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STOCKHOLDERS' EQUITY | 9 Months Ended
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Sep. 30, 2024
STOCKHOLDERS' EQUITY |
STOCKHOLDERS' EQUITY | 3. STOCKHOLDERS’ EQUITY Preferred Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with such designation rights and preferences as may be determined from time to time by the Board of Directors. Common Stock In June 2019, the Company amended and restated its certificate of incorporation. The amended and restated certificate of incorporation increased the number of shares of common stock authorized for issuance from 50,000,000 shares to 100,000,000 shares. Shelf Registration On July 14, 2021, the Company filed a registration statement on Form S-3 with the SEC, which was amended on July 20, 2021 and declared effective by the SEC on July 27, 2021 (as amended, the “2021 Shelf”). The 2021 Shelf enables the Company to offer and sell, in one or more offerings, any combination of common stock, preferred stock, senior or subordinated debt securities, warrants and units, up to a total dollar amount of $150 million and expires after three years. On July 26, 2024, the Company filed a registration statement on Form S-3 with the SEC (the “2024 Shelf”), which 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. On September 26, 2024, the Company filed Amendment No. 1 to the Form S-3 with the SEC. The 2024 Shelf was declared effective by the SEC on September 30, 2024. Because the Company’s market capitalization is less than $75 million, it will be subject to baby shelf rules which limit the amount of securities sales the Company can make to one-third of its public market float over a 12-month period. Open Market Sale Agreement with Jefferies LLC On December 30, 2021, the Company entered into an Open Market Sale Agreement (the “Sale Agreement”) with Jefferies LLC (the “Agent”), pursuant to which the Company may sell, from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $25 million through the Agent, as the Company’s sales agent. However, as a result of limitations related to our market capitalization discussed above, the Company may offer and sell shares of the Company's common stock having an aggregate offering price of up to approximately $19,700,000 from time to time through the Agent. If the Company's public float increases above $75,000,000, the Company may sell additional amounts under the Sales Agreement. All shares of the Company’s common stock offered and sold, or to be offered and sold under the Sale Agreement will be issued and sold pursuant to the Company’s 2024 Shelf by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, in block transactions or if specified by the Company, in privately negotiated transactions. Subject to the terms of the Sales Agreement, the Agent is required to use its commercially reasonable efforts consistent with their normal sales and trading practices to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company is required to pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of the shares of the Company’s common stock sold thereunder, if any. There were no sales under the Sale Agreement during the year ended December 31, 2022. During the year ended December 31, 2023, the Company sold 2,656,464 shares pursuant to the Sale Agreement, at an average selling price of $1.76 per share, generating net proceeds of approximately $4,532,000. In addition, during the year ended December 31, 2023, the Company paid approximately $61,000 in expenses related to the Sale Agreement. During the nine months ended September 30, 2024, the Company sold 53,290 shares pursuant to the Sales Agreement at an average selling price of $1.03 per share, generating net proceeds of approximately $53,000. In addition, the Company incurred ATM activation fees of approximately $41,000 during the three and nine months ended September 30, 2024. Stock-Based Compensation Total share-based employee, director, and consultant compensation amounted to approximately $782,000 and $2,345,000 for the three and nine months ended September 30, 2024, respectively, and approximately $1,086,000 and $2,487,000 for the three and nine months ended September 30, 2023, respectively. These amounts are included in the consolidated statements of operations and comprehensive loss under cost of revenue and selling, general, and administrative expenses. The summary of the stock option activity for the nine months ended September 30, 2024 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Weighted | ​ | Average
​ | ​ | ​ | ​ | Average | ​ | Remaining
​ | ​ | ​ | ​ | Exercise Price | ​ | Contractual
​ |  | Shares |  | per Share |  | Life (Years)
Outstanding, December 31, 2023 |  | 10,548,174 | ​ | $ | 4.49 | ​ | 7.01
Granted |  | 3,687,366 | ​ | $ | 0.96 |  | —
Forfeited |  | (1,018,794) | ​ | $ | 2.69 |  | —
Expired |  | (706,609) | ​ | $ | 5.40 |  | —
Exercised |  | — | ​ | $ | — |  | —
Outstanding, September 30, 2024 |  | 12,510,137 | ​ | $ | 3.54 |  | 7.06
​ 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 $0.84 to $1.08 per share) and expected life of the stock option (6 years), the current price of the underlying stock and its expected volatility (77.8%), expected dividends (0)% on the stock and the risk free interest rate (ranging from 3.60% to 4.65%) for the expected term of the stock option. The intrinsic value is calculated as the difference between the market value of the shares as of September 30, 2024 of $1.50 and the exercise price of the shares. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Options Outstanding
​ | ​ | Number | ​ | Weighted | ​ | Weighted | ​ | ​ | ​
Range of | ​ | Outstanding at | ​ | Average | ​ | Average | ​ | Aggregate
Exercise | ​ | September 30, | ​ | Exercise | ​ | Remaining | ​ | Intrinsic
Price |  | 2024 |  | Price |  | Life (Years) |  | Value
$0.84 - $13.20 |  | 12,510,137 | ​ | $ | 3.54 | ​ | 7.06 | ​ | $ | 1,892,822
​
​ | ​ | ​ | ​ | ​ | ​ | ​
Options Exercisable
Number | ​ | Weighted | ​ |
Exercisable at | ​ | Average | ​ | Aggregate
September 30, | ​ | Exercise | ​ | Intrinsic
2024 |  | Price |  | Value
6,164,466 | ​ | $ | 5.48 | ​ | $ | 33,555
​ The summary of the status of the Company’s non-vested options for the nine months ended September 30, 2024 is as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant Date
​ |  | Shares |  | Fair Value
​ | ​ | ​ | ​ | ​ | ​
Non-vested, December 31, 2023 |  | 5,205,736 | ​ | $ | 1.89
Granted |  | 3,687,366 | ​ | $ | 0.67
Forfeited |  | (1,018,794) | ​ | $ | 1.81
Vested |  | (1,528,637) | ​ | $ | 2.30
Non-vested, September 30, 2024 |  | 6,345,671 | ​ | $ | 1.08
​ As of September 30, 2024, the Company had approximately $3,540,000 of total unrecognized compensation cost related to stock options which will be amortized over approximately 35 months. On March 29, 2024, the Company granted options to purchase 380,480 shares of common stock to certain executive officers and certain other non-executive officer employees related to the Company’s salary reduction for stock options program. These options will vest in full on January 31, 2025. The grant date fair value of these unvested options amounted to approximately $249,000. On April 2, 2024, the Company granted options to purchase 1,214,400 shares of common stock to the Company’s employees which will be awarded based upon each employee’s 2024 individual performance evaluation. Once awarded, these options will vest one half on the first anniversary of the grant date, one quarter on the second anniversary of the grant date, and one quarter on the third anniversary of the grant date. The grant date fair value of these unvested options amounted to approximately $830,000. On April 2, 2024, the Company granted options to purchase 922,147 shares of common stock to certain of the Company’s employees. These options will vest in full on the first anniversary of the grant date. The grant date fair value of these unvested options amounted to approximately $594,000. On April 2, 2024, the Company granted options to purchase 110,000 shares of common stock to members of the Company’s Board of Directors. These options will vest in full on the first anniversary of the grant date. The grant date fair value of these unvested options amounted to approximately $71,000. On April 2, 2024, the Company granted options to purchase 556,000 shares of common stock to certain senior managers of the Company. These options will vest one half on the first anniversary of the grant date, one quarter on second anniversary of the grant date, and one quarter on third anniversary of the grant date. The grant date fair value of these unvested options amounted to approximately $380,000. On April 8, 2024, the Company granted options to purchase 131,339 shares of common stock employees related to the Company’s salary reduction for stock options program. The grant date fair value of these unvested options amounted to approximately $85,000. These options will vest in full on January 31, 2025. On August 14, 2024, the Company granted, in connection with the appointment of its new Chief Financial Officer, options to purchase 80,000 shares of common stock which will vest as follows: 41,000 options upon the six - month anniversary of the date of grant and 13,000 options upon each of the first, second and third anniversaries of the date of grant. The Company also granted options to purchase 215,000 shares of common stock that will vest only upon the achievement of certain milestones pursuant to the terms of the Company's existing 2022 - 2025 performance pool in place for the Company's management team. During the nine months ended September 30, 2024, 78,000 options were awarded to newly hired employees or to consultants in connection with their employment or consulting agreements. Change in Control-Based Awards of Restricted Stock Units: The Board of Directors has granted restricted stock units to members of the Board of Directors, to the Company’s executive officers, and to employees of the Company. These restricted stock units will only vest upon a Change in Control of the Company, as defined in the Amended and Restated CytoSorbents Corporation 2014 Long-Term Incentive Plan, as amended. The following table is a summary of these restricted stock units: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Restricted Stock Units | ​ | ​
​ |  | Board of |  | Executive |  | Other | ​ | ​ |  | ​
​ | ​ | Directors | ​ | Management |  | Employees |  | Total | ​ | Intrinsic Value
December 31, 2023 |  | 346,500 |  | 779,500 |  | 1,697,500 |  | 2,823,500 |  | $ | 3,134,085
Granted |  | — |  | 175,000 |  | 156,250 |  | 331,250 |  | ​ | ​
Forfeited |  | — |  | — |  | (330,750) |  | (330,750) |  | ​ | ​
September 30, 2024 |  | 346,500 |  | 954,500 |  | 1,523,000 |  | 2,824,000 | ​ | $ | 4,236,000
​ Due to the uncertainty over whether these restricted stock units will vest, which only happens upon a Change in Control, no charge for these restricted stock units has been recorded in the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023. Other Awards of Restricted Stock Units: On August 10, 2022, certain named executive officers and senior managers were granted 288,500 restricted stock units. These awards were valued at approximately $563,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested (or will vest) one-third on the date of the grant, one-third on the first anniversary of the date of the grant, and one-third on the second anniversary of the date of the grant. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $(67,000) and $27,000, and $106,000 and $214,000, respectively, related to these restricted stock unit awards. On July 7, 2023, certain named executive officers and senior managers were granted 250,000 restricted stock units. These awards were valued at approximately $883,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and will vest two-thirds on the first anniversary of date of the grant, and one-third on the second anniversary of the date of the grant. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $(234,000) and $(13,000) and $102,000 and $0, respectively, related to these restricted stock unit awards. On September 18, 2023, a former named executive officer was granted 45,000 restricted stock units. This award was valued at approximately $89,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant. These restricted stock units vested (will vest) as follows: 25,000 on the date of the grant, 10,000 on the first anniversary of the date of the grant and 10,000 on the second anniversary of the date of the grant. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $(1,000) and $9,000 and $50,000 and $0, respectively, related to these restricted stock unit awards. On April 2, 2024, the Board of Directors granted 343,000 restricted stock units to certain senior managers of the Company. These awards were valued at approximately $328,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and will vest one half on the first anniversary of the grant date and one half on the second anniversary of the grant date. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge of approximately $41,000 and $81,000 and $0 and $0, respectively, related to these restricted stock unit awards. On August 14, 2024, the Company granted, in connection with the appointment of its new Chief Financial Officer, 65,000 restricted stock units. This award was valued at approximately $63,000 at the date of issuance, based upon the market price of the Company's common stock at the date of the grant. These restricted stock units will vest equally on the first anniversary of the date of the grant and the second anniversary of the date of the grant. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge of approximately $4,000 and $4,000 and $0 and $0, respectively, related to these restricted stock unit awards. Additionally, certain employees were offered a total of 213,000 restricted stock units as a condition of their employment. These awards were valued at approximately $517,000 at the date of issuance. 40,000 of these restricted stock units valued at $149,000 were forfeited as of September 30, 2024. 33,000 of these restricted stock units valued at approximately $231,000 were vested as of September 30, 2024. The remaining 140,000 of these restricted stock units will vest upon the earlier of a Change in Control or in three or four years from the date of the award, whichever occurs first. For the three and nine months ended September 30, 2024 and 2023, the Company recorded a charge (income) of approximately $(23,000) and $(186,000), and $8,000 and $0, respectively, related to these restricted stock unit awards. The following table outlines the restricted stock unit activity for the nine months ended September 30, 2024: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant Date
​ |  | Shares |  | Fair Value
Non-vested, December 31, 2023 |  | 430,505 | ​ | $ | 3.31
Granted | ​ | 548,000 | ​ | $ | 0.96
Vested |  | (297,169) | ​ | $ | 3.23
Forfeited | ​ | (40,000) | ​ | $ | 3.73
Non-vested, September 30, 2024 | ​ | 641,336 | ​ | $ | 1.31
​ Warrants: As of September 30, 2024, the Company had 4,352,130 warrants outstanding. 2,706,561 warrants outstanding are related to the Company’s December 13, 2023 offering and these warrants are immediately cash exercisable at an exercise price of $2.00 per share and expire on December 13, 2028. Another 1,645,569 warrants were issued on June 28, 2024 in connection with the closing of the Company’s Loan and Security Agreement with Avenue Capital Group (see Note 5). These warrants have an exercise price of $0.79 and expire on June 28, 2029. The number of warrants is fixed, however, the exercise price may be adjusted down if the Company raises equity (excluding sales of equity utilizing the Company’s at-the-market equity facility) at a share price that is lower than $0.79. These warrants can be exercised into common stock.

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