What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-29 compared with 2022-03-30 · 686 added, 692 removed, 811 unchanged (63% of the section changed)

ITEM 9A — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Our management,

with the participation of the individual who serves as our principal executive and principal financial officer, evaluated the effectiveness

of our disclosure controls and procedures as of December 31, 2021.

Based on this evaluation, that officer concluded that our disclosure

controls and procedures were effective as of that date.

Disclosure controls and procedures are designed to ensure that information required

to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported,

within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including

our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Annual Report on Internal

Control Over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal

control over financial reporting.

The Company’s internal control over financial reporting is designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

generally accepted accounting principles.

We conducted an evaluation of the effectiveness of the internal controls over financial reporting

based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway

This evaluation included a review of the documentation of controls, evaluation of the design effectiveness of controls, testing

the operating effectiveness of the controls and a conclusion on this evaluation.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective can provide

only reasonable assurance with respect to financial statement preparation and presentation.

Also, projections of any evaluation of effectiveness

to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of

compliance with the policies or procedures may deteriorate.

Management assesses the effectiveness of the Company’s internal control

over financial reporting at the end of each quarter.

Based on management’s assessment, we believe that our internal control over

financial reporting was effective as of December 31, 2021.

This Annual Report does not include an attestation report of the Company’s

independent registered public accounting firm regarding internal control over financial reporting.

Management’s internal control

report was not subject to annual or quarterly attestation by the Company’s independent registered public accounting firm pursuant

to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report.

Changes in Internal Controls over Financial Reporting.

Our principal executive and principal financial officer and our Director of Finance and Administration periodically evaluate any change

in internal control over financial reporting which has occurred during the prior fiscal quarter.

We have concluded that there was no change

in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that has materially affected,

or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B — OTHER INFORMATION

ITEM 9C — DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS

ImmuCell Corporation

— CONTROLS AND PROCEDURES

Disclosure Controls

and Procedures :

Our management, with the participation of the individual who serves as our principal executive and principal financial

officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022.

Based on this evaluation, that

officer concluded that our disclosure controls and procedures were effective as of that date.

Disclosure controls and procedures are

designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i)

recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated

and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely

decisions regarding required disclosures.

Annual Report on Internal Control Over Financial Reporting :

The management of the Company is responsible for establishing and maintaining

adequate internal control over financial reporting.

The Company’s internal control over financial reporting is designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes

in accordance with generally accepted accounting principles.

We conducted an evaluation of the effectiveness of the internal controls

over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

This evaluation included a review of the documentation of controls, evaluation of the design effectiveness

of controls, testing the operating effectiveness of the controls and a conclusion on this evaluation.

Because of its inherent limitations,

internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective

can provide only reasonable assurance with respect to financial statement preparation and presentation.

Also, projections of any evaluation

of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

the degree of compliance with the policies or procedures may deteriorate.

This Annual Report does not include an attestation report of

the Company’s independent registered public accounting firm regarding internal control over financial reporting.

internal control report was not subject to annual or quarterly attestation by the Company’s independent registered public accounting

firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report.

Material Weakness

in Internal Controls over Financial Reporting :

Management assesses the effectiveness of the Company’s internal control over

financial reporting at the end of each quarter.

Based on this assessment, we concluded that our internal control over financial reporting

was not effective as of September 30, 2022, June 30, 2022 and March 31, 2022, because we identified one material weakness in the operation

(but not the design) of our internal controls over financial reporting during the first quarter of 2022 and a second one during the third

quarter of 2022.

First, we did not accrue $222,000 of deferred compensation expense (consisting of earned and unused paid time off) during

the first quarter of 2022, which impacted the amount of our administrative expenses, accrued expenses and the related disclosures.

we did not properly account for the extension of our lease agreement at 175 Industrial Way, which would have understated the value of

our operating lease right-of-use asset and operating lease liability by approximately $1,200,000 if the error had not been detected before

we issued our Quarterly Report on Form 10-Q for the three-month and nine-month periods ended September 30, 2022.

These errors had no

impact on our product sales or cash position.

We do believe that the design of our internal controls is effective, but the operating

effectiveness was not.

We have implemented some changes to our internal controls over financial reporting, including documenting the

accounting for all contractual obligations in excess of $50,000 with accounting complexities in written memorandums to be reviewed by

a public accounting firm who is not our auditor or by another relevant consultant when the issues are complex in nature.

we have concluded that these material weaknesses over internal controls have been remediated as of December 31, 2022.

Based on management’s

assessment, we believe that our internal controls over financial reporting were effective as of December 31, 2022.

Changes in Internal

Controls over Financial Reporting :

Our principal executive and principal financial officer and our Director of Finance and Administration

periodically evaluate any change in internal control over financial reporting which has occurred during the prior fiscal quarter.

have concluded that, with the exception of the enhanced internal control procedures discussed in the prior paragraph, there was no change

in our internal control over financial reporting that occurred during the three-month period or year ended December 31, 2022 that has

materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

— OTHER INFORMATION

— DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

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which we intend to file with the Securities and Exchange Commission within 120 days after December 31, 2022.

ImmuCell Corporation

ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 15 — EXHIBITS AND FINANCIAL

STATEMENT SCHEDULES

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company’s 1987 Registration Statement No.

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Sixth Amendment to Rights Agreement dated as of August 10, 2017 (incorporated by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q for the three-month period ended June 30, 2017).

Seventh Amendment to Rights Agreement dated as of August 10, 2022 (incorporated by reference to Exhibit 4.1 of the Company’s Amended Quarterly Report on Form 10-Q/A filed on November 21, 2022).

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.2 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020).

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Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.9 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).

Independent Contractor Agreement between the Company and Joseph H.

Crabb dated February 11, 2022 (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on February 11, 2022).

ImmuCell Corporation

Amendment to the 2017 Stock Option and Incentive Plan of the Company.

Second Amended and Restated Incentive Compensation Agreement between the Company and Elizabeth L.

Williams dated as of March 28, 2022 (incorporated by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10-K filed on March 30, 2022).

Third Amended and Restated Incentive Compensation Agreement between the Company and Elizabeth L.

Williams dated as of November 11, 2022 (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q filed on November 21, 2022).

Fourth Amended and Restated Incentive Compensation Agreement between the Company and Elizabeth L.

Williams dated as of March 28, 2023.

Amended and Restated Separation and Deferred Compensation Agreement between the Company and Michael F.

Brigham dated as of March 28, 2022.

Brigham dated as of March 28, 2022 (incorporated by reference to Exhibit 10.9 of the Company’s Annual Report on Form 10-K filed on March 30, 2022).

Incentive Compensation Agreement between the Company and Michael F.

Brigham dated as of March 28, 2022 (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K filed on March 30, 2022).

Amended and Restated Incentive Compensation Agreement between the Company and Michael F.

Brigham dated as of March 28, 2023.

Second Amended and Restated Incentive Compensation Agreement between the Company and Bobbi Jo Brockmann dated as of March 28, 2022.

Second Amended and Restated Incentive Compensation Agreement between the Company and Bobbi Jo Brockmann dated as of March 28, 2022 (incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K filed on March 30, 2022).

Third Amended and Restated Incentive Compensation Agreement between the Company and Bobbi Jo Brockmann dated as of March 28, 2023.

Development Services and Commercial Supply Agreement between the Company and Norbrook Laboratories Limited dated as of September 5, 2019 (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on September 11, 2019).

Indenture of Lease for Premises Located in Portland, Maine between the Company and TVP, LLC (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on September 17, 2019).

Second Amendment of Indenture of Lease for Premises Located in Portland, Maine between the Company and TVP, LLC dated as of August 15, 2022 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on August 17, 2022).

Term Note for $5,100,000 between the Company and Gorham Savings Bank dated March 11, 2020 (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on March 12, 2020).

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Loan Agreement for $3,500,000 between the Company and Gorham Savings Bank dated March 11, 2020 (incorporated by reference to Exhibit 99.5 of the Company’s Current Report on Form 8-K filed on March 12, 2020).

Line of Credit Agreement for up to $1,000,000 between the Company and Gorham Savings Bank dated March 11, 2020 (incorporated by reference to Exhibit 99.6 of the Company’s Current report on Form 8-K filed on March 12, 2020).

Promissory Note for $937,700 executed by the Company in favor of Gorham Savings Bank dated April 13, 2020 (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on April 14, 2020).

Allonge to and Amendment of Line of Credit Loan for up to $1,000,000 between the Company and Gorham Savings Bank dated March 23, 2022.

Note Purchase Agreement executed by the Company in favor of the Maine Technology Institute dated June 12, 2020 (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on June 16, 2020).

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Consent of Independent Registered Public Accounting Firm.

Certifications Required by Rule 13a-14(a).

Certification Required by Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 .

XBRL Instance Document-the instance document does not appear in

the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Power of Attorney (incorporated by reference to the signature page of this Form 10-K).

Certification Pursuant to Rule 13a-14(a).

