IMMUCELL CORP /DE/

1. THE COMPANY AND NATURE OF OPERATIONS

ImmuCell Corporation (the “Company”, “we”, “us”, “our”) is an animal health biologics company focused on the development, manufacture and commercialization of products intended to improve the survivability, health and long-term performance of neonatal dairy and beef calves. We primarily manufacture and market the First Defense® product line, providing Immediate Immunity™ to prevent scours in newborn dairy and beef calves. 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 although we do sell into other select international regions. Beginning in the early2000s, we initiated the development of Re-Tain®, our purified Nisin treatment for sub-clinical mastitis in lactating dairy cows. During late2025, we made the decision to focus on First Defense® and pause further investment in Re-Tain® manufacturing.

2. BASIS OF PRESENTATION AND USE OF ESTIMATES AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

We have prepared the accompanying audited financial statements in accordance with Generally Accepted Accounting Principles (GAAP), which requires us to reflect 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. References to GAAP in these footnotes are to the FASBAccounting Standards Codification™ (ASC). We believe that the disclosures are adequate to ensure that the information presented isnot misleading. 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, deferred tax assets, and the impairment of long-lived assets.

Significant Accounting Policies

Cash and Cash Equivalents

We consider all highly liquid investment instruments that mature withinthree months of their purchase dates to be cash equivalents. Our 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.

Trade Accounts Receivable

Accounts receivable are carried at the original invoice amount less an estimate made for credit losses, when applicable. Management determines the current estimate of expected 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. We didnot charge interest on past due accounts during the years ended* December 31, 2025* or2024 because the time past due wasnot significant, and there wasno accrual for such interest charges as of* December 31, 2025* or2024. As of* December 31, 2025and2024*, we determined thatno allowance for credit losses was necessary. Accounts receivable are written off when deemed uncollectible. No accounts receivable were written off during the years ended* December 31, 2025* or2024. Recoveries of accounts receivable previously written off are recorded as income when received. No such recoveries were recorded during the years ended* December 31, 2025* or2024. See Note3, "Trade Accounts Receivable".

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 in excess, expired, or obsolete are written down to their estimated net realizable value. Once inventory is written down and a new cost basis is established, it isnot written back up.

Our policy is to maintain more thanone source of supply for the components used in our products, when feasible. See Note4, "Inventory".

Property, Plant and Equipment, Net

We record property, plant and equipment at cost, which we depreciate on the straight-line method by charges to operating expenses and costs of goods sold from the date they arefirst put into service to the end of the estimated useful lives of the assets.

Leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining 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 and all maintenance are expensed when incurred. See Note6, "Property, Plant and Equipment, Net".

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Operating Leases

We account for our real estate leases under ASC842 Leases, which requires us to recognize a lease liability and corresponding right-of-use (ROU) asset at lease commencement. Our lease liability represents the present value of all non-cancellable fixed future lease payments. 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. 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. The incremental borrowing rate represents the rate for a secured loan with similar terms.

At the commencement date, we adjust the ROU asset for any lease prepayments made, lease incentives received and initial direct costs incurred, when applicable. 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. 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. 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. 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 insignificant during both the years ended* December 31, 2025and2024.* These costs are recognized in the period in which the obligation is incurred. See Note11, "Operating Leases".

Intangible Assets and Goodwill

We amortize intangible assets using 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 the years ended December 31, 2025* or2024. See Note7, "Intangible Assets".

Impairment of Long-Lived Assets

We periodically evaluate our long-lived assets, consisting principally of property, plant and equipment, net, operating lease ROU 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* may**not* 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. If the carrying amount of a long-lived asset group exceeds the related undiscounted future cash flows, we recognize an impairment loss by the amount that the carrying value of the asset exceeds fair value. See Note6, "Property, Plant and Equipment, Net" for discussion of our impairment charge during the year ended* December 31, 2025as well as discussion of idle assets that are being monitored for potential impairment. No other impairments were recognized during the year ended December 31, 2025.There wereno impairments recognized during the year ended December 31, 2024.*

Fair Value Measurements

In determining fair value measurements, we follow the provisions of ASC820, Fair Value Measurements and Disclosures. The ASC 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.

