other market factors.
Technological competition from medical device, pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying
into the field is intense and is expected to increase. Many of these entities have significantly greater research and development capabilities and budgets than
we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities represent significant competition for us.

Our business could be harmed by adverse economic conditions in Germany, our primary geographical market, or by economic and/or political instability
in the EU or elsewhere caused by Brexit, trade conflicts, or other factors.

For the year ended December 31, 2019, we derived a majority of our net product sales from sales in Germany. Despite modest European and global
growth, there are many economic and political issues that could negatively impact the health of Germany’s economy, the broader EU economy, and the world
economy overall. Examples include the uncertainty over the implications of the United Kingdom’s exit from the EU, also known as “Brexit,” economic
instability in a number of EU member countries, and changes in the political leadership in the EU and United States. Germany and other European countries
face additional risks to their local economies, some of which include the impact of foreign exchange fluctuations, unemployment, tightening of monetary
policy, the economic burden of immigration, diminished liquidity and reliance on debt, the rising cost of healthcare, and other factors. In addition, the German
government, insurance companies, health maintenance organizations and other payers of healthcare costs continue to focus on healthcare reform and
containment of healthcare costs. We cannot predict whether Germany’s economy will continue to grow or decline consistent with the overall global economy,
which decline would negatively impact the demand for medical devices and healthcare technologies generally and lead to reduced spending on the products
we provide. In addition, continued healthcare cost containment efforts may result in lower prices and a reduction or elimination of reimbursement for our
products. Due to the concentration of our product sales in this country, any of the foregoing may have a negative impact on our revenues, business operations
and financial condition.

Significant economic downturns or international trade disruptions or disputes could adversely affect our business and operating results.

Significant portions of our business are conducted in Europe, including the U.K.; Asia; and other international geographies. Interruptions in
international relationships such as the recent exit by the U.K. from the EU, and trade disputes such as the current trade negotiations between the U.S. and
China, could result in changes to regulations governing our products and our intellectual property, or otherwise affect our ability to do business. Additionally,
global events such as the current COVID-19 coronavirus pandemic, that slow worldwide economies, disrupt travel and trade, and destabilize financial
markets, may interfere with our ability to raise capital, sell and market our products, obtain reimbursement and payment of our products, or reduce the ability
of our customers to pay for our product. Although these global problems transcend our company and afflict companies across industries and borders, these
and similar events could adversely affect us, or our business partners or customers.

Our business may be negatively affected if the United States and/or the countries in which we sell our products participate in wars, military actions or are
otherwise the target of international terrorism.

Involvement in a war or other military action or international acts of terrorism may cause significant disruption to commerce throughout the world.
To the extent that such disruptions result in (i) delays or cancellations of customer orders, (ii) a general decrease in consumer spending on healthcare
technology, (iii) our inability to effectively market and distribute our products globally or (iv) our inability to access capital markets, our business and results
of operations could be materially and adversely affected. We are unable to predict whether acts of international terrorism or the involvement in a war or other
military actions by the United States and/or the countries in which we sell our products will result in any long-term commercial disruptions or if such
involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.

We could be adversely affected by violations of the Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

We are subject to the Foreign Corrupt Practices Act (the “FCPA”), which generally prohibits companies and their intermediaries from making
payments to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other improper advantage. We are also subject to
anti-bribery laws in the jurisdictions in which we operate. Although we have policies and procedures designed to ensure that we, our employees and our
agents comply with the FCPA and other anti-bribery laws, there is no assurance that such policies or procedures will protect us against liability under the
FCPA or other laws for actions taken by our agents, employees and intermediaries with respect to our business or any businesses that we acquire. We do
business in a number of countries in which FCPA violations by other companies have recently been enforced. Failure to comply with the FCPA, other anti-
bribery laws or other laws governing the conduct of business with foreign government entities, including local laws, could disrupt our business and lead to
severe criminal and civil penalties, including imprisonment, criminal and civil fines, loss of our export licenses, suspension of our ability to do business with
the federal government, denial of government reimbursement for our products and/or exclusion from participation in government healthcare programs. Other
remedial measures could include further changes or enhancements to our procedures, policies, and controls and potential personnel changes and/or
disciplinary actions, any of which could have a material adverse effect on our business, financial condition, results of operations and liquidity. We could also
be adversely affected by any allegation that we violated such laws.

We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements
and subject us to liability if we are not in compliance with applicable laws.

Our products are subject to export control and import laws, tariffs, and regulations, including the U.S. Export Administration Regulations, U.S.
Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets
Controls. Exports of our products must be made in compliance with these laws, tariffs, and regulations. If we fail to comply with these laws, tariffs, and
regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import
privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or
managers.

In addition, changes in our products or changes in applicable export or import laws, tariffs, and regulations may create delays in the introduction and
sale of our products in international markets or, in some cases, prevent the export or import of our products to certain countries, governments or persons
altogether. Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws, tariffs, and regulations, or change in the
countries, governments, persons, products, or technologies targeted by such laws, tariffs, and regulations, could also result in decreased use of our products, or
in our decreased ability to export or sell our products to existing or potential customers. Any decreased use of our products or limitation on our ability to
export or sell our products would likely adversely affect our business, financial condition and results of operations.

Cyberattacks and other security breaches could compromise our proprietary and confidential information which could harm our business and reputation.

In the ordinary course of our business, we generate, collect and store proprietary information, including intellectual property and business
information, as well as employee personal data. The secure storage, maintenance, and transmission of and access to this information is important to our
operations our day-to-day business and our reputation. Security breaches have become more common across industries. Computer hackers may attempt to
penetrate our computer systems and, if successful, misappropriate our proprietary and confidential information including e-mails and other electronic
communications, as well as our intellectual property and business data. In addition, an employee, contractor, or other third-party with whom we do business
may attempt to obtain such information, and may purposefully or inadvertently cause a breach involving such information. We have recently experienced
mulitiple attempts by third parties to penetrate our computer systems. While we have certain safeguards in place to reduce the risk of and detect cyber-attacks,
as well as limit the potential exposure of proprietary and confidential information, including multi-layer security protections, our information technology
networks and infrastructure may be vulnerable to unpermitted access by hackers or other breaches powered by new and sophisticated technologies, or
employee error or malfeasance. Further, we may not be immediately aware of any unpermitted access by hacker or other breaches and we may be unable to
quickly and effectively remediate any such breaches. Any such compromise of our data security and access to, or public disclosure or loss of, confidential
business or proprietary information could disrupt our operations, damage our reputation, provide our competitors with valuable information, and subject us to
additional costs which could adversely affect our business.

Our failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against us, and
adversely impact our operating results.

European Union member states and other foreign jurisdictions, including Switzerland, have adopted data protection laws and regulations which
impose significant compliance obligations. Moreover, the collection and use of personal health data in the European Union, which was formerly governed by
the provisions of the European Union Data Protection Directive, was replaced with the European Union General Data Protection Regulation, or the GDPR, in
May 2018. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data
relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party
processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union
to the United States, provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million
or 4% of the annual global revenues of the noncompliant company, whichever is greater. The recent implementation of the GDPR has increased our
responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place
additional mechanisms to ensure compliance with the GDPR, which could divert management's attention and increase our cost of doing business. In addition,
new regulation or legislative actions regarding data privacy and security (together with applicable industry standards) may increase our costs of doing
business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection
in the United States, the European Union and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on
our business.

In the U.S., even for companies that are not “covered entities” or business associates” under HIPAA, the U.S. Federal Trade Commission, or the
FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation
of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 U.S.C § 45(a). The FTC expects a company’s data security measures to be reasonable
and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools
to improve security and reduce vulnerabilities. Medical data is considered sensitive data that merits stronger safeguards. The FTC’s guidance for
appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule. Some state privacy and security laws
apply more broadly than HIPAA and associated regulations. For example, California recently enacted legislation – the California Consumer Privacy Act, or
CCPA – which goes into effect January 1, 2020. The CCPA, among other things, creates new data privacy obligations for covered companies and provides
new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also creates a private right of
action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. Legislators have stated that they
intend to propose amendments to the CCPA before it goes into effect, and the California Attorney General will issue clarifying regulations. Although the law
includes limited exceptions, including for certain information collected as part of clinical trials as specified in the law, it may regulate or impact our
processing of personal information depending on the context. It remains unclear what, if any, modifications will be made to this legislation or how it will be
interpreted.

Risks Connected to Our Securities

The price of our common stock has been highly volatile due to factors that will continue to affect the price of our stock.

Our common stock closed as high as $8.56 and as low as $3.61 per share between January 1, 2019 and December 31, 2019 on Nasdaq. On March 3,
2020, the closing price of our common stock, as reported on Nasdaq, was $5.18. Historically, medical device company securities such as our common stock
have experienced extreme price fluctuations. Some of the factors leading to this volatility include, but are not limited to:

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fluctuations in our operating results;
announcements of product releases by us or our competitors;
announcements of acquisitions and/or partnerships by us and our competitors; and
general market conditions.

There is no assurance that the price of our common stock will not continue to be volatile.

Directors, executive officers and principal stockholders own a significant percentage of the shares of common stock, which will limit your ability to
influence corporate matters.

Our directors, executive officers and principal stockholders together beneficially own a significant percentage of the voting control of the common
stock on a fully diluted basis. Accordingly, these stockholders could have a significant influence over the outcome of any corporate transaction or other matter
submitted to stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets and also could prevent or cause a
change in control. The interests of these stockholders may differ from the interests of our other stockholders. Third parties may be discouraged from making a
tender offer or bid to acquire us because of this concentration of ownership. As of December 31, 2019, two shareholders hold 13.1% of our shares and our
directors and officers hold 6.0% of our shares on a fully diluted basis.

Our Board of Directors may, without stockholder approval, issue and fix the terms of shares of preferred stock and issue additional shares of common
stock adversely affecting the rights of holders of our common stock.

On December 3, 2014, we effected a twenty-five-for-one (25:1) reverse split of our common stock. Immediately after the reverse stock split, we
changed our state of incorporation from the State of Nevada to the State of Delaware pursuant to an Agreement and Plan of Merger, dated December 3, 2014,
whereby we merged with and into our recently formed, wholly-owned Delaware subsidiary. Pursuant to the Agreement and Plan of Merger effecting the
merger, we adopted the certificate of incorporation, as amended and restated, and bylaws of our Delaware subsidiary as our certificate of incorporation and
bylaws at effective time of the merger. As a result, our certificate of incorporation, as amended and restated, 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. Currently,
our certificate of incorporation, as amended and restated, which was effective June 12, 2019, authorizes the issuance of up to 100,000,000 shares of common
stock, of which approximately 67,384,000 shares remain available for issuance as of December 31, 2019 and may be issued by us without stockholder
approval.

Anti-takeover provisions in our charter documents and under Delaware law could prevent or delay transactions that our stockholders may favor and may
prevent stockholders from changing the direction of our business or our management.

After giving effect to our merger into our wholly-owned Delaware subsidiary, provisions of our certificate of incorporation, as amended and restated,
and bylaws may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable, including transactions in which you might
otherwise receive a premium for your shares, and may also frustrate or prevent any attempt by stockholders to change the direction or management of us. For
example, these provisions:

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authorize the issuance of “blank check” preferred stock without any need for action by stockholders;
eliminate the ability of stockholders to call special meetings of stockholders;
prohibit stockholder action by written consent; and
establish advance notice requirements for nominations for election to the board of directors or for
proposing matters that can be acted on by stockholders at stockholder meetings.

Compliance with changing corporate governance and public disclosure regulations may result in additional expense.

Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Sarbanes-Oxley Act of 2002, new SEC regulations will require an increased amount of management attention and external resources. In
addition, prior to the merger, our current management team was not subject to these laws and regulations, as we were a private corporation. We intend to
continue to invest all reasonably necessary resources to comply with evolving standards, which may result in increased general and administrative expense
and a diversion of management time and attention from revenue-generating activities to compliance activities.

Our common stock is thinly traded on The Nasdaq Capital Market exchange and no assurances can be made about stock performance, liquidity, or
maintenance of our Nasdaq listing.

Prior to December 23, 2014, our common stock was quoted on the OTCQB, which provided significantly less liquidity than a securities exchange
(such as the New York Stock Exchange or the Nasdaq Stock Market). On December 17, 2014, our common stock was approved for trading on Nasdaq.
Beginning on December 23, 2014, our common stock began trading on Nasdaq under the symbol “CTSO.” Although currently listed on Nasdaq, there can be
no assurance that we will continue to meet Nasdaq’s minimum listing requirements or that of any other national exchange. In addition, there can be no
assurances that a liquid market will be created for our common stock. If we are unable to maintain listing on Nasdaq or if a liquid market for our common
stock does not develop, our common stock may remain thinly traded.

Future sales of our common stock may cause our share price to fall.

We are party to a Controlled Equity Offering Sales Agreement with Jefferies LLC and B. Riley FBR, who serve as agents, pursuant to which we may
offer shares of our common stock from time to time through “at-the-market” offerings. We are not obligated to make or continue to make any sale of shares of
our common stock under the “at-the-market” offerings. Although any sale of securities pursuant to the “at-the-market” offerings will result in a concomitant
increase in cash for each share sold, it may result in shareholder dilution and may cause our share price to fall.

Item 1B.

Unresolved Staff Comments.

None.

Item 2.

Properties.

We currently operate a facility near Princeton, New Jersey with approximately 19,920 sq. ft., housing research laboratories, manufacturing
operations and clinical and administrative offices, under a lease agreement which expires in May 2020, and contains a provision allowing us to renew the
lease for another year. We expect to secure new, expanded facilities in the future. In the opinion of management, the leased properties are adequately insured,
are in good condition and suitable for the conduct of our business. We also collaborate with numerous institutions, universities and commercial entities who
conduct research and testing of our products at their facilities. Our monthly base rent as of February 2020 is approximately $32,400 and additionally we
reimburse the landlord for monthly operating expenses of approximately $28,600.

We also operate a facility in Berlin, Germany housing our sales and administrative offices and warehouse space. We entered into a lease for this

office on September 1, 2016. The lease expires on August 31, 2021. We rent this space for approximately $9,000 per month.

Item 3.

Legal Proceedings.

We are from time to time subject to claims and litigation arising in the ordinary course of business. We intend to defend vigorously against any future

claims and litigation. We are not currently a party to any legal proceedings.

Item 4.

Mine Safety Disclosures.

Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Beginning on December 23, 2014, our common stock began trading on Nasdaq under the symbol “CTSO.” Previously, the Company’s common

stock traded in the over-the counter-market on the OTC Bulletin Board.

Approximate Number of Equity Security Holders

As of February 15, 2020, there were approximately 8,400 stockholders of record. Because shares of our Common Stock are held by depositaries,

brokers and other nominees, the number of beneficial holders of our shares is larger than the number of stockholders of record.

Stock Performance Graph

The following graph shows the value of an investment of $100 on December 31, 2014 in each of CytoSorbents Corporation common stock, the
Russell 2000 Index and the Nasdaq Biotech Index. All values assume reinvestment of the pretax value of dividends and are calculated as of December 31 st of
each year. The historical stock price performance of the Company’s common stock shown in the performance graph is not necessarily indicative of future
stock price performance.

CytoSorbents Corporation vs. Russell 2000 Index and Nasdaq Biotech Index
Comparison of 5 Year Total Cumulative Return
Value of a $100 Investment on December 31, 2014

Issuer Purchases of Securities

There were no repurchases of the Company’s securities during the year ended December 31, 2019.

Recent Sales of Unregistered Securities

We had no sales of unregistered securities in 2019 that have not been previously disclosed in a Current Report on Form 8-K or Quarterly Report on

Form 10-Q.

Item 6.

Selected Financial Data.

The following table summarizes our selected financial data for the periods and as of the dates indicated, which have been derived from our audited
financial statements and related notes and should be read together with the section titled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and with our consolidated financial statements and related notes, which are included elsewhere in this Annual Report.