Certification

Pursuant to Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document-the instance document does not appear in the

Interactive Data File because its

XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document.

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Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File-the cover page interactive data

file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Cover Page Interactive Data File-the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

+ Management contract or compensatory plan or arrangement.

* Filed herewith.

ITEM 16 – FORM 10-K SUMMARY

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of ImmuCell Corporation

To the Stockholders and the Board of Directors of ImmuCell

Opinion on the Financial Statements

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sheets of ImmuCell Corporation (the “Company”) as of December 31, 2022 and 2021, and the related statements of operations,

comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the

related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and

its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted

in the United States of America.

stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively

referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each

of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

Basis for Opinion

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Valuation of Inventory

Description of the Matter

At December 31, 2021, the Company’s inventory was $3,089,974.

Description of the Matter At December 31, 2022, the Company’s inventory was $6,038,539.

As discussed in Note 2 of the financial statements, inventory is recorded at the lower of cost, or net realizable value.

Auditing management’s valuation of inventory is complex and highly judgmental because of the estimates and assumptions used by management to determine the cost accounting and because of the variability of the cost per dose due to fluctuations in the biological yield achieved.

How We Addressed the

Matter In Our Audit

The primary procedures we performed to address this

critical audit matter included the following.

We obtained an understanding of the cost accounting developed by management and the related assumptions and estimates used.

We tested the cost accounting by examining the underlying data used by the Company to prepare the cost accounting.

We evaluated the effect of the variability of the cost per dose on the inventory value by comparing the biological yield to historical results and by performing a sensitivity analysis of the potential range in inventory value within a corridor of historical results based on minimum and maximum outcomes for the biological yield.

Auditing management’s valuation of inventory is complex

and highly judgmental because of the estimates and assumptions used by management to determine the cost accounting and because of the

variability of the cost per dose due to fluctuations in the biological yield achieved.

How We Addressed the Matter

In Our Audit The primary procedures we performed to address this critical

audit matter included the following.

We obtained an understanding of the

cost accounting developed by management and the related assumptions and estimates used.

We tested the cost accounting by examining the

underlying data used by the Company to prepare the cost accounting.

We evaluated the effect of the variability of the cost per dose on

the inventory value by comparing the biological yield to historical results and by performing a sensitivity analysis of the potential

range in inventory value within a corridor of historical results based on minimum and maximum outcomes for the biological yield.

/s/ WIPFLI LLP

We have served as the Company’s auditor since 2019.

South Portland, Maine

Minneapolis, Minnesota

March 29, 2023

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BALANCE SHEETS

of December 31,

As of December 31,

CURRENT ASSETS:

Cash and cash equivalents

Short-term investments

Trade accounts receivable, net

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STOCKHOLDERS’ EQUITY:

Common stock, $ 0.10 par value per share, 15,000,000 and 15,000,000 shares authorized, 7,814,165 and 7,299,009 shares issued and 7,741,864 and 7,218,836 shares outstanding, as of December 31, 2021 and 2020, respectively

Common stock, $ 0.10 par value per share, 15,000,000 shares authorized and

7,814,165 shares issued as of both December 31, 2022 and 2021 and

7,746,864 and 7,741,864 shares outstanding as of December 31, 2022 and

2021, respectively

Additional paid-in capital

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STATEMENTS OF OPERATIONS

During the Years

Ended December 31,

During the Years Ended December 31,

Product sales

Costs of goods sold

OPERATING EXPENSES:

Product development expenses

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Operating expenses

NET OPERATING INCOME (LOSS)

NET OPERATING (LOSS) INCOME

( 2,298,943 )

Other expenses (income), net

Other expenses, net

LOSS BEFORE INCOME TAXES

( 2,486,133 )

Income tax expense (benefit)

Income tax expense

$ ( 2,493,805 )

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Diluted net loss per share

STATEMENTS OF COMPREHENSIVE LOSS

Ended December 31,

$ ( 1,022,117 )

Other comprehensive income:

Interest rate swaps, before taxes

Income tax applicable to interest rate swaps

Other comprehensive income, net of taxes

Total comprehensive loss

$ ( 978,222 )

The accompanying notes are an integral part

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STATEMENTS OF STOCKHOLDERS’ EQUITY

Treasury Stock

Comprehensive

(Loss) Income

paid-in capital

Stockholders’

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$ ( 175,392 )

( 1,022,117 )

Other comprehensive income, net of taxes

Public offering of common stock, net of $ 17,011 of offering costs

Exercise of stock options

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$ ( 158,171 )

Public offering of common stock, net of $ 17,011 of offering costs

( 2,493,805 )

Exercise of stock options

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STATEMENTS OF CASH FLOWS

During the Years

Ended December 31,

During the Years Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 2,493,805 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash (used for) provided by operating activities:

Amortization of intangible assets

Amortization and write-off of debt issuance costs

Forgiveness of debt

Deferred income taxes

Amortization of debt issuance costs

Stock-based compensation

Loss on disposal of fixed assets

(Gain) loss on disposal of property, plant and equipment

Non-cash rent expense

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Accrued interest income

( 2,948,565 )

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Net cash provided by operating activities

Net cash (used for) provided by operating activities

( 1,543,871 )

CASH FLOWS FROM INVESTING ACTIVITIES:

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Maturities of investment

Purchases of investments

( 1,992,000 )

Proceeds from sale of assets

Proceeds from sale of property, plant and equipment

Net cash used for investing activities

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Debt principal repayments

( 9,573,568 )

Payments of debt issuance costs

(Payments) net adjustments of debt issuance costs

Proceeds from exercise of stock options

Net cash provided by financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 4,393,906 )

BEGINNING CASH AND CASH EQUIVALENTS

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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Ended December 31,

During the Years Ended

CASH PAID FOR:

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NON-CASH ACTIVITIES:

Forgiveness of debt

$ ( 937,700 )

Change in capital expenditures included in accounts payable and accrued expenses

$ ( 170,220 )

Net change in fair value of interest rate swaps, net of taxes

Surrender of shares to exercise stock options

Lease liability arising from obtaining right-of-use asset

The accompanying notes are an integral part

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As disclosed in Note 17, “Segment Information”,

one of our business segments is dedicated to growing sales of First Defense ® and the other is focused on developing

sales of Re-Tain ® .

We manufacture and market the First Defense ® product line for the prevention

of scours in newborn dairy and beef calves.

We have expanded this line into five different products with formulations targeting E.

coli and coronavirus pathogens as well as E.

one of our business segments is dedicated to Scours and the other is focused on Mastitis.

We manufacture and market the First Defense ®

product line, providing Immediate Immunity™ to prevent scours in newborn dairy and beef calves.

We have expanded this line

into four different products with formulations targeting E.

coli , coronavirus and rotavirus pathogens.

This product line provides Immediate

Immunity™ to newborn calves.

We are also in the late stages of developing Re-Tain ® , a treatment for lactating

dairy cows with subclinical mastitis, mastitis being the most significant cause of economic loss to the dairy industry.

These products

help reduce the need to use traditional antibiotics in food producing animals.

We are subject to certain risks associated with this stage

of development including dependence on key individuals and third-party providers of critical goods and services, competition from other

larger companies, the successful sale of existing products and the development and acquisition of additional commercially viable products

with appropriate regulatory approvals, where applicable.

The global COVID-19 pandemic has created, and

continues to create, uncertainty for us.

The full impact of this viral outbreak on the global economy, and the duration of such impact,

is still uncertain at this time.

A combination of the conditions, trends and concerns related to or arising from the pandemic could have

a corresponding negative effect on our business and operations, including the supply of the colostrum we purchase to produce our First

Defense ® product line, the demand for our products in the U.S.

market and our ability to penetrate or maintain a profitable

presence in international markets.

We are experiencing price increases and shortages in key components, supportive services, transportation

and other supplies that may cause production slowdowns that affect our ability to consistently deliver our products to market on time

in accordance with customer demand.

Despite some recent favorable trends and our diligent efforts and intentions, there is a risk that

an employee could become infected and could infect others.

This could lead to plant shutdowns and production interruptions and have other

negative economic and health and safety impacts.

We are also in the late

stages of developing Re-Tain ® , a treatment for lactating dairy cows with subclinical mastitis.

Mastitis is the most

significant cause of economic loss to the dairy industry.

These products help reduce the need to use traditional antibiotics in food producing

We are subject to certain risks including dependence on key individuals and third-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 the global COVID-19

pandemic, as well as 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 and shortages in key components,

supportive services, transportation and other supplies that may cause production slowdowns that affect our ability to consistently deliver

our products to market.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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 consistently report our financial condition,

results of operations, earnings per share and cash flows.

References to GAAP in these footnotes are to the FASB Accounting Standards

Codification ™ (Codification).

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 FASB Accounting Standards Codification ™

(Codification).

We believe that the disclosures are adequate to ensure that the information presented is not misleading.

