IMMUCELL CORP /DE/

1. BUSINESS OPERATIONS

ImmuCell Corporation (the “Company”, “we”, “us”, “our”) was originally incorporated in Maine in1982 and reincorporated in Delaware in1987, in conjunction with an initial public offering of common stock. We are an animal health company whose purpose is to create scientifically proven and practical products that improve the health and productivity of dairy and beef cattle. We focus on thetwo most critical stages of dairy productivity, those being thefirst 30 days of life and thefirst 30 days of lactation. Our concentrated colostrum and purified Nisin technologies could offer unique animal health solutions during these periods when immunity is at its most vulnerable. As disclosed in Note16, “Segment Information”,one of our business segments is dedicated to Scours and the other is focused on Mastitis. We manufacture and market theFirst Defense® product line, providing** Immediate Immunity**™ to prevent scours in newborn dairy and beef calves. Our product line offersthree formats intwo distinct platforms: veterinary biologics providing protection againstE. coli, coronavirus, and rotavirus, and functional feed products delivering concentrated bioactive colostrum proteins. We are developingRe-Tain® – a treatment for subclinical mastitis in lactating dairy cows. Upon approval, it could represent afirst-of-its-kind new animal drug, unrelated to human-use antibiotics. The governing regulatory authorities are Center for Veterinary Biologics, U.S. Department of Agriculture and American Association of Feed Control Officials forFirst Defense®, and Center for Veterinary Medicine, U.S. Food and Drug Administration forRe-Tain®. We are subject to certain risks including dependence on key individuals andthird-party providers of critical goods and services, competition from other larger companies, the successful sale of existing products and the development of new viable products with appropriate regulatory approvals, where applicable. A combination of the conditions, trends and concerns related to or arising from tariffs, inflation, rising interest rates and potential recessionary conditions in the United States and/or internationally, could have a corresponding negative effect on our business and operations. We are experiencing price increases in key components, supportive services, transportation and other supplies that create upward pressure on costs of goods sold.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

We have prepared the accompanying unaudited financial statements reflecting all adjustments (which are of a normal recurring nature) that are, in our opinion, necessary in order to ensure that the financial statements arenot misleading. We follow accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets Generally Accepted Accounting Principles (GAAP) that we follow to ensure we accurately report our financial condition, results of operations, earnings per share and cash flows. References to GAAP in these footnotes are to the FASBAccounting Standards Codification™ (Codification). We believe that the disclosures are adequate to ensure that the information presented isnot misleading.

(b) Cash and Cash Equivalents

We consider all highly liquid investment instruments that mature withinthree months of their purchase dates to be cash equivalents. Cash equivalents are principally invested in securities backed by the U.S. government. We holdno cash or cash equivalents in excess of Federal Deposit Insurance Corporation (FDIC) limits of $250,000 per financial institution per depositor.

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(c) Trade Accounts Receivable

Accounts receivable are carried at the original invoice amount less an estimate made for credit losses, when applicable. Management determines the allowance for credit losses on a monthly basis by identifying troubled accounts and by using historical experience applied to an aging of accounts and other relevant factors. Accounts receivable are considered to be past due if a portion of the receivable balance is outstanding for more than30 days. Past due accounts receivable are subject to an interest charge. It wasnot necessary to charge interest on past due accounts during thethree-month ornine-month periods ended* September 30, 2025* or2024 because the time past due wasnot significant, and there wasno accrual for such interest charges as of* September 30, 2025* or* December 31, 2024*. As of* September 30, 2025* and* December 31, 2024*, we determined thatno allowance for credit losses was necessary. Accounts receivable are written off when deemed uncollectible. No accounts receivable were written off during thethree-month ornine-month periods ended* September 30, 2025* or2024. Recoveries of accounts receivable previously written off are recorded as income when received. No such recoveries were recorded during thethree-month ornine-month periods ended* September 30, 2025* or2024. See Note3.

(d) Inventory

Inventory includes raw materials, work-in-process and finished goods and is recorded at the lower of cost, on thefirst-in,first-out method, or net realizable value (determined as the estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal and transportation). Work-in-process and finished goods inventories include materials, labor and manufacturing overhead. At each balance sheet date, we evaluate our ending inventories for excess quantities and obsolescence. Inventories that we consider excess or obsolete are written down to estimated net realizable value. Once inventory is written down and a new cost basis is established, it isnot written back up. We believe that supplies and raw materials for the production of our products are available from more thanone vendor or farm. Our policy is to maintain more thanone source of supply for the components used in our products when feasible. See Note4.

(e) Property, Plant and Equipment, net

We depreciate property, plant and equipment on the straight-line method by charges to operations and costs of goods sold in amounts estimated to expense the cost of the assets from the date they arefirst put into service to the end of the estimated useful lives of the assets. The facility we have constructed at33 Caddie Lane to produce the Nisin Drug Substance (DS) forRe-Tain® (Building33) is being depreciated over 39 years from when a Certificate of Occupancy was issued during thefourth quarter of2017. We began depreciating the equipment for our Nisin DS facility when it was placed in service during thethird quarter of2018. Approximately 86% of these assets are being depreciated over 10 years. We began depreciating the leasehold improvements to our newFirst Defense®** production facility at175 Industrial Way (Building175A) over the remainder of the 10-year lease term beginning when a Certificate of Occupancy was issued during thesecond quarter of2020. During Augustof2022, this lease term was extended to* Januaryof2043* in connection with a new lease covering additional space at175 Industrial Way (Building175B). As a result, the net book value of these leasehold improvements as of* August 31, 2022is now being depreciated over the remainder of the extended lease term. Significant repairs to property, plant and equipment that benefit more than a current period are capitalized and depreciated over their useful lives. Insignificant repairs are expensed when incurred. See Notes2*(h) and6 for additional disclosures.