Thethree-level hierarchy is as follows:

Level 1 — Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the measurement date.

Level 2 — 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.

Level 3 — 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.

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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 evaluate assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level at which to classify them for each reporting period. Some nonfinancial assets are measured at fair value only in certain circumstances, including the event of impairment. During the year ended* December 31, 2025,we remeasured certain property, plant and equipment at fair value on a nonrecurring basis using Level3* inputs. The fair value of the manufacturing equipment was determined by estimating the amount of future discounted cash flows expected to be generated from the manufacturing equipment, which represented the current estimate of the salvage value of the manufacturing equipment, since we determined that the assets haveno additional future use or related cash flows aside from the proceeds resulting from their disposal. The salvage value estimates were determined based on quotes provided by an equipment broker. This remeasurement resulted in a $2,667,100 impairment charge related to property, plant and equipment, which is included in other expenses, net on the statement of operation for the year ended* December 31, 2025.See Note6,* "Property, Plant and Equipment, Net" for further discussion. There wereno assets or liabilities measured at fair value on a nonrecurring basis as of* December 31,*2024.

As of* December 31, 2025and2024*, the carrying amounts of 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.

These assets and liability measured at fair value on a recurring basis are reflected in the following tables:

(1)Cash and cash equivalents are stated at nominal value, which equals fair value. A portion of our cash and cash equivalents is invested in money market accounts. The fair value of these investments is based on their closing published net asset value.

(2)Due to inflation and the changing interest rate environment, the carrying values of our fixed rate bank debt as of* December 31, 2025and2024* differed from their fair market values. The amount outstanding under our bank debt facilities is measured at carrying value in our accompanying balance sheets.

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 the years ended* December 31, 2025and2024*, there wereno transfers between levels. We hadno assets or liabilities measured at fair value using level3 inputs as of* December 31, 2025and2024*

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, as a consequence, 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:

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

Revenue Recognition

We recognize revenue in accordance with ASC606, Revenue from Contracts with Customers (ASC606*). ASC606* requires that we recognize the amount of revenue to which we expect to be entitled for the transfer of promised goods to customers when a customer obtains control of promised goods in an amount that reflects the consideration we expect to receive in exchange for those goods.

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, "Revenue".

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. Advertising costs amounted to $109,506 and $35,696 during the years ended* December 31, 2025and2024,* respectively. 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 expired or obsolete.

Income Taxes

We account for income taxes in accordance with ASC740, 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.

ASC740-10 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 before2022. We have evaluated the positions taken on our filed tax returns and have concluded thatno uncertain tax positions existed as of* December 31, 2025* or2024. Although we believe that our estimates are reasonable, actual results could differ from these estimates. See Note15, "Income Taxes".

Share-Based Compensation

We account for share-based compensation in accordance with ASC718, Compensation-Stock Compensation, which generally requires us to recognize non-cash compensation expense for share-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 is 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. See Note12, "Stockholders' Equity".

Earnings Per Share

Net income (loss) per common share has been computed in accordance with ASC260, 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. Stock options are excluded from the denominator in the calculation of dilutive earnings per share when their impact would be anti-dilutive. Outstanding stock options that werenot included in this calculation because the effect would be anti-dilutive amounted to 801,760 and 664,000 during the years ended* December 31, 2025and2024*, respectively.

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(1) All stock options are excluded from the dilutive impact of share-based compensation awards when we are in a loss position because their inclusion would be anti-dilutive.

New Accounting Pronouncement Adopted

In* Decemberof2023,* the Financial Accounting Standards Board (FASB) issued ASU2023-09*, Income Taxes (Topic740): Improvements to Income Tax Disclosures*, which improves the transparency of income tax disclosures requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU2023-09 also includes certain other amendments to improve the effectiveness of income tax disclosures. We adopted ASU2023-09 for the year ended* December 31, 2025,and applied retrospective disclosures for all prior periods presented. The adoption of ASU2023*-09 didnot have a material impact on our financial statements.

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.

