IMMUCELL CORP /DE/

Previous wording

Gross margin on product sales: One of our goals is to achieve a gross margin as a percentage of total sales of approximately 45% or more (including depreciation expense) after the initial launch of new products. Depreciation expense will be a larger component of costs of goods sold forRe-Tain® than it is for theFirst Defense® product line. The estimated gross margin forRe-Tain® is still to be determined and will be heavily influenced by production and sales volume in the early years after commercial launch. This may materially influence the achievement of our gross margin goals, at least for some period of time. Many factors discussed in this Quarterly Report (including contaminations, process yields, inflation, cost increases, supply-chain disruptions and the rising price of commodities and supplies) impact our costs of goods sold. There is a risk that we are not able to achieve our gross margin goal, which would adversely affect our operating results and could impact our future operating plans. We missed our gross margin goal during the years ended December 31, 2024 and 2023 with realized gross margins equal to 30% and 22% of product sales, respectively. We achieved a gross margin of 43% of product sales during the six-month period ended June 30, 2025. There is a risk that our plans to maintain or improve our gross margin may not be realized due to cost increases, production yield losses, future manufacturing contamination events, production equipment failures, price inelasticity or any combination of these factors. In addition, such negative events, depending on their severity, could deplete our cash reducing our ability to fund our business.

Current wording

Gross margin on product sales: One of our goals is to achieve a gross margin as a percentage of total sales of approximately 45% or more (including depreciation expense) after the initial launch of new products. Depreciation expense will be a larger component of costs of goods sold forRe-Tain® than it is for theFirst Defense® product line. The estimated gross margin forRe-Tain® is still to be determined and will be heavily influenced by production and sales volume in the early years after commercial launch. This may materially influence the achievement of our gross margin goals, at least for some period of time. Many factors discussed in this Quarterly Report (including contaminations, process yields, inflation, cost increases, supply-chain disruptions and the rising price of commodities and supplies) impact our costs of goods sold. There is a risk that we are not able to achieve our gross margin goal, which would adversely affect our operating results and could impact our future operating plans. We missed our gross margin goal during the years ended December 31, 2024 and 2023 with realized gross margins equal to 30% and 22% of product sales, respectively. We achieved a gross margin of 43% of product sales during the nine-month period ended September 30, 2025. There is a risk that our plans to maintain or improve our gross margin may not be realized due to cost increases, production yield losses, future manufacturing contamination events, production equipment failures, price inelasticity or any combination of these factors. In addition, such negative events, depending on their severity, could deplete our cash and thus reduce our ability to fund our business.

Previous wording

Exposure to interest rates and debt service obligations: Future rises in interest rates could negatively affect the operating costs of dairy and beef producers and thus put further financial pressure on an already stressed business sector, which could indirectly, but materially and adversely, affect our business. Increases in interest rates since 2020 have had only limited effect on our direct cost of borrowing. Our mortgage debt outstanding as of June 30, 2025 was $5.5 million bearing interest at the fixed rate of 3.53% per annum. Our equipment loans outstanding as of June 30, 2025 were $1.5 million bearing interest at the fixed rate of 3.50% per annum. The outstanding balance on the two State of Maine loans as of June 30, 2025 was approximately $507,000 bearing interest at the fixed rate of 5% per annum. The $3 million in debt that we borrowed during the third quarter of 2023 (which had an outstanding balance of approximately $2.3 million as of June 30, 2025) bears interest at the blended fixed rate of 7.33% per annum illustrating the effect of rising interest rates. Our outstanding debt as of June 30, 2025 aggregating $9.9 million (gross of debt issuance and debt discount costs) bears interest at the blended fixed rate of 4.50% per annum. Increasing interest rates would negatively impact the cost of any future borrowings. This was experienced on the new debt facilities aggregating $3 million that we closed during the third quarter of 2023. The additional debt we incurred to fund our growth objectives has significantly increased our total debt service costs. Under the bank debt refinancing that closed in August of 2025 (discussed in “Subsequent Events” in Note 19 to the accompanying unaudited financial statements), we are obligated to make principal and interest payments aggregating approximately $2 million during both of the years ending December 31, 2025 and 2026. See Note 9 to the accompanying unaudited financial statements for more details about our debt outstanding at June 30, 2025. A decline in sales or gross margin, coupled with this debt outstanding at June 30, 2025 service burden, could impair our ability to fund our capital and operating needs and objectives.

Current wording

Exposure to interest rates and debt service obligations: Future rises in interest rates could negatively affect the operating costs of dairy and beef producers and thus put further financial pressure on an already stressed business sector, which could indirectly, but materially and adversely, affect our business. Increases in interest rates since 2020 have had only limited effect on our direct cost of borrowing. Our mortgage debt outstanding as of September 30, 2025 was $5.4 million bearing interest at the fixed rate of 3.53% per annum. Our equipment loans outstanding as of September 30, 2025 were $1.4 million bearing interest at the fixed rate of 3.50% per annum. The outstanding balance on our two State of Maine loans as of September 30, 2025 was approximately $464,000 bearing interest at the fixed rate of 5% per annum. The $2.3 million in debt that we borrowed during the third quarter of 2025 (which had an outstanding balance of approximately $2.3 million as of September 30, 2025) bears interest at the fixed rate of 6.5% per annum (down from a blended rate of approximately 7.3% per annum on two 2023 loans refinanced through this new borrowing). Our outstanding debt as of September 30, 2025 aggregating $9.5 million (gross of debt issuance and debt discount costs) bears interest at the blended fixed rate of 4.31% per annum as of September 30, 2025. Increasing interest rates would negatively impact the cost of any future borrowings. We are obligated to make principal and interest payments aggregating approximately $4.2 million and $2.0 million during the years ending December 31, 2025 and 2026, respectively. See Note 9 to the accompanying unaudited financial statements for more details about our debt outstanding at September 30, 2025. A decline in sales or gross margin, coupled with this debt outstanding at September 30, 2025 service burden, could impair our ability to fund our capital and operating needs and objectives.