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(f) Operating Leases

We account for our real estate leases using a right-of-use model, which recognizes that at the date of commencement, a lessee has a financial obligation to make lease payments to the lessor for the right to use the underlying asset during the lease term and recognizes a corresponding right-of-use (ROU) asset related to this right. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term. The ROU asset is also adjusted for any lease prepayments made, lease incentives received and initial direct costs incurred. For operating leases with lease payments that fluctuate over the lease term, the total lease costs are recognized on a straight-line basis over the lease term. Our leases, at times,* mayinclude options to extend the term of the lease. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining future lease payments. For all underlying classes of assets, we made an accounting policy election tonot* recognize assets or liabilities for leases with a term oftwelve months or less and to account for all components in a lease arrangement as a single combined lease component. Short-term lease payments are recognized on a straight-line basis. Certain of our lease agreements include variable rent payments, consisting primarily of amounts paid to the lessor based on cost or consumption, such as maintenance and real estate taxes. These costs are recognized in the period in which the obligation is incurred. Because our leases donot specify an implicit rate, we use an incremental borrowing rate based on information available at the lease commencement date to determine the present value of the lease payments. We evaluate our ROU asset for impairment when events or changes in circumstances indicate that the carrying value of the asset* may**not* be recoverable. See Notes2(h) and11 for additional disclosures.

(g) Intangible Assets and Goodwill

We amortize intangible assets on the straight-line method by charges to costs of goods sold in amounts estimated to expense the cost of the assets from the date they arefirst put into service to the end of the estimated useful lives of the assets. We have recorded intangible assets related to customer relationships, non-compete agreements and developed technology, each with defined useful lives. Amounts paid in excess of the fair value of the net assets (including tax attributes) are recorded as goodwill under the acquisition method of accounting. We assess the impairment of intangible assets that have indefinite lives (when applicable) and goodwill (at the reporting unit level) on an annual basis (as of* December 31st) and whenever events or changes in circumstances indicate that the carrying value of the asset may**not* be recoverable. We would record an impairment charge if such an assessment were to indicate that the fair value of such assets was less than the carrying value. Judgment is required in determining whether an event has occurred that* mayimpair the value of goodwill or identifiable intangible assets. Factors that could indicate that an impairment mayexist include significant under-performance relative to plan or long-term projections, significant changes in business strategy and significant negative industry or economic trends. Although we believe intangible assets and goodwill are properly stated in the accompanying financial statements, changes in strategy or market conditions could significantly impact these judgments and require an adjustment to the recorded balance in the future. No goodwill impairments were recorded during thethree*-month ornine-month periods ended* September 30, 2025* or2024. See Notes2(h) and7 for additional disclosures.

(h) Valuation of Long-Lived Assets

We periodically evaluate our long-lived assets, consisting principally of property, plant and equipment, operating lease right-of-use asset and amortizable intangible assets, for potential impairment. In accordance with the applicable accounting guidance for the treatment of long-lived assets, we review the carrying value of our long-lived assets or asset group that is held and used, including intangible assets subject to amortization, for impairment whenever events and circumstances indicate that the carrying value of the assets* maynot* be recoverable. Under the held for use approach, the asset or asset group to be tested for impairment should represent the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. One example of an asset category we are carefully monitoring is property, plant and equipment related toRe-Tain**®.

No impairment was recognized during thethree-month ornine-month periods ended* September 30, 2025* or2024.

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(i) Fair Value Measurements

In** determining fair value measurements, we follow the provisions of Codification Topic820, Fair Value Measurements and Disclosures. Codification Topic820 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. The topic provides a consistent definition of fair value which focuses on an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The topic also prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information and establishes athree-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. As of September 30, 2025 and* December 31, 2024*, the carrying amounts of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, other assets, accounts payable and accrued expenses approximate fair value because of their short-term nature. The amount outstanding under our bank debt facilities is measured at carrying value in our accompanying balance sheets. Our bank debt facilities are valued using Level2 inputs. Thethree-level hierarchy is as follows:

Level1 — Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date.

Level2 — Pricing inputs are quoted prices for similar assets or liabilities, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data.

Level3 — Pricing inputs are unobservable for the assets or liabilities, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

In certain cases, the inputs used to measure fair value* may*fall into different levels of the fair value hierarchy. In such cases, the level of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. We also hold money market accounts in our bank account, which are classified as cash equivalents and measured at fair value. The fair value of these investments is based on their closing published net asset value.

We assess the levels of the investments at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer in accordance with our accounting policy regarding the recognition of transfers between levels of the fair value hierarchy. During thenine-month periods ended* September 30, 2025and2024*, there wereno transfers between levels. As of* September 30, 2025* and* December 31, 2024*, our Level1 assets measured at fair value by quoted prices in active markets consisted of cash and money market accounts. There wereno assets or liabilities measured at fair value on a nonrecurring basis as of* September 30, 2025* and* December 31, 2024*. The carrying values of our cash and money market accounts as of* September 30, 2025* and* December 31, 2024* approximated their fair market values. Due to inflation and the changing interest rate environment, the carrying values of our fixed rate bank debt as of* September 30, 2025* and* December 31, 2024* differed from its fair market values. These fair market values are reflected in the following tables:

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(j) Concentration of Risk

Concentration of credit risk with respect to accounts receivable is principally limited to certain customers to whom we make substantial sales. To reduce risk, we routinely assess the financial strength of our customers and, therefore, believe that our accounts receivable credit risk exposure is limited. We maintain an allowance for potential credit losses when deemed necessary, but historically we havenot experienced significant credit losses related to an individual customer or groups of customers in any particular industry or geographic area. Sales to significant customers that amounted to10% or more of total product sales are detailed in the following table:

Trade accounts receivable due from significant customers that amounted to10% or more of our total trade accounts receivable are detailed in the following table:

(k) Revenue Recognition

We recognize revenue in accordance with Codification Topic606, Revenue from Contracts with Customers (ASC606*). ASC606* is a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers. The core principle is that we recognize the amount of revenue to which we expect to be entitled for the transfer of promised goods or services to customers when a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We conduct our business with customers through valid purchase orders or sales orders which are considered contracts and arenot interdependent onone another. A performance obligation is a promise in a contract to transfer a distinct product to the customer. The transaction price is the amount of consideration we expect to receive under the arrangement. Revenue is measured based on consideration specified in a contract with a customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized when or as the customer receives the benefit of the performance obligation. Product transaction prices on a purchase or sales order are discrete and stand-alone. We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer when product ships to a customer. Amounts due are typically paid approximately30 days from the time control is transferred. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost in costs of goods sold. We donot bill for or collect sales tax because our sales are generally made to distributors and thus our sales to them arenot subject to sales tax. We generally have experienced an immaterial amount of product returns. See Note13 for additional disclosures.