3. TRADE ACCOUNTS RECEIVABLE

Historically, we have experienced a very low level of credit loss, and most of our trade receivables are collected by the due date or within a few days of the due date. 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.

Accounts receivable past due more than30 days are subject to an interest charge. We didnot charge interest on past due accounts during the years ended* December 31, 2025* or2024 because the time past due wasnot significant, and there wasno accrual for such interest charges as of* December 31, 2025* or2024.

As of* December 31, 2025and2024*, we determined thatno allowance for credit losses or product returns was necessary. Accounts receivable are written off when deemed uncollectible. No accounts receivable were written off during the years ended* December 31, 2025* or2024. Recoveries of accounts receivable previously written off are recorded as income when received. No such recoveries were recorded during the years ended* December 31, 2025* or2024.

4. INVENTORY

Inventory consisted of the following:

(1) Includes $3,402,201 and $3,590,628 of colostrum on hand as of* December 31, 2025and2024,* respectively.

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

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6. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:

(1)We recognized $2,667,100 in non-cash impairment charges during the year ended* December 31, 2025,related to the write down of machinery that we determined hadno* related future undiscounted cash flows other than the current estimated proceeds from its sale. This determination was made after further delays in FDA regulatory approval of the Company's Re-Tain® product in development. As a result, we decided to focus on First Defense®and pause further investment in Re-Tain® manufacturing, leading to the Companyno longer having a use for the machinery. This impairment charge is included in other expense, net, in the accompanying statement of operations for the year ended* December 31, 2025.No similar impairment was recognized during the year ended December 31, 2024.*

(2) As of* December 31, 2025,property, plant and equipment, net includes approximately $12,300,000 of idle assets, which primarily related toone* of our manufacturing facilities that was previously utilized for Re-Tain® that we now plan to refit for use in producing First Defense® products. We are monitoring these assets for impairment. No impairment was recognized on these assets during the years ended* December 31, 2025or2024.*

As of* December 31, 2025and2024*, construction in progress consisted principally of payments toward the First Defense® production capacity expansion project. Construction in progress also included $2,316,951 of equipment needed to bring the formulation and aseptic filling for Re-Tain® in-house as of* December 31, 2024,which has been written down to its fair value of $200,000 as of December 31, 2025.*

The gross amounts associated with property, plant and equipment disposals were $3,076,911 and $130,365 as of* December 31, 2025and2024,* respectively, resulting in loss on disposal of property, plant and equipment of $106,350 and $15,391 during the years ended* December 31, 2025and2024.*

Depreciation expense was $2,710,497 and $2,668,077 during the years ended* December 31, 2025and2024*, respectively.

7. INTANGIBLE ASSETS

Intangible assets were valued using the relief from royalty method and were amortized to costs of goods sold over their useful lives, which was estimated to be 10 years.

Intangible assets as of* December 31, 2025* consisted of the following:

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

Amortization expense on intangible assets was $19,104 during both of the years ended* December 31, 2025and2024*.

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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 $3,687,751 and extended the due date of the balloon payment from thefirst quarter of2030 to thefirst quarter of2032.

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.

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 the year ended December 31, 2025,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 the year ended* December 31, 2025,utilizing the proceeds from Loan#8* discussed below.

Loan#8: During the year ended December 31, 2025,we refinanced some of our bank debt. The principal amount of $1,525,852 outstanding as of the closing date under Loan#6 and the principal amount of $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, a reduction from both Loan*#6* and Loan*#7.* This refinancing also removed 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. As of* December 31, 2025,we were required to meet a minimum debt service covenant (DSC) of 1.35 for the year and annually thereafter. We are in compliance with these covenants as of December 31, 2025.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.

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Principal payments due under bank loans outstanding as of* December 31, 2025* are reflected in the following table by the year that payments are due:

(1)In connection with these credit facilities, we incurred a total of both debt issuance and debt discount costs as of* December 31, 2025and2024,* of $97,522 and $173,305, respectively. The amortization of these debt issuance costs and debt discount costs is being recorded as a component of interest expense, included in other expenses, net, and is being amortized on a straight-line basis over the underlying terms of the notes.

