What changed in this filing

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Item 1A. Risk Factors

2026-03-30 compared with 2025-03-28 · 242 added, 653 removed, 25 unchanged (97% of the section changed)

TO ITEM 1A – RISK FACTORS

Risks Pertaining to the Dairy and Beef Industries

Size of the Company

Pertaining to Common Stock

margin on product sales:

One of our goals is to achieve a gross margin as a percentage of total sales of 40% or more (including depreciation

expense) after the initial launch of new products.

Depreciation expense will be a larger component of costs of goods sold for Re-Tain ®

than it is for the First Defense ® product line.

Gross margins generally improve over time, but this anticipated

improvement may not be realized for Re-Tain ® .

Many factors discussed in this Annual Report (including contaminations,

process yields, inflation, cost increases, supply-chain disruptions and the rising price of oil and other commodities and supplies) impact

our costs of goods sold.

There is a risk that we are not able to achieve our gross margin goal, which would adversely affect our operating

results and could impact our future operating plans.

We missed our gross margin goal during the years ended December 31, 2024 and 2023

with realized gross margins of 30% and 22%, respectively.

There is a risk that our plans to maintain or improve our gross margin may

not be realized due to cost increases, production yield losses, additional manufacturing contamination events, production equipment failures,

price inelasticity or any combination of these factors.

In addition, such negative events, depending on their severity, could deplete

our cash resulting in an inability to fund our business.

to interest rates and debt service obligations:

Rising interest rates could negatively affect the operating costs of dairy and beef

producers and thus put further financial pressure on an already stressed business sector, which could indirectly, but materially and

adversely, affect our business.

Increases in interest rates since 2020 have had only limited effect on our direct cost of borrowing.

During the first quarter of 2020, we refinanced our bank debt (with the exception of our line of credit) with fixed rate notes.

debt outstanding as of December 31, 2024 was $5.6 million bearing interest at the fixed rate of 3.53% per annum.

Our equipment loans

outstanding as of December 31, 2024 were $1.9 million bearing interest at the fixed rate of 3.50% per annum.

The outstanding balance

on the two State of Maine loans as of December 31, 2024 was approximately $592,000 bearing interest at the fixed rate of 5% per annum.

The $3 million in debt that we borrowed during the third quarter of 2023 (which had an outstanding balance of approximately $2.5 million

as of December 31, 2024) bears interest at the blended fixed rate of 7.33% per annum illustrating the effect of rising interest rates.

Our outstanding debt as of December 31, 2024 aggregating $10.6 million (gross of debt issuance and debt discount costs) bears interest

at the blended fixed rate of 4.51% per annum.

ITEM 1A — RISK FACTORS

We caution you that our business and operations are subject to a number of risks and uncertainties.

The factors listed below are important factors that could cause our actual results to differ materially from our historical results and from projections in forward-looking statements contained in this report.

Other factors that we do not anticipate, or that we do not consider material based on currently available information, may also have an adverse effect on our results.

Financial Risks

Gross margin on product sales:

We consider gross profit as a percentage of product sales (gross margin) to be a key measure of our overall efficiency of production and of our ability to maintain favorable pricing of our products.

Between 2024 and 2025, we saw a substantial recovery of gross margin, from 30% to 41% of product sales, with the latter percentage materially affected by a non-cash write-down of inventories representing approximately 2.4% of product sales for the year ended December 31, 2025.

Many factors affect our costs of goods sold and therefore impact gross margin.

There is a risk that efforts to maintain or improve our gross margin may not be realized due to distributor or end-customer price inelasticity, lack of colostrum supply or increased colostrum costs, other cost increases, production yield losses, in-process contamination events, equipment failures, or any combination of these factors.

Product sales :

We will seek to expand our First Defense® product sales by increasing the share of calves in the U.S.

using our products and by seeking to enter non-U.S.

markets where we presently have little or no presence.

We have increased our investment in our commercial staff.