2019

Year Ended December 31,
2017

2018

2016

2015

Revenue:
Sales
Grant income
Other revenue
Total revenue
Cost of revenue
Gross margin
Operating expenses:
Research and development
Legal, financial and other consulting
Selling general and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest expense, net
Foreign currency transaction gain (loss)
Total other income (expense), net
Loss before benefit from income taxes
Benefit from income taxes
Net loss
Dividends
Net loss available to common stockholders, basic and diluted

Weighted average common shares outstanding, basic and diluted
Net loss per share, basic and diluted

22,765,854
2,183,619

24,949,473
7,363,919
17,585,554

12,091,797
2,462,151
22,005,670
36,559,618
(18,974,064)

(1,033,661)
(350,365)
(1,384,026)
(20,358,090)
1,092,446
(19,265,644)

20,252,383
2,251,525
--
22,503,908
7,489,400
15,014,508

13,381,853 $
1,768,901
--
15,150,754
5,518,360
9,632,394

8,206,036 $
1,321,807
--
9,527,843
3,953,725
5,574,118

7,723,028
2,002,032
20,874,376
30,599,436
(15,584,928)

(1,461,045)
(784,752)
(2,245,797)
(17,830,725)
619,546
(17,211,179)

3,221,233
1,339,493
14,914,266
19,474,992
(9,842,598)

4,073,093
1,184,788
11,808,362
17,066,243
(11,492,125)

(749,076)
1,454,136
705,060
(9,137,538)
676,739
(8,460,799)
335,731

(231,804)
(358,077)
(589,881)
(12,082,006)
318,550
(11,763,456)
--
(8,796,530) $ (11,763,456) $
25,433,719
27,613,911
(0.46) $
(0.32) $

4,043,819
735,863
11,934
4,791,616
2,212,546
2,579,070

3,744,803
1,089,145
7,048,781
11,882,729
(9,303,659)

(9,301)
(507,276)
(497,975)
(9,801,634)
324,606
(9,477,028)
--
(9,477,208)
24,885,809
(0.38)

(19,265,644) $
32,255,253

(17,211,179) $
30,719,176

(0.60) $

(0.56) $

Consolidated Balance Sheet Data:
Cash and cash equivalents
Short term investments
Working capital
Total assets
Preferred stock
Accumulated deficit
Total stockholders' equity

2019

2018

2017

2016

2015

As of December 31,

12,232,418
--
10,965,262
27,382,510
--

22,368,837
--
21,725,888
34,196,763
--

(188,789,459)
3,418,042

(169,523,815)
16,934,600

17,321,862 $
--
12,891,009
24,103,307
--
(152,312,636)
10,262,835

5,245,178 $
--
3,550,353
9,693,844
--
(143,516,106)
1,337,459

5,316,851
2,192,000
8,452,677
11,254,366
--
(131,752,650)
9,846,815

Item 7.

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

The following discussion and analysis of the results of operations and financial condition for the fiscal years ended December 31, 2019, 2018 and

2017 should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this Report.

Overview

We are a leader in critical care immunotherapy using blood purification technology to treat deadly inflammation in hospitalized patients around the
world. The technology is based upon biocompatible, highly porous polymer sorbent beads that are capable of extracting unwanted substances from blood and
other bodily fluids. The technology is protected by 21 issued U.S. patents, multiple issued foreign patents and multiple applications pending both in the U.S.
and internationally. Our intellectual property consists of composition of matter, materials, methods of production, systems incorporating the technology and
multiple medical uses with expiration dates ranging from one to 16 years.

In March 2011, we received EU regulatory approval under the CE Mark and Medical Devices Directive for our flagship product, CytoSorb, as an
extracorporeal cytokine filter indicated for use in clinical situations where cytokines are elevated. The goal of CytoSorb is to prevent or treat organ failure by
reducing cytokine storm and the potentially deadly systemic inflammatory response syndrome in diseases such as sepsis, trauma, burn injury, acute
respiratory distress syndrome, pancreatitis, liver failure, and many others. Organ failure is the leading cause of death in the ICU, and remains a major unmet
medical need, with little more than supportive care therapy (e.g., mechanical ventilation, dialysis, vasopressors, fluid support, ECMO, etc.) as treatment
options. By potentially preventing or treating organ failure, CytoSorb may improve clinical outcome, including survival, while reducing the need for costly
ICU treatment, thereby potentially saving significant healthcare costs. CytoSorb is also being used during and after cardiac surgery to remove inflammatory
mediators, such as cytokines and free hemoglobin, which can lead to post-operative complications including multiple organ failure. In January 2018, the
Company received approval for the first CytoSorb label expansion increasing treatment time from six hours to 24 hours. In May 2018, the Company received
the second label expansion for CytoSorb covering use of the device for the removal of bilirubin and myoglobin in the treatment of liver failure and trauma,
respectively. In January 2020, the Company received the third a label expansion for CytoSorb covering the use of the device for the removal of the anti-
platelet agent, ticagrelor, in cardiac patients during surgery requiring cardiopulmonary bypass.

Our CE Mark enables CytoSorb to be sold throughout all 27 countries of the EU and the United Kingdom. In addition, many countries outside the
EU accept CE Mark approval for medical devices, but may also require registration with or without additional clinical studies. The broad approved indication
enables CytoSorb to be used “on-label” in diseases where cytokines are elevated including, but not limited to, critical illnesses such as those mentioned
above, autoimmune disease flares, cancer cachexia, and many other conditions where cytokine-induced inflammation plays a detrimental role.

As part of the CE Mark approval process, we completed our randomized, controlled, European Sepsis Trial amongst fourteen trial sites in Germany
in 2011, with enrollment of 100 patients with predominantly septic shock and respiratory failure. The trial established that CytoSorb was safe in this
critically-ill population, and that it was able to broadly reduce key cytokines from the blood of these patients. We plan to conduct larger, prospective studies in
septic patients in the future to confirm the European Sepsis Trial findings.

In addition to CE Mark approval, we also achieved ISO 13485:20016 Full Quality Systems certification, an internationally recognized quality
standard designed to ensure that medical device manufacturers have the necessary comprehensive management systems in place to safely design, develop,
manufacture and distribute medical devices in the EU. We manufacture CytoSorb at our manufacturing facilities in New Jersey for sale and for additional
clinical studies. We also established specific reimbursement for CytoSorb in Germany. We have also been assigned two specific procedure codes for our
CytoSorb device in Switzerland that are pending reimbursement valuation assignment.

From September 2011 through June 2012, we began a controlled market release of CytoSorb in select geographic territories in Germany with the
primary goal of preparing for commercialization of CytoSorb in Germany in terms of manufacturing, reimbursement, logistics, infrastructure, marketing,
contacts, and other key issues.

In late June 2012, following the establishment of our European subsidiary, CytoSorbents Europe GmbH, we began the commercial launch of
CytoSorb in Germany with the hiring of Dr. Christian Steiner as Vice President of Sales and Marketing and three additional sales representatives. The fourth
quarter of 2012 represented the first full quarter of direct sales with the full sales team in place. During this period, we expanded our direct sales efforts to
include both Austria and Switzerland.

On March 5, 2019, the Company announced the expansion of direct sales of CytoSorb for all applications to Poland and the Netherlands, and critical
care applications to Sweden, Denmark and Norway. As part of this effort, the Company established CytoSorbents Poland Sp. Z.o.o., a wholly-owned
subsidiary of CytoSorbents Europe GmbH.

At the end of 2018, we had hundreds of KOLs in our commercialized territories worldwide in critical care, cardiac surgery, and blood purification

who were either using CytoSorb or supporting its use in clinical practice or clinical trials.

In the third quarter of 2019, we established CytoSorbents UK Limited, a wholly-owned subsidiary of CytoSorbents Medical, Inc., to manage our

clinical trial activities in the United Kingdom.

As of February 10, 2020, our European commercialization team includes 79 people.

We have been working to expand the number and scope of our strategic partnerships. In September 2013, we entered into a strategic partnership with
Biocon Ltd., India’s largest biopharmaceuticals company, with an initial distribution agreement for India and select emerging markets, under which Biocon
has the exclusive commercialization rights for CytoSorb initially focused on sepsis. In October 2014, the Biocon partnership was expanded to include all
critical care applications and cardiac surgery. In addition, Biocon committed to higher annual minimum purchases of CytoSorb to maintain distribution
exclusivity and committed to conduct and publish results from multiple investigator-initiated studies and patient case studies. In December 2017, the Biocon
partnership was further expanded to include exclusive distribution of CytoSorb in Malaysia. Under the terms of the agreement, Biocon has committed to
minimum annual purchases in Malaysia to maintain exclusivity this territory. In addition, the term of the original agreement was extended to December 2022.

In December 2014, we entered into a multi-country strategic partnership with Fresenius Medical Care AG & Co KGaA (“Fresenius”) to
commercialize the CytoSorb therapy. Under the agreement reflecting the terms of the partnership, Fresenius was granted exclusive rights to distribute
CytoSorb for critical care applications in France, Poland, Sweden, Denmark, Norway, and Finland. The partnership allows Fresenius to offer an innovative
and easy way to use blood purification therapy for removing cytokines in patients that are treated in the ICU. To promote the success of CytoSorb, Fresenius
agreed to also engage in the ongoing clinical development of the product. This includes the support and publication of a number of small case series and
patient case reports as well as the potential for future larger, clinical collaborations. In May 2016, Fresenius launched the product in the six countries for
which it was granted exclusive distribution rights. In January 2017, the Fresenius partnership was expanded pursuant to a revised three year agreement. The
terms of the revised three-year agreement extended Fresenius’ exclusive distributorship of CytoSorb for all critical care applications in their existing
territories through 2019 and include guaranteed minimum quarterly orders and payments, evaluable every one and a half years. At the same time, we entered
into a new comprehensive co-marketing agreement with Fresenius. Under the terms of the co-marketing agreement, CytoSorbents and Fresenius agreed to
jointly market CytoSorb to Fresenius’ critical care customer base in all countries where CytoSorb is being actively commercialized. CytoSorb will continue to
be sold by our direct sales force or through our international network of distributors and partners, while Fresenius sells all ancillary products to their
customers. Fresenius further agreed to provide written endorsements of CytoSorb for use with their multiFiltrate and multiFiltratePRO acute care dialysis
machines that can be used by us and our distribution partners to promote CytoSorb worldwide. Training and preparation for this co-marketing program began
in five initial countries in 2017 and is continuing, with implementation of the co-marketing program in additional countries planned for the future.

In December 2018, the Fresenius agreement originally signed in 2014 was amended, thereby modifying the territory to include exclusive distribution
rights for Czech Republic and Finland and all critical care medicine and intensive care unit (ICU) applications on dialysis or ECMO machines for France. In
addition, starting in 2019, Poland, Sweden, Denmark, and Norway were transitioned into the co-marketing program. Finally, the guaranteed minimum
quarterly purchases and payments requirements were removed for 2019.

In addition, in this December 2018 reconfiguration of territories, the Fresenius partnership was expanded to include South Korea and Mexico. Under
the terms of these agreements, Fresenius Medical Care has the exclusive rights to distribute CytoSorb for acute care and other hospital applications in Korea
and Mexico. Commercial sales of CytoSorb are expected to commence after securing market registration clearance from Korean and Mexican health
authorities. These multi-year agreements include an initial stocking order and are subject to annual minimum purchases of CytoSorb to maintain exclusivity.

In September 2016, we entered into a multi-country strategic partnership with Terumo Cardiovascular Group to commercialize CytoSorb for cardiac
surgery applications. Under the terms of the agreement, Terumo has exclusive rights to distribute the CytoSorb cardiopulmonary bypass (“CPB”) procedure
pack for intra-operative use during cardiac surgery in France, Sweden, Denmark, Norway, Finland and Iceland. Terumo launched the product in these six
countries in December 2016.

In March 2017, we announced a partnership with Dr. Reddy’s Laboratories to exclusively distribute CytoSorb in South Africa for multiple

applications. In December 2019, we discontinued this partnership.

We continuously evaluate other potential distributor and strategic partner networks in other countries where we are approved to market the device.

Concurrent with our commercialization plans, we intend to conduct or support additional clinical studies in sepsis, cardiac surgery, and other critical
care diseases to generate additional clinical data to expend the scope of clinical experience for marketing purposes, to increase the number of treated patients,
and to support potential future publications. We have completed a single arm, dose ranging trial in Germany amongst several clinical trial sites supporting the
safety and efficacy of CytoSorb when used 24 hours per day for seven days, each day with a new device.

In addition, we now have more than 50 investigator-initiated studies planned, enrolling or completed in Germany, Austria, Switzerland, the
Netherlands, Hungary, the United Kingdom, India, and the U.S. Approximately 20 of these studies are currently enrolling patients. Others have been
completed. These trials, which are funded and supported by well-known university hospitals and KOLs, are post-market clinical studies. They have provided
and will continue to provide invaluable information regarding the success of the device in the treatment of sepsis, cardiac surgery, trauma, and many other
indications, and if successful, will be integral in helping to drive additional usage and adoption of CytoSorb.

In February 2015, the U.S. Food and Drug Administration (the “FDA”) approved our Investigational Device Exemption (“IDE”) application to
commence a planned U.S. cardiac surgery feasibility study called REFRESH I (REduction of FREe Hemoglobin) amongst 20 patients and three U.S. clinical
sites. The FDA subsequently approved an amendment to the protocol, expanding the study to a 40-patient randomized controlled study (20 treatment, 20
control) in eight clinical centers. REFRESH I represented the first part of a larger clinical trial strategy intended to support the approval of CytoSorb in the
U.S. for intra-operative use during cardiac surgery.

The market focus of CytoSorb is prevention or treatment of organ failure in life-threatening conditions, including commonly seen illnesses in the
ICU such as infection and sepsis, trauma, burn injury, ARDS, and others. Severe sepsis and septic shock, a potentially life-threatening systemic inflammatory
response to a serious infection, accounts for approximately 10% to 20% of all ICU admissions and is one of the largest target markets for CytoSorb. Sepsis is
a major unmet medical need with no approved products in the U.S. or Europe to treat it. As with other critical care illnesses, multiple organ failure is the
primary cause of death in sepsis. When used with standard of care therapy, that includes antibiotics, the goal of CytoSorb in sepsis is to reduce the excessive
levels of cytokines and other inflammatory toxins, to help reduce the SIRS response and either prevent or treat organ failure.

We intend to conduct or support additional clinical studies in sepsis, cardiac surgery, and other critical care diseases where CytoSorb could be used,
such as ARDS, trauma, severe burn injury, acute pancreatitis, and other acute conditions that may benefit by the reductions of cytokines in the bloodstream.
Some examples include the prevention of post-operative complications of cardiac surgery (cardiopulmonary bypass surgery) and damage to organs for
transplant prior to organ harvest. We intend to generate additional clinical data to expand the scope of clinical experience for marketing purposes, to increase
the number of treated patients, and to support potential future publications.

Our proprietary hemocompatible porous polymer bead technology forms the basis of a broad technology portfolio. Some of our products include:

CytoSorb - an extracorporeal hemoperfusion cartridge approved in the EU for cytokine removal, with the goal of reducing SIRS and
preventing or treating organ failure.

CytoSorb XL – an intended next generation successor to CytoSorb currently in advanced pre-clinical testing designed to reduce a
broad range of cytokines and inflammatory mediators, including lipopolysaccharide (LPS) endotoxin, from blood.

VetResQ - a broad spectrum blood purification adsorber designed to help treat deadly inflammation and toxic injury in animals with
critical illnesses such as septic shock, toxic shock syndrome, severe systemic inflammation, toxin-mediated diseases, pancreatitis,
trauma, liver failure, and drug intoxication. VetResQ is being commercialized in the United States.

HemoDefend – a development-stage blood purification technology designed to remove non-infectious contaminants in blood
transfusion products, with the goal of reducing transfusion reactions and improving the quality and safety of blood. With the support
of NHLBI, we plan to initiate a U.S. pivotal trial designed to support U.S. FDA approval, expected to begin by the end of 2020.