We maintain a $1,000,000 line of credit (LOC) with MCB, which was extended during thethird quarter of2025 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 December 31, 2025* or2024.

10. COMMITMENTS AND CONTINGENCIES

Litigation and Regulatory

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 ASC460**, Guarantees*. Accordingly, we have recordedno liability for such obligations as of* December 31, 2025* or2024. 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 care 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* March 30, 2026.*

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 December 31, 2025* or2024.

Employee Compensation

Effective* March 28, 2022,we entered into an Amended and Restated Separation and Deferred Compensation Agreement (the “Deferred Compensation Agreement”) with Mr. Brigham (our former President and CEO) that superseded and replaced in its entirety a March 2020severance agreement between the Company and Mr. Brigham. Upon separation from the Company during Januaryof2026,* Mr. Brigham’s Deferred Compensation Agreement allowed Mr. Brigham to be paid, among other amounts, all earned and unused paid time off. Accordingly, a related accrual of $239,369 and $230,162 was included in accounts payable and accrued expenses as of* December 31, 2025and2024*, respectively. Additionally, Mr. Brigham was paid $300,000 in deferred compensation during thefirst quarter of2025, which was included in accounts payable and accrued expenses on the accompanying balance sheet as of* December 31, 2024.As of December 31, 2025,the Company had $100,000 recorded in accounts payable and accrued expenses related to a retention bonus and performance bonus in equal amounts, due to Mr. Brigham in thefirst* quarter of2026.

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* were negotiated between Mr. te Boekhorst and the Compensation and Stock Option Committee in thefirst quarter of2026. 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). 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.

Other Commitments

In addition to the commitments discussed above, we had committed $46,000 to increase our production capacity for the First Defense® product line, $1,326,000 to the purchase of inventory, $269,000 to information technology services, $312,000 to cold storage services, and $527,000 for other obligations as of* December 31, 2025.*

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11. OPERATING LEASES

We have non-cancelable operating lease agreements for certain office and warehouse space through* Januaryof2043.* Minimum lease payments include the fixed lease component of the agreement, as well as fixed rate increases that are initially measured at the lease commencement date. Our lease agreements include variable components such as common area maintenance charges and real estate taxes. Variable lease payments based on consumption and leases with terms less thantwelve months are insignificant and expensed as incurred.

The following table presents our lease assets and liabilities by their balance sheet classification:

(1) During the year ended* December 31, 2025,we made a balloon payment to our landlord in accordance with the terms of the lease agreement, resulting in the significant decrease in the current portion of our operating lease liability as of December 31, 2025.*

The following tables describe our lease costs and other lease information:

(1)We assess the incremental borrowing rate at the commencement date and any subsequent modification dates.

The following table presents supplemental cash and non-cash information:

Future lease payments required under non-cancelable operating leases in effect as of* December 31, 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.

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. Also on April 9, 2024,we entered into an 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. Legal, accounting and other fees in the amount of $152,272 associated with the completion of the shelf registration and the ATM Agreement were initially capitalized and then were offset against the initial proceeds received during thesecond* quarter of2024. Net proceeds through* December 31, 2024from 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 the year ended December 31, 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.

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Stock Option Plans

Under the terms of the Company's2010 Stock Option and Incentive Plan and the2017 Stock Option and Incentive Plan, ("the Plans"), last amended and restated in* Juneof2022,* the Company routinely grants service-based stock options to its employees and certain service providers as share-based compensation. While vesting requirements* maybe determined by the Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis, the majority become exercisable after three years as long as the employee remains employed by the Company. Stock options expireno* later than 10 years from the date of grant. There were 101,000 shares available for grant under the2017 Plan as of* December 31, 2025.*

In* Septemberof2025,* 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, 2025under the2025* Stock Option Plan, and was for 74,277 shares of common stock at an exercise price of $6.10 per share. 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 change in control, as defined, all then outstanding unvested equity awards, will immediately vest in full). 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.

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 the 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 the2025 Plan's adoption by the Board, then with limited expectations all stock options previously granted under the2025 Plan would, by their terms and consistent with Nasdaq Listing Rules, lapse and become non-exercisable.

We recorded compensation expense pertaining to share-based awards of $295,871 and $325,551 during the years ended* December 31, 2025and2024*, respectively.

Stock option activity during the year ended* December 31, 2025,*was as follows:

As of* December 31, 2025,total unrecognized share-based compensation expense related to stock options was $875,883, which will be recognize over a weighted-average remaining term of 1.94 years. The aggregate intrinsic value of options exercised during the year ended December 31, 2025* was insignificant. There wereno stock options exercised during the year ended* December 31, 2024.*

The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model. We* mayuse different assumptions for options granted throughout the year since the assumptions may*vary based on the grant date.

The following table presents the weighted-averages of the assumptions used for grants within each year:

The weighted-average grant date fair value per share for* December 31, 2025and2024* was $3.13 and $1.84, respectively.

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13. REVENUE

We primarily offer the First Defense® product line to dairy and beef producers to prevent scours in newborn calves. This line offerstwo distinct platforms: i) veterinary biologics providing scours protection with USDA-approved claims againstE.coli, coronavirus and rotavirus and ii) 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.

We have determined that each unit within each purchase order we receive from our customers is distinct, can be used on its own, and isnot combined with another promise. As such, each unit constitutes a distinct performance obligation. The transaction price is determined based on the pricing noted within each written contract or provided to customers via standard price lists and with payments typically due in full within30 days of invoicing. Our contracts donot include significant financing components.

We recognize revenue at a point in time, when we invoice at shipment, which is when the customer assumes legal title and we have the right to payment.

There wereno material changes between the allocation and timing of revenue recognition during the years ended* December 31, 2025or2024.*

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

All trade receivables on our balance sheet date are from contracts with customers. As of* January 1, 2024,trade accounts receivable (all of which relates to contracts with customers) totaled $2,185,383. We donot* have any contract assets for which we have satisfied the performance obligation, but donot yet have the right to payment. We donot have any contract liabilities such as upfront customer payments or deferred revenue. We incurno material costs to obtain or fulfill contracts with customers.

14. OTHER EXPENSES, NET

Other expenses net, consisted of the following:

15. INCOME TAXES

Our income tax expense aggregated $11,570 and $10,056 (amounting to 1% and less than 1% of our loss before income taxes) during the years ended* December 31, 2025and2024*, respectively. As of* December 31, 2025*, we had federal net operating loss carryforwards of $17,496,754 of which $16,055,226 donot expire and of which $1,441,528 expire in2034 through2037 (ifnot utilized before then) and state net operating loss carryforwards of $7,670,528 of which $7,513,712 donot expire and of which $156,816 expire in2037 through2038 (ifnot utilized before then). Additionally, we had federal general business tax credit carryforwards of $901,466 that expire in2028 through2045 (ifnot utilized before then) and state tax credit carryforwards of $745,316 that expire in2031 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 financial statements.

As described in Note2, "Basis of Presentations and Use of Estimates and Significant Accounting Policies", additional disclosures below are presented pursuant to the requirements of ASU2023-09. Amounts as of and for the year ended* December 31, 2024,where applicable, were recast to conform with the year ended December 31, 2025,*presentation.

The income tax expense consisted of the following:

The components of loss before taxes are as follows:

Income taxes paid, net of refunds received, by jurisdiction consists of the following:

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The following table reconciles income tax expense computed at the federal statutory rate with income tax expense as reported by category. Additionally, categories of at least5% of the expected tax expense are disaggregated by nature or jurisdiction:

(1)State taxes in California, New York, Pennsylvania, and Minnesota made up the majority of the tax effect in this category.

The following table presents qualitative disclosure of state and local income taxes, net of federal benefit:

The significant components of our deferred tax assets, net, consisted of the following:

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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, "The Company and Nature of Operations". Our chief operating decision-maker (CODM), our President and CEO, regularly evaluatestwo operating segments: i) Scours and ii) Mastitis for purposes of deciding how to allocate resources and assess performance. Our CODM primarily evaluates performance based on product sales as well as net operating income (loss).No operating segments have been aggregated; therefore, ourtwo operating segments are the Company'stwo reportable segments.