(b) Cash, Cash Equivalents and Short-Term Investments

(b) Cash and Cash Equivalents

We consider all highly liquid investment instruments

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backed by the U.S.

Certain cash balances in excess of Federal Deposit Insurance Corporation (FDIC) limits of $ 250,000 per

financial institution per depositor are maintained in money market accounts at financial institutions that are secured, in part, by the

Securities Investor Protection Corporation.

Amounts in excess of these FDIC limits per bank that are not invested in securities backed

government aggregated $ 0 and $ 751,050 as of December 31, 2021 and 2020, respectively.

Short-term investments are classified

as held to maturity and are comprised of certificates of deposit that mature in more than three months from their purchase dates and not

more than twelve months from the balance sheet date.

Short-term investments are held at different financial institutions that are insured

by the FDIC, within the FDIC limits per financial institution.

We account for investments in marketable securities in accordance with

Codification Topic 320, Investments — Debt and Equity Securities .

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

There are no cash equivalents in excess of Federal Deposit Insurance Corporation (FDIC) limits of $ 250,000

per financial institution per depositor.

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is to maintain more than one source of supply for the components used in our products when feasible.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(e) Property, Plant and Equipment, net

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the remainder of the 10 -year lease term beginning when a certificate of occupancy was issued during the second quarter of 2020.

repairs to fixed assets that benefit more than a current period are capitalized and depreciated over their useful lives.

Insignificant

repairs are expensed when incurred.

(f) Intangible Assets and Goodwill

August of 2022, this lease term was extended to January of 2043 in connection with a new lease covering space at 165 Industrial Way.

a result, the net book value of these leasehold improvements as of August 31, 2022 is 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.

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, may include 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 to not recognize assets

or liabilities for leases with a term of twelve 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 do not 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

We evaluate our right-of-use asset for impairment when events or changes in circumstances indicate that the carrying value of

the asset may not be recoverable.

(g) Intangible Assets and Goodwill

We amortize intangible assets on the straight-line

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non-compete agreements and developed technology, each with defined useful lives.

We have classified as goodwill the amounts paid in excess

of fair value of the net assets (including tax attributes) acquired in purchase transactions.

We assess the impairment of intangible assets

and goodwill that have indefinite lives at the reporting unit level on an annual basis (as of December 31 st ) 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 may impair the value of goodwill or identifiable intangible assets.

Factors that could indicate that

an impairment may exist 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.

No goodwill impairments were recorded during the years ended December 31, 2021 or 2020.

2(g) and 8 for additional disclosures.

We have classified the amounts paid in excess of fair

value of the net assets (including tax attributes) as goodwill, which is accounted for under the acquisition method of accounting.

assess the impairment of intangible assets and goodwill that have indefinite lives (when applicable) at the reporting unit level on an

annual basis (as of December 31 st ) 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 may impair the value of

goodwill or identifiable intangible assets.

Factors that could indicate that an impairment may exist 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.

No goodwill impairments

were recorded during the years ended December 31, 2022 or 2021.

See Notes 2(h) and 8 for additional disclosures.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(g) Valuation of Long-Lived Assets

(h) Valuation of Long-Lived Assets

We periodically evaluate our long-lived assets,

consisting principally of fixed assets, 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 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.

We evaluate our long-lived assets whenever events or circumstances suggest that the carrying amount

of an asset or group of assets may not be recoverable.

consisting principally of property, plant and equipment, operating lease right-of-use asset and amortizable intangible assets, for potential

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.

No impairment was recognized during the years ended December 31, 2022 or

(h) Fair Value Measurements

(i) Fair Value Measurements

In determining fair value measurements, we follow

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As of December 31,

2021 and 2020, the carrying amounts of cash and cash equivalents, short-term investments, accounts receivable, inventory, other assets,

accounts payable and accrued liabilities 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 Level 2 inputs.

The estimated fair value of our bank debt facilities approximates their carrying value based on similar instruments with similar maturities.

2022 and 2021, 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

Level 2 inputs.

The three-level hierarchy is as follows:

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

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.

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.

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.

In certain cases, the inputs used to measure fair

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of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

From time to time, we also hold money market mutual funds in a brokerage 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.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

We also hold money market accounts in our bank account, which are classified as cash equivalents and measured at fair value.

value of these investments is based on their closing published net asset value.

We assess the levels of the investments at each

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As of December 31, 2022 and 2021, our Level 1 assets

measured at fair value by quoted prices in active markets consisted of bank savings accounts and money market funds.

As of December 31,

2020, our bank certificates of deposit were classified as Level 2 and were measured by other significant observable inputs.

no assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2021 or 2020.

measured at fair value by quoted prices in active markets consisted of bank savings accounts and money market accounts.

There were no

assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2022 and 2021.

The carrying values of our cash

and money market accounts as of December 31, 2022 and 2021 and of our bank debt as of December 31, 2021 approximated their fair market

Due to inflation and the changing interest rate environment, the carrying value of our bank debt as of December 31, 2022 differed

from its fair market value.

These values are reflected in the following tables:

As of December 31, 2022

Cash and money market accounts

$ ( 9,139,329 )

of December 31, 2020

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

As of December 31, 2021

Cash and money market accounts

Bank certificates of deposit

$ ( 9,497,486 )

(i) Concentration of Risk

(j) Concentration of Risk

Concentration of credit risk with respect to

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that amounted to 10 % or more of total product sales are detailed in the following table:

During the Years

Ended December 31,

During the Years Ended

Trade accounts receivable due from significant

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December 31, 2021

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(j) Revenue Recognition

We recognize revenue in accordance with Accounting

Standards Codification (ASC) 606, Revenue from Contracts with Customers .

ASC 606 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.

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 are not interdependent

on one another.

* Amount is less than 10 %.

(k) Revenue Recognition

We recognize revenue in accordance with Codification

Topic 606, Revenue from Contracts with Customers (ASC 606) .

ASC 606 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 are not interdependent on one

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.

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

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We recognize revenue when we satisfy a performance obligation in a contract by transferring control over a product to a customer

when product delivery occurs.

when product ships to a customer.

Amounts due are typically paid approximately 30 days from the time control is transferred.

handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment

cost in costs of goods sold.

We do not bill for or collect sales tax because our sales are generally made to distributors and thus our

sales to them are not subject to sales tax.

We generally have experienced an immaterial amount of product returns.

We have enhanced disclosures

related to disaggregation of revenue sources and accounting policies prospectively as a result of adopting this standard.

(k) Expense Recognition

and handling costs associated with outbound freight are accounted for as a fulfillment cost in costs of goods sold.

We do not bill for

or collect sales tax because our sales are generally made to distributors and thus our sales to them are not subject to sales tax.

generally have experienced an immaterial amount of product returns.

See Note 14 for additional disclosures.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(l) Expense Recognition

We do not incur costs in connection with product

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in which the advertisement is published.

Advertising expenses amounted to $ 37,817 and $ 29,083 during the years ended December 31, 2021

and 2020, 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.

(l) Income Taxes

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.

(m) Income Taxes

We account for income taxes in accordance with

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the extent they are realizable.

During the second quarter of 2018, we assessed our historical and near-term future profitability and decided

to record $ 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 tax credits).

At that time, we had incurred a net loss for six consecutive

quarters, had not been profitable on a year-to-date basis since the nine-month period ended September 30, 2017 and projected additional

net losses for some period going forward before returning to profitability.

We consider future taxable income and feasible tax planning

strategies in assessing the need for a valuation allowance at each quarter end.

If we determine that we would be able to 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 we would not be able to 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.

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 than not 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

than not that we will not 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 Topic 740-10 clarifies the accounting

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We have evaluated the positions taken on

our filed tax returns.

We have concluded that no uncertain tax positions existed as of December 31, 2021 or 2020.

our filed tax returns and have concluded that no uncertain tax positions existed as of December 31, 2022 or 2021.

Although we believe

that our estimates are reasonable, actual results could differ from these estimates.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(m) Stock-Based Compensation

(n) Stock-Based Compensation

We account for stock-based compensation in accordance

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of $ 266,244 and $ 144,313 during the years ended December 31, 2022 and 2021, respectively.

(n) Net Loss Per Common Share

(o) Net Loss Per Common Share

Net loss per common share has been computed in

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the years ended December 31, 2022 and 2021, respectively.

During the Years

Ended December 31,

During the Years Ended

Net loss attributable to stockholders

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Weighted average common shares outstanding - Diluted

Loss per share:

(o) Use of Estimates

Net loss per share:

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(p) Use of Estimates

The preparation of financial statements in conformity

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lives of intangible assets.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(p) New Accounting Pronouncements Adopted

In February 2016, the FASB issued ASU 2016-02,

Leases (Topic 842) .

The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases .

Under the new guidance,

lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months.

Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

This ASU and its amendments became effective for fiscal years beginning after December 15, 2018, including interim periods within those

fiscal years.

Early adoption was permitted.

We elected to adopt this ASU effective January 1, 2019.

In July 2018, the FASB issued ASU

2018-10, Codification improvements to Topic 842, Leases.

