Cost of Goods Sold

6 Months Ended

Jun. 30, 2012

Note 4:

Cost of Goods Sold

The majority of the Company's inventory was purchased prior to obtaining authorization to affix the CE Mark to its Generation 2 Delcath Hepatic CHEMOSAT® Delivery System in April 2012, including all of the components used in kits sold during the quarter ended June 30, 2012. Additionally, the kits were built during the quarter ended March 31, 2012 and accordingly, all labor and overhead related to the kits was expensed during the first quarter. As a result, the costs of sales related to recognized revenue was $0.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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