K+ontrol – a development-stage blood purification technology designed to reduce excessive levels of potassium in the blood in severe
hyperkalemia.

ContrastSorb – a development-stage extracorporeal hemoperfusion cartridge designed to remove IV contrast from the blood of high
risk patients undergoing CT imaging with contrast, or interventional radiology procedures such as cardiac catheterization. The goal of
ContrastSorb is to prevent contrast-induced nephropathy.

DrugSorb – a development-stage extracorporeal hemoperfusion cartridge designed to remove toxic chemicals from the blood (e.g.,
drug overdose, high dose regional chemotherapy).

BetaSorb – a development-stage extracorporeal hemoperfusion cartridge designed to remove mid-molecular weight toxins, such as
b2-microglobulin, that standard high-flux dialysis cannot remove effectively. The goal of BetaSorb is to improve the efficacy of
dialysis or hemofiltration.

We have been successful in obtaining technology development contracts from governmental agencies such as the National Institutes of Health and
the U.S. Department of Defense, including the Defense Advanced Research Projects Agency, or DARPA, the U.S. Army, U.S. Special Operations Command,
and others.

Results of Operations

Our financial statements have been presented on the basis that it is a going concern, which contemplates the realization of revenues and the
satisfaction of liabilities in the normal course of business. We have incurred losses from inception of operations. These factors raise substantial doubt about
our ability to continue as a going concern.

Comparison of the year ended December 31, 2019 and 2018

Revenues:

For the year ended December 31, 2019, we generated total revenue, which includes product revenue and grant income, of approximately
$24,949,000 as compared to revenues of approximately $22,504,000 for the year ended December 31, 2018, an increase of approximately $2,445,000, or
11%. Revenue from product sales was approximately $22,766,000 for the year ended December 31, 2019, as compared to approximately $20,252,000 in the
year ended December 31, 2018, an increase of approximately $2,514,000 or 12%. This increase was primarily driven by an increase in direct sales of
approximately $3,194,000 resulting from both new customers and repeat orders from existing customers. This increase was offset by a decrease in distributor
sales of approximately $680,000. In addition, sales were negatively impacted by approximately $1,201,000 as a result of the decrease in the average exchange
rate of the Euro to the U.S. dollar. For the year ended December 31, 2019, the average exchange rate of the Euro to the U.S. dollar was $1.12 as compared to
an average exchange rate of $1.18 for the year ended December 31, 2018.

Cost of Revenue:

For the years ended December 31, 2019 and 2018, cost of revenue was approximately $7,364,000 and $7,489,000, respectively, a decrease of
approximately $125,000. Product cost of revenues decreased approximately $63,000 during the year ended December 31, 2019 as compared to the year ended
December 31, 2018 as a result of achieved production efficiencies. Product gross margins were approximately 77% for the year ended December 31, 2019
and approximately 74% for the year ended December 31, 2018.

Gross Profit:

Gross profit was approximately $17,586,000 for the year ended December 31, 2019, an increase of approximately $2,571,000 or 17%, over gross

profit of $15,015,000 in 2018. This increase is attributed to an increase in CytoSorb product sales during 2019 as well as achieved production efficiencies.

Research and Development Expenses:

Our research and development costs were approximately $12,092,000 and $7,723,000 for the years ended December 31, 2019 and 2018,
respectively, an increase of approximately $4,369,000, or 57%. This increase was due to an increase in clinical trial and related costs of
approximately$3,890,000, which include expenditures related to our REFRESH 2-AKI study and our TISORB study, an increase in non-clinical research and
development salary related costs of approximately $223,000, decreases in direct labor and other costs being deployed toward grant-funded activities of
approximately $62,000, which had the effect of increasing the amount of our non-reimbursable research and development costs and an increase in our non-
grant related research and development costs of approximately $194,000.

Legal, Financial and Other Consulting Expenses:

Our legal, financial and other consulting costs were approximately $2,462,000 and $2,002,000 for the years ended December 31, 2019 and 2018,
respectively, an increase of approximately $460,000, or 23%. This increase was due to an increase in legal fees of approximately $334,000 related to patent
matters and certain corporate initiatives, an increase in employment agency fees of approximately $88,000 related to the hiring of senior level personnel, an
increase in accounting and auditing fees of approximately $24,000 and an increase in consulting fees of approximately $14,000.

Selling, General and Administrative Expenses:

Our selling, general and administrative expenses were approximately $22,006,000 and $20,874,000 for the years ended December 31, 2019 and
2018, respectively, an increase of approximately $1,132,000, or 5%. This increase was due to an increase in salaries, commissions and related costs of
approximately $2,323,000, additional sales and marketing costs, which include advertising and conference attendance of approximately $863,000, an increase
in royalty expenses of approximately $198,000 due to the increase in product sales, and an increase in restricted stock expense of approximately $226,000
related to restricted stock units granted to the Company’s executive officers, an increase in public relations cost of approximately $78,000 and increase in
other general and administrative costs of approximately $215,000. These increases were offset by a decrease in non-cash stock compensation expense of
approximately $2,771,000.

Interest Expense, Net:

For the year ended December 31, 2019, interest expense, net was approximately $1,034,000, as compared to interest expense, net of approximately
$1,461,000 for the year ended December 31, 2018. This decrease in net interest expense of approximately $427,000 is related to the settlement of the Success
Fee with Bridge Bank in the amount of $637,000 that became due in May 2018 in accordance with the terms of the 2016 Success Fee Letter, offset by an
increase in interest due to the draw down of the $5,000,000 Term B Loan with Bridge Bank on July 31, 2019.

Gain (Loss) on Foreign Currency Transactions:

For the year ended December 31, 2019, the loss on foreign currency transactions was approximately $350,000, as compared to a loss on foreign
currency transactions of approximately $785,000 for the year ended December 31, 2018. The 2019 loss is directly related to the decrease in the exchange rate
of the Euro at December 31, 2019, as compared to December 31, 2018. The exchange rate of the Euro to the U.S. dollar was $1.12 per Euro at December 31,
2019 as compared to $1.15 per Euro at December 31, 2018. The 2018 loss is directly related to the decrease in the exchange rate of the Euro at December 31,
2018, as compared to December 31, 2017. The exchange rate of the Euro to the U.S. dollar was $1.15 per Euro at December 31, 2018 as compared to $1.20
per Euro at December 31, 2017.

Benefit from Income Taxes:

Our benefit from income taxes was approximately $1,092,000 and $620,000 for the years ended December 31, 2019 and 2018, respectively. These
benefits were realized by utilizing the New Jersey Technology Business Tax Certificate Transfer Program whereby the State of New Jersey allows us to sell a
portion of our state net operating losses to a third party.

Comparison of the year ended December 31, 2018 and 2017

Revenues:

For the year ended December 31, 2018, we generated total revenue, which includes product revenue and grant income, of approximately
$22,504,000 as compared to revenues of approximately $15,151,000 for the year ended December 31, 2017, an increase of approximately $7,353,000, or
49%. Revenue from product sales was approximately $20,252,000 for the year ended December 31, 2018, as compared to approximately $13,382,000 in the
year ended December 31, 2017, an increase of approximately $6,870,000 or 51%. This increase was primarily driven by increases in both direct and
distributor sales from both new customers and repeat orders from existing customers. In addition, approximately $792,000 of this increase was due to the
increase in the average Euro to U.S. dollar exchange rate for the year ended December 31, 2018 as compared to the year ended December 31, 2017.

Grant income increased by approximately $483,000, or 27%, to approximately $2,252,000 in 2018 from $1,769,000 in 2017 as a result of increased

revenue received from existing grants and revenue received from a new grant awarded in 2018.

Cost of Revenue:

For the years ended December 31, 2018 and 2017, cost of revenue was approximately $7,489,000 and $5,518,000, respectively, an increase of
approximately $1,971,000, or 36%. This increase is related to an increase in product cost of revenue of approximately $1,482,000 attributable to increased
sales in 2018. Product gross margins were approximately 74% for the year ended December 31, 2018, as compared to approximately 71% for the year ended
December 31, 2017, due to a reduction in the cost of devices manufactured as a result of production efficiencies achieved and, to a lesser extent, the impact of
the increase in the exchange rate of the Euro. Grant income related expenses increased by approximately $489,000 during the year ended December 31, 2018
as compared to the year ended December 31, 2017 due to an increase in direct labor and other costs being deployed toward grant-funded activities during the
year ended December 31, 2018 as compared to the year ended December 31, 2017.

Gross Profit:

Gross profit was approximately $15,015,000 for the year ended December 31, 2018, an increase of approximately $5,383,000 or 56%, over gross
profit of $9,632,000 in 2017. This increase is primarily attributed to an increase in CytoSorb product sales during 2018, and, to a lesser extent, a result of the
increase in product gross margins.

Research and Development Expenses:

Our research and development costs were approximately $7,723,000 and $3,221,000 for the years ended December 31, 2018 and 2017, respectively,
an increase of approximately $4,502,000, or 140%. This increase in research and development expenditures was due to an increase in our clinical trial costs of
approximately $4,179,000, which is primarily related to our REFRESH 2-AKI trial, an increase in non-clinical research and development salary related costs
of approximately $329,000 and an increase in new product development costs of approximately $164,000 and increase in other non-grant related research and
development costs of approximately $319,000. These increases were offset by an increase in direct labor and other costs being deployed toward grant-funded
activities of approximately $489,000, which had the effect of decreasing the amount of our non-reimbursable research and development costs.

Legal, Financial and Other Consulting Expenses:

Our legal, financial and other consulting costs were approximately $2,002,000 and $1,339,000 for the years ended December 31, 2018 and 2017,
respectively, an increase of approximately $663,000, or 50%. This increase was due to an increase in employment agency fees of approximately $271,000
related to the recruitment of senior level personnel, an increase in legal fees of approximately $254,000 related to certain corporate initiatives, an increase in
accounting fees of approximately $39,000 related to fees in Germany and an increase in other professional fees of approximately $99,000.

Selling, General and Administrative Expenses:

Our selling, general and administrative expenses were approximately $20,874,000 and $14,914,000 for the years ended December 31, 2018 and
2017, respectively, an increase of approximately $5,960,000, or 40%. The increase in selling, general, and administrative expenses was due to an increase in
non-cash stock compensation expense of approximately $1,379,000 primarily based upon achievement of the 2018 operating milestones, increases in salaries,
commissions and related costs of approximately $2,831,000 due to headcount additions, an increase in royalty expenses of approximately $555,000 due to the
increase in product sales, additional sales and marketing costs, which include advertising and conferences of approximately $343,000, an increase in travel
and entertainment costs and other expenses of approximately $453,000, an increase in occupancy cost of approximately $237,000 related to our
manufacturing facility expansion, an increase in public relations expense of approximately $98,000 and an increase in other G&A expenses of approximately
$64,000.

Interest Expense, Net:

For the year ended December 31, 2018, interest expense, net was approximately $1,461,000, as compared to interest expense, net of approximately
$749,000 for the year ended December 31, 2017. This increase in net interest expense of approximately $712,000 is directly related to the settlement of the
Success Fee with Bridge Bank in the amount of $637,000 that became due in May 2018 in accordance with the terms of the 2016 Success Fee Letter with
Bridge Bank and the additional interest related to the drawdown of the Term B Loan (as defined in the Loan and Security Agreement dated June 30, 2016
with Bridge Bank) on June 30, 2017 in the amount of $5,000,000.

Gain (Loss) on Foreign Currency Transactions:

For the year ended December 31, 2018, the loss on foreign currency transactions was approximately $785,000, as compared to a gain on foreign
currency transactions of approximately $1,454,000 for the year ended December 31, 2017. The 2018 loss is directly related to the decrease in the exchange
rate of the Euro at December 31, 2018, as compared to December 31, 2017. The exchange rate of the Euro to the U.S. dollar was $1.15 per Euro at December
31, 2018 as compared to $1.20 per Euro at December 31, 2017. The 2017 income is directly related to the increase in the exchange rate of the Euro at
December 31, 2017, as compared to December 31, 2016. The exchange rate of the Euro to the U.S. dollar was $1.20 per Euro at December 31, 2017 as
compared to $1.05 per Euro at December 31, 2016.

Benefit from Income Taxes:

Our benefit from income taxes was approximately $620,000 and $677,000 for the years ended December 31, 2018 and 2017, respectively. These
benefits were realized by utilizing the New Jersey Technology Business Tax Certificate Transfer Program whereby the State of New Jersey allows us to sell a
portion of our state net operating losses to a third party.

History of Operating Losses

We have experienced substantial operating losses since inception. As of December 31, 2019, we had an accumulated deficit of approximately
$188,789,000, which included losses of approximately $19,266,000, $17,211,000 and $8,461,000 for years ended December 31, 2019, 2018 and 2017,
respectively. Historically, our losses have resulted principally from costs incurred in the research and development of our polymer technology, our legal,
financial and consulting expenses, and selling, general and administrative expenses, which together were approximately $36,560,000, $30,599,000 and
$19,475,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

Liquidity and Capital Resources

Since inception, our operations have been primarily financed through the private and public placement of our debt and equity securities. At
December 31, 2019, we had current assets of approximately $20,902,000 including cash on hand of approximately $12,232,000 and had current liabilities of
approximately $9,936,000. During the period from January 1, 2020 through March 2, 2020, we raised approximately $13,321,000 by utilizing our ATM
facility with co-agents Jefferies LLC and B. Riley FBR. Also, we expect to receive approximately $1,092,000 in cash from the approved sale of our net
operating losses and research and development credits from the State of New Jersey in the first quarter of 2020.

We believe that we have sufficient cash to fund our operations into 2021. We will need to raise additional capital to support our ongoing operations

in the future. In addition, we will need to raise additional funds to support clinical trials in the U.S. and in Europe.

Loan and Security Agreement:

On June 30, 2016, we and our 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 we borrowed $10 million in two equal tranches of $5
million (the “Original Term Loans”). On March 29, 2018 (the “Closing Date”), 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 “Settlement Date”), 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 we drew down the full $5.0 million Term B Loan on the Settlement Date, bringing the total outstanding debt to
$15,000,000 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. The outstanding balances on Term Loans bear interest at the prime rate reported in the Wall Street Journal plus 3.66%. This rate was
8.41% at December 31, 2019.

On the Closing Date, we were required to pay a non-refundable closing fee of $25,000, expenses incurred by the Bank related to the Amended and
Restated Loan and Security Agreement of $11,000 and a portion of the final fee for the period the Original Term Loans were outstanding of $85,938. In
addition, we incurred legal expenses related to the Amended and Restated Loan and Security Agreement of $20,050 and $4,212 related to the First
Amendment. As of the Settlement Date, the total unamortized loan costs related to the Term Loans amounted to $90,925. These costs have been presented as
a direct deduction from the proceeds of the loan on the consolidated balance sheet in accordance with the provisions of ASC 850. These costs are being
amortized over the loan period as a charge to interest expense. For the years ended December 31, 2019, 2018 and 2017, we recorded interest expense
amounting to $33,175, $31,946, and $29,971, respectively related to these costs. After accounting for the various costs outlined above, the effective interest
rate on the Term A Loan was 9.1% as of March 29, 2018. Under the terms of the First Amendment, commencing on the first calendar day of the calendar
month after Term B Loan was made, we are required to make monthly payments of interest-only through April 2020. The interest-only period will be further
extended through November 2020 provided the Borrower has been compliant with its obligations under the financial covenant revenue test set forth in the
Amended and Restated Loan and Security Agreement for all months from the month immediately after the month in which the Term B Loan is funded
through March 2020. Commencing on May 1, 2020, if we do not comply with financial covenant revenue test, we must make equal monthly payments of
principal of $625,000, together with accrued and unpaid interest. Commencing on November 1, 2020, if we comply with the financial covenant revenue test,
we must make equal monthly payments of principal of $833,333, 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 April 1, 2022. In addition, the Amended and Restated Loan and Security Agreement requires that we to
pay a non-refundable final fee equal to 2.5% of the principal amount of each Term Loan funded upon the earlier of the (i) April 1, 2022 maturity date or (ii)
termination of the Term Loan via acceleration or prepayment. This final fee is being accrued and charged to interest expense over the term of the loan. For
the years ended December 31, 2019, 2018 and 2017, we recorded interest expense of $82,031, $65,104 and 52,083, respectively, related to the final fee. The
Term Loans are evidenced by secured promissory notes issued to the Bank by us. If we elect 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 through April 1, 2022, an amount equal to 1.0% of the principal amount of such Term Loan prepaid.