The amendments in ASU 2018-10 provide more clarification in regard to

the application and requirements of Topic 842.

In July 2018, the FASB issued ASU 2018-11, Topic 842, Leases - Targeted improvements.

The amendments in ASU 2018-11 provide for the option to adopt the standard prospectively and recognize a cumulative-effect adjustment

to the opening balance of retained earnings as well as offer a new practical expedient that allows us to elect, by class of underlying

asset, to not separate non-lease and lease components in certain circumstances and instead to account for those components as a single

Based on our current lease agreements and a review of all of our material vendor relationships for potential embedded lease obligations,

we concluded that we were not subject to material lease obligations as of December 31, 2019, and the adoption of Topic 842 did not have

a material impact on our financial statements as of January 1, 2019.

The lease we entered into on September 12, 2019 to expand our production

capacity for the First Defense ® product line with a possession date of November 15, 2019 and a commencement date

of February 13, 2020 has been accounted for in accordance with Topic 842 since the first quarter of 2020.

The only material lease pursuant

to which we are the lessee relates to real estate property.

All leases are classified as operating leases, and therefore, were previously

not recognized on our balance sheets.

With the adoption of Topic 842, operating lease agreements are required to be recognized on our

balance sheets as a right-of-use (ROU) asset with a corresponding lease liability.

If at a lease inception date or at some later date

during the term of a lease, we consider the exercising of a renewal option to be reasonably certain, we would include the extended term

in the calculation of the ROU asset and lease liability.

Regarding the discount rate, Topic 842 requires the use of the rate implicit

in the lease whenever this rate is readily determinable.

As this rate is rarely determinable, we utilize our incremental borrowing rate

at lease inception, on a collateralized basis, over a similar term.

We elected the following practical expedients in conjunction

with implementation of Topic 842:

● Inclusion of both the lease and non-lease components for all classes of underlying

assets as a single component.

● Election to exclude short-term leases (i.e., leases with initial terms of

twelve months or less) from capitalization on our balance sheets.

In August 2018, the FASB issued ASU 2018-13,

Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which

modifies the disclosure requirements of fair value measurements.

Topic 820 is effective for fiscal years beginning after December 15,

2019, and early adoption was permitted.

The adoption of Topic 820 did not have a material impact on our financial statements as of January

We adopted ASU 2016-13, “Financial Instruments-Credit

Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” effective January 1, 2020, using the modified retrospective

transition method.

This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology

for financial instruments, including trade receivables and leased equipment.

The amendment requires entities to consider a broader range

of information to estimate expected credit losses, which may result in earlier recognition of losses.

The adoption of Topic 326 did not

have a material impact on our financial statements as of January 1, 2020.

In December 2019, the FASB issued ASU 2019-12,

(q) New Accounting Pronouncements Adopted

Effective January 1, 2021, we adopted ASU 2019-12,

Income Taxes (Topic 740):

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the allocation of current and deferred tax expense among legal entities, among other minor changes.

ASU 2019-12 is effective for fiscal

years beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption was permitted.

of ASU 2019-12 did not have a material impact on our financial statements as of January 1, 2021.

The adoption of ASU 2019-12 did not

have a material impact on our financial statements.

In March 2020, the FASB issued ASU 2020-04, Facilitation

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The relief offered by this guidance,

if adopted, is available to companies for the period March 12, 2020 through December 31, 2022.

The discontinuation of LIBOR did not have

a material impact on our financial statements as of January 1, 2021.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash, cash equivalents and short-term investments

(at amortized cost plus accrued interest) consisted of the following:

December 31, 2021

December 31, 2020

if adopted, was available to companies during the period from March 12, 2020 through December 31, 2022.

The discontinuation of LIBOR did

not have a material impact on our financial statements.

(r) New Accounting Pronouncement Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial

Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which is effective for us as of January

1, 2023, using the modified retrospective transition method.

This ASU amends the impairment model to utilize an expected loss methodology

in place of the incurred loss methodology for financial instruments, including trade receivables and leased equipment.

The amendment requires

entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

Historically, we have experienced a very low level of bad debt expense, and most of our trade receivables are collected by the due date

or within a few days of the due date.

Because of this experience, we do not expect the adoption of ASU 2016-13 to have a material impact

on our financial statements.

CASH AND CASH EQUIVALENTS

Short-term investments (1)

(1) Certificates of deposit are carried at amortized cost.

Cash and cash equivalents amounted to $ 5,791,562

and $ 10,185,468 as of December 31, 2022, and 2021, respectively.

TRADE ACCOUNTS RECEIVABLE, net

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$ 2,694,229 and $ 1,796,801 as of December 31, 2022, 2021 and 2020, respectively.

No allowance for bad debt and product returns was recorded as of December

31, 2021 or 2020.

No allowance for bad debt or product returns was recorded

as of December 31, 2022, 2021 or 2020.

The trade accounts receivable balances include $ 46,426 and $ 55,490 due from a related party as

of December 31, 2022 and 2021, respectively.

Inventory consisted of the following:

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Finished goods

These inventory figures are net of a $ 587,620

write-off of scrapped inventory that resulted principally from a contamination event in our production process around the end of the third

quarter of 2022.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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Other receivables

Security deposits

PROPERTY, PLANT AND EQUIPMENT, net

Property, plant and equipment consisted of the following:

Estimated Useful Lives

December 31, 2022

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Property, plant and equipment, net

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

As of December 31, 2022 and 2021, construction in

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of the following:

Carrying Value

Gross Carrying Value

Accumulated Amortization

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of the following:

Carrying Value

Gross Carrying Value

Accumulated Amortization

Developed technology

$ ( 110,460 )

Customer relationships

Non-compete agreements

$ ( 114,624 )

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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Income tax payable

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Prior to a refinancing with Gorham Savings Bank

(GSB) during the first quarter of 2020, we had in place five different credit facilities and a line of credit with TD Bank N.A.

During the first quarter of 2020, we closed on a debt financing with GSB aggregating $ 8,600,000 and a $ 1,000,000 line of credit.

The debt was comprised of a $ 5,100,000 mortgage note (Loan #6) 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 the first quarter of 2030) and a $ 3,500,000

note (Loan #7) that bears interest at a fixed rate of 3.50 % per annum (with a 7 -year term and amortization schedule).

The line of credit

is available as needed through March 11, 2024.

Interest on borrowings against the line of credit is variable at the National Prime Rate

plus 0.00% per annum.

There was no outstanding balance under this line of credit as of December 31, 2021 or 2020.

In connection with these

three credit facilities, we incurred debt issuance costs of $ 39,789 .

The amortization of debt issuance costs is being recorded as a component

of interest expense, included with other expenses (income), net, and is being amortized over the underlying terms of the two notes and

the line of credit.

The proceeds from the debt refinancing were used to repay all bank debt outstanding at the time of closing (Loans

#1 to #5) and to provide some additional working capital.

We were required by bank debt covenant to maintain $ 1,400,000 in escrow (a non-current

During the fourth quarter of 2020, we closed on a $ 1,500,000 note with GSB (Loan #10) that bears interest at a fixed rate of 3.50 %

per annum (with a 7 -year term and amortization schedule).

In connection with this note, we incurred debt issuance costs of $ 11,075 .

amortization of these debt issuance costs is also being recorded as a component of interest expense, included with other expenses (income),

net, and is being amortized over the underlying term of the note.

Proceeds of $ 624,167 were used to prepay a portion of the outstanding

principal on our mortgage note (Loan #6), which reduced the outstanding balance to 80 % of the most recent appraised value of the property

securing the debt, which allowed GSB to release the $ 1,400,000 that had been held in escrow.

This resulted in no change in the balloon

principal payment of $3,145,888 due during the first quarter of 2030.

The remaining proceeds were available for general working capital

During the first quarter of 2020, we closed on

a debt financing with Gorham Savings Bank (GSB) aggregating $ 8,600,000 and a $ 1,000,000 line of credit.

The debt 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 the first quarter of 2030) 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 line of credit is available as needed through March

Interest on borrowings against the line of credit is variable at the National Prime Rate per annum.

There was no outstanding

balance under this line of credit as of December 31, 2022 or 2021.

The proceeds from the debt refinancing were used to repay all bank

debt outstanding at the time of closing and to provide some additional working capital.

During the fourth quarter of 2020, we closed on

a $ 1,500,000 note with GSB (Loan #4) 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 GSB to release the $ 1,400,000 that

had been held in escrow.

This resulted in no change in the balloon principal payment of $3,145,888 due during the first quarter of 2030.

The remaining proceeds were available for general working capital purposes.

During the first quarter of 2022, 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 $ 3,687,348 and extended the due date

of the balloon payment from the first quarter of 2030 to the first quarter of 2032.

In connection with these credit facilities, we incurred

aggregate debt issuance costs of $ 70,170 ($ 19,306 of which was incurred during 2022).