(l) Expense Recognition

We donot incur costs in connection with product sales to customers that are eligible for capitalization. Advertising costs are expensed when incurred, which is generally during the month in which the advertisement is published. All product development expenses are expensed as incurred, as are all related patent costs. We capitalize costs to produce inventory during the production cycle, and these costs are charged to costs of goods sold when the inventory is sold to a customer or is deemed to be in excess or obsolete.

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(m) Income Taxes

We account for income taxes in accordance with Codification Topic740, Income Taxes, which requires that we recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences and carryforwards to the extent they are realizable. We consider future taxable income and feasible tax planning strategies in assessing the need for a valuation allowance against our deferred tax assets at the end of each quarter. If we determine that it is more likely thannot that we will realize our deferred tax assets in the future in excess of the net recorded amount over a reasonably short period of time, a reduction of the valuation allowance would increase income in the period such determination was made. Likewise, if we determine that it is more likely thannot that we willnot realize all or part of our net deferred tax asset in the future, an increase to the valuation allowance would be charged to income in the period such determination was made.

Codification Topic740-10 clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position must meet before being recognized in the financial statements. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service and other taxing authorities. With few exceptions, we areno longer subject to income tax examinations by tax authorities for years before2021. We have evaluated the positions taken on our filed tax returns and have concluded thatno uncertain tax positions existed as of* September 30, 2025* or* December 31, 2024*. Although we believe that our estimates are reasonable, actual results could differ from these estimates. See Note15.

(n) Stock-Based Compensation

We account for stock-based compensation in accordance with Codification Topic718, Compensation-Stock Compensation, which generally requires us to recognize non-cash compensation expense for stock-based payments using the fair-value-based method. The expected life is calculated utilizing the simplified method, which uses the mid-point between the weighted average vesting period and the contractual term as the expected life. The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model and is recognized as compensation expense on a straight-line basis over the requisite service period for awards subject to time vesting conditions. Accordingly, we recorded compensation expense pertaining to stock-based compensation of $73,161 and $77,557 during thethree-month periods ended* September 30, 2025and2024*, respectively, and $192,090 and $256,688 during thenine-month periods ended* September 30, 2025and2024*, respectively. See Note12.

(o) Net (Loss) Income Per Common Share

Net (loss) income per common share has been computed in accordance with Codification Topic260-10, Earnings Per Share. The basic net income per share has been computed by dividing net income by the weighted average number of common shares outstanding during the period. The diluted net income per share has been computed by dividing net income by the weighted average number of shares outstanding during the period, plus all outstanding stock options with an exercise price that is less than the average market price of the common stock during the period, less the number of shares that could have been repurchased at this average market price, with the proceeds from the hypothetical stock option exercises and proceeds from unrecognized compensation. Inno event can the diluted number of common shares outstanding be less than the weighted average number of common shares outstanding. The basic net (loss) per share and the diluted net (loss) per share have been computed by dividing the net (loss) by the weighted average number of common shares outstanding during the period. All stock options are excluded from the denominator in the calculation of dilutive earnings per share when we are in a loss position because their inclusion would be anti-dilutive.

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(p) Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Although we regularly assess these estimates, actual amounts could differ from those estimates and are subject to change in the near term. Changes in estimates are recorded during the period in which they become known. Significant estimates include our valuation of inventory, certain other assets related toRe-Tain®, deferred tax assets and costs of goods sold.

(q) New Accounting PronouncementsNot Yet Adopted

In* Novemberof2024,* the FASB issued ASU2024-03, Disaggregation of Income Statement Expenses, to provide disaggregated disclosures of specific expense categories underlying all relevant income statement expense line items on an annual and interim basis. The disclosure requirements will be applied on a prospective basis, with the option to apply it retrospectively. The effective date for the standard is for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027.Early adoption is permitted. We are evaluating ASU2024*-03 to determine its impact on our financial statements.

In* Decemberof2023,* the FASB issued ASU2023-09*, Income Taxes (Topic740): Improvements to Income Tax Disclosures*, which includes amendments that enhance income tax disclosures, primarily through standardization and disaggregation of income tax rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after* December 15, 2024,with early adoption permitted, and maybe applied either prospectively or retrospectively. We are currently evaluating ASU2023*-09 to assess the impact on our financial statement disclosures and to determine the transition method in which the new guidance will be adopted.

3. TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable amounted to $2,554,766 and $3,771,133 as of* September 30, 2025* and* December 31, 2024*, respectively. No allowance for credit losses or product returns was recorded as of* September 30, 2025* or* December 31, 2024*. We consider a broad range of information to estimate credit losses. Historically, we have experienced a very low level of credit loss expense, and most of our trade receivables are collected by the due date or within a few days of the due date. We anticipateno future events or conditions that would impact our ability to collect our accounts receivable. Because of the generally short duration from the balance sheet date to the date of collection, our collection rate isnot expected to be significantly impacted by events occurring after the balance sheet date. The trade accounts receivable balances included $22,387 and $52,097 due from a related party as of* September 30, 2025* and* December 31, 2024*, respectively. See Note17.