The markets for calf scours preventatives and treatments are highly competitive.

First Defense® typically has a higher price per application than vaccine products against which we compete, reflecting what we consider to a higher level of efficacy.

There is no assurance that our increased sales efforts in domestic markets or our attempts to enter new international markets will result in higher product sales.

Our efforts to expand into international markets also may be constrained by difficulties in achieving necessary regulatory approvals for our products in that country.

Net income (loss):

In 2025 we achieved a significant increase in net operating income, amounting to $1.6 million versus a $1.6 million net operating loss for 2024.

Our future financial performance can be affected by numerous factors that are difficult to predict or that are beyond our control.

Exposure to interest rates and debt service obligations:

Rising interest rates could negatively affect the operating costs of distributors and producers and put financial pressure on dairy and beef business sectors, which could indirectly, but materially and adversely, affect our business.

Our aggregate outstanding debt as of December 31, 2025 totaled $9.1 million (without counting debt issuance and debt discount costs) bearing interest at the blended fixed rate of 4.31% per annum.

Increasing interest rates would negatively impact the cost of any future borrowings.

was experienced on the new debt facilities aggregating $3 million that we closed during the third quarter of 2023.

The additional debt

we incurred to fund our growth objectives has significantly increased our total debt service costs.

We are obligated to make principal

and interest payments aggregating approximately $2 million and $3.7 million during the years ending December 31, 2025 and 2026, respectively.

The additional debt we incurred to fund our growth objectives has increased our total debt service costs.

We are obligated to make principal and interest payments aggregating approximately $2 million and $1.5 million during the years ending December 31, 2026 and 2027, respectively.

See Note 9 to the accompanying audited financial statements for more details about our debt.

A decline in sales or gross margin, coupled

with this debt service burden, could impair our ability to fund our capital and operating needs and objectives.

Our debt with Maine Community Bank (formerly Gorham Savings Bank) and the Finance Authority of Maine is subject to certain

financial covenants.

ImmuCell Corporation

Debt covenants:

Our debt with Maine Community Bank is subject to certain financial covenants.

We are required to meet a minimum debt service coverage (DSC) ratio of 1.35.

Our actual DSC ratios were 0.73, (1.10),

0.44, 2.68 and 2.03 for the years ended December 31, 2024, 2023, 2022, 2021 and 2020, respectively.

During the first quarter of 2023,

the DSC ratio covenant for the year ended December 31, 2023 was preemptively waived by our lender.

Instead, we were required to meet

a minimum DSC ratio requirement of 1.35 for the twelve-month periods ended June 30, 2024, September 30, 2024 and December 31, 2024, and

then again annually after that.

During the first quarter of 2024, the DSC ratio covenant for the twelve-month period ended June 30, 2024

was preemptively waived by our lenders.

During the third quarter of 2024, the DSC ratio covenant for the twelve-month period ended September

30, 2024 was preemptively waived by our lenders.

During the fourth quarter of 2024, the DSC ratio covenant for the twelve-month period

ended December 31, 2024 was preemptively waived by our lenders.

Our next compliance obligation is for the year ending December 31, 2025.

Our actual DSC ratios were 2.65 and 0.73 for the years ended December 31, 2025 and 2024, respectively.

The DSC ratio covenant was preemptively waived by our lenders for the twelve months periods ended June 30, 2024, September 30, 2024 and December 31, 2024.

There is no assurance that we will be able to achieve the required DSC ratio going forward.

If we are unable to do so or reach a favorable

agreement with our lenders regarding that requirement (including an amendment to or waiver of such requirement), we would be in violation

of that covenant, which could result in unfavorable amendments to the terms of our bank debt (including a possible bank requirement to

prepay our debt) or have other adverse impacts on our business and results of operations.

exchange fluctuation:

If we are unable to do so or reach a favorable agreement with our lenders regarding that requirement (including an amendment to or waiver of such requirement), we would be in violation of that covenant, which could result in unfavorable amendments to the terms of our bank debt (including a possible bank requirement to prepay our debt) or have other adverse impacts on our business and results of operations.