The amortization of these debt issuance costs is

being recorded as a component of interest expense, included in other expenses, net, and is being amortized over the underlying terms of

These three credit facilities are secured by liens on substantially all of our assets and are subject to certain restrictions

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Given the funds we raised through an equity issuance in April 2021, GSB waived the minimum debt service coverage

ratio requirement of 1.35 for the year ended December 31, 2021.

(DSC) ratio requirement of 1.35 for the year ended December 31, 2021.

By negotiation with GSB in connection with the mortgage debt financing

during the first quarter of 2022, the required minimum DSC ratio was reduced to 1.0 for the year ending December 31, 2022.

By subsequent

negotiation with GSB, compliance with the required minimum DSC ratio was waived for the year ended December 31, 2022.

During the first

quarter of 2023, the DSC ratio covenant for the year ending December 31, 2023 was waived by GSB.

Instead, we are required to meet a minimum

DSC ratio requirement of 1.35 for the twelve-month periods ending June 30, 2024, September 30, 2024 and December 31, 2024 and then again

annually after that.

During the second quarter of 2020, we received

in support from the federal government under the Paycheck Protection Program (PPP) (Loan #8).

We used the proceeds only for eligible payroll

costs incurred and paid during the 24-week period beginning April 13, 2020.

Our obligation to repay the principal was forgiven, and we

recognized this amount as part of other expenses (income), net, during the fourth quarter of 2020.

This forgiveness of indebtedness, in

accordance with the CARES Act, does not give rise to federal or State of Maine taxable income, and the expenses incurred using PPP proceeds

are fully deductible for federal and Maine income tax purposes.

During the second quarter of 2020, we received a

loan from the Maine Technology Institute (MTI) (Loan #9) in the aggregate principal amount of $ 500,000 .

The first 27 months of this loan

are interest-free with no interest accrual or required principal payments.

Principal and interest payments at a fixed rate of 5% per annum

are due quarterly over the final five years of the loan, beginning during the fourth quarter of 2022 and continuing through the third

quarter of 2027.

On June 30, 2021, we executed definitive agreements covering a second loan from the MTI (Loan #11) in the aggregate principal

amount of $400,000, which proceeds were received in July 2021.

The first 24 months of this loan are interest-free with no interest accrual

or required principal payments.

Beginning in July 2023, principal and interest payments are due quarterly at a fixed rate of 5% per annum

based on a 5.5-year amortization schedule until December 2028.These credit facilities are unsecured and subordinated to our indebtedness

to Gorham Savings Bank, which senior indebtedness is secured by mortgages and security interests with respect to substantially all of

Failure to make timely payments of principal and interest, or otherwise to comply with the terms of the agreements with the

MTI, would entitle the MTI to accelerate the maturity of such debt and demand repayment in full.

These loans may be prepaid without penalty

a loan from the Maine Technology Institute (MTI) (Loan #3) in the aggregate principal amount of $ 500,000 .

The first 2.25 years of this

loan were interest-free with no interest accrual or required principal payments.

Beginning during the fourth quarter of 2022, 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

the third quarter of 2027 if not repaid before then.

On June 30, 2021, we executed definitive agreements covering a second loan from the

MTI (Loan #5) in the aggregate principal amount of $400,000, proceeds from which were received in July 2021.

The first two years of this

loan are interest-free with no 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 the third quarter of 2023 and continuing through the

fourth quarter of 2028 if not repaid before then.

These credit facilities are unsecured and subordinated to our indebtedness to GSB.

to make timely payments of principal and interest, or otherwise to comply with the terms of the agreements with the MTI, 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.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Debt proceeds received and principal repayments

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Ended December 31, 2022

During the Year

Ended December 31, 2021

Proceeds from

Debt Issuance

Proceeds from Debt

Debt Principal

Proceeds from

Debt Issuance

Proceeds from Debt Issuance

Debt Principal

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$ ( 768,271 )

$ ( 10,511,268 )

(1) Loan #8 was forgiven by the federal government during the

fourth quarter of 2020.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Principal payments (net of debt issue costs)

Principal payments (net of debt issuance costs)

due under bank loans outstanding as of December 31, 2022 (excluding our $ 1,000,000 line of credit) are reflected in the following table

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Our bylaws, as amended, in effect provide that the

Company will indemnify its officers and directors to the maximum extent permitted by Delaware law.

In addition, we make similar indemnity

undertakings to each director through a separate indemnification agreement with that director.

The maximum payment that we may be required

to make under such provisions is theoretically unlimited and is impossible to determine.

We maintain directors’ and officers’

liability insurance, which may provide 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 Topic 460 ,

Accordingly, we have recorded no liability for such obligations as of December 31, 2021.

Since our incorporation, we have

had no occasion to make any indemnification payment to any of our officers or directors for any reason.

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 may be required to make under such provisions is theoretically

unlimited and is impossible to determine.

We maintain directors’ and officers’ liability insurance, which may provide 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 Topic 460 , Guarantees .

Accordingly, we have recorded no liability

for such obligations as of December 31, 2022.

Since our incorporation, we have had no occasion to make any indemnification payment to

any of our officers or directors for any reason.

The development, manufacturing and marketing of

1 unchanged sentence

We are aware of no such claims against us as of the date of this filing.

We feel that we have reasonable levels of liability insurance

We believe that we have reasonable levels of liability insurance

to support our operations.

9 unchanged sentences

as of December 31, 2022.

We are committed to purchasing certain key parts

(syringes) and services (formulation, aseptic filling and final packaging of Drug Product) pertaining to Re-Tain ® ,

our Nisin-based intramammary treatment of subclinical mastitis in lactating dairy cows, exclusively from contractors.

We are investing

in the necessary equipment to perform the Drug Product formulation and aseptic filling services in-house.

During the first quarter of 2020, we entered into

a Severance Agreement with our President and CEO.

Under the terms of this agreement, we agree to pay this executive (or his estate) nine

months of his then current salary plus any accrued and unused paid time off in the event of the involuntary termination of his employment

by the Company (except for cause) or in the event of termination by him for good reason.

In addition to the commitments discussed above,

we had committed $ 1,405,000 to increase our production capacity for the First Defense ® product line, $ 356,000 to

construct and equip our own Drug Product formulation and aseptic filling facility for Re-Tain ® , $ 2,605,000 to the

purchase of inventory, $ 116,000 to other capital expenditures and $ 453,000 to other obligations as of December 31, 2021.

We plan to purchase certain key parts (syringes)

and services (formulation, aseptic filling and final packaging of Drug Product) pertaining to Re-Tain ® , our Nisin-based

intramammary treatment of subclinical mastitis in lactating dairy cows, exclusively from contractors.

We are investing in the necessary

equipment to perform the Drug Product formulation and aseptic filling services in-house.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Effective March 28, 2022, the Company entered into

an Amended and Restated Separation and Deferred Compensation Agreement (the “Deferred Compensation Agreement”) with Mr.

its President and CEO, that superseded and replaced in its entirety a March 2020 severance agreement between the Company and Mr.

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 (which amount totaling $222,000 was accrued during the first quarter of 2022 and included

in accounts payable and accrued expenses on the accompanying balance sheet as of December 31, 2022) and to receive up to an additional

$300,000 in deferred compensation (which amount is being accrued over the three-year period ending in January 2025).

This deferred compensation

payment vested as to $100,000 on January 1, 2023, and will vest as to an additional $100,000 on each of January 1, 2024 and January 1,

2025, provided that Mr.

Brigham is employed by the Company on these future vesting dates.

The vested amounts would be paid upon the earlier

of January 31, 2025 or within thirty (30) days following his separation from the Company.

This amount is being accrued over the three-year

period ending in January 2025.

As of December 31, 2022, $100,000 was included as part of accounts payable and accrued expenses on the

accompanying balance sheet.

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 a twelve-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.

We generally enter into incentive compensation agreements

with our three executive officers annually.

These agreements, which are publicly filed, with Mr.

Brigham (our President and CEO), Ms.

Brockmann (our Vice President of Sales and Marketing) and Ms.

Williams (our Vice President of Manufacturing Operations) allowed them to

earn incentive compensation if certain regulatory and financial objectives were met during the years ended December 31, 2022 and 2021,

as specified in their agreements.

Similar agreements have been entered into and filed with these executive officers for the year ending

December 31, 2023.

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.

to the commitments discussed above, we had committed $ 294,000 to increase our production capacity for the First Defense ®

product line, $ 129,000 to construct and equip our own Drug Product formulation and aseptic filling facility for Re-Tain ® ,

$ 1,881,000 to the purchase of inventory, $ 134,000 to other capital expenditures and $ 401,000 to other obligations as of December 31, 2022.

OPERATING LEASE

6 unchanged sentences

First Defense ® product line.

The lease term is 10 years with a right to renew for a second 10-year term and a right

of first offer to purchase.

At this time, we are not reasonably assured that we would exercise this renewal option in place of other real

estate options.

A 10-year period is reflected in the right-of-use (ROU) asset and lease liability on our balance sheet.