4. INVENTORY

Inventory consisted of the following:

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5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

6. PROPERTY, PLANT AND EQUIPMENT, net

Property, plant and equipment consisted of the following:

As of* September 30, 2025* and* December 31, 2024*, construction in progress consisted principally of payments toward theFirst Defense® production capacity expansion project and equipment needed to bring the formulation and aseptic filling forRe-Tain® in-house. The costs associated with property, plant and equipment disposals were $1,406,194 and $49,652 during thethree-month periods ended* September 30, 2025and2024*, respectively, and $1,542,599 and $120,814 during thenine-month periods ended* September 30, 2025and2024*, respectively. Depreciation expense was $674,314 and $670,346 during thethree-month periods ended* September 30, 2025and2024*, respectively, and $2,008,958 and $1,999,005 during thenine-month periods ended* September 30, 2025and2024*, respectively.

7. INTANGIBLE ASSETS

Intangible assets of $191,040 were valued using the relief from royalty method and are being amortized to costs of goods sold over their useful lives, which are estimated to be 10 years. Intangible amortization expense was $4,776 during both of thethree-month periods ended* September 30, 2025and2024* and $14,328 during both of thenine-month periods ended* September 30, 2025and2024*. The net value of these intangibles was $4,776 and $19,104 as of* September 30, 2025* and* December 31, 2024*, respectively. Intangible asset amortization expense is estimated to be $19,104 during the year ending* December 31, 2025*.

Intangible assets as of* September 30, 2025* consisted of the following:

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Intangible assets as of* December 31, 2024* consisted of the following:

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

9. BANK DEBT

Loans #1 and#2**: During thefirst quarter of2020, we closed on a debt financing with Maine Community Bank (formerly known as Gorham Savings Bank) (MCB) aggregating $8,600,000, which was comprised of a $5,100,000 mortgage note (Loan*#1*) that bears interest at a fixed rate of 3.50% per annum (with a 10-year term and 25-year amortization schedule and a balloon principal payment of $3,145,888 due during thefirst quarter of2030) and a $3,500,000 note (Loan*#2*) that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). The proceeds from the2020 debt refinancing were used to repay all bank debt outstanding at the time of closing and to provide some additional working capital. During thefirst quarter of2022, we closed on an additional $2,000,000 in mortgage debt, which bears interest at the fixed rate of 3.58% per annum. This was accomplished through an amendment of the original mortgage note (Loan*#1*) that increased the then outstanding principal balance from $4,233,957 to $6,233,957 bearing interest at the blended fixed rate of 3.53% per annum. This increased the balloon payment from $3,145,888 to $3,687,726 and extended the due date of the balloon payment from thefirst quarter of2030 to thefirst quarter of2032.

Line of Credit (LOC): During thefirst quarter of2020, MCB extended a*$1,000,000* LOC to us, which was extended during thethird quarter of2025, such that it is available, as needed, through* September 11, 2026.Interest on borrowings against the LOC is variable at the National Prime Rate per annum. There wasno outstanding balance under this LOC as of September**30,* 2025 or* December 31, 2024.*

Loan#3**: During thesecond quarter of2020, we received a loan from the Maine Technology Institute (MTI) in the aggregate principal amount of $500,000. Thefirst 2.25 years of this loan were interest-free withno interest accrual or required principal payments. Beginning during thefourth quarter of2022, Loan*#3* became subject to quarterly principal and interest payments at a fixed rate of 5% per annum over the final five years of the loan, through thethird quarter of2027 ifnot repaid before then.

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Loan#4**: During thefourth quarter of2020, we closed on a $1,500,000 note with MCB that bears interest at a fixed rate of 3.50% per annum (with a 7-year term and amortization schedule). Proceeds of $624,167 were used to prepay a portion of the outstanding principal on our mortgage note (Loan*#1*), which reduced the outstanding balance to 80% of the most recent appraised value of the property securing the debt, which allowed MCB to release the $1,400,000 that had been held in escrow. The remaining proceeds were available for general working capital purposes.

Loan#5**: On* June 30, 2021,we executed definitive agreements covering asecond* loan from the MTI in the aggregate principal amount of $400,000, proceeds from which were received in* Julyof2021.* Thefirst two years of this loan were interest-free withno interest accrual or required principal payments. Principal and interest payments at a fixed rate of 5% per annum are due quarterly over the final 5.5 years of the loan, beginning during thethird quarter of2023 and continuing through thefourth quarter of2028 ifnot repaid before then.

Loan#6: During thethird quarter of2023, we closed on a $2,000,000 term loan bearing interest at a fixed rate of 7% per annum from MCB. The Finance Authority of Maine (FAME) provided $1,000,000 of loan insurance to MCB. This loan was repayable under a 7-year amortization schedule with a balloon payment of $1,285,029 due during thethird quarter of2026. This loan was refinanced during thethird quarter of2025 utilizing the proceeds from Loan#8 discussed below.

Loan#7:** Also during thethird quarter of2023, we closed on a $1,000,000 term loan bearing interest at a fixed rate of 8% per annum from FAME. The loan was repayable under a 7-year amortization schedule with a balloon payment of $649,267 due during thethird quarter of2026. This loan was refinanced during thethird quarter of2025 utilizing the proceeds from Loan*#8* discussed below.

Loan#8:** During thethird quarter of2025, we refinanced some of our bank debt. The principal amount of approximately $1,525,852 outstanding as of the closing date under Loan*#6* and the principal amount of approximately $768,209 outstanding as of the closing date under Loan*#7* were both refinanced intoone MCB loan with a principal amount of $2,327,119 bearing interest at a fixed rate of 6.5% per annum. This interest rate is reduced from 7% on Loan*#6* and from 8% on Loan*#7.* This refinancing removes the balloon principal payments that were due in* Julyof2026* under both Loans*#6* and*#7.* Principal and interest payments under the new loan of $45,637 per month are due over afive-year term ending during thethird quarter of2030.