Events of default which may cause repayment of the Term Loans to be accelerated include, among other customary events of default, (1) non-
payment of any obligation when due, (2) the failure to perform any obligation required under the Amended and Restated Loan and Security Agreement and to
cure such default within a reasonable time frame, (3) the occurrence of a Material Adverse Event (as defined in the Amended and Restated Loan and Security
Agreement), (4) the attachment or seizure of a material portion of the Borrower’s assets if such attachment or seizure is not released, discharged or rescinded
within 10 days, and (5) if the Borrower becomes insolvent or starts an insolvency proceeding or if an insolvency proceeding is brought by a third party against
the Borrower and such proceeding is not dismissed or stayed within 30 days. The Amended and Restated Loan and Security Agreement includes customary
loan conditions, Borrower representations and warranties, Borrower affirmative covenants and Borrower negative covenants for secured transactions of this
type. We are in substantial compliance with these covenants.

Our 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 our 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).

2016 Success Fee Letter:

Pursuant to that certain Success Fee Letter (the “2016 Letter”) entered into between the Borrower and the Bank in connection with the Original Term
Loans, the Borrower agreed to pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Original Term Loans (the “2016 Letter
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 our common stock on
Nasdaq being $8.00 (after giving effect to any stock splits or consolidations effected after the date thereof) or more for five successive business days. On May
18, 2018, the 2016 Letter Success Fee became due to the Bank as result of an occurrence of the event described in clause (d) above. The Company elected to
satisfy the 2016 Letter Success Fee by issuing shares of its common stock, which was permitted under the terms of the 2016 Letter. On May 23, 2018, we
issued 68,791 shares of its common stock in full satisfaction of the 2016 Letter Success Fee, and the obligations of the Borrower under the 2016 Letter. The
2016 Letter Success Fee was valued at $637,000 and was charged to interest expense.

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 our common stock on the Nasdaq Capital Market being the greater of (i) 70% or more over $7.05, the
closing price of our common stock on March 29, 2018 (after giving effect to any stock splits or consolidations effected after the date thereof) for five
successive business days, or (ii) at least 26.13% more than the average price of Company’s common stock for the 365 day period ending on the date of the
funding of the Term B Loan.

Contractual Obligations

The following table summarizes our obligations with regard to our contractual obligations as of December 31, 2019, and the expected timing of
maturities of those contractual obligations. This table should be read in conjunction with the notes to financial statements included elsewhere in this Annual
Report on Form 10-K.

Operating lease obligations

Long-term debt

Effects of Recent Accounting Pronouncements

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years

428,083 $

307,292 $

168,989 $

166,398

1,666,666 $

13,333,334 $

– $

–

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 outlines reporting requirements for lessees to recognize a
right-of-use asset and corresponding liability on the balance sheet for all leases covering a period of greater than 12 months. The liability is to be measured as
the present value of the future minimum lease payments, plus any initial direct costs. The minimum payments are discounted using the rate implicit in the
lease, or, if not known, the lessee’s incremental borrowing rate. The updated guidance is effective for public entities for fiscal years beginning after December
31, 2018. We adopted the updated guidance effective January 1, 2019 by recording a right of use asset and corresponding lease liability of $1,449,437.

Critical Accounting Policies

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

Patents

Legal costs incurred to establish patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the

related patent term. In the event a patent is abandoned, the net book value of the patent is written off.

Revenue Recognition

Product Sales: Revenues from sales of products to both direct and distributor/strategic partner customers are recognized at the time when control
passes to the customer, in accordance with the terms of their respective contracts. Recognition of revenue occurs as each performance obligation is completed.

Grant Revenue: Revenue from grant income is based on contractual agreements. Certain agreements provide for reimbursement of costs, other
agreements provide for reimbursement of costs and an overhead margin and certain agreements are performance based, where revenue is earned based upon
the achievement of milestones outlined in the contract. Revenues are recognized when the associated performance obligation is fulfilled. Costs are recorded as
incurred. Costs subject to reimbursement by these grants have been reflected as costs of revenue.

Research and Development

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

incurred.

Stock Based-Compensation

We account for our 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.

We also follow 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.

Off-Balance Sheet Arrangements

We currently operate a facility near Princeton, New Jersey with approximately 19,920 sq. ft., housing research laboratories, clinical manufacturing
operations and administrative offices, under a lease agreement which expires in May 2020. The lease includes a one year option to renew. We expect to secure
additional square footage to support increased manufacturing capacity in the future. Our monthly base rent is approximately $32,400 and, additionally, we
reimburse the landlord for monthly operating expenses of approximately $29,000.

We also operate a facility in Berlin, Germany housing our sales and administrative offices and warehouse space. We entered into a lease for this

office on September 1, 2016. The lease expires on August 31, 2021. We rent this space for $9,000 per month.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to certain market risks in the ordinary course of business. These risks result primarily from changes in foreign currency exchange
rates and interest rates. In addition, international operations are subject to risks related to differing economic conditions, changes in political climate, differing
tax structures and other regulations and restrictions.

To date we have not utilized derivative financial instruments or derivative commodity instruments. We do not expect to employ these or other
strategies to hedge market risk in the foreseeable future. Cash is held in checking, savings, and money market funds, which are subject to minimal credit and
market risk. We generate sales in both dollars and euros most significantly, the majority of our sales are in Euros and changes in the exchange rate of the Euro
to the U.S. dollar may positively or negatively impact our revenue. On the other hand, should sales decline due to a devaluation of the Euro relative to the
U.S. dollar, expenses related to our European subsidiary would also decline. This produces a natural currency hedge. We believe that the market risks
associated with these financial instruments are immaterial, although there can be no guarantee that these market risks will be immaterial to us in the future.

Item 8.

Financial Statements and Supplementary Data.

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

Item 15 of Part IV.

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an
evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2019, to ensure that information
required to be disclosed in our reports filed or submitted under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management’s report on internal control over financial reporting procedures (as defined in Rule 13a-15(f) under the Exchange Act) is included

with the financial statements reflected in Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

Attestation Report of the Registered Public Accounting Firm

WithumSmith+Brown, PC, the independent registered public accounting firm that audited the financial statements of included in Item 8 of this
Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2019.
This report is included with the financial statements included in Item 8 of this Annual Report on Form 10-K and incorporated herein by reference.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the fiscal quarter ended December 31, 2019 that has materially affected, or

is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Control Persons.

Information required to be disclosed by this Item with respect to our executive officers is incorporated in this Annual Report on Form 10-K by
reference from the section entitled “Officers and Key Employees” contained in our definitive proxy statement for our 2020 annual meeting of stockholders
scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about our board of directors is incorporated in this Annual Report on Form 10-K by reference from
the section entitled “Nomination and Election of Directors” contained in our definitive proxy statement for our 2020 annual meeting of stockholders
scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

Information required to be disclosed by this Item about the Section 16(a) compliance of our directors and executive officers is incorporated in this
Annual Report on Form 10-K by reference from the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” contained in our definitive
proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our
fiscal year.

Information required to be disclosed by this Item about our board of directors, the audit committee of our board of directors, our audit committee
financial expert, our Code of Business Conduct and Ethics, and other corporate governance matters is incorporated in this Annual Report on Form 10-K by
reference from the section entitled “Board of Directors and Corporate Governance Matters” contained in our definitive proxy statement for our 2020 annual
meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal year.

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

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

inactive textual reference only.

Item 11.

Executive Compensation.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled
“Executive Compensation,” “Director Compensation” and “Board of Directors and Corporate Governance Matters” contained in our definitive proxy
statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal
year.

Item 12.

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

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the sections entitled
“Principal Stockholders,” “Stock Ownership of Directors, Nominees for Director, and Executive Officers” and “Equity Compensation Plan Information”
contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within
120 days of the end of our fiscal year.

Item 13.

Certain Relationships and Related Transactions and Director Independence.

Information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section(s) entitled
“Certain Relationships and Related Party Transactions” and “Board of Directors and Corporate Governance Matters,” “Compensation for Executive Officers
and Directors, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” contained in our definitive proxy
statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which we intend to file within 120 days of the end of our fiscal
year.

Item 14.

Principal Accounting Fees and Services.

This information required to be disclosed by this Item is incorporated in this Annual Report on Form 10-K by reference from the section entitled
“Audit and Other Fees” contained in our definitive proxy statement for our 2020 annual meeting of stockholders scheduled to be held on June 2, 2020, which
we intend to file within 120 days of the end of our fiscal year.

Item 15.

Exhibits, Financial Statement Schedules.

(a)

Financial Statements and Schedules:

Financial Statements

PART IV

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

Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Financial Statement Schedules

Not applicable.

List of Exhibits

F-3
F-5
F-6
F-7
F-8
F-9

Exhibit
No.
3.1

Description
Second Amended and Restated Certificate of Incorporation, dated June 12, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s

Current Report on Form 8-K filed on June 13, 2019).

3.2

Amended and Restated Bylaws of CytoSorbents Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on

Form 8-K filed on January 2, 2020).

4.1*

Description of Capital Stock of CytoSorbents Corporation.

10.1.+

Amended and Restated Employment Agreement, dated as of July 30, 2019, by and between CytoSorbents Medical, Inc. and Phillip P. Chan

(incorporated by reference to Exhibit 10.1 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

10.2.+

Amended and Restated Employment Agreement, dated as of July 30 2019, by and between CytoSorbents Medical, Inc. and Vincent Capponi

(incorporated by reference to Exhibit 10.2 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

10.3+

Amended and Restated Employment Agreement, dated as of July 30, 2019, by and between CytoSorbents Medical, Inc. and Kathleen P.

Bloch (incorporated by reference to Exhibit 10.3 of the Registrant’s current report on Form 8-K filed on August 5, 2019).

10.4+

Consulting Agreement with Dr. Robert Bartlett Effective as of January 1, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s

Current Report on Form 8-K filed on February 9, 2016).

10.5+

Separation Agreement and Release, dated December 9, 2019, by and between CytoSorbents Corporation and Dr. Eric Mortensen

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 12, 2019).

10.6+

Lease Agreement between Princeton Corporate Plaza LLC and the Registrant dated as of March 9, 2000 (incorporated by reference to Exhibit

10.4 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.7

Third Amendment to Lease Agreement between Princeton Corporate Plaza LLC and the Registrant dated as of December 12, 2014

(incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.8

Fourteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza, LLC, dated April 1, 2016

(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2016).

10.9

Amended and Restated Fourteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza LLC, dated

August 5, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2016).

10.10

Eighteenth Amendment to Lease Agreement by and between the Registrant and Princeton Corporate Plaza, LLC, dated January 4, 2019

(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 6, 2019).

10.11

Royalty Agreement between Guillermina Vega Montiel and the Registrant dated as of August 11, 2003 (incorporated by reference to Exhibit

10.6 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.12

Stipulated Order and Settlement Agreement between Bro-Tech Corporation, Purolite International Ltd. And the Registrant, dated August 7,

2006 (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed on September 8, 2006).

10.13†

Distribution Agreement between Biocon Limited and the Registrant dated as of September 20, 2013 (incorporated by reference to Exhibit

10.8 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.14†

First Amendment to the Distribution Agreement between Biocon Limited and the Registrant, dated October 30, 2014 (incorporated by

reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K filed on March 31, 2015).

10.15+

CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on

Form 8-K filed on July 6, 2006).

10.16+

Amendment No. 1 to the CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the

Registrant’s registration statement on Form S-8, filed on November 4, 2014).

10.17+

Amendment No. 1 to the CytoSorbents Corporation 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the

Registrant’s registration statement on Form S-8, filed on November 4, 2014).

10.18

10.19

Amended and Restated Loan and Security Agreement, dated as of March 29, 2018, by and among CytoSorbents Corporation, CytoSorbents
Medical, Inc. and Western Alliance Bank (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on
April 4, 2018).

First Amendment to Amended and Restated Loan and Security Agreement, dated as of July 30, 2019, by and among CytoSorbents
Corporation, CytoSorbents Medical, Inc. and Western Alliance Bank (incorporated by reference to Exhibit 10.1 of the Registrant’s current
report on Form 8-K filed on August 5, 2019).

10.20

Success Fee Letter, dated as of March 29, 2018, by and among CytoSorbents Corporation, CytoSorbents Medical, Inc. and Western Alliance

Bank (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 2, 2018).

10.21*†

Exclusive Distribution Agreement, dated as of September 26, 2014, by and between CytoSorbents Europe GmbH and Aferetica s.r.l

(incorporated by reference to Exhibit 10.23 of the Registrant’s Annual Report of Form 10-K filed on March 7, 2019).

10.22*†

Amendment to Exclusive Distribution Agreement, dated December 15, 2014, by and between CytoSorbents Europe GmbH and Aferetica s.r.l

(incorporated by reference to Exhibit 10.24 of the Registrant’s Annual Report of Form 10-K filed on March 7, 2019).

21.1*

List of Subsidiaries.

23.1*

Consent of WithumSmith+Brown, PC.

31.1*

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002.

31.2*

Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-

Oxley Act of 2002.

32.1*

Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

of 2002.

32.2*

Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

of 2002.

101

The following materials from CytoSorbents Form 10-K for the fiscal year ended December 31, 2019, formatted in Extensible Business
Reporting Language (XBRL): (1) Consolidated Balance Sheets at December 31, 2019 and December 31, 2018, (iii) Consolidated Statements
of Operations and Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017, (iii) Consolidated Statements of Changes in
Redeemable Convertible Preferred Stock and Stockholders’ Equity/(Deficit) for the years ended December 31, 2019, 2018 and 2017, (iv)
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, and (v) Notes to the Consolidated Financial
Statements.

* Filed or furnished herewith.

+ Management contract or compensatory plan or arrangement of the Registrant required to be filed as an exhibit to this Annual Report.

† Confidential treatment has been requested for certain portions of this exhibit. The confidential portions of this exhibit have been omitted and filed
separately with Securities and Exchange Commission.

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

Item 16.

Form 10-K Summary.

None.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, CytoSorbents Corporation has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 5th day of March, 2020.

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

CYTOSORBENTS CORPORATION

By: /s/ Dr. Phillip P. Chan
Dr. Phillip P. Chan

President and Chief Executive Officer

Signature

Title

/s/ Dr. Phillip P. Chan
Dr. Phillip P. Chan

President and Chief Executive Officer (Principal
Executive Officer) and Director

/s/ Kathleen P. Bloch
Kathleen P. Bloch

Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Al Kraus
Al Kraus

/s/ Alan D. Sobel
Alan D. Sobel

/s/ Edward R. Jones
Edward R. Jones

/s/Michael G. Bator
Michael G. Bator

Chairman of the Board

Director

Date

March 5, 2020

FINANCIAL STATEMENTS

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2019 and 2018

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Cash Flows for the for the years ended December 31, 2019, 2018 and 2017

Notes to Consolidated Financial Statements

F-1

Page

F-2

F-3

F-5

F-6

F-7

F-8

F-9

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-
15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles in the United States of America. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors
of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, because of changes in
conditions, effectiveness of internal control over financial reporting may vary over time. Management, with the participation of the Chief Executive Officer
and the Chief Financial Officer, working with an external consultant, conducted an evaluation of the effectiveness of internal control over financial reporting
based on the framework in Internal-Control –Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that internal control over financial reporting was effective as of December 31, 2019.