The total lease

liability over the initial 10-year term (including inflationary adjustments) aggregates approximately $1,313,698 and includes real estate

and personal property taxes, utilities, insurance, maintenance and related building and operating expenses.

Our lease includes variable

lease and non-lease components that are included in the ROU asset and lease liability.

Such payments primarily include common area maintenance

charges and increases in rent payments that are driven by factors such as future changes in an index, such as the Consumer Price Index.

As of December 31, 2021, the balance of the operating lease ROU asset was $ 1,109,133 and the operating lease liability was $ 1,135,169 .

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.

As we elected not to separate lease and non-lease components for all classes of underlying

assets, and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such

as real estate taxes and common area maintenance.

The following table represents lease costs and other lease information:

During the Years

Ended December 31,

The original lease term was ten years with a right to renew for a second 10-year term

and a right of first offer to purchase.

At the time we entered into this lease, we were not reasonably assured that we would exercise

this renewal option in place of other real estate options.

For that reason, a 10-year period was reflected in the right-of-use (ROU) asset

and lease liability on our balance sheet.

During the third quarter of 2022, we committed to lease an additional 15,400 square feet of

space at 165 Industrial Way, which is connected to the original space at 175 Industrial Way, over a 20-year term.

The ROU asset and lease

liability for the committed space to be leased at 165 Industrial Way will be recorded upon the commencement date of the new lease, which

is anticipated during the second quarter of 2023 after construction of the building shell is completed.

In connection with the lease commitment

for space at 165 Industrial Way, the term of the original lease for 175 Industrial Way was extended by approximately 13 years.

lease liability over the amended term (including inflationary adjustments) aggregates $2,247,978.

Our lease includes variable non-lease

Such payments primarily include common area maintenance charges.

The balance of the operating lease ROU asset was $ 2,194,670

and the operating lease liability was $ 2,249,182 as of December 31, 2022.

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 elected not

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:

During the Years Ended

Operating lease cost

2 unchanged sentences

Operating Lease

Cash paid for operating lease liabilities

Weighted average remaining lease term (in years)

Weighted average discount rate

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Future lease payments required under non-cancelable operating leases

3 unchanged sentences

imputed interest (discount effect of cash flows)

( 1,623,248 )

Total operating liabilities

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

STOCKHOLDERS’ EQUITY

Common Stock Issuances

From February 2016 to April 2021, we issued the

aggregate of 4,553,017 shares of common stock in six different transactions raising gross proceeds of approximately $ 26,714,000 .

funds are essential to funding our business growth plans.

The details of each transaction are discussed below.

On October 28, 2015, we filed a registration statement

on Form S-3 (File No.

333-207635) with the Securities and Exchange Commission (SEC) for the potential issuance of up to $ 10,000,000 in

equity securities (subject to certain limitations).

This registration statement became effective on November 10, 2015.

Under this form

of registration statement, we were limited within a twelve-month period to raising gross proceeds of no more than one-third of the market

capitalization of our common stock (as determined by the high price of our common stock within the preceding 60 days leading up to a sale

of securities) held by non-affiliates (non-insiders) of the Company.

Having raised $10,000,000 in gross proceeds under the February 2016,

July 2017 and December 2017 equity transactions described below, no additional equity securities can be issued under this registration

On February 3, 2016, we sold 1,123,810 shares of

common stock at a price to the public of $ 5.25 per share in an underwritten public offering pursuant to our effective shelf registration

From February 2016 to April 2021, we sold the

aggregate of 4,553,017 shares of common stock in six different transactions raising gross proceeds of approximately $ 26,714,000 at the

weighted average price of $ 5.87 per share.

These funds have been essential to funding our business growth plans.

The details of each transaction

are discussed below.

1) During February of 2016, we sold 1,123,810 shares

of common stock at a price to the public of $ 5.25 per share in an underwritten public offering pursuant to our effective shelf registration

statement on Form S-3, raising gross proceeds of approximately $ 5,900,000 and resulting in net proceeds to the Company of approximately

$ 5,313,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing).

On October 21, 2016, we closed on a private placement

of 659,880 shares of common stock to nineteen institutional and accredited investors at $ 5.25 per share, raising gross proceeds of approximately

$ 3,464,000 and resulting in net proceeds to the Company of approximately $ 3,161,000 (after deducting placement agent fees and other expenses

incurred in connection with the equity financing).

On July 27, 2017, we issued 200,000 shares of our

common stock at a price of $ 5.25 per share in a public, registered sale to two related investors pursuant to our effective shelf registration

2) During October of 2016, we sold, in a private

placement, 659,880 shares of common stock to nineteen institutional and accredited investors at $ 5.25 per share, raising gross proceeds

of approximately $ 3,464,000 and resulting in net proceeds to the Company of approximately $ 3,161,000 (after deducting placement agent

fees and other expenses incurred in connection with the equity financing).

3) During July of 2017, we sold 200,000 shares of

our common stock at a price of $ 5.25 per share in a public, registered sale to two related investors pursuant to our effective shelf registration

statement on Form S-3, raising gross proceeds of $ 1,050,000 and resulting in net proceeds of approximately $ 1,034,000 (after deducting

expenses incurred in connection with the equity financing).

On December 21, 2017, we sold 417,807 shares of

common stock at a price to the public of $ 7.30 per share in an underwritten public offering pursuant to our effective shelf registration

4) During December of 2017, we sold 417,807 shares

of common stock at a price to the public of $ 7.30 per share in an underwritten public offering pursuant to our effective shelf registration

statement on Form S-3, raising gross proceeds of approximately $ 3,050,000 and resulting in net proceeds to the Company of approximately

$ 2,734,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing).

On November 20, 2018, we filed a registration statement

on Form S-3 (File No.

333-228479) with the Securities and Exchange Commission (SEC) for the potential issuance of up to $ 20,000,000 in

equity securities (subject to certain limitations).

This registration statement became effective on November 29, 2018.

Under this form

of registration statement, we are limited within a twelve-month period to raising gross proceeds of no more than one-third of the market

capitalization of our common stock (as determined by the high price of our common stock within the preceding 60 days leading up to a sale

of securities) held by non-affiliates (non-insiders) of the Company.

Under SEC rules governing this form of registration statement, this

registration statement cannot be utilized subsequent to the third anniversary of its effectiveness.

On March 29, 2019, we sold 1,636,364 shares of common

stock at a price to the public of $ 5.50 per share in an underwritten public offering pursuant to our effective shelf registration statement

on Form S-3, raising gross proceeds of approximately $ 9,000,000 and resulting in net proceeds to the Company of approximately $ 8,303,000

5) During March of 2019, we sold 1,636,364 shares

of common stock at a price to the public of $ 5.50 per share in an underwritten public offering pursuant to our effective shelf registration

statement on Form S-3, raising gross proceeds of approximately $ 9,000,000 and resulting in net proceeds to the Company of approximately

$ 8,303,000 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing).

On April 14, 2021, we issued 515,156 shares of

our common stock at a price of $ 8.25 per share in a public, registered sale to seven investors pursuant to our effective shelf registration

6) During April of 2021, we sold 515,156 shares

of our common stock at a price of $ 8.25 per share in a public, registered sale to seven investors pursuant to our effective shelf registration

statement on Form S-3, raising gross proceeds of approximately $ 4,250,000 and resulting in net proceeds of approximately $ 4,233,000 (after

deducting expenses incurred in connection with the equity financing).

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Stock Option Plans

13 unchanged sentences

202,500 options outstanding under the 2010 Plan.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

In June 2017, our stockholders approved the 2017

2 unchanged sentences

fair market value on the date of grant.

At that time, 300,000 shares of common stock were reserved for issuance under the 2017 Plan and

subsequently no additional shares have been reserved for the 2017 Plan.

Vesting requirements are determined by the Compensation and Stock

Option Committee of the Board of Directors on a case-by-case basis.

All options granted under the 2017 Plan expire no later than 10 years

from the date of grant.

The 2017 Plan expires in March 2027, after which date no further options can be granted under the 2017 Plan.

options outstanding under the 2017 Plan at that time can be exercised in accordance with their terms.

As of December 31, 2021, there were

224,500 options outstanding under the 2017 Plan.

At that time, 300,000 shares of common stock were reserved for issuance under the 2017 Plan.

amendment to the 2017 Plan increasing the number of shares reserved for issuance under the 2017 Plan from 300,000 shares to 650,000 shares

was approved by a vote of stockholders at the Annual Meeting of Stockholders in June 2022.

Vesting requirements are determined by the

Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis.

All options granted under the 2017 Plan expire

no later than 10 years from the date of grant.

The 2017 Plan expires in March 2027, after which date no further options can be granted

under the 2017 Plan.

However, options outstanding under the 2017 Plan at that time can be exercised in accordance with their terms.

of December 31, 2022, there were 402,500 options outstanding under the 2017 Plan.