Loans*#1,* #2, #4 and*#8* are secured by liens on substantially all of our assets and are subject to certain restrictions and financial covenants. Reflecting our poor financial performance during2023 and into thefirst nine months of2024, the debt service covenant (DSC) requirements for thetwelve-month periods ended* December 31, 2023,** June 30, 2024,** September 30, 2024and December 31, 2024were waived pre-emptively by our lenders. We are required to meet a minimum DSC ratio of 1.35 for the year ending December 31, 2025and annually thereafter. In connection with our credit facilities, we incurred aggregated debt issuance and debt discount costs of $97,522 and $173,305 as of September 30, 2025and December 31, 2024,respectively. The amortization of these debt issuance and debt discount costs is being recorded as a component of interest expense, included in other expenses, net, on the statements of operations, and is being amortized on a straight-line basis over the underlying terms of the notes. Loans#3* and*#5* are unsecured and subordinated to our indebtedness to MCB. Failure to make timely payments of principal and interest, or otherwise to comply with the terms of the agreements of Loans*#3* and*#5,* would entitle the MTI to accelerate the maturity of such debt and demand repayment in full. These loans* may*be prepaid without penalty at any time.

Debt proceeds received and principal repayments made (excluding our $1,000,000 line of credit) are reflected by loan during the periods as described in the tables below:

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Principal payments (net of debt issuance and debt discount costs) due under bank loans outstanding as of* September 30, 2025* (excluding our*$1,000,000* line of credit) are reflected in the following table by the year that payments are due:

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10. CONTINGENT LIABILITIES AND COMMITMENTS

Our bylaws, as amended, in effect provide that the Company will indemnify its officers and directors against any liability arising from their responsibilities as officers and directors to the maximum extent permitted by Delaware law. In addition, we make similar indemnity undertakings with each director through a separate indemnification agreement with that director. The maximum payment that we* maybe required to make under such provisions is theoretically unlimited and is impossible to determine. We maintain directors’ and officers’ liability insurance, which mayprovide reimbursement to the Company for payments made to, or on behalf of, officers and directors pursuant to the indemnification provisions. Our indemnification obligations were grandfathered under the provisions of Codification Topic460**, Guarantees*. Accordingly, we have recordedno liability for such obligations as of* September 30, 2025* or* December 31, 2024*. Since our incorporation, we have hadno occasion to make any indemnification payment to any of our officers or directors for any reason.

The development, manufacturing and marketing of animal health and nutrition products entails an inherent risk that liability claims will be asserted against us during the normal course of business. We are aware ofno such claims against us as of the time of this filing on* November 13, 2025.*We believe that we have reasonable levels of liability insurance to support our operations.

We enter into agreements withthird parties in the ordinary course of business under which we are obligated to indemnify suchthird parties from and against various risks and losses. The precise terms of such indemnities vary with the nature of the agreement. In many cases, we limit the maximum amount of our indemnification obligations, but in some cases those obligations* maybe theoretically unlimited. We havenot incurred material expenses in discharging any of these indemnification obligations and based on our analysis of the nature of the risks involved, we believe that the fair value of the liabilities potentially arising under these agreements is minimal. Accordingly, we recordedno liabilities for such obligations as of September 30, 2025* or* December 31, 2024*.

We plan to purchase certain key parts (syringes) and services (formulation, aseptic filling and final packaging) pertaining toRe-Tain® Drug Product (DP), our Nisin-based intramammary treatment of subclinical mastitis in lactating dairy cows, exclusively from contractors. The contract for formulation, aseptic filling and final packaging of DP terminated on* November 30, 2024.This contract was extended through Marchof2026* for the purpose of final packaging of existing DP inventory, but this contract extension doesnot anticipate the production of new DP inventory. During2019, we initiated an investment in the necessary equipment to perform the DP formulation and aseptic filling services in-house, but this investment is paused at the present time.

Effective* March 28, 2022,we entered into an Amended and Restated Separation and Deferred Compensation Agreement (the “Deferred Compensation Agreement”) with Mr. Brigham (our then current CEO) that superseded and replaced in its entirety a Marchof2020* severance agreement between the Company and Mr. Brigham. Upon separation from the Company for any reason, Mr. Brigham’s Deferred Compensation Agreement allows Mr. Brigham to be paid, among other amounts, all earned and unused paid time off. Accordingly, an expense of $222,379 for earned and unpaid sick time was accrued during thefirst quarter of2022 and a related accrual of $239,369 and $230,162 was included in accounts payable and accrued expenses as of* September 30, 2025and December 31, 2024,respectively. Additionally, Mr. Brigham was paid $300,000 in deferred compensation during thefirst* quarter of2025 (which was accrued over thethree-year period ending in* Decemberof2024*). This deferred compensation payment vested as to $300,000, $200,000 and $100,000 on* January 1, 2025,2024 and2023, respectively. Deferred compensation of $0 and $300,000 was included in accounts payable and accrued expenses on the accompanying balance sheets as of September**30,* 2025 and* December 31, 2024,*respectively. In addition, upon termination of Mr. Brigham’s employment (a) by the Company other than for cause, (b) due to death or disability or (c) by Mr. Brigham for good reason, in each case as described and defined in the Deferred Compensation Agreement, the Company agrees to pay Mr. Brigham 100% of his then current annual base salary and a lump sum payment equal to the employer portion of the costs of continued health benefits for Mr. Brigham and his covered dependents for atwelve-month period following termination, and certain equity incentive awards granted to Mr. Brigham would continue to vest following such termination in accordance with the terms of the Deferred Compensation Agreement.