WithumSmith+Brown, PC, the independent registered public accounting firm that audited the Company’s financial statements included in this

Annual Report on Form 10-K, was engaged to audit our Internal Control. Their report appears on page F-3.

/s/ Dr. Phillip P. Chan
Dr. Phillip P. Chan
President and Chief Executive Officer
(Principal Executive Officer)

March 5, 2020

/s/ Kathleen P. Bloch
Kathleen P. Bloch
Chief Financial Officer
(Principal Financial Officer)

F-2

Board of Directors and Stockholders
CytoSorbents Corporation:

Report of Independent Registered Public Accounting Firm

Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of CytoSorbents Corporation (the "Company") as of December 31, 2019 and 2018,
and the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows, for each of the three years in
the period ended December 31, 2019, and the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the
Company’s internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework
(2013) issued by the COSO.

Adoption of New Accounting Standard

As discussed in Note 8 to the Consolidated Financial Statements, the Company changed its method of accounting for leases in 2019 due to the

adoption of ASU 2016-02, Leases (Topic 842).

Substantial Doubt Regarding Going Concern

As disclosed in Note 1 to the consolidated financial statements, the Company sustained net losses for the years ended December 31, 2019, 2018 and
2017 of approximately $19.3 million, $17.2 million and $8.5 million, respectively. Further, the Company believes it will have to raise additional capital to
fund its planned operations for the twelve month period through March 2021. These matters raise substantial doubt regarding the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the consolidated financial statements. The
consolidated financial statements do not include any adjustments related to the outcome of this uncertainty.

Basis for Opinion

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on
internal control over financial reporting. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the
Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

F-3

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether
effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of
America. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United
States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

/s/ WithumSmith+Brown, PC
WithumSmith+Brown, PC

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

East Brunswick, New Jersey
March 5, 2020

F-4

CYTOSORBENTS CORPORATION
CONSOLIDATED BALANCE SHEETS

December 31,
ASSETS
Current Assets:

Cash and cash equivalents
Grants and accounts receivable, net of allowance for doubtful accounts of $145,313 and $83,726 at December 31,
2019 and 2018, respectively
Inventories
Prepaid expenses and other current assets

Total current assets

Property and equipment – net
Right of use asset
Other assets

Total Assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable
Accrued expenses and other current liabilities
Current maturities of long-term debt
Lease liability – current portion

Total current liabilities

Lease liability, net of current portion
Long-term debt, net of current maturities and debt issuance costs

Total liabilities

Commitments and contingencies (Note 10)

2019

2018

12,232,418 $

22,368,837

4,467,087
2,113,897
2,088,127

3,943,119
833,133
1,118,998

20,901,529

28,264,087

1,925,325
1,070,762
3,484,894

1,729,860
1,449,437
2,753,379

27,382,510 $

34,196,763

2,039,222 $
5,802,296
1,666,666
428,083

1,485,812
4,385,720
666,667
378,675

9,936,267

6,916,874

642,679
13,385,522

1,070,762
9,274,527

23,964,468

17,262,163

Stockholders’ Equity:
Common Stock, Par Value $0.001, 100,000,000 shares authorized; 32,616,107 and 31,774,139 shares issued and
outstanding at December 31, 2019 and 2018, respectively
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders’ equity
Total Liabilities and Stockholders' Equity

32,616
191,648,907
525,978
(188,789,459)
3,418,042
27,382,510 $

31,774
186,138,466
288,175
(169,523,815)
16,934,600
34,196,763

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

F-5

CYTOSORBENTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Revenue:

CytoSorb sales
Other sales

Total product sales

Grant income

Total revenue
Cost of revenue
Gross profit

Operating expenses:

Research and development
Legal, financial and other consulting
Selling, general and administrative

Total operating expenses

Loss from operations

Other income (expense):
Interest expense, net
Gain/(loss) on foreign currency transactions

Total other income (expense), net

Loss before benefit from income taxes
Benefit from income taxes
Net loss

Dividend, warrant exercise price adjustment

Net loss attributable to common shareholders

Basic and diluted net loss per common share

Year ended

Year ended Year ended

December 31,

2019

2018

2017

22,545,754 $
220,100
22,765,854
2,183,619
24,949,473
7,363,919
17,585,554

20,143,354 $
109,029
20,252,383
2,251,525
22,503,908
7,489,400
15,014,508

13,254,953
126,900
13,381,853
1,768,901
15,150,754
5,518,360
9,632,394

12,091,797
2,462,151
22,005,670
36,559,618

7,723,028
2,002,032
20,874,376
30,599,436

3,221,233
1,339,493
14,914,266
19,474,992

(18,974,064)

(15,584,928)

(9,842,598)

(1,033,661)
(350,365)
(1,384,026)

(1,461,045)
(784,752)
(2,245,797)

(20,358,090)
1,092,446
(19,265,644)

(17,830,725)
619,546
(17,211,179)

(749,076)
1,454,136
705,060

(9,137,538)
676,739
(8,460,799)

—

(335,731)

(19,265,644) $

(17,211,179) $

(8,796,530)

(0.60) $

(0.56) $

(0.32)

Weighted average number of shares of common stock outstanding

32,255,253

30,719,176

27,613,911

Comprehensive loss:
Net loss

Other comprehensive income (loss):
Currency translation adjustment

Comprehensive loss

(19,265,644) $

(17,211,179) $

(8,460,799)

237,803

649,160

(1,259,669)

(19,027,841) $

(16,562,019) $

(9,720,468)

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

F-6

CYTOSORBENTS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 and 2017

Common Stock

Par value

Balance at December 31, 2016
Stock based compensation -
employees, consultants and directors
Issuance of common stock - offerings, net of fees incurred
Issuance of restricted stock options
Proceeds from exercise of warrants
Cashless exercise of warrants
Proceeds from exercise of stock options
Cashless exercise of stock options
Dividend, warrant exercise price adjustment
Other comprehensive income, foreign translation
adjustment
Net loss
Balance at December 31, 2017
Stock based compensation -
employees, consultants and directors
Issuance of common stock - offerings, net of fees incurred
Issuance of restricted stock options
Proceeds from exercise of warrants
Cashless exercise of warrants
Proceeds from exercise of stock options
Cashless exercise of stock options
Success fee – Bridge Bank
Other comprehensive income,
foreign translation adjustment
Net loss
Balance at December 31, 2018
Stock based compensation - employees, consultants and
directors
Issuance of common stock - offerings, net of fees incurred
Issuance of restricted stock options
Proceeds from exercise of warrants
Cashless exercise of warrants
Proceeds from exercise of stock options
Cashless exercise of stock options
Other comprehensive income, foreign translation
adjustment
Net loss
Balance at December 31, 2019

Shares
25,483,966

—
3,105,555
41,390
192,001
1,516
145,848
3,403
—

—
—
28,973,679

—
1,515,260
62,406
313,802
89,556
683,673
66,972
68,791

—
—
31,774,139

—
191,244
84,249
360,358
9,029
173,734
23,354

Accumulated
Other

Stockholders’

Paid-In
Capital

Comprehensive Accumulated

Income

Deficit

Equity
(Deficit)

25,484 $ 143,929,397 $

898,684 $ (143,516,106) $

1,337,459

—
3,106
41
192
2
146
3
—

3,313,603
13,676,624
207,567
852,812
(2)
591,753
(3)
335,731

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
(335,731)

3,313,603
13,679,730
207,608
853,004
—
591,899
—
—

—
—
28,974

—
—
162,907,482

(1,259,669)
—
(360,985)

—
(8,460,799)
(152,312,636)

(1,259,669)
(8,460,799)
10,262,835

—
1,515
62
314
89
684
67
69

4,437,250
14,125,010
545,631
1,280,142
(89)
2,206,176
(67)
636,931

—
—
—
—
—
—
—
—

4,437,250
14,126,525
545,693
1,280,456
—
2,206,860
—
637,000

—
—
31,774

—
—
186,138,466

649,160
—
288,175

—
(17,211,179)
(169,523,815)

649,160)
(17,211,179)
16,934,600

—
192
84
361
9
174
22

1,666,024
673,461
663,284
1,768,130
(9)
739,573
(22)

—
—
—
—
—
—
—

1,666,024
673,653
663,368
1,768,491
—
739,747
—

—
—
32,616,107

—
—

—
—
32,616 $ 191,648,907 $

237,803
—

—
(19,265,644)
525,978 $ (188,789,459) $

237,803
(19, 265,644)
3,418,042

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

F-7

CYTOSORBENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended Year ended Year ended
December 31, December 31, December 31,
2018

2019

2017

Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used by operating activities:

Non-cash interest expense
Non-cash compensation
Depreciation and amortization
Bad debt expense
Foreign currency transaction (gains) losses
Stock-based compensation
Amortization of loan acquisition costs
Changes in operating assets and liabilities:

Grants and accounts receivable
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable and accrued expenses

Net cash used by operating activities
Cash flows from investing activities:

Purchases of property and equipment
Patent costs

Net cash used by investing activities
Cash flows from financing activities:

Proceeds from long-term debt
Repayment of long-term debt
Payment of loan acquisition costs
Equity contributions - net of fees incurred
Proceeds from exercise of stock options
Proceeds from exercise of warrants
Net cash provided by financing activities
Effect of exchange rates on cash
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

$ (19,265,644) $ (17,211,179) $ (8,460,799)

–
1,173,743
581,532
72,429
350,365
1,666,024
115,206

637,000
947,910
390,551
14,762
784,752
4,437,250
97,041

(642,171)
(1,284,848)
(953,888)
4,030
1,424,440
(16,758,782)

(1,847,848)
(56,751)
(731,672)
(6,345)
1,704,845
(10,839,684)

–
691,480
218,271
904
(1,454,136)
3,313,603
82,054

(649,318)
57,320
(76,981)
(15,000)
(168,103)
(6,460,705)

(698,165)
(821,952)
(1,520,117)

(671,970)
(848,294)
(1,520,264)

(990,673)
(687,446)
(1,678,119)

5,000,000
–
(4,212)
673,653
739,747
1,768,491
8,177,679
(35,199)
(10,136,419)
22,368,837

5,000,000
–
(1,560)
13,679,730
591,899
853,004
20,123,073
92,435
12,076,684
5,245,178
$ 12,232,418 $ 22,368,837 $ 17,321,862

666,667
(666,667)
(147,988)
14,126,525
2,206,860
1,280,456
17,465,853
(58,930)
5,046,975
17,321,862

Supplemental disclosure of cash flow information:
Cash paid during the year for interest

Supplemental disclosure of non-cash financing activities:
Settlement of accrued bonuses with restricted stock units
Dividend, warrant exercise price adjustment

1,059,541 $

891,386 $

634,608

$
$

425,639 $
– $

545,693 $
– $

207,608
335,731

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

F-8

1. BASIS OF PRESENTATION

CYTOSORBENTS CORPORATION
Notes to Consolidated Financial Statements

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

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. Based on its projections, the Company believes it will have to raise additional capital to fund its
planned operations over the next twelve-month period.

As of December 31, 2019, the Company had an accumulated deficit of $188,789,459, which included net losses of $19,265,644 for the year ended
December 31, 2019, $17,211,179 for the year ended December 31, 2018 and $8,460,799 for the year ended December 31, 2017. The Company’s losses have
resulted principally from costs incurred in the research and development of the Company’s polymer technology and selling, general and administrative
expenses. The Company intends to continue to conduct significant additional research, development, and clinical study activities which, together with
expenses incurred for the establishment of manufacturing arrangements and a marketing and distribution presence and other selling, general and
administrative expenses, are expected to result in continuing operating losses for the foreseeable future. The amount of future losses and when, if ever, the
Company will achieve profitability are uncertain. The Company’s ability to achieve profitability will depend, among other things, on successfully completing
the development of its technology and commercial products, obtaining additional requisite regulatory approvals in markets not covered by the CE Mark
previously received for the Company’s CytoSorb product and for potential label extensions of the Company’s current CE Mark, establishing manufacturing
and sales and marketing arrangements with third parties, and raising sufficient funds to finance the Company’s activities. No assurance can be given that the
Company’s product development efforts will be successful, that the Company’s current CE Mark will enable it to achieve profitability, that additional
regulatory approvals in other countries will be obtained, that any of the Company’s products will be manufactured at a competitive cost and will be of
acceptable quality, or that the Company will be able to achieve profitability or that profitability, if achieved, can be sustained. These matters raise substantial
doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments related to the
outcome of this uncertainty.

2. PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Business

The Company is a critical care immunotherapy leader commercializing its CytoSorb blood purification technology to treat deadly inflammation in
critically-ill and cardiac surgery patients around the world. 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 Company’s flagship product, CytoSorb. 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 our clinical trial activities in the United Kingdom.

F-9

CytoSorb was approved in the European Union (“EU”) in March 2011, and is currently being distributed in fifty-eight countries around the world, as
a safe and effective extracorporeal cytokine absorber, designed to reduce the “cytokine storm” that could otherwise cause massive inflammation, organ failure
and death in common critical illnesses such as sepsis, burn injury, trauma, lung injury, and pancreatitis. 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. In January 2020, the Company received a label extension for CytoSorb covering the use of the device for the removal the anti-platelet
agent, ticagrelor, in cardiac patients during surgery requiring cardiopulmonary bypass. CytoSorb is also being used during and after cardiac surgery to remove
inflammatory mediators, such as cytokines and free hemoglobin, which can lead to post-operative complications, including multiple organ failure.

The Company’s 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 absorption. The Company has numerous products under development based upon this unique blood
purification technology, which is protected by 21 issued U.S. patents and multiple international patents, with applications pending both in the U.S. and
internationally, including HemoDefend, ContrastSorb, DrugSorb, and others. These patents and patent applications are directed to various compositions and
methods of use related to our blood purification technologies. The existing patents are scheduled to expire between 2020 and 2035, absent any patent term
extensions. Management believes that any near term expiring patents will not have a significant impact on our ongoing business.

Stock Market Listing

On December 17, 2014 the Company’s common stock 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 and CytoSorbents Poland
Sp. z.o.o., 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 of America dollar, the foreign currency financial
statements of the European subsidiary, for which the United States of America dollar is the functional currency, are included in operations. Foreign currency
transaction gain (loss) included in net loss amounted to approximately $(350,000), $(785,000) and $1,454,000 for the years ended December 31, 2019, 2018
and 2017, respectively. The Company translates assets and liabilities of the European subsidiary, whose functional currency is their local currency, at the
exchange rate in effect at the 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 (loss) as a component of stockholder’s equity.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

F-10

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 customers’ financial condition. Management reviews accounts
receivable periodically to determine collectability. Balances that are determined to be uncollectible are written off to the allowance for doubtful accounts.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using a first-in first-out (“FIFO”) basis. At December 31, 2019
and 2018, the Company’s inventory was comprised of finished goods, which amounted to $305,452 and $213,839, respectively, work in process which
amounted to $1,523,923 and $415,265, respectively and raw materials which amounted to $284,522 and $204,029, 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.

Property and Equipment

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

Patents

Legal costs incurred to establish patents are capitalized. When patents are issued, capitalized costs are amortized on the straight-line method over the

related patent term. In the event a patent is abandoned, the net book value of the patent is written off.

Impairment or Disposal of Long-Lived Assets

The Company assesses the impairment of patents and other long-lived assets under accounting standards for the impairment or disposal of long-lived
assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. For long-lived assets to be held and used, the
Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss
based on the difference between the carrying amount and fair value.

Revenue Recognition

F-11

Research and Development

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

incurred.

Advertising Expenses

Advertising costs are charged to activities when incurred. Advertising expense amounted to approximately $314,000, $212,000 and $162,000 in

2019, 2018 and 2017, respectively, and is included in selling, general, and administrative expenses on the consolidated statements of operations.