Activity under the stock option plans described

1 unchanged sentence

Weighted Average Exercise Price

Aggregate Intrinsic Value (1)

Intrinsic Value (1)

Outstanding as of December 31, 2020

2 unchanged sentences

Outstanding as of December 31, 2021

$ ( 180,038 )

Terminations/forfeitures (2)

Outstanding as of December 31, 2022

$ ( 661,310 )

Vested as of December 31, 2022

$ ( 165,575 )

Vested and expected to vest as of December 31, 2022

$ ( 661,310 )

Reserved for future grants

(1) Intrinsic value is the difference between the fair market value of the underlying common stock as of the date indicated and as of

the date of the option grant (which is equal to the option exercise price).

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

(1) Intrinsic value is the difference between the fair market value

of the underlying common stock as of the date indicated and as of the date of the option grant (which is equal to the option exercise

(2) Terminations and forfeitures are recognized when they occur.

The following table displays additional information

8 unchanged sentences

Stock options that vested during the year ended December 31, 2022

Stock options that were forfeited during the year ended December 31, 2021

Stock options that were terminated or forfeited during the year ended December 31, 2022

During the year ended December 31, 2022, one

director and three employees exercised stock options covering 25,000 shares by the surrender of 17,128 shares of common stock with a fair

market value of $165,337 at the time of exercise and the payment of $11,693 in cash.

During the year ended December 31, 2020, two employees

exercised stock options covering 12,500 shares by the surrender of 6,583 stock options with a fair market value of the underlying common

stock equal to $39,366 at the time of exercise and the payment of $9 in cash.

former employee and two employees exercised stock options covering 5,000 shares with $ 30,670 in cash.

During the year ended December 31,

2021, one director and three employees exercised stock options covering 25,000 shares by the surrender of 17,128 shares of common stock

with a fair market value of $165,337 at the time of exercise and the payment of $11,693 in cash.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

The weighted average remaining life of the options

outstanding under the 2010 Plan and the 2017 Plan as of December 31, 2021 was approximately 5 years.

The weighted average remaining life

of the options exercisable under these plans as of December 31, 2021 was approximately 4 years and 3 months.

The exercise prices of the

options outstanding as of December 31, 2021 ranged from $ 4.00 to $ 10.04 per share.

The 86,000 stock options granted during the year ended

December 31, 2021 had exercise prices between $ 6.10 and $ 10.04 per share.

The 100,000 stock options granted during the year ended December

31, 2020 had exercise prices between $ 4.00 and $ 6.37 per share.

The aggregate intrinsic value of options exercised during the years ended

December 31, 2021 and 2020 approximated $ 64,977 and $ 35,375 , respectively.

The weighted-average grant date fair values of options granted

during the years ended December 31, 2021 and 2020 were $ 4.51 and $ 2.47 per share, respectively.

As of December 31, 2021, total unrecognized

stock-based compensation related to non-vested stock options aggregated $349,477, which will be recognized over a weighted average remaining

period of 1 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 Note 2(m), with the following weighted-average assumptions:

During the Years

Ended December 31,

Risk-free interest rate

outstanding under the 2010 Plan and the 2017 Plan as of December 31, 2022 was approximately 5 years and 2 months.

The weighted average

remaining life of the options exercisable under these plans as of December 31, 2022 was approximately 3 years and 7 months.

prices of the options outstanding as of December 31, 2022 ranged from $ 4.00 to $ 10.04 per share.

The 210,500 stock options granted during

the year ended December 31, 2022 had exercise prices between $ 6.52 and $ 9.39 per share.

The 86,000 stock options granted during the year

ended December 31, 2021 had exercise prices between $ 6.10 and $ 10.04 per share.

The aggregate intrinsic value of options exercised during

the years ended December 31, 2022 and 2021 approximated $ 10,525 and $ 64,977 , respectively.

The weighted-average grant date fair values

of options granted during the years ended December 31, 2022 and 2021 were $ 4.03 and $ 4.51 per share, respectively.

As of December 31,

2022, total unrecognized stock-based compensation related to non-vested stock options aggregated $793,171, which will be recognized over

a weighted average remaining period of approximately 2 years.

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 Note 2(n), with the following weighted-average assumptions:

During the Years Ended

interest rate (1)

Dividend yield (2)

2 unchanged sentences

(1) The risk-free interest rate is based on U.S.

Treasury yields for a maturity approximating the expected option term, while the other assumptions are derived from averages of our historical

Treasury yields

for a maturity approximating the expected option term.

(2) The dividend yield and expected volatility are derived from

averages of our historical data.

(3) The expected life is calculated utilizing the simplified method,

which uses the mid-point between the vesting period and the contractual term as the expected life.

Common Stock Rights Plan

6 unchanged sentences

of the Rights are set forth in a Rights Agreement between the Company and American Stock Transfer & Trust Co., as Rights Agent.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

The Rights (as amended) become exercisable and transferable

12 unchanged sentences

having a market value at that time equal to twice the Right’s exercise price.

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

At any time after a person or group becomes an Acquiring

5 unchanged sentences

may redeem the then outstanding Rights in whole, but not in part, at a price of $0.005 per Right, subject to adjustment.

During the third quarter of 2011, our Board of

Directors voted to authorize an amendment to the Rights Plan to increase the ownership threshold for determining “Acquiring Person”

status to 20 %.

During the second quarter of 2015, our Board of Directors also voted to authorize an amendment to remove a provision that

prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20 % of our stock) from

controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors.

We did this because such

provisions have come to be viewed with disfavor by Delaware courts.

Each time that we made such amendments we entered into amendments

to the Rights Agreement with the Rights Agent reflecting such extensions, threshold increases or provision changes.

No other changes have

been made to the terms of the Rights or the Rights Plan.

At various times over the years, our Board of

Directors has voted to authorize amendments of the Rights Agreement to extend the Final Expiration Date, which is currently September

Our Board of Directors also has voted to authorize amendments to increase the ownership threshold for determining “Acquiring

Person” status to 20%.

During the second quarter of 2015, our Board of Directors also voted to authorize an amendment to remove

a provision that prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20%

of our stock) from controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors.

did this because such provisions have come to be viewed with disfavor by Delaware courts.

Each time that we made such amendments we entered

into amendments to the Rights Agreement with the Rights Agent reflecting such extensions, threshold increases or provision changes.

other changes have been made to the terms of the Rights or the Rights Agreement.

Directors has voted to authorize amendments to the Rights Plan to extend the Final Expiration Date.

Our Board of Directors decided to

seek an advisory vote by stockholders at the Annual Meeting of Stockholders held in June 2022, as to whether to extend the Rights Plan

by one year to September 19, 2023.

Recognizing that there might be a substantial number of broker non-votes, our Board of Directors, which

has the authority to amend the Rights Plan, disclosed that it would be guided by the votes actually cast on this proposal in deciding

whether to extend the expiration date of such plan by one year.

Of the votes actually cast on this proposal, 65% voted in favor, 32% voted

against and 3% abstained.

On the basis of this vote, our Board of Directors voted to extend the Rights Plan by one year to September 19,

Authorized Common Stock

4 unchanged sentences

to our Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 11,000,000 to 15,000,000 .

primarily offer the First Defense ® product line to dairy and beef producers to prevent scours in newborn calves.

Generally, our products are promoted to veterinarians as well as dairy and beef producers by our sales team and then sold through distributors.

primarily offer the First Defense Ò product

line to dairy and beef producers to prevent scours in newborn 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.

We do sell into select international regions and may expand this international reach in the future.

There were no material changes between the allocation and timing of revenue recognition during the years ended December 31, 2021 or 2020.

We do not have any contract assets for which we have satisfied the performance obligations, but do not yet have the right to bill for,

or contract liabilities such as customer advances.

We do sell into select

international regions and may expand this international reach in the future.

There were no material changes between the allocation and

timing of revenue recognition during the years ended December 31, 2022 or 2021.

We do not have any contract assets for which we have

satisfied the performance obligations, but do not 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.

incur no material costs to obtain contracts.

We incur no material costs to obtain contracts.

ImmuCell Corporation

11 unchanged sentences

Total Product Sales

Our primary customers for the majority of our product

sales ( 86 % and 89 % during the years ended December 31, 2021 and 2020, respectively) are in the U.S.

dairy and beef industries.

sales to international customers, who are also in the dairy and beef industries, aggregated 14 % and 11 % of our total product sales during

the years ended December 31, 2021 and 2020, respectively.

OTHER EXPENSES (INCOME), NET

Other expenses (income), net, consisted of the

During the Years

Ended December 31,

OTHER EXPENSES, NET

Other expenses, net, consisted of the following:

During the Years Ended

Interest expense (1)

Interest rate swap termination fee

Debt forgiveness

Loss on disposal of fixed assets

(Gain) loss on disposal of property, plant and equipment

Interest income

Other expenses (income), net

$ ( 348,100 )

(1) Interest expense during the year ended December 31, 2020

included a $ 94,782 write-off of debt issuance costs associated with debt that we repaid during the first quarter of 2020.