Currency exchange fluctuation:

We do not believe that currency exchange rates have had a significant effect on our revenues and expenses.

However, future increases in the value of the U.S.

dollar could affect our customers and the demand for our products.

We hope to increase

the level of our future sales of products outside the United States.

The cost of our products to international customers could be affected

by currency fluctuations.

The decline of the U.S.

dollar against other currencies could make our products less expensive to international

Conversely, a stronger U.S.

dollar could make our products more costly for international customers.

A weaker U.S.

international purchases more expensive for us.

supply disruptions, tax rates and economic downturns:

Inflation is having a material and adverse impact on almost all supplies we

purchase and labor we hire and retain.

Continuing or increasing inflationary trends could materially reduce our gross margin on product

sales if we are unable or unwilling to impose offsetting price increases on our customers.

The extent and duration of the negative impact

on the economics of our customers and on the demand for our products going forward are very difficult to assess.

The dairy market, similar

to many others, has been unstable as a result of the pandemic.

The price paid to producers for milk has been very volatile.

III milk price has been extremely volatile since the onset of the pandemic.

Market conditions have improved somewhat, but this volatility

remains a concern.

Additionally, like most input costs, the cost of grain and other feed is rising, which puts a strain on the profitability

of our customers.

There is also economic uncertainty for beef producers, as the supply chain is interrupted or otherwise adversely affected

due to closures of processing plants and reduced throughput.

This is a very unusual situation for farmers who work so hard to improve

production quality and efficiency in order to help feed a growing population with high-quality and cost-effective proteins.

created risk and continues to create uncertainty and challenges for us and has created or contributed to global supply-chain disruptions

and has affected international trade, while creating a worldwide health and economic crisis.

Stock market valuations have declined and

recovered somewhat but remain very volatile.

Inflation has increased significantly, and tax rates may increase.

There is a risk of a

period of economic downturn, the severity and duration of which are difficult to know.

Prior to the pandemic and the responsive federal

economic stimulus programs, many feared the United States had taken on too much national debt.

Now the debt load is significantly higher.

A combination of the conditions, trends and concerns summarized above could have a corresponding negative effect on our business and

operations, including the supply of the colostrum we purchase to produce our First Defense ® product line, the demand

for our products in the U.S.

However, particularly if we expand non-U.S.

sales of First Defense® future increases in the value of the U.S.

dollar could make our products more expensive for our non-U.S.

customers and affect demand for our products.

Conversely, decline of the U.S.

dollar against other currencies could make our products less expensive to international customers.

Inflation, supply disruptions, tax rates and economic downturns:

Cumulative inflation over the past five years has materially increased the price of almost all supplies we purchase and the labor we hire and retain.

The cost of grain and other inputs for our customers has risen over that period, putting strain on the profitability of our customers.

On the other hand, calf prices have increased significantly since 2020, which we believe makes spending on scours prevention more attractive.

economy were to experience an extended period of economic downturn, we expect this 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.

to this risk is mitigated to some extent by the fact that our supply chain is not heavily dependent on foreign manufacturers, by our

on-going cross-training of our employees, by qualifying alternate suppliers and components and by our early and continued compliance

with recommended hygiene.

of net (loss) income:

Generally speaking, our financial performance can differ significantly from management projections, due to

numerous factors that are difficult to predict or that are beyond our control.

Weaker than expected sales of the First Defense ®

product line could lead to deeper operating losses or less profits.

The timing of FDA approval of Re-Tain ®

will continue to have a material impact on our net (loss) income until sufficient commercial sales are generated and sustained, unless

we adequately reduce product development expenses.

associated with our funding strategy for Re-Tain ® :

The inability to maintain adequate cash and

liquidity to support the commercialization of Re-Tain ® is a risk to our business.

Achieving FDA approval of our

pharmaceutical-grade Nisin produced at commercial-scale is the most critical action remaining in front of us on our path to U.S.

approval of Re-Tain ® .

Having completed the construction and equipping of the DS production facility (as described

in more detail in PART I:

ITEM 2 of this Annual Report) at a cost of approximately $20.8 million, we will continue to incur product

development expenses to operate and maintain this facility until commercialization, although we are reducing these expenses now that

production of inventory for our Controlled Launch is complete.

of market size and product sales estimates:

Estimating the size of the total addressable market and future sales growth potential

for our First Defense ® product line is based on our experience and understanding of market dynamics but is inherently

Estimating the size of the market for any new product, such as Re-Tain ® , involves more uncertainties

than do projections for established products.

We do not know whether, or to what extent, our products will achieve, maintain or increase

market acceptance and profitability.

Some of the uncertainties surrounding Re-Tain ® include the product’s

effectiveness against currently prevalent pathogens, market acceptance, the effect of a premium selling price on market penetration,

cost of manufacture, competition from new and existing products sold by substantially larger competitors with greater market reach and

promotional resources and other risks described under “Product Risks” – “Sales risks pertaining to Re-Tain ® ”

Since Re-Tain ® is a novel approach to treating mastitis, there are many uncertainties with regards to how

quickly and to what extent we can develop the subclinical mastitis treatment market.

We believe that polypeptide antimicrobial technology

may be viewed positively (relative to traditional antibiotics).

If realized, this may offset some of these risks and result in better

overall market acceptance.

deferred tax assets:

Business interruption and business continuity:

Our business interruption insurance may not be adequate to cover our potential losses, liabilities and damages.

Furthermore, we may be subject to business continuity risk in the event of an unexpected loss of a material facility or operation.

Our product operations are concentrated at a single location, which exposes us to significant business interruption risk if that facility is damaged or otherwise unavailable.

Although we maintain insurance coverage intended to protect against certain losses;

waiting periods, deductibles, and exceptions could materially reduce or eliminate recovery for certain events.

We pursue risk mitigation measures and periodically review our insurance programs, but these steps may not be sufficient to eliminate the risks described above or to prevent a material adverse effect on our business.

Uncertainty of market size and product sales estimates:

Estimating the size of the total addressable market and future sales growth potential for our First Defense ® product line is based on our experience and understanding of market dynamics but is inherently subjective.

Estimating the size of the market for any new product, such as First Defense Technology ® , involves more uncertainties than do projections for established products.

We do not know whether, or to what extent, our products will achieve, maintain or increase market acceptance and profitability.

Some of the uncertainties surrounding First Defense Technology ® include the product’s effectiveness against currently prevalent pathogens, market acceptance, the effect of our selling price on market penetration, the potential cannibalization effect on other First Defense ® products, competition from new and existing products sold by substantially larger competitors with greater market reach and promotional resources and other risks.

Net deferred tax assets:

The realizability of our net deferred tax assets is a subjective estimate that is contingent upon many variables.

During the second quarter of 2018, we recorded a full valuation allowance against our net deferred tax assets that significantly increased

our net loss in comparison to other periods.

This non-cash expense could be reversed, and this valuation allowance could be reduced or

eliminated, if warranted by our actual and projected profitability in the future.

We will continue to assess the need for the valuation

allowance each quarter.

risks generally:

During the second quarter of 2018, we recorded a full valuation allowance against our net deferred tax assets that significantly increased our net loss in comparison to other periods.

This non-cash expense could be reversed, and this valuation allowance could be reduced or eliminated, if warranted by our actual and projected profitability in the future.

We will continue to assess the need for the valuation allowance each quarter.

Product Risks

Product risks generally:

We set objectives for our products that we believe we can achieve, but the achievement of such goals is not a certainty.

The sale of our products is subject to production, financial, efficacy, regulatory, competitive and other market risks.

Elevated standards

to achieve and maintain regulatory compliance required to sell our products continue to evolve.

Failure to achieve acceptable biological

yields from our production processes can materially increase our costs of goods sold and reduce our production output, leading to lower

margins and/or an order backlog that could adversely affect our customer relationships and operating results.

First Defense ®

is sold, and we expect Re-Tain ® to be sold, at significant price premiums relative to competitive products.

There is no assurance that we will continue to achieve market acceptance of the First Defense ® product line, or

achieve and sustain market acceptance of Re-Tain ® , at a profitable price level or that we can continue to manufacture

our products at a low enough cost to result in a sufficient gross margin to justify their continued manufacture and sale.

Re-Tain ® to market, these risks could be heightened by the additional uncertainties associated with introducing

a new product requiring a shift in customer behavior.

Contamination

events, equipment failures and gross margin from our production process:

During the first three and a half months of 2024 as well

as during 2023 and late 2022, we experienced certain contamination events and equipment failures in our production process that resulted

in scrapped inventory and a slowdown of our production process, which had a significant negative impact on our operating results.

realization of this risk following the contamination events discussed above did result in a slowdown of our production output during

2023 to remediate this problem, which led to less sales and gross margin during the year.

We are at risk of further such production contaminations

or equipment failures resulting in more scrapped inventory.

Additional contamination events or equipment failures causing significantly

less production output, depending on their severity, could deplete our cash resulting in an inability to fund our business operations.

risks pertaining to Re-Tain ® :

Actual or prospective Re-Tain ® customers

may decide to discontinue, reduce or avoid usage of Re-Tain ® due to the following risks:

A rejection of a tank of milk by a positive milk inhibitor test because too much of the milk in a bulk tank is comprised of milk from

cows being treated with Re-Tain ® , when tested randomly for inhibitors by a milk hauler, which could create legal

A failed or stalled cheese tank occurs when a Nisin susceptible cheese starter culture is impacted by residues in milk that exceed our

on-farm treatment recommendations, which aims to limit concentrations of bulk tanks or tankers to 1% of milk from cows treated with Re-Tain ®

or is not effectively diluted through the milk collection and transportation system.

After we study this potential impact during

our Controlled Launch of Re-Tain ® , we may decide to seek a post-approval label change requiring a short discard

of milk, which may be limited to just the treated quarter of the cow.

Producers’ current practice generally is to treat only clinical mastitis, which has the visual indicator of abnormal milk.

to gain market penetration for Re-Tain ® , we will need to change that practice and increase awareness of the importance

of treating subclinical disease.

This will require the producers’ ability and willingness to diagnose without visual indicators.

Users of Re-Tain ® could have unsatisfactory treatment outcomes if they lack the equipment needed to measure and

monitor somatic cell counts (SCC) of the herd or individual cows (for which data is needed).

This risk limits our access to treatment

cows because about 40% of farms do not presently have access to this kind of testing at the cow level, and thus are not good candidates

for the use of Re-Tain ® .

Lower than anticipated treatment cure rates could be experienced because the product is administered to cows that we would not identify

as the best treatment candidates based on SCC data or because the product is administered to cows that are infected with pathogens outside

of our label claims.

Off-label use of our product in cows infected with clinical mastitis before we have run the required studies and achieved a label claim

extension for this disease state, resulting in negative treatment outcomes and potential legal liability.

Producers either do not choose to use it or might use it improperly, rather than follow our label instructions to administer one dose

after each of three consecutive milkings, or they may limit use within the herd in an abundance of caution to avoid the negative outcomes

described above.

Our agreement to have DP filled by our current contract manufacturer expired in November of 2024.

However, this agreement does provide

for ongoing product labeling and packaging through the first quarter of 2026.

Based on the anticipated best-case product expiration dating

for Re-Tain ® , we could have inventory available for sale into the first quarter of 2026.

We would need to secure

a new DP manufacturing agreement, or bring the process in-house, to fill more inventory after that.

on sales of the First Defense ® product line:

We presently are reliant on the market acceptance of the First

Defense ® product line to generate product sales and fund our operations.

Our business would not have been profitable

during the years ended December 31, 2012, 2013, 2015 and 2016, during the nine-month periods ended September 30, 2017 or during the three-month

periods ended March 31, 2019, December 31, 2020, June 30, 2021, September 30, 2021, December 31, 2021, March 31, 2022 and December 31,

2024 without the gross margin that we earned on sales of the First Defense ® product line.

Our anticipated return

to profitability is contingent upon the gross margin we earn from First Defense ® and prudent management of product

development expenses.

Concentration

Sales of the First Defense ® product line aggregated 99% of our total product sales during both of

the years ended December 31, 2024 and 2023.

Our primary customers for the majority of our product sales (86% and 91% during the years

ended December 31, 2024 and 2023, respectively), are in the U.S.

dairy and beef industries.

The concentration of our sales from one product

into just two markets (the dairy and beef markets) is a risk to our business.

The animal health distribution segment has been aggressively

consolidating over the last few years, with larger distributors acquiring smaller distributors.

A large portion of our product sales

(77% and 79% during the years ended December 31, 2024 and 2023, respectively), was made to two large distributors.

A large portion of

our trade accounts receivable (78% and 79% as of December 31, 2024 and 2023, respectively) was due from these two distributors.

a good history with these distributors, but the concentration of sales and accounts receivable with a small number of customers does

present a risk to us, including risks related to such customers experiencing financial difficulties or altering the basis on which they

do business with us in a manner unfavorable to us.

capacity constraints:

We invested $9.9 million from 2019 to December 31, 2024 to increase our annual production capacity (in terms

of annual sales dollars) for the First Defense ® product line from approximately $16.5 million to approximately

$30 million or more based on current selling prices and estimated production yields.

We are making initial plans to further increase

our production capacity.

While previous capacity expansion investments have proceeded very close to budget, there is a risk of cost overruns

in our ongoing projects and any future production expansions that we may undertake, and a risk that we will not be able to achieve our

production capacity growth objectives on a timely basis, resulting in a continuing or increasing shortfall in supply to the market.

inability to meet market demand for our products is a risk to our business.

The historically large backlog of orders, as well as any

ongoing order backlog, presents a risk that we could lose customers during this period that are not easily regained thereafter, when

our production capacity is expected to meet or exceed sales demand.

Our long-term capital plan to continue to expand the First Defense ®

product line requires ongoing review of equipment capacity and utilization across the manufacturing value stream at Building

56 and our leased facilities at Building 175A and 175B , as well as assessment of costs, functional obsolescence and

reliability of equipment.

Elevated standards to achieve and maintain regulatory compliance required to sell our products continue to evolve.

Failure to achieve acceptable biological yields from our production processes can materially increase our costs of goods sold and reduce our production output, leading to lower margins and/or an order backlog that could adversely affect our customer relationships and operating results.

First Defense ® is sold at price premiums relative to competitive products.

There is no assurance that we will continue to achieve market acceptance of the First Defense ® product line at a profitable price level or that we can continue to manufacture our products at a low enough cost to result in a sufficient gross margin to justify their continued manufacture and sale.

These risks could be heightened by the additional uncertainties associated with introducing a new product requiring a shift in customer behavior.

Reliance on sales of the First Defense ® product line:

We presently are reliant on the market acceptance of the First Defense ® product line to generate product sales and fund our operations.

Our business would not be profitable without the gross margin that we earn on sales of the First Defense ® product line.

Our ability to achieve net operating income in 2025 was largely driven by gross margin we earned from First Defense ® and prudent management of product development expenses.

Concentration of sales:

Sales of the First Defense ® line of products aggregated 99% of our total product sales during both the years ended December 31, 2025 and 2024.

The majority of our product sales is from the U.S.

dairy and beef industries (approximately 88% and 86% during the years ended December 31, 2025 and 2024, respectively), and the concentration of our sales into the dairy and beef markets is a risk to our business.

The animal health distribution segment has been consolidating over the last few years, with larger distributors acquiring smaller distributors.

A large portion of our product sales (approximately 72% and 77% during the years ended December 31, 2025 and 2024, respectively), was made to two large distributors and a large portion of our trade accounts receivable (approximately 69% and 78% as of December 31, 2025 and 2024, respectively) was due from these two distributors.

We have a good history with these distributors, but the concentration of sales and accounts receivable with a small number of customers does present a risk to us, including risks related to such customers experiencing financial difficulties or altering the basis on which they do business with us in a manner unfavorable to us.

Production capacity constraints:

The inability to meet market demand for our products is a risk to our business.

We invested $11.0 million from 2019 to December 31, 2025 to increase our annual production capacity for the First Defense ® product line from approximately 2.2 million manufactured units in 2018 to approximately 4.6 million manufactured units in 2025.

Our future plans call for increases of our production capacity through yield improvements and by redeploying assets previously slated for production of Re-Tain ® .

Expanding manufacturing capacity involves practical and technical risks affecting efficiency of production, risks of contamination, and risks of not being able to access sufficient high-quality colostrum needed for this process.

There is a risk of cost overruns in our projects and any future production expansions that we may undertake, and a risk that we will not be able to achieve our production capacity growth objectives on a timely basis, resulting in a continuing or increasing shortfall in supply to the market.

A backlog of orders presents a risk that we could lose customers that are not easily regained.

Our long-term capital plan to continue to expand the First Defense ® product line requires ongoing review of equipment capacity and utilization and assessment of costs, functional obsolescence and reliability of equipment.

This review and assessment could identify a need to fund unexpected equipment maintenance or replacement costs.

ImmuCell Corporation

Contamination events, equipment failures and gross margin from our production process:

During the first three and a half months of 2024, as well as during 2023 and late 2022, we experienced certain contamination events and equipment failures in our production process that resulted in scrapped inventory and a slowdown of our production process, which had a significant negative impact on our operating results.

The realization of this risk following the contamination events discussed above did result in a slowdown of our production output during 2023 to remediate this problem, which led to less sales and gross margin during the year.

We are at risk of further such production contaminations or equipment failures resulting in more scrapped inventory.

Additional contamination events or equipment failures causing significantly less production output, depending on their severity, could deplete our cash resulting in an inability to fund our business operations.

Recent losses incurred from contamination events in 2022 through early 2024 were only partially offset by business interruption insurance recoveries in 2023 and 2025.

Colostrum collection:

There is a risk that the farms that participate in our vaccination and colostrum collection process no longer wish to continue supplying us with colostrum or participating in our vaccination program, due to the need to use all or part of the colostrum for their own calves and concerns with the increasing cost of colostrum-replacement.

There is a risk that our supply farms, which are almost entirely located in one state, are subject to a disease outbreak that inhibits their ability to supply the colostrum.

There is a risk that other companies will offer higher premiums for colostrum for use in human or other animal health markets.

There is a risk that the quality of the colostrum collected will not be suitable for our production requirements.

Product liability:

The manufacture and sale of our products entails a risk of product liability.

Our exposure to product liability is mitigated

to some extent by the fact that our products are directed towards the animal health market.

We have maintained product liability insurance

in an amount which we believe is reasonable in relation to our potential exposure in this area.

We have no history of claims of this

nature being made.

requirements for the First Defense ® product line:

First Defense ® is sold in the United

States subject to a product license from the Center for Veterinary Biologics, USDA, which was first obtained in 1991, with subsequent

approvals of line extensions in 2017 and 2018.

As a result, our operations are subject to periodic inspection by the USDA, and we are

at risk of an unfavorable outcome from such inspections.