Scourssegment - consists of the First Defense® product line. The core technology underlying the Scours segment is focused on polyclonal antibodies.

Mastitissegment - includes our CMT product line, consisting of reagents and equipment used for rapid cow-side testing to identify mastitic quarters by detecting elevated somatic cell counts. This segment also includes our Re-Tain® product in development for the treatment of subclinical mastitis based on the bacteriocin nisin. On* December 23, 2025,*we made the decision to cease our focus on obtaining FDA approval of Re-Tain®and instead continue the stability and investigational testing related to Re-Tain®.

Other- includes unallocated administrative and overhead expenses and other products.

The revenues and expenses allocated to each segment are in some cases direct and in other cases involve reasonable and consistent estimations by management. The significant accounting policies of these segments are the same as those described in Note2, "Basis of Presentation and Use of Estimates and Significant Accounting Policies".

(1) As of* December 31, 2025,property, plant and equipment, net includes approximately $12,300,000 of idle assets, which primarily related toone* of our manufacturing facilities that was previously utilized for Re-Tain® that we now plan to refit for use in producing First Defense® products.

We arenot organized by geographic region.

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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 (the First Defense® product line and CMT). His affiliated company purchased $802,407 and $567,114 of products from us during the years ended* December 31, 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 $0 and $52,097 as of* December 31, 2025and2024*, 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 $189,398 and $203,756 into the Plan for the years ended* December 31, 2025and2024*, respectively.

19. SUBSEQUENT EVENTS

We have evaluated subsequent events through the time of this filing on the date we have issued this Annual Report on Form10-K.

Employee Compensation

Effective as of* January 27, 2026,*the Company entered into new employment agreements with Timothy C. Fiori, the Company’s Chief Financial Officer, and Bobbi Jo Brockmann, the Company’s Senior Vice President of Sales and Marketing.

Pursuant to the new employment agreements, Mr. Fiori will be compensated at an annual base salary of $315,000 and Ms. Brockmann will be compensated at an annual base salary of $300,000. Starting with the fiscal year ending* December 31, 2026,each of Mr. Fiori and Ms. Brockmann will be eligible to earn a formulaic annual cash bonus if various preset financial and strategic targets are achieved. The target cash bonus amount is 50% of base salary (potentially 60% if all targets are exceeded by at least 20%). The financial and strategic targets for2026* were approved by the Compensation and Stock Option Committee of the Company’s Board of Directors (the “Committee”). Per the employment agreements, the annual financial and strategic targets thereafter will be set each year by the Company’s CEO in consultation with the Committee; for targets that are qualitative in nature, the extent to which the qualitative target was achieved is to be determined each year by the Committee. As with other incentive-based compensation, payouts of annual cash bonuses are subject to possible retroactive clawback if and to the extent mandated by Company policy or applicable laws or listing requirements.

Stock Option Plans

In connection with the employment agreements described above, the Committee also approved grants under the*"2025* Plan" of a stock option to Mr. Fiori to purchase up to 120,000 shares of the Company’s common stock and a stock option to Ms. Brockmann to purchase up to 100,000 shares of the Company’s common stock. Both options vest inthree equal annual installments starting in* Januaryof2027,* are exercisable at a price of $6.26 per share, and expire10 years from the date of grant. Consistent with the new employment agreements for these officers, vesting of each stock option is subject to potential acceleration upon a change of control or certain terminations of employment.

Effective as of* January 27, 2026,the Committee issued a Compensation Letter to Olivier te Boekhorst, the Company’s CEO, which included a grant to Mr. te Boekhorst under the2025* Plan of a performance-based stock option to purchase up to 110,000 shares of the Company’s stock. The option vests only if and when the Company’s net operating income forfour consecutive calendar quarters equals or exceeds 300% of the Company’s audited net operating income for its2025 fiscal year, is exercisable at a price of $6.26 per share, and expires 10 years from the date of grant. Consistent with Mr. te Boekhorst’s employment agreement with the Company, vesting of this performance stock option is subject to potential acceleration upon a change of control or certain terminations of employment.