Interest expense

included amortization of debt issuance costs of $ 7,841 and $ 7,942 during the years ended December 31, 2021 and 2020, respectively.

Our income tax expense (benefit) aggregated $ 9,165

and ($ 10,136 ) (amounting to 13 % and ( 1 %) of our loss before income taxes) during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we had federal net operating loss carryforwards of $14,734,684 of which $13,022,777 do not expire and of which

$1,711,907 expire in 2034 through 2037 (if not utilized before then) and state net operating loss carryforwards of $1,440,707 that expire

in 2037 through 2038 (if not utilized before then).

Additionally, we had federal general business tax credit carryforwards of $557,795

that expire in 2027 through 2042 (if not utilized before then) and state tax credit carryforwards of $775,473 that expire in 2022 through

2042 (if not utilized before then).

Income - other

Other expenses, net

(1) Interest expense includes amortization of debt issuance costs

of $ 7,658 and $ 7,841 during the years ended December 31, 2022 and 2021, respectively.

Our income tax expense aggregated $ 7,672 and $ 9,165

(amounting to less than 1 % and 13 % of our loss before income taxes) during the years ended December 31, 2022 and 2021, respectively.

of December 31, 2022, we had federal net operating loss carryforwards of $15,516,167 of which $13,804,260 do not expire and of which $1,711,907

expire in 2034 through 2037 (if not utilized before then) and state net operating loss carryforwards of $1,106,340 that expire in 2037

through 2038 (if not utilized before then).

Additionally, we had federal general business tax credit carryforwards of $673,233 that expire

in 2027 through 2042 (if not utilized before then) and state tax credit carryforwards of $791,397 that expire in 2023 through 2042 (if

not utilized before then).

The provision for income taxes is determined using

31 unchanged sentences

The income tax provision consisted of the following:

During the Years

Ended December 31,

During the Years Ended December 31,

Current subtotal

2 unchanged sentences

Deferred subtotal, net

Income tax expense (benefit)

The actual income tax expense differs from the

expected tax computed by applying the U.S.

federal corporate tax rate of 21 % to the loss before income taxes during the years ended December

31, 2021 and 2020 respectively, as follows:

the Years Ended December 31,

Income tax expense

The actual income tax expense differs from the expected tax computed

by applying the U.S.

federal corporate tax rate of 21 % to the loss before income taxes during the years ended December 31, 2022 and 2021

respectively, as follows:

During the Years Ended December 31,

Computed expected income tax expense rate

3 unchanged sentences

Valuation allowance

Paycheck Protection Program loan forgiveness

Income tax expense (benefit)/rate

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

Income tax expense/rate

The significant components of our deferred tax assets,

net, consisted of the following:

of December 31,

Product rights

As of December 31,

Property, plant and equipment

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Federal net operating loss carryforwards

State tax credits carryover

State tax credits and net operating loss carryforwards

§174 R & D expenditures

Deferred compensation

Prepaid expenses and other

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Deferred tax assets, net

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

SEGMENT INFORMATION

2 unchanged sentences

Pursuant to Codification Topic 280, Segment Reporting , we operate in the following two reportable business segments:

Defense ® and ii) Re-Tain ® .

The significant accounting policies of these segments are described

Product sales are the primary factor we use in determining our reportable segments.

The governing regulatory authority (USDA

or FDA) is also a factor in determining our reportable segments.

Management monitors and evaluates segment performance from sales to net

operating income (loss) closely.

and ii) Mastitis.

The Scours segment consists of the First Defense ® product line.

The core technology underlying

the Scours segment is derived around polyclonal antibodies.

The Mastitis segment includes our products, CMT and Re-Tain ® .

Re-Tain ® is projected to be the driver of this segment when approved for sale.

The core technology underlying the

Mastitis segment is derived around 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 Note 2.

Product sales

are the primary factor we use in determining our reportable segments.

The governing regulatory authority (USDA for First Defense ®

or FDA for Re-Tain ® ) is also a factor in determining our reportable segments.

Management monitors and evaluates

segment performance from sales to net operating income (loss) closely.

We are not 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.

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.

the Year Ended December 31, 2021

First Defense ®

No segments have been

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.

chief operating decision-maker is our President and CEO.

During the Year Ended December 31, 2022

Product sales

Costs of goods sold

OPERATING EXPENSES:

Product development expenses

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$ ( 2,400,614 )

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

the Year Ended December 31, 2020

First Defense ®

$ ( 2,298,943 )

During the Year Ended December 31, 2021

Product sales

Costs of goods sold

OPERATING EXPENSES:

Product development expenses

5 unchanged sentences

$ ( 1,890,013 )

$ ( 1,380,353 )

First Defense ®

Total Assets as of December 31, 2022

Total Assets as of December 31, 2021

Depreciation and amortization expense during the year ended December 31, 2021

Depreciation and amortization expense during the year ended December 31, 2020

Depreciation and amortization expense during the year ended

December 31, 2022

Depreciation and amortization expense during the year ended

December 31, 2021

Capital Expenditures during the year ended December 31, 2022

Capital Expenditures during the year ended December 31, 2021

ImmuCell Corporation

Notes to Audited Financial Statements (continued)

RELATED PARTY TRANSACTIONS

Tomsche (Chair of our Board of Directors) is a controlling owner of Leedstone Inc., a domestic distributor of ImmuCell products (the

First Defense ® product line and CMT ), and of J-t Enterprises of Melrose, Inc., an exporter.

His affiliated

companies purchased $ 651,424 and $ 668,308 of products from us during the years ended December 31, 2021 and 2020, respectively, on terms

consistent with those offered to other distributors of similar status.

We made marketing-related payments of $ 0 and $ 975 to these affiliated

companies during the years ended December 31, 2021 and 2020, respectively, which represent amounts similar to those offered to other

distributors of similar status.

Our accounts receivable (subject to standard and customary payment terms) due from these affiliated companies

aggregated $ 55,490 and $ 51,286 as of December 31, 2021 and 2020, respectively.

Tomsche (Chair of our Board of Directors) is a controlling

owner of Leedstone Inc., a domestic distributor of ImmuCell products (the First Defense ® product line and CMT ),

and of J-t Enterprises of Melrose, Inc., an exporter.

His affiliated companies purchased $ 587,677 and $ 651,424 of products from us during

the years ended December 31, 2022 and 2021, respectively, all on terms consistent with those offered to other distributors of similar

Our accounts receivable (subject to standard and customary payment terms) due from these affiliated companies aggregated $ 46,426

and $ 55,490 as of December 31, 2022 and 2021, respectively.

EMPLOYEE BENEFITS

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We have evaluated subsequent events through the

time of filing on March 30, 2022, the date we have issued this Annual Report on Form 10-K.

On March 23, 2022, we (a) extended our existing

$1.0 million line of credit with Gorham Savings Bank (GSB) until March 11, 2024, and (b) increased our mortgage borrowing from GSB by

$2.0 million, resulting in the initial principal balance of $6,233,956 being subject to repayment on the basis of a 20-year amortization

schedule payable over a 10-year term at a blended interest rate of 3.53% per annum, under which a balloon payment of $3,682,918 plus accrued

interest would become due on March 11, 2032.

The revised mortgage note is secured by a mortgage on our premises located at 56 Evergreen

Drive and 33 Caddie Lane in Portland, Maine.

As of the time of filing on March 30, 2022, there were no other material, reportable subsequent

time of filing on the date we have issued this Annual Report on Form 10-K.

Except for the contamination event and the bank debt covenant

waiver discussed below, there were no material, reportable subsequent events.

Subsequent to year end, our standard in-process quality

control testing detected a contamination event in our production process.

In response, we have temporarily slowed down production during

the first quarter of 2023 to investigate the root cause and remediate the problem.

We anticipate this slowdown will reduce sales during

the first quarter of 2023 to between approximately $3,200,000 and $3,400,000.

Due to the resulting loss in gross margin caused by the

reduced sales level, we have decided to defer, for the time being, certain capital expenditures.

The related one-time charge to costs

of goods sold during the first quarter of 2023 is expected to be up to approximately $200,000, of which approximately $114,000 worth of

product remains under evaluation.

During the first quarter of 2023, the Debt Service Coverage (DSC) ratio covenant for the year ending

December 31, 2023 was waived by our bank.

Instead, we are required to meet a minimum DSC ratio requirement of 1.35 for the twelve-month

periods ending June 30, 2024, September 30, 2024 and December 31, 2024 and then again annually after that.

ImmuCell Corporation

5 unchanged sentences

/s/ Michael F.

Brigham President,

Chief Executive Officer and

Principal Financial Officer

Brigham President, Chief Executive Officer and Principal Financial Officer

POWER OF ATTORNEY

15 unchanged sentences

March 22, 2023

Principal Financial Officer

Principal Financial Officer and Director

/s/ Bobbi Jo Brockmann

6 unchanged sentences

March 22, 2023

/s/ Elizabeth S.

March 22, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures