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REVENUE | 9 Months Ended
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Sep. 30, 2024
REVENUE |
REVENUE | 4. REVENUE The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2024:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | United States | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Distributors/ | ​ | Government | ​ | ​ | ​
​ |  | Direct |  | Strategic Partners |  | Agencies |  | Total
Product sales: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 20,705 | ​ | $ | — | ​ | $ | — | ​ | $ | 20,705
Germany | ​ |  | 3,180,863 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 3,180,863
All other countries | ​ |  | 1,937,580 | ​ | ​ | 3,473,647 | ​ | ​ | — | ​ | ​ | 5,411,227
Total product revenue | ​ |  | 5,139,148 | ​ | ​ | 3,473,647 | ​ | ​ | — | ​ | ​ | 8,612,795
Grant and other income: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States | ​ |  | — | ​ | ​ | — | ​ | ​ | 777,593 | ​ | ​ | 777,593
​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total revenue | ​ | $ | 5,139,148 | ​ | $ | 3,473,647 | ​ | $ | 777,593 | ​ | $ | 9,390,388
​ The following table disaggregates the Company’s revenue by customer type and geographic area for the three months ended September 30, 2023:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | United States | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Distributors/ | ​ | Government | ​ | ​ | ​
​ |  | Direct |  | Strategic Partners |  | Agencies |  | Total
Product sales: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 44,933 | ​ | $ | — | ​ | $ | — | ​ | $ | 44,933
Germany | ​ |  | 2,937,431 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 2,937,431
All other countries | ​ |  | 1,267,051 | ​ | ​ | 3,504,601 | ​ | ​ | — | ​ | ​ | 4,771,652
Total product revenue | ​ |  | 4,249,415 | ​ | ​ | 3,504,601 | ​ | ​ | — | ​ | ​ | 7,754,016
Grant and other income: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States | ​ |  | — | ​ | ​ | — | ​ | ​ | 1,056,831 | ​ | ​ | 1,056,831
​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total revenue | ​ | $ | 4,249,415 | ​ | $ | 3,504,601 | ​ | $ | 1,056,831 | ​ | $ | 8,810,847
​ The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2024: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | United States | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Distributors/ | ​ | Government | ​ | ​ | ​
​ |  | Direct |  | Strategic Partners |  | Agencies |  | Total
Product sales: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 62,719 | ​ | $ | 36,000 | ​ | $ | — | ​ | $ | 98,719
Germany | ​ |  | 9,497,184 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 9,497,184
All other countries | ​ |  | 5,361,933 | ​ | ​ | 11,486,268 | ​ | ​ | — | ​ | ​ | 16,848,201
Total product revenue | ​ |  | 14,921,836 | ​ | ​ | 11,522,268 | ​ | ​ | — | ​ | ​ | 26,444,104
Grant and other income: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States | ​ |  | — | ​ | ​ | — | ​ | ​ | 2,627,212 | ​ | ​ | 2,627,212
​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total revenue | ​ | $ | 14,921,836 | ​ | $ | 11,522,268 | ​ | $ | 2,627,212 | ​ | $ | 29,071,316
​ The following table disaggregates the Company’s revenue by customer type and geographic area for the nine months ended September 30, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | United States | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Distributors/ | ​ | Government | ​ | ​ | ​
​ |  | Direct |  | Strategic Partners |  | Agencies |  | Total
Product sales: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
United States | ​ | $ | 55,284 | ​ | $ | — | ​ | $ | — | ​ | $ | 55,284
Germany | ​ |  | 9,443,787 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 9,443,787
All other countries | ​ |  | 4,263,375 | ​ | ​ | 9,974,022 | ​ | ​ | — | ​ | ​ | 14,237,397
Total product revenue | ​ |  | 13,762,446 | ​ | ​ | 9,974,022 | ​ | ​ | — | ​ | ​ | 23,736,468
Grant and other income: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
United States | ​ |  | — | ​ | ​ | — | ​ | ​ | 3,944,696 | ​ | ​ | 3,944,696
​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total revenue | ​ | $ | 13,762,446 | ​ | $ | 9,974,022 | ​ | $ | 3,944,696 | ​ | $ | 27,681,164
​ The Company has two primary revenue streams: (1) sales of the CytoSorb device and related device accessories and (2) grant income from contracts with various agencies of the United States government. The following is a brief description of each revenue stream. CytoSorb Sales The Company sells its CytoSorb device using both its own sales force (direct sales) and through the use of distributors and/or strategic partners. The majority of sales of the device are outside the United States, as CytoSorb is not yet approved for commercial sale in the United States. However, in April 2020, the Company was granted Emergency Use Authorization (“EUA”) of CytoSorb for use in critically-ill patients infected with COVID-19 with imminent or confirmed respiratory failure by the United States Food and Drug Administration (the “FDA”). Direct sales outside the United States relate to sales to hospitals located in Germany, Switzerland, Austria, Belgium, Luxembourg, Poland, the Netherlands, Sweden, Denmark, Norway and the United Kingdom. Direct sales are fulfilled from the Company’s warehouse facility in Berlin, Germany. There are no formal sales contracts with any direct customers relating to product price or minimum purchase requirements. However, there are agreements in place with certain direct customers that provide for either free of charge product or rebate credits based upon achieving minimum purchase levels. The Company records the value of these items earned as a reduction of revenue. These customers submit purchase orders and the order is fulfilled and shipped directly to the customer. Prices to all direct customers are based on a standard price list based on the packaged quantity (6 packs versus 12 packs). Distributor and strategic partner sales make up the remaining product sales. These distributors are located in various countries throughout the world. The Company has a formal written contract with each distributor/strategic partner. These contracts have terms ranging from 1-5 years in length, with three years being the typical term. In addition, certain distributors are eligible for volume discount pricing if their unit sales are in excess of the base amount in the contract. Most distributor’s/strategic partner’s contracts have minimum annual purchase requirements in order to maintain exclusivity in their respective territories. There is no additional consideration or monetary penalty that would be required to be paid to CytoSorbents if a distributor does not meet the minimum purchase commitments included in the contract, however, at the discretion of the Company, the distributor may lose its exclusive rights in the territory if such commitments are not met. Government Grants The Company has been the recipient of various grant contracts from various agencies of the United States government, primarily the Department of Defense, to perform various research and development activities. These contracts fall into one of the following categories:
| 1. | Fixed price – the Company invoices the contract amount in equal installments over the term of the contract without regard to the timing of the costs incurred related to this contract. If billings on fixed price contracts exceed the costs incurred, revenue will be deferred to the extent of the excess billings.
| 2. | Cost reimbursement – the Company submits monthly invoices during the term of the contract for the amount of direct costs incurred during that month plus an agreed upon percentage that relates to allowable overhead and general and administrative expenses. Cumulative amounts invoiced may not exceed the maximum amount of funding stipulated in the contract.
| 3. | Cost plus – this type of contract is similar to a cost reimbursement contract but this type also allows for the Company to additionally invoice for a fee amount that is included in the contract.
| 4. | Performance based – the Company submits invoices only upon the achievement of the milestones listed in the contract. The amount to be invoiced for each milestone is documented in the contract.
These government contracts have terms ranging from three months to four years. The Company may apply for an extension of the term of the contract in order to complete its research and development activities but would not receive additional funding during the extension period in excess of the original contract. See Note 2 regarding the accounting policies related to these contracts. The Company is evaluating the potential reclassification of grant income and related costs of goods sold to net with research and development expenses. In summary, the contracts the Company has with customers are the distributor/strategic partner contracts related to CytoSorb product sales, agreements with direct customers related to free-of-charge product and credit rebates based upon achieving minimum purchase levels, and contracts with various government agencies related to the Company’s grants. The Company does not currently incur any outside/third party incremental costs to obtain any of these contracts. The Company does incur internal costs, primarily salary related costs, to obtain the contracts related to the grants. Company employees spend time reviewing the program requirements and developing the budget and related proposal to submit to the grantor agency. There may additionally be travel expenditures involved with meeting with government agency officials during the negotiation of the contract. These internal costs are expensed as incurred. The following table provides information about receivables and contract liabilities from contracts with customers: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2024 |  | December 31, 2023
Receivables, which are included in grants and accounts receivable | ​ | $ | 4,845,233 | ​ | $ | 3,846,271
Contract liabilities, which are included in accrued expenses and other current liabilities | ​ | $ | 837,592 | ​ | $ | 1,573,141
​ Contract receivables represent balances due from product sales to distributors amounting to $4,528,972 and $3,270,724 at September 30, 2024 and December 31, 2023, respectively, and billed and unbilled amounts due on government contracts amounting to $316,261 and $575,547 at September 30, 2024 and December 31, 2023, respectively. Contract liabilities represent the value of free of charge goods and credit rebates earned in accordance with the terms of certain direct customer agreements, which amounted to $51,192 and $196,322 as of September 30, 2024 and December 31, 2023, respectively, and deferred grant revenue related to the billing on fixed price contracts in excess of costs incurred, which amounted to $786,400 and $1,376,819 at June 30, 2024 and December 31, 2023, respectively.

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