Item 2. Properties
ITEM 2 — PROPERTIES
Building 56:
During 1993, we purchased a 15,000 square foot
facility (that included 5,000 square feet of unfinished office space on the second floor) at 56 Evergreen Drive in Portland, Maine. We
currently use this space for substantially all of our: i) office and laboratory needs, ii) vaccine manufacturing operations, iii) liquid
processing operations and iv) freeze-drying operations for our USDA-regulated product line. All of our powder milling and filling operations,
gel formulation operations and assembly services have been relocated out of this building. During 2001, we completed a construction project
that added approximately 5,200 square feet of new manufacturing space on the first floor and approximately 4,100 square feet of storage
space on the second floor. During 2007, we built out the 5,000 square feet of unfinished space on the second floor into usable office
space. After moving offices from the first floor into this new space on the second floor, we modified and expanded the laboratory space
on the first floor and added approximately 2,500 additional square feet of storage space on the second floor. During 2009, we added 350
square feet of cold storage space connected to our first floor production area and added an additional 600 square feet to the second floor
storage area. During 2015, we completed construction of a two-story addition connected to our facility to provide us with approximately
7,100 additional square feet for cold storage, production and warehouse space for our operations. These additions increased the size of
the facility to approximately 34,850 square feet.
Building 33:
During 2015, we exercised an option to acquire
land at 33 Caddie Lane in Portland, Maine which is near our facility at 56 Evergreen Drive, on which we initiated construction of our
Drug Substance production facility for Re-Tain ®
during the third quarter of 2016. During the fourth quarter of 2017, we obtained a Certificate of Occupancy from the City of Portland
for our 16,202 square foot (9,803 on the first floor and 6,399 on the second floor) Drug Substance production facility. Our FDA-regulated
operations are conducted in this building.
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ImmuCell
Corporation
Building 14:
During 2017, we purchased a 4,080 square foot
facility adjacent to the Drug Substance production facility for Re-Tain ®
at 14 Wedge Way in Portland, Maine. We are using this warehouse space primarily for storage of inventory, materials and equipment. We
are presently modifying this facility for packing, shipping and cold storage for Re-Tain ®
and other warehousing needs. We expect these modifications to be complete during the middle of 2023.
Building 175:
During 2019, we entered into a lease covering
approximately 14,300 square feet of office and warehouse space to expand our USDA-regulated manufacturing operations. We have renovated
this space (a Certificate of Occupancy was issued during the second quarter of 2020) to help us expand our production capacity and improve
quality for the First Defense ® product line. This space is being used for all of our powder milling and filling,
gel formulation and assembly services. The original lease term was ten years with a right to renew for a second ten-year term and a right
of first offer to purchase. During the third quarter of 2022, we entered into a new 20-year lease covering a facility that is now being
constructed by our landlord ( Building 165 , described below), which is adjacent to (and could be connected to) Building 175 .
In connection with this new lease, the lease to Building 175 was extended by approximately 13 years to match the expiration of
the other lease to Building 165 .
Building 165:
During the third quarter of 2022, we committed
to lease an additional 15,400 square feet of space at 165 Industrial Way in Portland, Maine, which could be connected to Building 175 ,
over a 20-year term. The lease commencement date is when the landlord is issued a Certificate of Occupancy for the building shell, which
is anticipated to be around the beginning of the second quarter of 2023. Lease payments begin four months after this date. We intend to
use this space for the following three purposes: 1) improve product quality by moving powder milling out of Building 56 , 2) provide
much needed additional warehouse space and 3) provide space for additional freeze-drying equipment to increase our production capacity
to approximately $40 million per year. Due to the loss in gross margin on product sales during the first quarter of 2023 caused by the
slowdown in production output necessary to remediate a product contamination event, we have decided to defer, for the time being, completion
of the investment to build out Building 165 . The objective to separate our powder milling operations out of Building 56
has been achieved by moving milling to Building 175 for the time being.
Other:
During the first quarter of 2017, we entered
into a renewable, two-year lease for approximately 1,350 square feet of office, warehouse and garage space in Warsaw, New York to support
our farm operations. This lease was extended through and terminated at the end of March of 2021. During March of 2021, we entered into
a different renewable, two-year lease for approximately 1,300 square feet of office, storage and parking space in New York. Subsequently,
we entered into a new two-year lease to the same property through March of 2025 that includes an option to renew for an additional two-year
term. We are renting approximately 960 square feet in Winona, Minnesota for a sales office. This lease automatically renews with 4% increases
for one-year terms unless we or the landlord give 60-days’ notice of a change. The current term expires in June 2023. We do not
expect to provide notice of cancellation at this time. We also maintain access to cows (as a source of colostrum used in the production
of the First Defense ® product line) through contractual
relationships with commercial dairy farms. We maintain property insurance in amounts that approximate replacement cost and a modest amount
of business interruption insurance.