Previous wording

Debt covenants: Our debt with Maine Community Bank (formerly Gorham Savings Bank) and the Finance Authority of Maine is subject to certain financial covenants. We are required to meet a minimum debt service coverage (DSC) ratio of 1.35. Our actual DSC ratios were 0.73, (1.10), 0.44, 2.68 and 2.03 for the years ended December 31, 2024, 2023, 2022, 2021 and 2020, respectively. After being allowed several compliance waivers, our next compliance obligation is for the year ending December 31, 2025. For the trailing twelve-month period ended June 30, 2025, our DSC ratio was 2.64. There is no assurance that we will be able to achieve the required DSC ratio going forward. If we are unable to do so or reach a favorable agreement with our lenders regarding that requirement (including an amendment to or waiver of such requirement), we would be in violation of that covenant, which could result in unfavorable amendments to the terms of our bank debt (including a possible bank requirement to prepay our debt) or have other adverse impacts on our business and results of operations.

Current wording

Debt covenants: Our debt with Maine Community Bank (formerly Gorham Savings Bank) is subject to certain financial covenants. We are required to meet a minimum debt service coverage (DSC) ratio of 1.35. Our actual DSC ratios were 0.73, (1.10), 0.44, 2.68 and 2.03 for the years ended December 31, 2024, 2023, 2022, 2021 and 2020, respectively. After being allowed several compliance waivers, our next compliance obligation is for the year ending December 31, 2025. For the trailing twelve-month period ended September 30, 2025, our DSC ratio was 2.96. There is no assurance that we will be able to achieve the required DSC ratio in the future. If not, then we would be in violation of that covenant, which could result in acceleration of our bank debt or have other adverse impacts on our business and results of operations.

Previous wording

Inflation, supply disruptions, tax rates and economic downturns: Inflation is having a material and adverse impact on almost all supplies we purchase and labor we hire and retain. Continuing or increasing inflationary trends could materially reduce our gross margin on product sales if we are unable or unwilling to impose offsetting price increases on our customers. The extent and duration of the negative impact on the economics of our customers and on the demand for our products going forward are very difficult to assess. The Class III milk price has been volatile since the onset of the pandemic. Market conditions have improved somewhat, but this volatility remains a concern. Additionally, like most input costs, the cost of grain and other feed is rising, which puts a strain on the profitability of our customers. There is also economic uncertainty for beef producers, as the supply chain is interrupted or otherwise adversely affected due to closures of processing plants and reduced throughput. This is a very unusual situation for farmers who work so hard to improve production quality and efficiency in order to help feed a growing population with high-quality and cost-effective proteins. The pandemic created risk and continues to create uncertainty and challenges for us and has created or contributed to global supply-chain disruptions and has affected international trade, while creating a worldwide health and economic crisis. Stock market valuations remain very volatile. Inflation has increased significantly, and tax rates may increase. There is a risk of a period of economic downturn, the severity and duration of which are difficult to know. Prior to the pandemic and the responsive federal economic stimulus programs, many feared the United States had taken on too much national debt. Now the debt load is significantly higher. A combination of the conditions, trends and concerns summarized above could have a corresponding negative effect on our business and operations, including the supply of the colostrum we purchase to produce ourFirst Defense® product line, the demand for our products in the U.S. market and our ability to penetrate or maintain a profitable presence in international markets.

Current wording

Inflation, supply disruptions, tax rates and economic downturns: Inflation is having a material and adverse impact on almost all supplies we purchase and labor we hire and retain. Continuing or increasing inflationary trends could materially reduce our gross margin on product sales if we are unable or unwilling to impose offsetting price increases on our customers. The extent and duration of the negative impact on the economics of our customers and on the demand for our products going forward are very difficult to assess. The Class III milk price has been volatile since the onset of the pandemic. Market conditions have improved somewhat, but this volatility remains a concern. Additionally, like most input costs, the cost of grain and other feed is rising, which puts a strain on the profitability of our customers. There is also economic uncertainty for beef producers, as the supply chain is interrupted or otherwise adversely affected due to closures of processing plants and reduced throughput. This is a very unusual situation for farmers who work so hard to improve production quality and efficiency in order to help feed a growing population with high-quality and cost-effective proteins. Global supply-chain disruptions have affected international trade. Stock market valuations remain very volatile. Inflation has increased significantly, and tax rates may increase. There is a risk of a period of economic downturn, the severity and duration of which are difficult to know. Prior to the pandemic and the responsive federal economic stimulus programs, many feared the United States had taken on too much national debt. Now the debt load is significantly higher. A combination of the conditions, trends and concerns summarized above could have a corresponding negative effect on our business and operations, including the supply of the colostrum we purchase to produce our** First Defense**® product line, the demand for our products in the U.S. market and our ability to penetrate or maintain a profitable presence in international markets.

Previous wording

Risks associated with our funding strategy forRe-Tain**®: The inability to have adequate cash and liquidity to support the commercialization ofRe-Tain®** is a risk to our business. Having completed the construction and equipping of the DS production facility at a cost of approximately $20.8 million, we will continue to incur product development expenses to operate and maintain this facility until commercialization, or achieve some other strategic option. We are reducing these expenses now that production of inventory for Investigational Product use is complete. Further, our agreement to have DP filled by our current contract manufacturer expired in November of 2024. However, this agreement does provide for ongoing product labeling and packaging through the first quarter of 2026. We would need to secure a new DP manufacturing agreement, or bring the process in-house, to fill more inventory after that, which would require significant capital.

Current wording

Risks associated with our funding strategy forRe-Tain®: Constraints on cash and liquidity to support the commercialization ofRe-Tain® pose a risk to our business. Having completed the construction and equipping of the DS production facility at a cost of approximately $20.8 million, we will continue to incur product development expenses to operate and maintain this facility until commercialization, or achieve some other strategy. We have reduced these expenses now that production of inventory for Investigational Product use is complete. Although our agreement to have DP filled by our current contract manufacturer expired in November of 2024, that agreement continued to provide for ongoing product labeling and packaging through the first quarter of 2026. To fill more inventory after that, we will need to secure a new DP manufacturing agreement, or bring the process in-house, which would require significant capital expenditures. Continued investment inRe-Tain® could distract resources fromFirst Defense®growth.

Previous wording

Contamination events, equipment failures and gross margin from our production process: As described above, we experienced certain contamination events and equipment failures in our production process that resulted in scrapped inventory and a slowdown of our production process, which had a significant negative impact on our operating results. We are at risk of further such production contaminations or equipment failures resulting in more scrapped inventory. Additional contamination events or equipment failures causing significantly less production output, depending on their severity, could deplete our cash resulting in an inability to fund our business operations.

Current wording

Contamination events, equipment failures and gross margin from our production process: As described in this Quarterly Report, we experienced certain contamination events and equipment failures in our production process that resulted in scrapped inventory and a slowdown of our production process, which had a significant negative impact on our operating results. We are at risk of further such production contaminations or equipment failures resulting in more scrapped inventory. Additional contamination events or equipment failures causing significantly less production output, depending on their severity, could deplete our cash resulting in an inability to fund our business operations.

Previous wording

A rejection of a tank of milk by a positive milk inhibitor test because too much of the milk in a bulk tank is comprised of milk from cows being treated withRe-Tain®, when tested randomly for inhibitors by a milk hauler, which could create legal liability.

Current wording

A rejection of a tank of milk, when tested randomly for inhibitors by a milk hauler, because too much of the milk in a bulk tank is comprised of milk from cows being treated withRe-Tain®.

Previous wording

Producers’ current practice generally is to treat clinical mastitis only, which has the visual indicator of abnormal milk. In order to gain market penetration forRe-Tain®, we will need to change that practice and increase awareness of the importance of treating subclinical disease. This will require the producers’ ability and willingness to diagnose without visual indicators. This diagnoses can be done with somatic cell testing or usingCMT. Users ofRe-Tain® could have unsatisfactory treatment outcomes if they lack the equipment needed to measure and monitor somatic cell counts (SCC) of the herd or individual cows (for which data is needed). This risk limits our access to treatment cows because about 40% of farms do not presently have access to this kind of testing at the cow level and thus may not be good candidates for the use ofRe-Tain®.

Current wording

Producers’ current practice generally is to treat for clinical mastitis only, once the milk shows visible indicators of being abnormal. In order to gain market penetration forRe-Tain®, we will need to change that practice and increase awareness of the importance of treating subclinical disease. This will require the producers’ ability and willingness to diagnose without visual indicators. These diagnoses can be done with somatic cell testing or usingCMT. Users ofRe-Tain® could have unsatisfactory treatment outcomes if they lack the equipment needed to measure and monitor somatic cell counts (SCC) of the herd or individual cows (for which data is needed). This risk limits our access to treatment cows because about 40% of farms do not presently have access to this kind of testing at the cow level and thus may not be good candidates for the use ofRe-Tain®.

Previous wording

Lower than anticipated, or uneconomic, treatment cure rates could be experienced because: i) the product is administered to cows that we would not identify as the best treatment candidates based on SCC data, ii) the product is administered to cows that are infected with pathogens outside of our label claims or iii) cure rates in pending investigational trials yield unclear profit improvements for dairy producers.

Current wording

Perceived benefits fromRe-Tain® could be undercut if the product is administered to cows that we would not identify as the best treatment candidates based on SCC data or if the product is administered to cows that are infected with pathogens outside of our label claims. Also, if currently pending investigational trials ofRe-Tain®were to yield lower than anticipated cure rates, this could makeRe-Tain® less attractive for dairy producers.

Previous wording

Future off-label use of our product in cows infected with clinical mastitis before we have run the required studies and achieved a label claim extension for this disease state, could result in negative treatment outcomes and potential legal liability.

Current wording

Future off-label use of our product in cows infected with clinical mastitis before we have run the required studies and achieved a label claim extension for this more advanced disease state, could result in negative treatment outcomes and potential legal liability.

Previous wording

Producers either do not choose to use it or might use it improperly, rather than follow our label instructions to administer one dose after each of three consecutive milkings, or they may limit use within the herd in an abundance of caution to avoid the negative outcomes described above.

Current wording

Producers might not choose to use it or might use it improperly, rather than follow our label instructions to administer one dose after each of three consecutive milkings, or they might limit use within the herd in an abundance of caution to avoid the negative outcomes described above.

Previous wording

Reliance on sales of theFirst Defense® product line: We presently are reliant on the market acceptance of theFirst Defense® product line to generate product sales and fund our operations. Our business cannot cover expenses without sufficient gross margin earned on sales of theFirst Defense® product line. Future profitability is thus largely contingent upon the gross margin we earn fromFirst Defense®, together with prudent management of product development expenses.

Current wording

Reliance on sales of theFirst Defense®* product line: We presently are reliant on the market acceptance of theFirst Defense*®** product line to generate product sales and fund our operations. Our business cannot cover expenses without sufficient gross margin earned on sales of theFirst Defense**® product line. Future profitability is thus largely contingent upon the gross margin we earn from** First Defense**®, together with prudent management of product development expenses.

Previous wording

Concentration of sales: Sales of theFirst Defense® product line aggregated 99% of our total product sales during both of the years ended December 31, 2024 and 2023, and 99% of total product sales during both of the six-month periods ended June 30, 2025 and 2024. Our primary customers for the majority of our product sales (86% and 91% during the years ended December 31, 2024 and 2023, respectively, and 83% and 88% during the six-month periods ended June 30, 2025 and 2024, respectively), are in the U.S. dairy and beef industries. The concentration of our sales from one product into just two markets (the dairy and beef markets) is a risk to our business. The animal health distribution segment has been aggressively consolidating over the last few years, with larger distributors acquiring smaller distributors. A large portion of our product sales (77% and 79% during the years ended December 31, 2024 and 2023, respectively, and 75% and 79% during the six-month periods ended June 30, 2025 and 2024, respectively), was made to two large distributors. A large portion of our trade accounts receivable (79% and 78% as of June 30, 2025 and December 31, 2024, respectively) was due from these two distributors. We have a good history with these distributors, but the concentration of sales and accounts receivable with a small number of customers does present a risk to us, including risks related to such customers experiencing financial difficulties or altering the basis on which they do business with us in a manner unfavorable to us.

Current wording

Concentration of sales: Sales of theFirst Defense® product line aggregated 99% of our total product sales during both of the years ended December 31, 2024 and 2023, and 99% of total product sales during both of the nine-month periods ended September 30, 2025 and 2024. Our primary customers for the majority of our product sales (86% and 91% during the years ended December 31, 2024 and 2023, respectively, and 87% and 88% during the nine-month periods ended September 30, 2025 and 2024, respectively), are in the U.S. dairy and beef industries. The concentration of our sales from one product into just two markets (the dairy and beef markets) is a risk to our business. The animal health distribution segment has been aggressively consolidating over the last few years, with larger distributors acquiring smaller distributors. A large portion of our product sales (77% and 79% during the years ended December 31, 2024 and 2023, respectively, and 73% and 77% during the nine-month periods ended September 30, 2025 and 2024, respectively), was made to two large distributors. A large portion of our trade accounts receivable (68% and 78% as of September 30, 2025 and December 31, 2024, respectively) was due from these two distributors. We have a good history with these distributors, but the concentration of sales and accounts receivable with a small number of customers does present a risk to us, including risks related to such customers experiencing financial difficulties or altering the basis on which they do business with us in a manner unfavorable to us.

Previous wording

Production capacity constraints: We invested $9.9 million from 2019 to December 31, 2024 to increase our annual production capacity (in terms of annual sales dollars) for theFirst Defense® product line from approximately $16.5 million to approximately $30 million or more based on current selling prices and estimated production yields. We are evaluating plans to further increase our production capacity. While previous capacity expansion investments have proceeded very close to budget, there is a risk of cost overruns in our ongoing projects and any future production expansions that we may undertake, and a risk that we will not be able to achieve our production capacity growth objectives on a timely basis, resulting in a continuing or increasing shortfall in supply to the market. The inability to meet market demand for our products is a risk to our business. The historically large backlog of orders presents a risk that we may have lost customers during this period that are not easily regained now that production output is meeting or exceeding sales demand. Our long-term capital plan to continue to expand theFirst Defense® product line requires ongoing review of equipment capacity and utilization across the manufacturing value stream atBuilding 56 and our leased facilities atBuilding 175A and175B, as well as assessment of costs, functional obsolescence and reliability of equipment. This review and assessment could identify a need to fund unexpected equipment maintenance or replacement costs.

Current wording

Production capacity constraints: We invested $9.9 million from 2019 to December 31, 2024 to increase our annual production capacity (in terms of annual sales dollars) for theFirst Defense® product line from approximately $16.5 million to approximately $30 million or more based on current selling prices and estimated production yields. We are evaluating plans to further increase our production capacity. While previous capacity expansion investments have proceeded very close to budget, there is a risk of cost overruns in our ongoing projects and any future production expansions that we may undertake, and a risk that we will not be able to achieve our production capacity growth objectives on a timely basis, resulting in a continuing or increasing shortfall in supply to the market. The inability to meet market demand for our products is a risk to our business. The prior extended period of product supply shortages may have caused us to lose customers who are not easily regained now that production output is meeting or exceeding sales demand. Our long-term capital plan to continue to expand theFirst Defense® product line requires ongoing review of equipment capacity and utilization across the manufacturing value stream atBuilding 56 and our leased facilities atBuilding 175A and175B, as well as assessment of costs, functional obsolescence and reliability of equipment. This review and assessment could identify a need to fund unexpected equipment maintenance or replacement costs.

Previous wording

Regulatory requirements for theFirst Defense® product line: The USDA-approved formats of ourFirst Defense® product line are sold in the United States subject to a product license from the Center for Veterinary Biologics, USDA, which was first obtained in 1991, with subsequent approvals of line extensions in 2017 and 2018. As a result, our operations are subject to periodic inspection by the USDA, and we are at risk of an unfavorable outcome from such inspections. The potency of serial lots is directly traceable to the original serial used to obtain the product performance claims (the Reference Standard). Due to the unique nature of the label claims, host animal re-testing is not required as long as periodic laboratory analyses continue to support the stability of the stored Reference Standard. To date, these analyses have demonstrated strong stability. However, if the USDA were not to approve requalification of the Reference Standard, additional clinical studies could be required to meet regulatory requirements and allow for continued sales of the product, which could interrupt sales and adversely affect our operating results. Territories outside of the United States may require additional regulatory oversight that we may not be able to meet with our current facilities, processes and resources. There is a risk that we will become subject to regulatory actions in the future, including actions that result in our inability to ship product. In these cases, the resulting interruption in sales could have a material and adverse effect on our operating results.

Current wording

Regulatory requirements for theFirst Defense®* product line:* The USDA-approved formats of our** First Defense**®** **product line are sold in the United States subject to a product license from the Center for Veterinary Biologics, USDA, which was first obtained in 1991, with subsequent approvals of line extensions in 2017 and 2018. As a result, our operations are subject to periodic inspection by the USDA, and we are at risk of an unfavorable outcome from such inspections. The potency of serial lots is directly traceable to the original serial used to obtain the product performance claims (the Reference Standard). Due to the unique nature of the label claims, host animal re-testing is not required as long as periodic laboratory analyses continue to support the stability of the stored Reference Standard. To date, these analyses have demonstrated strong stability. However, if the USDA were not to approve requalification of the Reference Standard, additional clinical studies could be required to meet regulatory requirements and allow for continued sales of the product, which could interrupt sales and adversely affect our operating results. Territories outside of the United States may require additional regulatory oversight that we may not be able to meet with our current facilities, processes and resources. There is a risk that we will become subject to regulatory actions in the future, including actions that result in our inability to ship product. In these cases, the resulting interruption in sales could have a material and adverse effect on our operating results.

Previous wording

Regulatory requirements forRe-Tain**®:*Commercial introduction of this product in the United States requires us to obtain FDA approval. Completing the process of obtaining FDA approval of the pending NADA involves risk. The regulatory development process timeline has been extensive (approximately 18 years from when the product rights were returned to us by a former partner in 2007) and has involved multiple commercial production strategies and multiple submissions of the CMC Technical Section. We received an Incomplete Letter from the FDA regarding this CMC Technical Section during the third quarter of 2022 that clarified the required path to product approval. During May of 2024, we received an Incomplete Letter from the FDA in response to our November of 2023 re-submission. We are working with a qualified contract manufacturer for alignment of the required validations and DP manufacture and have met with the FDA to clarify filing strategy and requirements. Early during the first quarter of 2024, the FDA conducted another pre-approval inspection of our DS facility. This resulted in the issuance of one deficiency as identified on the FDA’s Form 483. Since then, we have cleared the inspectional observation with the FDA. However, our efforts continue to be subject to inspection and approval by the FDA and other factors outside of our control, and there remains a risk that the required FDA approvals of our product and facilities could be further delayed or not obtained. The facility of our contract manufacturer is subject to similar inspectional obligations and is currently working to resolve certain inspectional observations at their facility. International regulatory approvals would be required for sales ofRe-Tain®* outside of the United States, and there is a risk that these approvals would be or become too costly to pursue or be delayed or not obtained.

Current wording

Regulatory requirements forRe-Tain®*:*Commercial introduction of this product in the United States requires us to obtain FDA approval. Completing the process of obtaining FDA approval of the pending NADA involves risk. The regulatory development process timeline has been extensive (approximately 18 years from when the product rights were returned to us by a former partner in 2007) and has involved multiple commercial production strategies and multiple submissions of the CMC Technical Section. We are working with a qualified contract manufacturer for alignment of the required validations and DP manufacture and have met with the FDA to clarify filing strategy and requirements. Early during the first quarter of 2024, the FDA conducted another pre-approval inspection of our DS facility. This resulted in the issuance of one deficiency as identified on the FDA’s Form 483. Since then, we have cleared the inspectional observation with the FDA. However, our efforts continue to be subject to inspection and approval by the FDA and other factors outside of our control, and there remains a risk that the required FDA approvals of our product and facilities could be further delayed or not obtained. The facility of our contract manufacturer is subject to similar inspectional obligations and is currently working to resolve certain inspectional observations at their facility. International regulatory approvals would be required for sales ofRe-Tain® outside of the United States, and there is a risk that these approvals would be or become too costly to pursue or be delayed or not obtained.

Previous wording

Cattle count: The January count of all cattle and calves in the United States had steadily declined from 97,000,000 as of January 1, 2007 to 88,500,000 as of January 1, 2014. Then this figure increased each year, reaching 94,800,000 as of January 1, 2019 before declining to 93,800,000 as of both January 1, 2020 and January 1, 2021. This count continued to decline to 92,100,000 as of January 1, 2022 and to 88,800,000 as of January 1, 2023 and to 87,200,000 as of January 1, 2024. This count dropped to 86,700,000 as of January 1, 2025. The cattle count has not been this low since it was 82,100,000 in 1951. Reflecting seasonal trends, this figure was equal to 102,000,000, 101,000,000, 98,600,000, 95,400,000 and 94,200,000 as of July 1, 2020, 2021, 2022, 2023 and 2025, respectively. The USDA did not make this data point available as of July 1, 2024. A significant decline in the cattle count could negatively affect the size of our addressable market.

Current wording

Cattle count: The January count of all cattle and calves in the United States had steadily declined from 97,000,000 as of January 1, 2007 to 88,500,000 as of January 1, 2014. Then this figure increased each year, reaching 94,800,000 as of January 1, 2019 before declining to 93,800,000 as of both January 1, 2020 and January 1, 2021. This count continued to decline to 92,100,000 as of January 1, 2022, to 88,800,000 as of January 1, 2023 and to 87,200,000 as of January 1, 2024. This count dropped to 86,700,000 as of January 1, 2025. The cattle count has not been this low since it was 82,100,000 in 1951. Reflecting seasonal trends, this figure was equal to 102,000,000, 101,000,000, 98,600,000, 95,400,000 and 94,200,000 as of July 1, 2020, 2021, 2022, 2023 and 2025, respectively (the USDA did not publish this data point for 2024). A significant decline in the cattle count could negatively affect the size of our addressable market.

Previous wording

Herd size: Prior to 1957, there were over 20,000,000 cows in the U.S. dairy herd. Prior to 1986, there were over 10,000,000 cows in the U.S. dairy herd. From 1998 through 2021, the size (annual average) of the U.S. dairy herd ranged from the low of 9,011,000 in 2004 to the high of 9,448,000 in 2021. This average declined to 9,402,000 during the year ended December 31, 2022 and then declined to 9,386,000 during the year ended December 31, 2023. This average declined slightly to 9,342,000 during the year ended December 31, 2024, and then it increased to 9,429,000 during the first six-months of 2025. A significant decline in the herd size could negatively affect the size of our addressable market.

Current wording

Herd size: Prior to 1957, there were over 20,000,000 cows in the U.S. dairy herd. Prior to 1986, there were over 10,000,000 cows in the U.S. dairy herd. From 1998 through 2021, the size (annual average) of the U.S. dairy herd ranged from the low of 9,011,000 in 2004 to the high of 9,448,000 in 2021. This average declined to 9,402,000 during the year ended December 31, 2022 and then declined to 9,386,000 during the year ended December 31, 2023. This average declined slightly to 9,342,000 during the year ended December 31, 2024, and then it increased to 9,451,000 during the first eight-months of 2025. A significant decline in the herd size could negatively affect the size of our addressable market.

Previous wording

Milk cow price: In 2015, the annual average price for a milk cow hit $1,993, which was an all time high. Since then, this annual average value steadily declined to $1,205 during 2019 before increasing to $1,300 during 2020 and to $1,363 during 2021. This price for 2022 increased significantly to an average of $1,598, which is a 17% increase over 2021. The 2023 average price of $1,763 represents a 10% increase over prior year. This price for 2024 increased to an average of $2,243, which is a 27% increase over 2023. In April of 2025, this price increased by 23% over the 2024 average to $2,765. A significant decline in the milk cow price could negatively affect the size of our addressable market.

Current wording

Milk cow price: In 2015, the annual average price for a milk cow hit $1,993, which was an all-time high. Since then, this annual average value steadily declined to $1,205 during 2019 before increasing to $1,300 during 2020 and to $1,363 during 2021. This price for 2022 increased significantly to an average of $1,598, which is a 17% increase over 2021. The 2023 average price of $1,763 represents a 10% increase over prior year. This price for 2024 increased to an average of $2,243, which is a 27% increase over 2023. In July of 2025, this year-to-date average price increased by 27% over the 2024 average to $2,847. A significant decline in the milk cow price could negatively affect the size of our addressable market.

Previous wording

Milk price: The dairy market has been unstable for several reasons including as a result of the pandemic. The price paid to producers for milk has been very volatile. This market volatility, and the resulting impact on our primary end users, could negatively impact our ability to maintain and grow sales at a profitable level. The Class III milk price (an industry benchmark that reflects the value of product used to make cheese) is an important indicator because it defines our customers’ revenue level. This annual average milk price level (measured in dollars per hundred pounds of milk) reached its highest point (since these prices were first reported in 1980) during 2014 at $22.34 (peaking at $24.60 in September of 2014), which price level has never been repeated. During the year ended December 31, 2020, this average milk price was equal to $18.16, but it was extremely volatile during the year due largely to disruption in demand related to the COVID-19 pandemic. The one-month fluctuation of 73% from a low of $12.14 in May of 2020 to $21.04 in June of 2020 set an all-time record for variability. The average price for 2021 decreased by 6% to $17.08. This price average increased by 29% to $21.96 during the year ended December 31, 2022. The average price decreased by 22% to $17.02 during the year ended December 31, 2023. This average price increased by 11% to $18.89 during the year ended December 31, 2024. This average price decreased by 1% to $18.76 during the seven months ended July 31, 2025. The annual fluctuations in this milk price level are demonstrated in the following table:

Current wording

Milk price: The price paid to producers for milk is volatile. This market volatility, and the resulting impact on our primary end users, could negatively impact our ability to maintain and grow sales at a profitable level. The Class III milk price (an industry benchmark that reflects the value of product used to make cheese) is an important indicator because it defines our customers’ revenue level. This annual average milk price level (measured in dollars per hundred pounds of milk) reached its highest point (since these prices were first reported in 1980) during 2014 at $22.34 (peaking at $24.60 in September of 2014), which price level has never been repeated. During the year ended December 31, 2020, this average milk price was equal to $18.16, but it was extremely volatile during the year due largely to disruption in demand related to the COVID-19 pandemic. The one-month fluctuation of 73% from a low of $12.14 in May of 2020 to $21.04 in June of 2020 set an all-time record for variability. The average price for 2021 decreased by 6% to $17.08. This price average increased by 29% to $21.96 during the year ended December 31, 2022. The average price decreased by 22% to $17.02 during the year ended December 31, 2023. This average price increased by 11% to $18.89 during the year ended December 31, 2024. This average price decreased by 2% to $18.57 during the eight months ended August 31, 2025. The annual fluctuations in this milk price level are demonstrated in the following table:

Previous wording

Feed Costs: The actual level of milk prices may be less important than its level relative to feed costs. One measure of this relationship is known as the milk-to-feed price ratio, which represents the amount of feed that one pound of milk can buy. An increase in feed costs also has a negative impact on the beef industry and therefore could have a resulting negative impact on our business and results of operations. This ratio varies farm-to-farm based on individual operating parameters. Since this ratio reached 3.24 in 2005, it has not exceeded 3.00. This ratio averaged 1.74 for 2021, amounting to a significant decline of 25% from the 2020 average of 2.32. This average has not been lower since 2012. During 2022, this ratio improved by 9% to 1.90. This ratio dropped by 12% to 1.67 during the year ended December 31, 2023. This ratio increased to 2.48 during the year ended December 31, 2024, representing an increase of 49%. This ratio decreased to 2.47 during the six-months ended June 30, 2025, representing a decrease of 1% over 2024. The following table demonstrates the annual volatility:

Current wording

Feed Costs: The actual level of milk prices may be less important than its level relative to feed costs. One measure of this relationship is known as the milk-to-feed price ratio, which represents the amount of feed that one pound of milk can buy. An increase in feed costs also has a negative impact on the beef industry and therefore could have a resulting negative impact on our business and results of operations. This ratio varies farm-to-farm based on individual operating parameters. Since this ratio reached 3.24 in 2005, it has not exceeded 3.00. This ratio averaged 1.74 for 2021, amounting to a significant decline of 25% from the 2020 average of 2.32. This average has not been lower since 2012. During 2022, this ratio improved by 9% to 1.90. This ratio dropped by 12% to 1.67 during the year ended December 31, 2023. This ratio increased to 2.48 during the year ended December 31, 2024, representing an increase of 49% over the average for 2023. This ratio decreased slightly to 2.46 during the eight months ended August 31, 2025, representing a decrease of 1% over 2024. The following table demonstrates the annual volatility:

Previous wording

Volatility of the dairy market: While the number of cows in the U.S. herd and the production of milk per cow directly influence the supply of milk, the price for milk is also influenced by very volatile international demand for milk products. Given our focus on the dairy and beef industries, the volatile market conditions and the resulting financial insecurities of our primary end users are risks to our ability to maintain and grow sales at a profitable level. These factors also heighten the challenge of selling premium-priced animal health products (such asTri-Shield® andRe-Tain®) into the dairy market. Additionally, some important trading partners of the U.S. impose tariff and non-tariff barriers to their importation of U.S. dairy products. During 2025, U.S. trade negotiators have increased efforts to reduce such barriers. It presently is unclear whether or to what extent those efforts will result in increased U.S. exports of dairy products, or otherwise affect international demand for milk.

Current wording

Volatility of the dairy market: While the number of cows in the U.S. herd and the production of milk per cow directly influence the supply of milk, the price for milk is also influenced by very volatile international demand for milk products. Given our focus on the dairy and beef industries, the volatile market conditions and the resulting financial insecurities of our primary end users are risks to our ability to maintain and grow sales at a profitable level. These factors also heighten the challenge of selling premium-priced animal health products (such asTri-Shield®** andRe-Tain**®) into the dairy market. Additionally, some important trading partners of the United States impose tariff and non-tariff barriers to their importation of U.S. dairy products. It presently is unclear whether or to what extent ongoing trade negotiations will result in changes in U.S. exports of dairy products, or otherwise affect international demand for milk.

Previous wording

*Dependence on key personnel:*We are a small company with approximately 76 employees (including 7 part-time employees) presently. As such, we rely on certain key employees to support multiple operational functions, with limited redundancy in capacity and skillset. The loss of any of these key employees could adversely affect our operations until a qualified replacement is hired and trained, which could be even more challenging in the present difficult labor market. Our competitive position will be highly influenced by our ability to attract, retain and motivate key scientific, manufacturing, managerial and sales and marketing personnel. The cost of attracting and retaining the needed additional personnel in this current job market and inflationary environment could adversely affect our margins and profitability.

Current wording

*Dependence on key personnel:*We are a small company with approximately 77 employees (including 7 part-time employees) presently. As such, we rely on certain key employees to support multiple operational functions, with limited redundancy in capacity and skillset. The loss of any of these key employees could adversely affect our operations until a qualified replacement is hired and trained, which could be even more challenging in the present difficult labor market. Our competitive position will be highly influenced by our ability to attract, retain and motivate key scientific, manufacturing, managerial and sales and marketing personnel. The cost of attracting and retaining the needed additional personnel in this current job market and inflationary environment could adversely affect our margins and profitability.

Previous wording

*International Conflicts:*International conflicts, including ongoing wars in Ukraine and the Middle East, give rise to uncertainties and stress on the global economy, which in turn can affect the demand for our products and our costs of operation.

Current wording

*International Conflicts:*International conflicts, such as the ongoing war in Ukraine, give rise to uncertainties and stress on the global economy, which in turn can affect the demand for our products and our costs of operation.

Previous wording

Stock market valuation and liquidity: Our common stock trades on The Nasdaq Capital Market (Nasdaq: ICCC). Our average daily trading volume (which was 26,339 shares per day during the 20-day period ended August 7, 2025) is lower, our bid/ask stock price spread can be larger and our share price can be more volatile than what other companies experience. Those factors could result in investors facing difficulty selling their stock for proceeds that they may expect or desire. Our share price as of August 7, 2025 was $6.14. Most companies in the animal health sector have market capitalization values that greatly exceed our market capitalization of approximately $55.5 million as of August 7, 2025. Our product sales during the twelve-month period ended June 30, 2025 were $28.3 million. This means that our market capitalization as of August 7, 2025 was equal to approximately 2 times our sales during the twelve-month period ended June 30, 2025.

Current wording

Stock market valuation and liquidity: Our common stock trades on The Nasdaq Capital Market (Nasdaq: ICCC). Our average daily trading volume (which was 15,801 shares per day during the 20-day period ended October 31, 2025) is lower, our bid/ask stock price spread can be larger and our share price can be more volatile than what other companies experience. Those factors could result in investors facing difficulty selling their stock for proceeds that they may expect or desire. Our share price as of October 31, 2025 was $6.2393. Most companies in the animal health sector have market capitalization values that greatly exceed our market capitalization of approximately $56.4 million as of October 31, 2025. Our product sales during the twelve-month period ended September 30, 2025 were $27.8 million. This means that our market capitalization as of October 31, 2025 was equal to approximately 2.03 times our sales during the twelve-month period ended September 30, 2025.

Previous wording

*Access to raw materials and contract manufacturing services:*Our objective is to maintain more than one source of supply for the components used to manufacture and test our products that we obtain from third parties. However, we may experience difficulty in efficiently acquiring essential supplies. We have significantly increased the number of farms from which we purchase colostrum for theFirst Defense® product line. A significant reduction in farm capacity could make it difficult for us to produce enough inventory to meet customer demand. The specific antibodies that we purify from colostrum for theFirst Defense® product line are not readily available from other sources. We are and will be dependent on our manufacturing facilities and operations in Portland, Maine, along with contract manufactures in some cases, for the production of theFirst Defense® product line andRe-Tain®. We will be dependent on one manufacturer for the supply of syringes forRe-Tain®. We were dependent on our contract manufacturer for the DP formulation and aseptic filling for supply of our Nisin DP through 2024. At present, we have no such agreement in place for future DP supply. Any facility used to perform these services will be subject to FDA inspection and approval, the outcome and timing of which are not within our control. We anticipate that this FDA approval process would take at least two years. The potential alternative options for these services are narrowed considerably because our product cannot be formulated or filled in a facility that also processes traditional antibiotics (i.e., beta lactams). Any significant damage to or other disruption in the services at any of these third-party facilities or our own facilities (including due to lack of financing, regulatory issues or non-compliance) would adversely affect the production of inventory and result in significant added expenses and loss of potential future sales. We anticipate a supply interruption after our Investigational Product use initiative is complete. The extent of the interruption will be subject to the supply timeline from a new contract manufacturing agreement or from our own formulation and aseptic filling facility for DP.

Current wording

Access to raw materials and contract manufacturing services:Our objective is to maintain more than one source of supply for the components used to manufacture and test our products that we obtain from third parties. However, we may experience difficulty in efficiently acquiring essential supplies. We have significantly increased the number of farms from which we purchase colostrum for theFirst Defense® product line. A significant reduction in farm capacity could make it difficult for us to produce enough inventory to meet customer demand. The specific antibodies that we purify from colostrum for the First Defense**® product line are not readily available from other sources. We are and will be dependent on our manufacturing facilities and operations in Portland, Maine, along with contract manufactures in some cases, for the production of theFirst Defense®** product line andRe-Tain**®. We will be dependent on one manufacturer for the supply of syringes forRe-Tain®. We were dependent on our contract manufacturer for the DP formulation and aseptic filling for supply of our Nisin DP through 2024. At present, we have no such agreement in place for future DP supply. Any facility used to perform these services will be subject to FDA inspection and approval, the outcome and timing of which are not within our control. We anticipate that this FDA approval process would take at least two years. The potential alternative options for these services are narrowed considerably because our product cannot be formulated or filled in a facility that also processes traditional antibiotics (i.e., beta lactams). Any significant damage to or other disruption in the services at any of these third-party facilities or our own facilities (including due to lack of financing, regulatory issues or non-compliance) would adversely affect the production of inventory and result in significant added expenses and loss of potential future sales. We anticipate a supply interruption after our Investigational Product use initiative is complete. The extent of the interruption will be subject to the supply timeline from a new contract manufacturing agreement or from our own formulation and aseptic filling facility for DP.