Welcome to the CytoSorbents' First Quarter 2014 Shareholder Update Conference Call. During today's presentation, all parties will be in listen-only mode. This conference is being recorded today, May 14, 2014. I would now like to turn the conference over to our moderator, Ms. Amy Vogel. Please go ahead, Amy.

Thank you, operator and good afternoon. Welcome to CytoSorbent's first quarter 2014 operating and financial results conference call. With us today are, Dr. Phillip Chan, Chief Executive Officer and President; Vincent Capponi, Chief Operating Officer; Kathleen Bloch, Chief Financial Officer; Dr. Christian Steiner, Vice President of Sales and Marketing from Germany; and Chris Cramer, Vice President of Business Development. Before I turn the call over to Dr. Chan, I'd like to remind listeners that during the call management's prepared remarks may contain forward-looking statements which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore the company claims protection under Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today and therefore we refer to you to a more detailed discussion of these risks and uncertainties in the company's filing with the SEC. Any projections as to the company's future performance represented by management, include estimates today as of May 14, 2014 and the company assumes no obligation to update these projections in the future as market conditions change. During today's conference call, we will first have an overview presentation covering the financial and operational highlights for the quarter by Dr. Chan and Ms. Bloch. We again have taken everyone's submitted questions and will do our best to address them in the presentation, and also in the Q&A session with management to follow. Thanks everyone again for participating. If we do not answer your question, we would ask you contact the company directly after the call today. At this time, I would like to turn the call over to Dr. Phillip Chan. Please go ahead, Dr. Chan.

Thank you very much Amy and welcome everyone to our first quarter 2014 operating and financial results conference call. Thank you very much for taking the time to join the call today. Given that we recently gave an extensive presentation on our operating strategy for 2014 in the fiscal 2013 year-end presentation, today's presentation will be brief. I would encourage investors to visit our web site at www.cytosorbents.com to obtain a copy of the transcript and presentation of that year-end presentation. For new investors, I would like to now give a short overview of the company prior to getting into our financial results. On the call today are myself, Vincent Capponi, Kathleen Bloch, Christian Steiner and Chris Cramer, our Vice President of Business Development. CytoSorbents is an emerging leader in the $20 billion critical care immunotherapy space. We are leady the prevention of treatment of life-threatening inflammation in the intensive care unit. CytoSorb, our flagship product, removes the fuel to the fire of inflammation and it represents a powerful immunotherapy tool to control inflammation. It is approved in the European Union as the only specifically approved extracorporeal cytokine filter and has been clinically proven to remove key cytokines in blood by 30% to 50% in critically ill patients. It is approved for use in any situation where cytokines are elevated and it has been safe in more than 3,000 human treatments with no serious device related adverse events recorded. The heart of our technology is based on a state-of-the-art biocompatible highly porous polymer bead that acts like a tiny sponge to remove harmful substances for blood. Each of these beads are roughly the size of a grain of salt and has millions of pores and channels in every single bead. These beads are protected by 32 issued U.S. patents and…

Thank you, Phil, and good afternoon everyone. For today's call I will be providing an update regarding CytoSorbent's revenues and also our working capital position as of March 31, 2014. First quarter 2014 total revenue was approximately $1.1 million, which is an increase of 186% compared to total revenues of approximately $371,000 for the first quarter of 2013. Product sales for the first quarter of 2014 were approximately $569,000, that's at the upper end of the guidance and is an increase of approximately 223% over product sales for the first quarter of 2013 of approximately $176,000. Grant income for the first quarter of 2014 was approximately $491,000, an increase of more than 150% as compared to grant income of approximately $195,000 for the first quarter of 2013. First quarter 2014 product gross margins were in excess of 60%. Our next slide highlights the product sales of CytoSorb for each of the last seven quarters, since we began commercialization of the product. First of all, note that the product sales for the first quarter of 2014 of $569,000, that's the blue bar to the far right, represented the highest quarterly sales achieved to-date, and were approximately 81% higher than product sales for the previous quarter ended December 31, 2013. For the first quarter of 2014, direct sales accounted for the majority of our product sales. However, sales to distributors continued to strengthen with several reordering multiple times during the quarter. Now taking a look at our trailing 12 month of CytoSorb sales, and this chart demonstrates the positive trend that sales continued to take overall. We like this presentation because it removes the lumpiness that may be observed, when looking at purely quarter-over-quarter results. We do continue to remind investors that at these early stages of commercialization, we may experience quarter-over-quarter…

Thank you very much Kathy. So right now I'd like to transition to a question that has been submitted many-many times by our shareholders and the particular subject of interest in the emerging threat from the MERS virus or Middle Eastern Respiratory Syndrome coronavirus. This is a virus that has now spread throughout 70 countries and we have heard just recently, few documented cases occurring here in the United States. And so given that we have currently signed distribution in the Middle East, there have been a lot of questions about where we stand in the treatment of the MERS virus, and what I'd like to do now is, basically give just a quick background on rationale for using CytoSorb for existing and emerging viral threats. So many people know about influenza. Obviously this is something that inflicts many of us during the seasonal influenza season, starting winter time. But what is unknown to most people is that this is a -- it is a disease that inflicts about 60 million Americans every single year, hospitalizing 200,000 of them and killing 36,000, despite broad availability of vaccines and anti-viral medications. Now the swine flu pandemic of 2009, often called the H1N1 flu pandemic, taught us many lessons. The first lesson was that, we cannot rely on vaccination alone. At that time, 30 million to 70 million Americans contracted H1N1 flu, before the vaccine became widely available in December of 2009, and that's per Centers of Disease Control and Prevention Statistics, CDC statistics. And there are many reasons for this; there was lengthy production for new outbreaks. There were low yields of the vaccine potency issues and quality problems. There was initially short supply and limited availability, so only the most vulnerable were able to get the vaccine; and not everyone…

Thank you, Dr. Chan. Over the last week, we have been selecting a number of questions from investors. Christian, first quarter sales continue to trend upwards, can you please update us on your progress?

Thank you, Amy. We started the expansion of our direct sales force in Germany with our first sales rep added in December and he has already contributed to our first quarter results. This is unremarkable, as his territory was not covered before. We have added our sixth and seventh sales rep in February, who we expect will start to contribute during the current quarter. We are searching for additional sales reps at the moment. Sales are being driven primarily by three sources of revenues; reowners, new owners from new accounts, and distributor sales. We had a very healthy growth in reowner volume in Q1 and continue to see this in the current quarter. We had our best quarter in terms of new accounts in the first quarter as well, and we expect this trend to continue, driven by expansion of our direct sales force, and better focus and penetration into various direct sales territories. As Phil described, sales from existing distributors also continues to grow. We hope to obtain additional registrations including in Russia and the Middle East in the near future, which will enable sales to these regions. As mentioned in the last conference call, we plan to add at least five more distributors or partners this year. In order to support this growing distributor and partner network adequately, we have added dedicated people to support this important effort.

What about risk [indiscernible] of the patient registry?

The purpose of the patient registry is to develop a repository for clinical treatment data, for safety information and clinical outcomes, using CytoSorb for many different applications. Collectively, these data can be used to guide future therapy, used to publish papers and extracts and used to support regulatory filings for the right approval. Our goal remains to go online with this important project next month in June. The international CytoSorb registry will begin with two major patient groups, severe sepsis septic shock and cardiac surgery patients. However, I expect that we will need to expand to other application fields rapidly, since there is lot of interest and encouraging results in liver disease, burn and trauma patients and other applications. We even see interest in capturing treatment data on tropical diseases, such as dengue fever and malaria in India, and as Phil has described, MERS infection in many countries, particularly those in the Middle East.

Since you're mentioning the other application fields, can you please give us an example?

Yes, sure. As I just mentioned, I have included liver diseases as one of the possible next two [indiscernible] CytoSorb registry. In the United States end stage liver disease is the ninth leading cause of death. Chronic liver disease patients who suffer from an acute worsening of the disease, will develop a systemic inflammatory response, which is exactly our inflection point. Severe alcoholic hepatitis is another very problematic diseases, and there is not much that can be done for these patients. We had a number of very encouraging CytoSorb treatments in such patients here in Germany, and we will also start with a number of study projects to generate the necessary data in this field.

Thank you, Christian. Switching gears for a moment, Vince, can you provide us with an update on the U.S. clinical activity?

Thanks Amy. As we discussed last month, the U.S. Air Force trauma trials now open in screening patients to enroll into the trial. The trial is actually listed in clinicaltrials.gov. Those of you that are interested to look at specifically. We also intend to add a second site for the trial and are in contract negotiations at this time. Once completed, we will be in a position to begin screening and enrollment of patients following an accelerated IRB review. Last month, we also discussed our plans to run a cardiac surgery trial here in the United States. In preparation for this trial, we have now hired an experienced clinical trials manager devoted to work on this trial in the U.S. Air Force trauma trial. In addition, we plan to formally announce our Cardiac Surgery Advisory Board, with whom we are working to develop a clinical trial protocol. Finally, we plan to add a Chief Scientific Officer, Medical Director, to help manage our clinical trials domestically and provide oversight for our international trials, including more than 30 investigator initiated studies either being planned or underway.

And what is the status of production scale-up?

With the continued strong demand for CytoSorb, we have added manufactured personnel, which we believe are capable of meeting the current and expected demand. As part of the growth, we are now beginning to develop the production infrastructure to address the growing operation, and systems developed and necessary to allow us to grow the business effectively. Scale-up to larger facility remains a key objective for the operations team, and we are looking at the best approaches to meet both our short term and long term growth needs, in a fiscally responsible manner. In other words, we are really trying to balance increased manufacturing product inventory, with increasing demand.

Has the company made any progress in advancing the development of the HemoDefend product?

We continue to be focused on developing our assets to the point that will make them attractive to outside partners. HemoDefend remains our primary development opportunity in the short term, and we continue to make progress on this front. We are reviewing engineering proposals regarding tooling and tooling equipment for commercial production of the HemoDefend In-line filter that is needed for regulatory approval. While we concurrently finalize development of the device. I will provide additional updates on the progress of this project from time-to-time, as we move forward.

Chris, on the last call, you talked about the business development activities related to establishing new partnerships for CytoSorb. Can you please give an update on your progress?

Thanks Amy. As we talked about on the last investor call, we are diligently working to establish relationships with potential strategic partners. To that end, the business development team is coming off a very busy medical conference schedule. Over the past five months, CytoSorbents has exhibited at or attended approximately eight of the top cardiac and critical care shows. The majority of these conferences have been international events, reflecting the global opportunity for CytoSorb. These conferences have provided us with the opportunity to meet face-to-face with many of the key decision makers at targeted strategic motivations and deliver the CytoSorb message. I am pleased to report, that interest level from large partners appear strong. In the short amount of times with our last call, we continue to advance discussions with major players net in many different arenas. While I cannot disclose the details of these meetings, I can say that we believe CytoSorb is a strategic fit, and offers a clear value proposition with the partner organizations we are talking to. I am very encouraged by our progress and remain confident about the potential for strategic partnerships with CytoSorb. The business development team will continue to be very active at industry conferences throughout the remainder of 2014 to advance our strategic partnership objectives. We hope to have more positive news to discuss on future earnings calls.

What activity are we seeing from Biocon? And are they promoting the filter for used and cardiac surgery?

So Biocon continues to be an exceptional partner for CytoSorbents. On the prior call, I discussed several actions they are taking to ensure the successful launch of CytoSorb in India and surrounding regions. Those efforts include completing a surviving sepsis marketing campaign; hosting CytoSorb user group meetings and creating a dedicated sales and marketing team focused solely on CytoSorb. With first year sales exceeding projections within the first six months, Biocon's results have been truly impressive. In addition, Biocon is making considerable investments to ensure future growth, including developing key opinion leader physician support for CytoSorb; increasing product awareness, collecting usage and key study data; developing a patient registry; and evaluating case studies for developing manuscripts. We are very pleased to see Biocon making these types of investments, as we believe they are laying a solid foundation for ongoing and sustainable growth. Finally, many of you have asked about Biocon's promotional activities, and what applications are included. To clarify, the current focus would be CytoSorbents-Biocon relationship is on sepsis and critical care conditions. Given Biocon's expertise and commercial focus on the ICU, we felt strongly that this was the best place to start our partnership. With that said, given Biocon's initial success, we intend on exploring opportunities to expand the partnership in the future.

Well we seemed to have covered the major questions. Dr. Chan, do you have any closing remarks?

Thank you very much Amy, and thank you everyone for your participation on the call today. If you have any additional questions, feel free to forward them to Amy Vogel at avogel@cytosorbents.com, and we will try to address them in our next update. Thank you again, and have a great evening.

Ladies and gentlemen, this concludes the CytoSorbent's first quarter 2014 shareholder update conference call. If you would like to listen to a replay of today’s conference call, please dial 1-877-870-5176 and international 1-858-384-5517. We thank you for your participation. You may now disconnect.