As of* September 29, 2025,we entered into an employment agreement with Mr. te Boekhorst (effective upon commencement of employment as Company President and Chief Executive Officer starting November 1, 2025)under which he will receive an annual base salary of $450,000. He also will be entitled to earn annual cash bonuses of up to an additional $400,000 per year subject to the Company having achieved financial improvement targets from the prior year set in advance by the Company’s Board of Directors or its Compensation and Stock Option Committee. The targets for2026* are anticipated to be negotiated between Mr. te Boekhorst and the Compensation and Stock Option Committee in thefirst quarter of2026 after financial results for the2025 fiscal year are available. Subsequent to* September 30, 2025,he also received aone*-time $100,000 signing bonus upon commencement of employment (subject to repayment by him in certain events involving cessation of employment withinone year of commencement). As an inducement to employment, the Compensation and Stock Option Committee awarded him stock options, intwo installments, to purchase 150,260 shares of the Company’s common stock, of which 75,983 were granted as of* September 30, 2025and 74,277 were granted on November 7, 2025.Neither grant of stock options is immediately exercisable but instead will vest on the basis of continued employment, inthree* equal annual increments starting on thefirst anniversary of their respective grant dates (except that upon a change in control, as defined, all then outstanding unvested equity awards, including these awards, will immediately vest in full). Both option issuances have a 10-year term. In the event the Company terminates Mr. te Boekhorst’s employment without cause or he terminates his employment for good reason (each as defined), he will become eligible for severance compensation consisting ofone year’s base annual salary, up to12 months of COBRA cost reimbursement, up to12 months of accelerated vesting of his outstanding stock options, and an extended period (24 months) within which to exercise his vested stock options.

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Incentive compensation agreements* may*be entered into with Mr. te Boekhorst (our President and Chief Executive Officer), Mr. Brigham, Ms. Brockmann (our Vice President of Sales and Marketing) and Mr. Fiori (our Chief Financial Officer), which, at times, allow these executives to earn incentive compensation if certain operational and financial objectives are met during the year to which the agreement relates, as specified in their agreements. Amounts related to these incentive compensation agreements are accrued over the period they are earned (when it is probable that the amounts will be earned) based on our best estimate of the amounts expected to be earned.

In addition to the commitments discussed above, we had committed $65,000 for theFirst Defense® product line, $1,318,000 to the purchase of inventory, $258,000 to information technology services and $614,000 for other obligations as of* September 30, 2025*.

11. OPERATING LEASES

On* September 12, 2019,we entered into a lease covering approximately 14,300 square feet of office and warehouse space with a possession date of November 15, 2019and a commencement date of February 13, 2020.The property is located at175* Industrial Way in Portland (Building175A), which is a short distance from our headquarters and manufacturing facility at56 Evergreen Drive (Building56). We renovated this space to meet our needs in expanding our production capacity for theFirst Defense® product line. The original lease term wasten years with a right to renew for asecond 10-year term and a right offirst offer to purchase. At the time we entered into this lease, we werenot reasonably assured that we would exercise this renewal option in place of other real estate options. For that reason, a10-year period was reflected in the right-of-use (ROU) asset and lease liability on our balance sheet. During thethird quarter of2022, we committed to lease an additional 15,400 square feet of space at175 Industrial Way (Building175B), which is connected to the original space, over a 20-year term. The ROU asset and lease liability for the committed space atBuilding175B was recorded as of* April 1, 2023after construction of the building shell was completed in accordance with the lease agreement. Monthly lease payments commenced as of August 1, 2023.In connection with the lease commitment for space at**Building175B,* the term of the original lease forBuilding175A** was extended by approximately 13 years. On* November 14, 2023,** June 11, 2024and September 20, 2024,we amended this lease further to provide for certain tenant improvements on the leased premises to be paid for by our landlord. These improvements provided heat to an unfinished space, provided additional warehouse space and created a new primary shipping and receiving facility. As a result of thesethree* amendments and in consideration for the landlord agreeing to pay for the cost of those certain tenant improvements, we agreed to make additional rent payments of $20,000 per month from* Novemberof2023* through* Juneof2025* and aone-time additional rent payment of $248,743 in* Julyof2025.* Because of these modifications to the lease payments, the ROU asset and lease liability associated with the space atBuilding175B were remeasured as of the modification dates. Our leases include variable non-lease components. Such payments primarily include common area maintenance charges. As of* September 30, 2025*, the balance of the operating lease ROU asset was $4,419,527 and the operating lease liability was $4,115,122. As of* December 31, 2024*, the balance of the operating lease ROU asset was $4,560,679 and the operating lease liability was $4,561,174. The calculated amount of the ROU asset and lease liability is impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. We electednot to separate lease and non-lease components for all classes of underlying assets, and instead to account for them as a single lease component. Variable lease cost primarily represents variable payments such as real estate taxes and common area maintenance. The following tables describe our lease costs and other lease information:

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Future lease payments required under non-cancelable operating leases in effect as of* September 30, 2025* were as follows:

12. STOCKHOLDERS’** EQUITY**

Common Stock Issuances

From* Februaryof2016* to* Aprilof2021,* we sold the aggregate of 4,553,017 shares of common stock insix different transactions raising gross proceeds of $26,714,403 at the weighted average price of $5.87 per share. These funds have been essential to funding our business growth plans.

On* April 9, 2024,our shelf registration on Form S-3 relating to the offer, issuance and sale by the Company of up to $20,000,000 of securities was declared effective by the Securities and Exchange Commission (SEC). Also on April 9, 2024,we entered into an At-The-Market (ATM) Agreement with Craig-Hallum Capital Group LLC, pursuant to which we mayoffer and sell up to $11,000,000 of shares of our common stock. Net proceeds through December 31, 2024* from 1,228,227 shares sold pursuant to the ATM Agreement (net of the upfront legal, accounting and other fees), less sales commissions of $139,562, were $4,356,188. Net proceeds during thenine-month period ended* September 30, 2025* from 63,230 shares sold pursuant to the ATM Agreement (net of legal, accounting and other fees), less sales commissions of $10,489, were $281,446.

Stock Option Plans

In* Juneof2010,* our stockholders approved the2010 Stock Option and Incentive Plan (the*“2010* Plan”), under which employees and certain service providers could be granted options to purchase shares of the Company’s common stock atno less than fair market value on the date of grant. At that time,300,000 shares of common stock were reserved for issuance under the2010 Plan. Awards of stock options were determined by the Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis. All options granted under the2010 Plan expireno later than 10 years from the date of grant. The2010 Plan expired in* Marchof2020,* after which dateno further options could be granted under the2010 Plan. However, options outstanding under the2010 Plan at that time can be exercised in accordance with their terms. As of* September 30, 2025* and* December 31, 2024*, there were 145,500 and 183,500 options, respectively, outstanding under the2010 Plan.

In* Juneof2017,* our stockholders approved the2017 Stock Option and Incentive Plan (the*“2017* Plan”), under which employees and certain service providers* maybe granted options to purchase shares of the Company’s common stock atno* less than fair market value on the date of grant. At that time,300,000 shares of common stock were reserved for issuance under the2017 Plan. In* Juneof2022,* the stockholders approved an amendment to the2017 Plan increasing the number of shares reserved for issuance under the2017 Plan from 300,000 shares to 650,000 shares. This increase was approved by a vote of stockholders at the Annual Meeting of Stockholders in* Juneof2022.* Awards of stock options are determined by the Compensation and Stock Option Committee on a case-by-case basis. All options granted under the2017 Plan expireno later than 10 years from the date of grant. The2017 Plan expires in* Marchof2027,* after which dateno further options can be granted under the2017 Plan. As of* September 30, 2025* and* December 31, 2024*, there were 517,000 and 480,500 options, respectively, outstanding under the2017 Plan, and at* September**30,* 2025 100,000 shares remained available for future stock option grants under the2017 Plan.

Subsequent Developments

The Board of Directors, on* November 7, 2025,adopted a new2025* Stock Option and Incentive Plan (the*“2025* Plan”), under which employees, directors and other service providers* maybe granted options to purchase shares of the Company’s common stock atno* less than fair market value on the date of grant. At that time,500,000 shares of common stock were reserved for issuance under the2025 Plan. The Board intends to submit the2025 Plan to stockholders for approval at the2026 Annual Meeting of Stockholders. If for any reason the2025 Plan isnot approved by vote of the Company’s stockholders within12 months after the date of the Plan’s adoption by the Board, then with limited exceptions all stock options previously granted under that Plan would, by their terms and consistent with Nasdaq Listing Rules, lapse and become non-exercisable.

In* September 2025,the Board of Directors authorized the award of stock options, intwo* separate installments, to Mr. te Boekhorst as a material inducement to accept employment by the Company as President and Chief Executive Officer. Thefirst installment was granted to him by the Compensation and Stock Option Committee on* September 16, 2025 (concurrent with his signing an offer letter setting out preliminary terms of employment). That award was in the form of non-qualified stock options for 75,983 shares of the Company’s common stock, with an exercise price of $5.90 per share. Thesecond* award is a mix of incentive stock options and non-qualified options granted by the Compensation and Stock Option Committee on* November 7,*2025 under the2025 Stock Option Plan, and was for 74,277 shares of common stock at an exercise price of $6.10 per share. Thesetwo awards met the conditions of an inducement award under Nasdaq Listing Rule5635(c) and thus are exempt from the stockholder approval requirements under that Rule.

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Activity under the stock option plans described above was as follows:

The following table displays additional information about the stock option plans described above:

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During thethree-month period ended* September 30, 2025*, no stock options were exercised. During thenine-month period ended* September 30, 2025*,one director exercised stock options covering 15,000 shares by the surrender of 11,470 shares of common stock with a fair market value of $72,146 at the time of exercise and the payment of $3.70 in cash. The aggregate intrinsic value of options exercised during thenine-month period ended* September 30, 2025*, and the year ended* December 31, 2024*, approximated $22,200 and $0, respectively. No stock options were exercised during thethree-month andnine-month periods ended* September 30, 2024*. The weighted average remaining life of the options outstanding as of* September 30, 2025* was approximately5 years and5 months. The weighted average remaining life of the options exercisable under these plans as of* September 30, 2025* was approximately3 years and5 months. The exercise price of the options outstanding under these plans as of* September 30, 2025*, ranged from $3.60 to $10.04 per share. The weighted-average grant date fair values of options granted during thenine-month periods ended* September 30, 2025and2024* were $3.02 and $1.72 per share, respectively. As of* September 30, 2025*, total unrecognized stock-based compensation related to non-vested stock options aggregated $717,859 which will be recognized over a weighted average remaining period of approximately1 year and 10 months. The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model, for the purpose discussed in Note2(n), with the following weighted-average assumptions:

Common Stock Rights Plan

In* Septemberof1995,* our Board of Directors adopted a Common Stock Rights Plan (the “Rights Plan”) and declared a dividend ofone common share purchase right (a “Right”) for each of the then outstanding shares of the common stock of the Company. Each Right entitled the registered holder to purchase from the Companyone share of common stock at an initial purchase price of $70.00 per share, subject to adjustment. The description and terms of the Rights were set forth in a Rights Agreement between the Company and Equiniti Trust Company, LLC, as Rights Agent. At various times over the years, our Board of Directors, which has the authority to amend the Rights Plan, voted to authorize amendments to the Rights Plan to extend the expiration date of the Rights Plan. During2024, our Board of Directors determinednot to further extend the Rights Plan because these plans are generally considerednot to be stockholder friendly. Withno further extension, the Rights Plan expired as of* September 19, 2024.*No shares were issued under the Rights Plan while it was in effect.

13. REVENUE

We primarily offer theFirst Defense® product line to dairy and beef producers to prevent scours in newborn calves. This line offerstwo distinct platforms: veterinary biologics providing scours protection againstE. coli, coronavirus, and rotavirus and functional feed products delivering concentrated bioactive colostrum proteins. Generally, our products are promoted to veterinarians as well as dairy and beef producers by our sales team and then sold through distributors. Our primary market is North America. We do sell into select international regions and* mayexpand this international reach in the future. There wereno* material changes between the allocation and timing of revenue recognition during thethree-month ornine-month periods ended* September 30, 2025* or2024. We donot have any contract assets for which we have satisfied the performance obligations, but donot yet have the right to bill for, or contract liabilities such as customer advances. All trade receivables on our balance sheets are from contracts with customers. We incurno material costs to obtain contracts.

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The following table presents our product sales disaggregated by geographic area:

The following table presents our product sales disaggregated by major product category:

14. OTHER (EXPENSES) INCOME, NET

Other (expenses) income, net consisted of the following:

15. INCOME TAXES

Our income tax expense aggregated $4,456 and $1,340 (amounting to 3% and less than 1% of our loss before income taxes) during thethree-month periods ended* September 30, 2025and2024*, respectively, and $8,264 and $4,020 (amounting to less than 1% of our income (loss) before income taxes) during thenine-month periods ended* September 30, 2025and2024*, respectively. As of* December 31, 2024*, we had federal net operating loss carryforwards of $17,660,934 of which $16,055,226 donot expire and of which $1,605,708 expire in2037 (ifnot utilized before then) and state net operating loss carryforwards of $7,764,377 of which $7,513,712 donot expire and of which $250,665 expire in2037 (ifnot utilized before then). Additionally, we had federal general business tax credit carryforwards of $856,303 that expire in2027 through2044 (ifnot utilized before then) and state tax credit carryforwards of $952,145 that expire in2025 through2039 (ifnot utilized before then).

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The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the estimated future tax effects of temporary differences between book and tax treatment of assets and liabilities and carryforwards to the extent they are realizable. During thesecond quarter of2018, we assessed our historical and near-term future profitability and recorded $563,252 in non-cash income tax expense to create a full valuation allowance against our net deferred tax assets (which consist largely of net operating loss carryforwards and federal and state credits) based on applicable accounting standards and practices. At that time, we had incurred a net loss forsix consecutive quarters, hadnot been profitable on a year-to-date basis since thenine-month period ended* September 30, 2017and projected additional net losses for some period going forward before returning to profitability. Should future profitability be realized at an adequate level, we would be able to release this valuation allowance (resulting in a non-cash income tax benefit) and realize these deferred tax assets before they expire. We will continue to assess the need for the valuation allowance at each quarter and, in the event that actual results differ from these estimates, or we adjust these estimates in future periods, we may*need to adjust our valuation allowance. Currently, we adjust the valuation allowance at the end of each quarter to reduce the value of our deferred tax assets to zero.

Net operating loss carryforwards, credits, and other tax attributes are subject to review and possible adjustment by the Internal Revenue Service. Section382 of the Internal Revenue Code contains provisions that could place annual limitations on the future utilization of net operating loss carryforwards and credits in the event of a change in ownership of the Company, as defined.

We file income tax returns in the U.S. federal jurisdiction and several state jurisdictions. We currently haveno tax examinations in progress. We also havenot paid additional taxes, interest or penalties as a result of tax examinations nor do we have any unrecognized tax benefits for any of the periods in the accompanying unaudited financial statements.

16. SEGMENT INFORMATION

Our business operations (being the development, manufacture and sale of products that improve the health and productivity of dairy and beef cattle) are described in Note1. Pursuant to Codification Topic280, Segment Reporting, we operate in the followingtwo reportable business segments: i) Scours** and ii) Mastitis. The Scours segment consists of theFirst Defense**® product line. The core technology underlying the Scours segment is focused on polyclonal antibodies derived from hyperimmunized bovine colostrum. The Mastitis segment includes our products,CMTandRe-Tain®.Re-Tain®** **is projected to be the driver of this segment upon approval for sale. The core technology underlying the Mastitis segment is focused on a bacteriocin called Nisin. The category we define as “Other” includes unallocated administrative and overhead expenses and other products. The significant accounting policies of these segments are described in Note2. Product sales are the primary factor we use in determining our reportable segments. Management monitors and evaluates segment performance from sales to net operating income (loss) closely. We arenot organized by geographic region.No segments have been aggregated. The revenues and expenses allocated to each segment are in some cases direct and in other cases involve reasonable and consistent estimations by management. Each operating segment is defined as the component of our business for which financial information is available and evaluated regularly by our chief operating decision-maker in deciding how to allocate resources and in assessing performance. Our chief operating decision-maker is our President and CEO.

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17. RELATED PARTY TRANSACTIONS

David S. Tomsche (Chair of our Board of Directors) is a controlling owner of Leedstone Inc., a domestic distributor of our products (theFirst Defense® product line andCMT). His affiliated company purchased $212,666 and $119,455 of products from us during thethree-month periods ended* September 30, 2025and2024,* respectively, and $674,669 and $390,322 of products from us during thenine-month periods ended* September 30, 2025and2024*, respectively, all on terms consistent with those offered to other distributors of similar status. Our accounts receivable (subject to standard and customary payment terms) due from this affiliated company aggregated $22,387 and $52,097 as of* September 30, 2025* and* December 31, 2024*, respectively.

18. EMPLOYEE BENEFITS

We have a401(k) savings plan (the Plan) in which all employees completingone month of service with the Company are eligible to participate. Participants* maycontribute up to the maximum amount allowed by the Internal Revenue Service. We currently match 100% of thefirst* 3% of each employee’s salary that is contributed to the Plan and 50% of the next 2% of each employee’s salary that is contributed to the Plan. Under this matching plan, we paid $48,549 and $55,989 into the Plan for thethree-month periods ended* September 30, 2025and2024*, respectively, and $141,349 and $159,504 for thenine-month periods ended* September 30, 2025and2024*, respectively.

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19. SUBSEQUENT EVENTS

We have evaluated subsequent events through the time of filing on the date we have issued this Quarterly Report on Form10-Q. As of the time of this filing on* November 13, 2025,there areno* material, reportable subsequent events.

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