Income Taxes

Income taxes are accounted for under the asset and liability method prescribed by accounting standards for accounting for income taxes. Deferred
income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax
assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is
provided if it is more likely than not that some or all of the deferred tax asset will not be realized. Under Section 382 of the Internal Revenue Code the net
operating losses generated prior to the previously completed reverse merger may be limited due to the change in ownership. Additionally, net operating losses
generated subsequent to the reverse merger may be limited in the event of changes in ownership. The Tax Cuts and Jobs Act (the “Act”) was enacted on
December 22, 2017. The Act reduces the U.S. federal corporate tax rate from 35% to 21%. See Note 9 for the impact of the tax rate change on deferred tax
assets and liabilities.

The Company follows the accounting standards associated with uncertain tax provisions. The Company had no unrecognized tax benefits at

December 31, 2019 or 2018. The Company files tax returns in the U.S. federal and state jurisdictions.

The Company utilizes the Technology Business Tax Certificate Transfer Program to sell a portion of its New Jersey Net Operating Loss tax

carryforwards and Research and Development credits to an industrial company.

CytoSorbents Europe GmbH, CytoSorbents Switzerland GmbH, CytoSorbents Poland Sp. z.o.o. and CytoSorbents UK Limited files an annual

corporate tax return, a VAT return and a trade tax return in Germany, Switzerland, Poland and the United Kingdom, respectively.

Use of Estimates

The preparation of 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 and liabilities.
Actual results could differ from these estimates. Significant estimates in these financials are the valuation of options granted and valuation methods used to
determine the change in fair value of the down round feature related to certain of the Company’s outstanding warrants.

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. Management monitors the soundness of these institutions in an effort to minimize its collection risk of these balances.

F-12

A significant portion of our revenues are from product sales in Germany. Substantially all of our grant and other income are from grant agencies in

the United States. (See Note 3 for further information relating to the Company’s revenue.)

As of December 31, 2019, no agency, distributor/strategic partners or direct customer represented more than 10% of outstanding grants and accounts
receivables. As of December 31, 2018, two distributors/strategic partners accounted for 29 percent of the outstanding grants and accounts receivables. For the
years ended December 31, 2019, 2018 and 2017, no agency, distributor/strategic partners or direct customer represented more than 10% of the Company’s
total revenue.

Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and other debt obligations approximate their fair values due

to their short-term nature.

Net Loss per Common Share

Basic earnings per share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per common share is computed using the treasury stock method on the basis of the weighted-average number
of shares of common stock plus the dilutive effect of potential common shares outstanding during the period. Dilutive potential common shares include
outstanding warrants, stock options and restricted shares. The computation of diluted earnings per share does not assume conversion, exercise or contingent
exercise of securities that would have an anti-dilutive effect on earnings (See Note 12).

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 non-employees for

acquiring, or in conjunction with selling, goods or services for equity instruments issued to consultants.

Effects of Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 outlines reporting requirements for lessees to recognize a
right-of-use asset and corresponding liability on the balance sheet for all leases covering a period of greater than 12 months. The liability is to be measured as
the present value of the future minimum lease payments, plus any initial direct costs. The minimum payments are discounted using the rate implicit in the
lease, or, if not known, the lessee’s incremental borrowing rate. The updated guidance is effective for public entities for fiscal years beginning after December
31, 2018. The Company adopted the updated guidance effective January 1, 2019. See Note 8 for details regarding the Company’s leases.

Shipping and Handling Costs

The cost of shipping product to customers and distributors is typically borne by the customer or distributor. The Company records shipping and
handling costs in cost of revenue. Total freight costs amounted to approximately $476,000, $424,000 and $257,000 for the years ended December 31, 2019,
2018 and 2017, respectively.

F-13

3. REVENUE

On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all related
amendments (the “new revenue standard”) to all contracts with customers using the modified retrospective method. The adoption of the new revenue standard
had no impact on retained earnings as of December 31, 2017 and, accordingly, no cumulative adjustment was required. We do not expect the new revenue
standard to have a significant impact on our net income on an ongoing basis.

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2019:

Product sales:
United States
Germany
All other countries

Total product revenue

Grant and other income:
United States

Total revenue

Distributors/

Strategic
Partners

United States
Government
Agencies

Direct

Total

220,100 $
14,396,418
3,147,529
17,764,047

– $
–
5,001,807
5,001,807

– $
–
–
–

220,100
14,396,418
8,149,336
22,765,854

–

2,183,619

17,764,047 $

5,001,807 $

2,183,619 $

24,949,473

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2018:

Product sales:
United States
Germany
All other countries

Total product revenue

Grant and other income:
United States

Total revenue

Distributors/

Strategic
Partners

United States
Government
Agencies

Direct

Total

95,500 $
11,771,645
2,702,689
14,569,834

– $
–
5,682,549
5,682,549

– $
–
–
–

95,500
11,771,645
8,385,238
20,252,383

–

2,251,525

14,569,834 $

5,682,549 $

2,251,525 $

22,503,908

The following table disaggregates the Company’s revenue by customer type and geographic area for the year ended December 31, 2017:

Product sales:
United States
Germany
All other countries

Total product revenue

Grant and other income:
United States

Total revenue

Distributors/

Strategic
Partners

United States
Government
Agencies

Direct

Total

126,900 $
7,906,851
1,771,144
9,804,895

– $
–
3,576,958
3,576,958

– $
–
–
–

126,900
7,906,851
5,348,102
13,381,853

–

1,768,901

9,804,895 $

3,576,958 $

1,768,901 $

15,150,754

F-14

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. Both of these revenue streams are within the scope of this accounting pronouncement. 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. All
sales of the device are outside the United States, as CytoSorb is not yet approved in the United States. Direct sales are fulfilled from the Company’s office in
Berlin, Germany. Direct sales relate to sales to hospitals located in Germany, Switzerland, Austria, Belgium, Luxembourg, Poland, the Netherlands, Sweden,
Denmark and Norway. 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 vs 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.

Each distributor’s/strategic partner’s contract has 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 contacts 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.

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 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.

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.

F-15

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

Receivables, which are included in grants and accounts receivable
Contract liabilities, which are included in accrued accrued expenses and other current liabilities

December 31,
2019

$
$

2,246,821 $
171,842 $

December 31,
2018
2,399,662
42,219

Contract liabilities represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer

agreements during the years ended December 31, 2019 and December 31, 2018.

4. PROPERTY AND EQUIPMENT, NET:

Property and equipment - net, consists of the following:

December 31,
Furniture and fixtures
Equipment and computers

Leasehold improvements

Less accumulated depreciation and amortization
Property and Equipment, Net

Depreciation/
Amortization

2019

2018

795,167 $
3,861,912

621,702
3,340,282

927,894
5,584,973
3,659,648
1,925,325 $

942,228
4,904,212
3,174,352
1,729,860

Period
7 years
3 to 7 years
Lesser of term of
lease or estimated
useful life

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 amounted to $495,728, $329,469 and $177,776 respectively.

5. OTHER ASSETS:

Other assets consist of the following:

December 31,
Patents
Less accumulated amortization
Patents, net
Security deposits
Total

2019
3,751,468 $
(390,056)
3,361,412
123,482
3,484,894 $

2018
2,929,517
(304,252)
2,625,265
128,114
2,753,379

Amortization expense amounted to $85,804, $61,082 and $40,495 for the years ended December 31, 2019, 2018 and 2017, respectively.

Amortization expense for the next five years will be approximately $94,300 for the year ended December 31, 2020; approximately $92,200 for the
year ended December 31, 2021; approximately $88,900 for the year ended December 31, 2022; approximately $85,600 for the year ended December 31,
2023; and approximately $85,600 for the year ended December 31, 2024.

F-16

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

Accrued expenses and other current liabilities consist of the following:

December 31,
Accrued salaries and commissions
Clinical studies
Accrued accounts payable
Accrued royalties
Sales, payroll and income taxes payable
Professional fees
Travel and entertainment
Customer rebates
Interest
Board of Director fees
Congresses

7. LONG-TERM DEBT

2019
1,926,167 $
1,384,564
629,186
525,004
402,816
394,088
214,436
157,656
108,629
59,750
-
5,802,296 $

2018
1,840,457
822,085
479,783
433,589
182,753
280,381
187,047
-
76,726
31,350
51,549
4,385,720

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 “Closing Date”), 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 “Settlement Date”), 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 $15,000,000 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. The outstanding balances on Term Loans bear interest at the prime rate reported in the Wall Street Journal plus
3.66%. This rate was 8.41% at December 31, 2019.

F-17

On the Closing Date, the Company was required to pay a non-refundable closing fee of $25,000, expenses incurred by the Bank related to the
Amended and Restated Loan and Security Agreement of $11,000 and a portion of the final fee for the period the Original Term Loans were outstanding of
$85,938. In addition, the Company incurred legal expenses related to the Amended and Restated Loan and Security Agreement of $20,050 and $4,212 related
to the First Amendment. As of the Settlement Date, the total unamortized loan costs related to the Term Loans amounted to $90,925. These costs have been
presented as a direct deduction from the proceeds of the loan on the consolidated balance sheet in accordance with the provisions of ASC 850. These costs are
being amortized over the loan period as a charge to interest expense. For the years ended December 31, 2019, 2018 and 2017, the Company recorded interest
expense amounting to $33,175, $31,946, and $29,971, respectively related to these costs. After accounting for the various costs outlined above, the effective
interest rate on the Term A Loan was 9.1% as of March 29, 2018. Under the terms of the First Amendment, commencing on the first calendar day of the
calendar month after Term B Loan was made, the Company is required to make monthly payments of interest-only through April 2020. The interest-only
period will be further extended through November 2020 provided the Borrower has been compliant with its obligations under the financial covenant revenue
test set forth in the Amended and Restated Loan and Security Agreement for all months from the month immediately after the month in which the Term B
Loan is funded through March 2020. Commencing on May 1, 2020, if the Company does not comply with financial covenant revenue test, the Company shall
make equal monthly payments of principal of $625,000, together with accrued and unpaid interest. Commencing on November 1, 2020, if the Company
complies with the financial covenant revenue test, the Company shall make equal monthly payments of principal of $833,333, 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 April 1, 2022. 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 each
Term Loan funded upon the earlier of the (i) April 1, 2022 maturity date or (ii) termination of the Term Loan via acceleration or prepayment. This final fee is
being accrued and charged to interest expense over the term of the loan. For the years ended December 31, 2019, 2018 and 2017, the Company recorded
interest expense of $82,031, $65,104 and 52,083, respectively, related to the final fee. The Term Loans are evidenced by a secured promissory notes 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 through
April 1, 2022, an amount equal to 1.0% of the principal amount of such Term Loan prepaid.

Events of default which may cause repayment of the Term Loans to be accelerated include, among other customary events of default, (1) non-
payment of any obligation when due, (2) the failure to perform any obligation required under the Amended and Restated Loan and Security Agreement and to
cure such default within a reasonable time frame, (3) the occurrence of a Material Adverse Event (as defined in the Amended and Restated Loan and Security
Agreement), (4) the attachment or seizure of a material portion of the Borrower’s assets if such attachment or seizure is not released, discharged or rescinded
within 10 days, and (5) if the Borrower becomes insolvent or starts an insolvency proceeding or if an insolvency proceeding is brought by a third party against
the Borrower and such proceeding is not dismissed or stayed within 30 days. The Amended and Restated Loan and Security Agreement includes customary
loan conditions, Borrower representations and warranties, Borrower affirmative covenants and Borrower negative covenants for secured transactions of this
type. The Company is in substantial compliance with these covenants.

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).

F-18

2016 Success Fee Letter:

Pursuant to that certain Success Fee Letter (the “2016 Letter”) entered into between the Borrower and the Bank in connection with the Original Term
Loans, the Borrower agreed to pay to the Bank a success fee in the amount equal to 6.37% of the funded amount of the Original Term Loans (the “2016 Letter
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 Nasdaq being $8.00 (after giving effect to any stock splits or consolidations effected after the date thereof) or more for five successive business days.
On May 18, 2018, the 2016 Letter Success Fee became due to the Bank as result of an occurrence of the event described in clause (d) above. The Company
elected to satisfy the 2016 Letter Success Fee by issuing shares of its common stock, which was permitted under the terms of the 2016 Letter. On May 23,
2018, the Company issued 68,791 shares of its common stock in full satisfaction of the 2016 Letter Success Fee, and the obligations of the Borrower under
the 2016 Letter. The 2016 Letter Success Fee was valued at $637,000 and was charged to interest expense.

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 successive business days, or (ii) at least 26.13% more than the average price of Company’s common stock for the 365 day period ending on
the date of the funding of the Term B Loan.

Long-term debt consists of the following at December 31, 2019 and 2018 as follows:

Principal amount
Less unamortized debt acquisition costs
Plus accrued final fee
Subtotal
Less current maturities
Long-term debt net of current maturities

Principal payments of long-term debt are due as follows at December 31, 2019:

December 31,

2019

2018

$ 15,000,000 $ 10,000,000
(105,681)
46,875
9,941,194
666,667
9,274,527

(76,718)
128,906
15,052,188
1,666,666
$ 13,385,522 $

2020
2021
2022

Total

8. LEASES:

1,666,666
10,000,000
3,333,334
15,000,000

Effective January 1, 2019, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The provisions of
this ASU require the Company to record a right-of-use asset and related lease liability related to their leases. Accordingly, the Company has adjusted its
December 31, 2018 consolidated balance sheet to properly reflect the provisions of this ASU as discussed below.

F-19

Description of Leases:

The Company leases its operating facilities in both the United States and Germany under operating lease agreements. In the United States, in January 2019,
the Company entered into an Eighteenth Amendment to Lease with the landlord which became effective February 1, 2019. This amendment expands the
Company’s space to 19,920 square feet and extends the term of the lease to May 31, 2020. The Company’s base rent is approximately $32,000 per month. In
addition, the Company is obligated to pay monthly operating expenses of approximately $29,000 per month. The amendment also includes a one year renewal
option. The base rent for the renewal term will increase by the greater of five percent or the increase in the Consumer Price Index. There were no lease
incentives and no initial direct costs were incurred related to this lease amendment.

In Germany, the Company leases its operating facility under two operating lease agreements. These leases require combined base rent payments amounting to
approximately $9,000 per month. The initial lease term of both leases ends August 31, 2021. In addition, the Company is obligated to monthly operating
expenses of approximately $2,900 per month. Both leases have a five year option to renew that would extend the lease term to August 31, 2026. 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.

Initial Measurement of Right-Of-Use Asset and Lease Liability:

Under the provisions of this ASU, the Company has adjusted its consolidated balance sheet at December 31, 2018 to 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 9.16%, as the Company could not determine the rate
implicit in the lease. As a result, the value of the right-of-asset and related lease liability is as follows:

Right-of-use asset

Total lease liability
Less current portion
Lease liability, net of current portion

The maturities of the lease liabilities are as follows as of December 31, 2019:

2020
2021
2022
2023
2024
Thereafter
Total

Year Ended December 31,

2019
1,070,762 $

2018
1,449,437

1,070,762 $
(428,083)
642,679 $

1,449,437
(378,675)
1,070,762

428,083
233,683
73,609
80,642
88,347
166,398
1,070,762

For the years ended December 31, 2019, 2018 and 2017, operating cash flows paid in connection with operating leases amounted to approximately $906,000,
$805,000 and $676,000, respectively.

As of December 31, 2019 and 2018, the weighted average remaining lease term was 4.0 years and 4.5 years, respectively.

F-20

9. INCOME TAXES:

The Company accounts for income taxes under FASB ASC 740 ("ASC 740"). Deferred income tax assets and liabilities are determined based upon
differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

The Company's consolidated loss before income taxes for the years ended December 31, 2019, 2018 and 2017 is as follows:

Domestic
Foreign
Total

The benefit from income taxes consists of the following:

State Tax, including sale of New Jersey losses & credits
Foreign tax provision

Year Ended December 31,
2018

2019
(11,291,799) $
(8,436,291)
(20,358,090) $

(14,105,664) $
(3,725,061)
(17,830,725) $

2017
(6,071,009)
(3,066,529)
(9,137,538)

Year Ended December 31,
2018

2019

2017

1,092,446 $
—
1,092,446 $

619,546 $
—
619,546 $

676,739
—
676,739

As of December 31, 2019, the Company had federal net operating loss ("NOL") carry forwards of approximately $61.4 million, state NOL carry
forwards of approximately $10.0 million, and foreign NOL carry forwards of approximately $24.1 million, which may be available to offset future taxable
income, if any. The federal net operating loss carryforwards of $41.4 million, if not utilized, will expire between 2021 and 2037. The federal net operating
loss carryforwards of $20.0 million generated since 2018 are subject to an 80% limitation on taxable income, do not expire and will carry forward
indefinitely. The state net operating loss carryforwards of $10.0 million, if not utilized, will begin to expire in 2039. As of December 31, 2019, the Company
had Federal and state research and development tax credit carryforwards of approximately $1,720,000 and $142,000, respectively, available to reduce future
tax liabilities, which will begin to expire at various dates starting in 2022.

The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. The NOLs may
become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period
in excess of 50%, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. In addition to the
new provisions enacted under the Tax Cuts and Jobs Act, this could limit the amount of NOLs that the Company can utilize annually to offset future taxable
income or tax liabilities. The amount of the annual limitation, if any, will generally be determined based on the value of the Company immediately prior to the
ownership change. Subsequent ownership changes may further affect the limitation in future years.

U.S. Tax Reform

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("Tax Reform Legislation"), which made significant changes to U.S.
federal income tax law. The Company expects that certain aspects of the Tax Reform Legislation will positively impact the Company’s future after-tax
earnings in the U.S., primarily due to the lower federal statutory tax rate. Set forth below is a discussion of certain provisions of the Tax Reform Legislation
and our preliminary assessment of the effect of such provisions on the Company’s results of operations, cash flows and consolidated financial statements.

F-21

Beginning January 1, 2018, the Company’s U.S. income, if any, is taxed at a 21 percent federal corporate rate. Further, the Company is required to
recognize the effect of this rate change on our deferred tax assets and liabilities, and deferred tax asset valuation allowances in the period the tax rate change
is enacted. The Company does not expect any material non-cash impact from this rate change, with adjustments to deferred tax balances offset by adjustments
to deferred tax valuation allowances.

Further, the Tax Reform Legislation provides for a one-time “deemed repatriation” of accumulated foreign earnings for the year ended December 31,
2017. The Company did not pay U.S. federal cash taxes on the deemed repatriation due to an accumulated deficit in foreign earnings for tax purposes. The
Company does not expect that our future foreign earnings will be subject to U.S. federal income tax.

The Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Reform Act, enacted on December 22, 2017, require the Company to
include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. An accounting
policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax
basis differences that upon reversal may be subject to such taxes. The Company has elected to account for the tax effects of this provision in the period that is
subject to such tax. The Company concluded it was not subject to GILTI in 2019 and as such there was no impact from GILTI included in its 2019 provision.
The Company does not expect to be subject to GILTI. However, in accordance with FASB guidance, the Company’s policy will be to recognize GILTI in the
period it arises and it will not recognize a deferred charge with regard to GILTI.

In addition, the Tax Reform Legislation provides for 100 percent bonus depreciation on tangible property expenditures through 2022. The bonus

depreciation percentage is phased down from 100 percent beginning in 2023 through 2026. We do not expect this to have a material impact to the Company.

Sale of Net Operating Losses (NOLs)

The Company may be eligible, from time to time, to receive cash from the sale of its New Jersey Net Operating Losses and R&D tax credits under

the State of New Jersey Technology Business Tax Certificate Transfer Program.

The Company expects to receive a net cash amount of $1,092,446 from the approved sale of the 2018 state NOL and research and development

credits in the first quarter of 2020.

The principal components of the Company's deferred tax assets and liabilities are as follows:

Current and long term deferred tax assets:
Net operating loss carry forward
Stock options
Research and development credit carryforward
Accruals and others
Lease liability
Gross deferred tax assets
Less valuation allowance

Deferred tax liability:
Fixed Assets
Net deferred tax assets

Year Ended December 31,
2018

2019

2017

20,843,902 $
329,726
1,720,558
56,461
300,991
23,251,638
(22,857,741)
393,897

16,722,801 $
349,810
1,210,153
(27,098)
—
18,255,666
(18,233,810)
21,856

12,517,356
479,033
1,096,308
74,477
—
14,167,174
(14,147,354)
19,820

(393,987)
— $

(21,856)
— $

(19,820)
—

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred
tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of
the deferred tax assets for each period because it is more likely than not that all of the deferred tax assets will not be realized.

F-22

The increases (decreases) in valuation allowance for the years ended December 31, 2019, 2018 and 2017 were $4,623,930, $4,806,456 and

$(3,004,712) respectively.

A reconciliation of income tax (expense) benefit at the statutory federal income tax rate and income taxes as reflected in the financial statements is as

follows:

Federal statutory rate
State taxes, net of federal benefit
Foreign rate differential
Permanent items
Rate change and true-up
Change in valuation allowance
R&D credit
Effective income tax rate

10. COMMITMENTS AND CONTINGENCIES:

Employment Agreements

Year Ended December 31,
2018

2019

2017

21.0%
(4.4)
3.7
(2.0)
8.0
(22.7)
1.8
5.4%

21.0%
(2.2)
1.9
(2.9)
7.6
(22.9)
0.7
3.2%

34.0%
(2.6)
(1.4)
(5.1)
(62.7)
44.3)
0.8
7.3%

On July 30, 2019, CytoSorbents Corporation entered into amended and restated executive employment agreements with its principal executives, Dr.
Phillip P. Chan, President and Chief Executive Officer, Vincent Capponi, Chief Operating Officer, and Kathleen P. Bloch, Chief Financial Officer. Each of the
agreements has an initial term of three years, and was retroactively effective as of January 1, 2019. 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. On May 30, 2017, CytoSorbents Corporation announced the appointment of Dr. Eric R. Mortensen as the Company’s Chief Medical Officer,
pursuant to the terms of an employment agreement dated May 23, 2017. Dr. Mortensen’s employment agreement provides for an initial term commencing on
June 1, 2017 and ending on December 31, 2019. Dr. Mortensen’s contract has not been renewed.

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.

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 future royalty of 3% on all gross revenues
received by the Company from the sale of its CytoSorb device. For the years ended December 31, 2019, 2018 and 2017, the Company recorded royalty
expenses of approximately $675,000, $600,000 and $393,000 respectively. These expenses are included in selling, general and administrative expenses in the
consolidated statements of operations.

F-23

License Agreements

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 years ended December 31, 2019, 2018 and 2017 per the terms of the license agreement, the
Company recorded licensing expenses of approximately $1,125,000, $1,002,000 and $655,000 respectively. These expenses are included in selling, general
and administrative expenses in the consolidated statements of operations.

11. 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 from 50,000,000 shares authorized to be issued to 100,000,000 shares.

Shelf Registration

On July 26, 2018, the Company filed a registration statement on Form S-3 with the SEC (as amended, the “2018 Shelf”). The 2018 Shelf, which was
declared effective on August 7, 2018, 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.

Termination of Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On May 31, 2019, the Company delivered to Cantor Fitzgerald & Co. (“Cantor”) written notice of termination (the “Termination Notice”) of the
Controlled Equity Offering Sales Agreement, dated November 4, 2015, by and between the Company and Cantor, as amended by Amendment No. 1 to Sales
Agreement, dated July 26, 2018 (collectively, the “Sales Agreement”). In accordance with Section 13(b) thereof, the Sales Agreement terminated on June 10,
2019, ten (10) days after the delivery of the Termination Notice. As provided in the Sales Agreement, the Sales Agreement terminated without liability of any
party to any other party, except that certain provisions of the Sales Agreement identified therein shall remain in full force and effect notwithstanding the
termination.

Pursuant to the Sales Agreement, the Company offered and sold, from time to time through Cantor, shares of the Company’s common stock. In the
aggregate, the Company sold 2,094,140 shares pursuant to the Sales Agreement, at an average selling price of $8.72 per share, generating net proceeds of
approximately $17,718,000 from November 4, 2015 through December 31, 2018. There were no sales during the year ended December 31, 2019.

F-24

Open Market Sale Agreement with Jefferies LLC and B. Riley FBR, Inc.

On July 9, 2019 the Company entered into an Open Market Sale Agreement (the “New Sale Agreement”) with Jefferies LLC and B. Riley FBR, Inc.
(each an “Agent” and, together, the “Agents”), pursuant to which the Company may sell, from time to time, at its option, up to an aggregate proceeds of
$25,000,000 from shares of the Company’s common stock through the Agents, as the Company’s sales agents. Any shares of the Company’s common stock
to be offered and sold under the New Sale Agreement will be issued and sold pursuant to the Company’s 2018 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 New Sale Agreement, the Agents will 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 will pay the Agents 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. The Company has also agreed to provide the Agents with
customary indemnification rights. The offering of the shares of the Company’s common stock will terminate upon the earliest of (a) the sale of the maximum
number or amount of the shares of the Company’s stock permitted to be sold under the New Sale Agreement and (b) the termination of the New Sale
Agreement by the parties thereto. During the year ended December 31, 2019, the Company sold 191,244 shares pursuant to the New Sale Agreement, at an
average selling price of $4.11 per share, generating net proceeds of approximately $762,000. During the period from January 1, 2020 through March 2, 2020,
the Company sold 2,435,086 shares pursuant to the New Sale Agreement, at an average selling price of $5.64 per share, generating net proceeds of
approximately $13,322,000. In the aggregate, the Company has sold 2,626,330 shares pursuant to the New Sale Agreement, at an average selling price of
$5.53 per share, generating net proceeds of approximately $14,083,000.

Stock Option Plans

As of December 31, 2019, the Company had two Long Term Incentive Plans (the “2014 Plan” and the “2006 Plan”) to attract, retain, and provide
incentives to employees, officers, directors, and consultants. The Plans generally provide for the granting of stock, stock options, stock appreciation rights,
restricted shares, or any combination of the foregoing to eligible participants.

A total of 13,400,000 and 2,400,000 shares of common stock are reserved for issuance under the 2014 Plan and the 2006 Plan, respectively. As of
December 31, 2019, there were outstanding options to purchase approximately 6,100,000 and 743,000 shares of common stock reserved under the 2014 Plan
and the 2006 Plan, respectively.

The 2014 and 2006 Plans as well as grants issued outside of the Plan are administered by the Compensation Committee of the Board of Directors

(the “Compensation Committee”).

The Compensation Committee is authorized to select from among eligible employees, directors, advisors and consultants those individuals to whom
incentives are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Compensation
Committee is also authorized to prescribe, amend and rescind terms relating to options granted under the Plans. Generally, the interpretation and construction
of any provision of the Plans or any options granted hereunder is within the discretion of the Compensation Committee.

The 2014 Plan provides that options may or may not be Incentive Stock Options (ISOs) within the meaning of Section 422 of the Internal Revenue
Code. Only employees of the Company are eligible to receive ISOs, while employees and non-employee directors, advisors and consultants are eligible to
receive options, which are not ISOs, i.e. “Non-Qualified Options.” Because the Company has not yet obtained shareholder approval of the 2006 Plan, all
options granted thereunder to date are “Non-Qualified Options” and until such shareholder approval is obtained, all future options issued under the 2006 Plan
will also be “Non-Qualified Options.”

F-25

In December 2014, the Company’s received shareholder approval authorizing the Board of Directors to implement the form, terms and provisions of
the 2014 Plan. Accordingly, any options issued to employees under the 2014 Plan will be ISOs within the meaning of Section 422 of the Internal Revenue
Code.

Stock-based Compensation

Total share-based employee, director, and consultant compensation for the years ended December 31, 2019, 2018 and 2017 amounted to
approximately $ 1,666,000, $4,437,000 and $3,314,000, respectively. These amounts are included in selling, general, and administrative expenses on the
consolidated statements of operations.

The summary of the stock option activity for the years ended December 31, 2019, 2018 and 2017 is as follows:

Outstanding January 1, 2017
Granted
Forfeited
Expired
Exercised
Outstanding, December 31, 2017
Granted
Forfeited
Expired
Exercised
Outstanding, December 31, 2018
Granted
Forfeited
Expired
Exercised
Outstanding, December 31, 2019

Weighted
Average
Exercise
per Share

Weighted
Average
Remaining
Contractual
Life (Years)

2,762,177 $
1,204,950 $
(165,720) $
(34,020) $
(188,849) $
3,578,538 $
1,481,675 $
(544,671) $
(800) $
(856,280) $
3,658,462 $
1,557,300 $
(747,671) $
(16,320) $
(233,582) $
4,218,189 $

4.69
5.46
5.50
34.61
4.40
4.64
8.01
7.49
2.88
3.65
5.82
7.19
7.39
4.16
4.09
6.16

6.0
9.2
-
-
-
6.3
9.2
-
-
-
7.0
9.5
-
-
-
7.0

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 $3.84 to $8.25 per share in 2019) and expected life of the stock option (10 years in 2019), the current price of the underlying stock and its
expected volatility (ranging from 61.9 to 74.3 percent in 2019), expected dividends (-0- percent) on the stock and the risk free interest rate (1.40 to 2.61
percent) for the term of the stock option. In addition, the Company recognizes forfeitures as they occur.

The intrinsic value is calculated at the difference between the market value as of December 31, 2019 of $3.85 and the exercise price of the shares.

Options Exercisable

Number
Exercisable at
December 31,
2019
3,034,399

F-26

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

5.74 $

212,313

Range of
Exercise
Price
$2.23 - $14.80

Number
Outstanding at
December 31,
2019
4,218,189

Options Outstanding

Weighted
Average
Exercise
Price

6. 16

Weighted
Average
Remaining
Life (Years)

Aggregate
Intrinsic
Value

7.0

212,353

The summary of the status of the Company’s non-vested options for the year ended December 31, 2019 is as follows:

Non-vested, January 1, 2019
Granted
Forfeited
Vested
Non-vested, December 31, 2019

Weighted
Average

Grant Date
Fair Value

1,251,617 $
1,557,300
(716,855)
(908,272)
1,183,790 $

4.56
4.51
4.67
4.47
4.49

As of December 31, 2019, the Company had approximately $3,098,000 of total unrecognized compensation cost related to stock options which will,

on average, be amortized over four years.

In 2020, the Board of Directors intends to grant a pool of options to purchase shares of common stock to the Company’s employees which will vest
upon the achievement of certain specific, predetermined milestones related to the Company’s 2020 operations. Since these options relate exclusively to the
achievement of 2020 milestones, no charge for these options has been recorded in the consolidated statements of operations for the year ended December 31,
2019. The Company will assess the likelihood of meeting these milestones throughout 2020 and will record stock option expense as appropriate.

Awards of Stock Options:

On July 22, 2019, the Board of Directors granted options to purchase 926,800 shares of common stock to the Company’s employees which will vest
upon the achievement of certain specific, predetermined milestones related to the Company’s 2019 operations. The grant date fair value of these unvested
options amounted to approximately $4,294,000. On 2020, Board of Directors determined that the Company has met of these milestones, and accordingly we
have recorded approximately of stock option expense related to these options for the year ended December 31, 2019.

On March 15, 2018, the Board of Directors granted options to purchase 531,900 shares of common stock to the Company’s management. On April
23, 2018, the Board of Directors granted options to purchase 668,550 shares of common stock to the Company’s employees. These grants, which total
1,200,450 shares of common stock, will vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2018 operations.
The grant date fair value of these unvested options amounted to approximately $5,636,000. On February 19, 2019, based upon the finalization of its review of
the Company’s progress to meeting the predetermined milestones for 2018, the Board of Directors determined that 726,920 of these options would
immediately vest. Accordingly, a charge of approximately $3,381,000 related to these options has been recorded in the consolidated statements of operations
for the year ended December 31, 2018.

On February 24, 2017, the Board of Directors granted options to purchase 953,200 shares of common stock to the Company’s employees which will
vest upon the achievement of certain specific, predetermined milestones related to the Company’s 2017 operations. The grant date fair value of these unvested
options amounted to approximately $3,284,000. On February 15, 2018, based upon the finalization of its review of the Company’s progress to meeting the
predetermined milestones for 2017, the Board of Directors determined that 810,220 of these options would immediately vest. Accordingly, a charge of
approximately $2,791,000 related to these options has been recorded in the consolidated statements of operations for the year ended December 31, 2017.

F-27

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 Company’s 2014 Long-
Term Incentive Plan.

The following table is a summary of these restricted stock units:

December 31, 2017
Granted 2018
Forfeited 2018
December 31, 2018

Granted 2019
Forfeited 2019
December 31, 2019

Board of
Directors

Executive
Management

Other
Employees

Total

Intrinsic Value

264,000
13,200
-
277,200
-
-
277,200

675,300
49,200

724,500
-
(120,000)
604,500

815,700
256,350
(69,750)
1,002,300
264,500
(61,750)
1,205,050

1,755,000
318,750
(69,750)
2,004,000 $
264,500
(181,750)
2,086,750 $

16,192,320

8,033,988

Due to the uncertainty over whether these restricted stock units will vest, which will only happen 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 year ended December 31, 2019.

Performance Based Stock Awards:

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2016, on February 24, 2017,
the Board of Directors granted 125,000 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31,
2016. These awards were valued at approximately $700,000 on 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 grant, and one third on the second anniversary of the date of
the grant. For the years ended December 31, 2019, 2018 and 2017, the Company recorded a charge of approximately $150,000, $329,000, and $201,000,
respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2017, on February 28, 2018,
the Board of Directors granted 146,200 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31,
2017. These awards were valued at approximately $1,148,000 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 grant, and one third on the second anniversary of the date
of the grant. For the years ended December 31, 2019, 2018 and 2017, the Company recorded a charge of approximately $363,000, $319,000, and $383,000,
respectively related to these restricted stock unit awards.

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2018, on March 4, 2019 the
Board of Directors granted 22,220 restricted stock units to certain senior managers of the Company in order to settle bonuses accrued as of December 31,
2018. These awards were valued at approximately $179,000 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 years ended December 31, 2019, the Company recorded a charge of approximately $39,000 related to these restricted stock unit
awards.

F-28

Pursuant to a review of the compensation of the senior management of the Company and managements’ performance in 2019, on July 22, 2019 the
Board of Directors granted 180,300 restricted stock units to certain senior managers of the Company. These awards were valued at approximately $1,300,000
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 years ended December 31, 2019,
the Company recorded a charge of approximately $621,000 related to these restricted stock unit awards.

The following table outlines the restricted stock unit activity for the year ended December 31, 2019:

Non-vested, January 1, 2019
Granted
Forfeited
Vested
Non-vested, December 31, 2019

Warrants:

Weighted
Average

Grant Date
Fair Value

139,138 $
202,520 $
(15,882) $
(157,904) $
167,872 $

7.18
7.41
7.62
7.07
7.52

As of December 31, 2019, the Company has warrants outstanding to purchase 30,000 shares of the Company’s common stock. These warrants
had an exercise price of $9.90 and expired on January 14, 2020. During the year ended December 31, 2019, warrants representing 369,387 shares of the
Company’s common stock were exercised.

12. NET LOSS PER SHARE

Basic earnings per share and diluted earnings per share for the years ended December 31, 2019, 2018 and 2017 have been computed by dividing the
net loss attributable to common shareholders for each respective period by the weighted average number of shares outstanding during that period. All
outstanding warrants and options and restricted stock awards representing approximately 6,503,000, 6,232,000, and 6,326,000 incremental shares at
December 31, 2019, 2018 and 2017, respectively, have been excluded from the computation of diluted loss per share as they are anti-dilutive.

13. RETIREMENT PLAN

In June 2014, the Company formed the CytoSorbents 401(k) Plan. The plan is a defined contribution plan as described in section 401(k) of the
Internal Revenue Code (“IRC”) covering substantially all full-time employees. Employees are eligible to participate in the plan on the first day of the calendar
quarter following three full months of employment. Participants may defer up to 100% of their eligible compensation subject to certain IRC limitations. In
addition, the Company provides for a matching contribution of twenty percent of the participants’ contribution on a maximum of a five percent compensation
contribution. Matching contributions amounted to approximately $43,800, $43,600 and $41,700 for the years ended December 31, 2019, 2018 and 2017,
respectively.

14. SUBSEQUENT EVENT

During the period from January 1, 2020 through March 2, 2020, the Company sold 2,435,086 shares pursuant to the Open Market Sale Agreement
with Jefferies LLC and B. Riley FBR, Inc., at an average selling price of $5.64 per share, generating net proceeds of approximately $13,322,000 (see Note
11).

F-29

15. QUARTERLY FINANCIAL RESULTS (UNAUDITED)

Summarized quarterly data for 2019, 2018 and 2017 are as follows:

2019:
Total revenue
Gross margin
Loss from operations
Net loss attributable to common stockholders
Net loss per share, basic and diluted

2018:
Total revenue
Gross margin
Loss from operations
Net loss attributable to common stockholders
Net loss per share, basic and diluted

2017:
Total revenue
Gross margin
Loss from operations
Net loss attributable to common stockholders
Net loss per share, basic and diluted

March 31

For the Quarters Ended
June 30

September 30 December 31

5,191,629
3,453,040
(4,285,193)
(4,883,827)
(0.15)

6,232,526
4,398,160
(3,629,997)
(3,547,405)
(0.11)

6,095,007
4,398,733
(5,627,546)
(6,885,061)
(0.21)

4,924,651
3,357,006
(3,101,167)
(2,982,035)
(0.10)

5,755,438
3,969,584
(4,187,875)
(5,821,202)
(0.19)

5,742,975
3,690,278
(2,710,620)
(3,004,764)
(0.10)

3,113,518
1,859,035
(1,557,478)
(1,524,873)
(0.06)

3,566,226
2,084,216
(2,330,908)
(2,070,359)
(0.07)

3,824,299
2,307,435
(2,149,045)
(2,054,279)
(0.07)

7,430,311
5,335,621
(5,431,328)
(3,949,351)
(0.13)

6,080,844
3,997,640
(5,585,266)
(5,403,178)
(0.17)

4,646,711
3,381,708
(3,805,167)
(3,147,019)
(0.12)

F-30

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

Exhibit 4.1

The following description sets forth certain material terms and provisions of CytoSorbents’ (“CytoSorbents,” “we,” “us,” and “our”) securities that

are registered under Section 12 of the Securities Exchange Act of 1934, as amended.

DESCRIPTION OF CAPITAL STOCK

The following description of our common stock, $0.001 par value per share (“Common Stock”), together with the additional information we include
herein, summarizes the material terms and provisions of our Common Stock. The following description of our Common Stock is a summary and does not
purport to be complete. For the complete terms of our Common Stock please refer to our Second Amended and Restated Certificate of Incorporation
(“Certificate of Incorporation”) and Amended and Restated Bylaws (“Bylaws”), each of which are incorporated by reference as exhibits to our Annual Report
on Form 10-K of which this Exhibit 4.1 is a part. The Delaware General Corporation Law, or the DGCL, may also affect the terms of our Common Stock.

General

The total number of shares of capital stock that we have authority to issue is 105,000,000, consisting of (i) 100,000,000 shares of Common Stock and
(iii) 5,000,000 shares of preferred stock, par value per share $0.001 (“Preferred Stock”). The outstanding shares of our Common Stock are fully paid and
nonassessable.

Common Stock

Voting. For all matters submitted to a vote of stockholders, each holder of our Common Stock is entitled to one vote for each share registered in such
holder’s name. Except as may be required by law and in connection with some significant actions, such as mergers, consolidations, or amendments to our
Certificate of Incorporation that affect the rights of stockholders, holders of our Common Stock vote together as a single class. Generally, the election of
members of our Board of Directors (the “Board”) is determined by the vote of the majority of the votes cast by stockholders with respect to that director’s
election. However, in a Contested Election (as defined in our Bylaws), directors of the Board are elected by a plurality of the votes cast by the stockholders
entitled to vote (and not by majority vote).

Dividends. Subject to preferential dividend rights of any then outstanding Preferred Stock, the holders of Common Stock are entitled to receive

dividends, as and when declared by our Board.

Liquidation. In the event we are liquidated, dissolved or our affairs are wound up, after we pay or make adequate provision for all of our known
debts and liabilities, each holder of our Common Stock will be entitled to receive all of our assets available for distribution to our stockholders, subject to any
preferential or other rights of any then outstanding Preferred Stock.

Other Rights and Restrictions. Subject to the preferential rights of any other class or series of stock, all shares of our Common Stock have equal
dividend, distribution, liquidation and other rights, and have no preference, appraisal or exchange rights, except for any appraisal rights provided by Delaware
law. Furthermore, holders of our Common Stock have no conversion, sinking fund or redemption rights, or preemptive rights to subscribe for any of our
securities. Our Certificate of Incorporation and Bylaws do not restrict the ability of a holder of our Common Stock to transfer such holder’s shares of our
Common Stock.

The rights, powers, preferences and privileges of holders of our Common Stock are subject to, and may be adversely affected by, the rights of

holders of shares of any series of Preferred Stock which we may designate and issue in the future.

Listing. Our Common Stock is listed on the Nasdaq Capital Market under the symbol “CTSO.”

Transfer Agent and Registrar. The transfer agent for our Common Stock is American Stock Transfer & Trust Company, LLC.

Certain Effects of Authorized but Unissued Stock

We have shares of Common Stock and Preferred Stock available for future issuance without stockholder approval. We may issue these additional
shares for a variety of corporate purposes, including future public offerings to raise additional capital or facilitate corporate acquisitions or for payment as a
dividend on our capital stock. The existence of unissued and unreserved Common Stock and Preferred Stock may enable our Board to issue shares to persons
friendly to current management or to issue Preferred Stock with terms that could render more difficult or discourage a third-party attempt to obtain control of
us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. In addition, if we issue Preferred
Stock, the issuance could adversely affect the voting power of holders of Common Stock and the likelihood that such holders will receive dividend payments
and payments upon liquidation.

Delaware Law and Certificate of Incorporation and Bylaws Provisions

Board of Directors. Our Bylaws provide that:

subject to the rights of the holders of any series of preferred stock then outstanding, any directors, or the entire Board, may be removed
from office at any time, but only for cause, by the affirmative vote of the holders of sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class;
and

vacancies in the Board resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or
by the sole remaining director. Directors so chosen shall hold office until the next annual meeting of stockholders at which the term of
office of the class to which they have been elected expires.

These provisions could discourage, delay or prevent a change in control of our company or an acquisition of our company at a price which many
stockholders may find attractive. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our
Common Stock. These provisions may also have the effect of discouraging a third party from initiating a proxy contest, making a tender offer or attempting to
change the composition or policies of our Board.

Stockholder Action; Special Meeting of Stockholders. Our Certificate of Incorporation and Bylaws also provide that:

stockholder action may be taken only at a duly called and convened annual or special meeting of stockholders and then only if properly
brought before the meeting

stockholder action may not be taken by written action in lieu of a meeting;

special meetings of stockholders may be called only by our Board, the Chairman of the Board or our Chief Executive Officer; and

in order for any matter to be considered “properly brought” before a meeting, a stockholder must comply with requirements regarding
specified information and advance notice to us.

These provisions could delay, until the next stockholders’ meeting, actions which are favored by the holders of a majority of our outstanding voting
securities. These provisions may also discourage another person or entity from making a tender offer for our Common Stock, because a person or entity, even
if it acquired a majority of our outstanding voting securities, would be able to take action as a stockholder only at a duly called stockholders’ meeting, and not
by written consent.

Indemnification. Our Certificate of Incorporation provides that we shall, to the fullest extent permitted by, and in accordance with the provisions of,
the DGCL, indemnify each of our directors or officers or employees against expenses (including attorneys’ fees), judgments, taxes, fines and amounts paid in
settlement, incurred by him in connection with, and shall advance expenses (including attorneys’ fees) incurred by him in defending, any threatened, pending
or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) to which such director, officer or employee is, or is threatened
to be made, a party by reason of the fact that such director, officer or employee is or was a director or officer or employee of ours, or is or was serving at the
request of us as a director, officer, partner, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise.
Advancement of expenses shall be made upon receipt of an undertaking, with such security, if any, as the Board or stockholders may reasonably require, by or
on behalf of the person seeking indemnification to repay amounts advanced if it shall ultimately be determined that he or she is not entitled to be indemnified
by us as authorized therein.

Delaware Anti-Takeover Law

We are subject to the provisions of Section 203 of the DGCL. Section 203 prohibits publicly held Delaware corporations from engaging in a
“business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together
with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s voting stock. These provisions could have the effect of
delaying, deferring or preventing a change of control of our company or reducing the price that certain investors might be willing to pay in the future for
shares of our stock.

Exhibit 21.1

CytoSorbents Corporation

List of Subsidiaries

Delaware
Germany
Switzerland
Poland
United Kingdom

Jurisdiction

Name
CytoSorbents Medical Inc.*
CytoSorbents Europe GmbH*
CytoSorbents Switzerland**
CytoSorbents Poland Sp. z.o.o.**
CytoSorbents UK Limited***

*Wholly-owned subsidiary of CytoSorbents Corporation

**Wholly-owned subsidiary of CytoSorbents Europe GmbH

***Wholly-owend subsidiary of CytoSorbents Medical Inc.

CONSENT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference of our reports dated March 5, 2020 relating to the consolidated financial statements of Cytosorbents
Corporation (the “Company”) as of December 31, 2019 and 2018 and for each of the three years in the period ended December 31, 2019 and the effectiveness
of the Company’s internal control over financial reporting which appears in this annual report on Form 10-K into the Company’s previously filed Registration
Statements on Forms S-3 (Registration Nos. 333-226372, 333-194394, 333-193053, and 333-205806) and Forms S-8 (Registration Nos. 333-220630, 333-
199852, and 333-203244) and to the reference to our Firm under the caption “Experts”.

Exhibit 23.1

/s/ WithumSmith+Brown, PC
East Brunswick, New Jersey
March, 5, 2020

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Phillip Chan, certify that:

1. I have reviewed this annual report on Form 10-K of CytoSorbents Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the registrant’s board of directors (or persons performing the equivalent function):

Dated: March 5, 2020

all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal controls over financial reporting.

By:

/s/ Dr. Phillip P. Chan
Dr. Phillip P. Chan
President and Chief Executive Officer
(Principal Executive Officer)

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

Exhibit 31.2

I, Kathleen P. Bloch, certify that:

1. I have reviewed this annual report on Form 10-K of CytoSorbents Corporation;

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting;

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are

reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal

controls over financial reporting.

Dated: March 5, 2020

By:

/s/ Kathleen P. Bloch
Kathleen P. Bloch
Chief Financial Officer
(Principal Financial and Accounting Officer

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the Annual Report of CytoSorbents Corporation (the “Company”) on Form 10-K for the year ended December 31, 2019 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), Dr. Phillip Chan, President and Chief Executive Officer of the Company,
certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: March 5, 2020

By:

/s/ Dr. Phillip P. Chan
Dr. Phillip P. Chan
President and Chief Executive Officer
(Principal Executive Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature
that appears in typed form with the electronic version of this written statement has been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

In connection with the Annual Report of CytoSorbents Corporation (the “Company”) on Form 10-K for the year ended December 31, 2019 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), Kathleen P. Bloch, Chief Financial Officer of the Company, certifies,
pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: March 5, 2020

By:

/s/ Kathleen P. Bloch
Kathleen P. Bloch
Chief Financial Officer
(Principal Financial and Accounting Officer)