The potency of serial lots is directly traceable to the original serial used

to obtain the product performance claims (the Reference Standard).

Due to the unique nature of the label claims, host animal re-testing

is not required as long as periodic laboratory analyses continue to support the stability of the stored Reference Standard.

these analyses have demonstrated strong stability.

However, if the USDA were not to approve requalification of the Reference Standard,

additional clinical studies could be required to meet regulatory requirements and allow for continued sales of the product, which could

interrupt sales and adversely affect our operating results.

Territories outside of the United States may require additional regulatory

oversight that we may not be able to meet with our current facilities, processes and resources.

There is a risk that we will become subject

to regulatory actions in the future, including actions that result in our inability to ship product.

In these cases, the resulting interruption

in sales could have a material and adverse effect on our operating results.

requirements for Re-Tain ® :

Commercial introduction of this product in the United States requires

us to obtain FDA approval.

Completing the process of obtaining FDA approval of the pending NADA involves risk.

The regulatory development

process timeline has been extensive (approximately 17 years from when the product rights were returned to us by a former partner in 2007)

and has involved multiple commercial production strategies and multiple submissions of the Chemistry, Manufacturing and Controls (CMC)

Technical Section.

We received an Incomplete Letter from the FDA regarding this CMC Technical Section during the third quarter of 2022

that clarified the required path to product approval.

During May of 2024, we received an Incomplete Letter from the FDA in response to

our November of 2023 re-submission.

To reduce the risk associated with this process, we are working with a qualified contract manufacturer

(Norbrook) for alignment of the required validations and DP manufacture and have met with the FDA to clarify filing strategy and requirements.

Early during the first quarter of 2024, the FDA conducted another pre-approval inspection of our DS facility.

This resulted in the issuance

of one deficiency as identified on the FDA’s Form 483.

Since then, we have cleared the inspectional observation with the FDA.

our efforts continue to be subject to inspection and approval by the FDA and other factors outside of our control, and there remains

a risk that the required FDA approvals of our product and facilities could be further delayed or not obtained.

The facility of our contract

manufacturer is subject to similar inspectional obligations and is currently working to resolve certain inspectional observations at

their facility and is subject to re-inspection by the FDA.

International regulatory approvals would be required for sales of Re-Tain ®

outside of the United States, and there is a risk that these approvals would be or become too costly to pursue or be delayed

or not obtained.

Regulatory requirements limiting access to

suppliers and customer base:

Maine, where our principal executive office and manufacturing facilities are located, has adopted product

reporting and phase-out requirements for per- and polyfluoroalkyl substances (“PFAS”).

Maine’s statute establishes a

phased ban for products that contain intentionally added PFAS, with all products (subject to certain exceptions) other than cooling, heating,

ventilation, air conditioning or refrigeration equipment being banned by 2032 unless the Maine Department of Environmental Protection

(“DEP”) has determined that the use of PFAS within the product is a “currently unavoidable use.” Beginning January

1, 2032, the sale of products containing intentionally added but “currently unavoidable” PFAS also is banned if the manufacturer

of such products has failed to report to the DEP information concerning the presence of PFAS in those products.

The phased bans may limit

our ability to access supplies and may limit those customers to whom we may sell our products.

Environmental Protection Agency

also has adopted a PFAS reporting law, which requires that importers of articles that contain PFAS report the presence of such substances

to the extent such information is known or reasonably ascertainable.

Our exposure to product liability is mitigated to some extent by the fact that our products are directed towards the animal health market.

We have maintained product liability insurance in an amount which we believe is reasonable in relation to our potential exposure in this area.

We have no history of claims of this nature being made.

Risks pertaining to Re-Tain ®:

In late 2025 we made the decision not to pursue manufacture of Re-Tain® and to attempt to license this technology to other companies, or to sell to or partner with other companies.

There is no assurance that we will be able to find third parties who have an interest to in-license, acquire or partner with us related to Re-Tain®.

Parties may not be interested if they perceive that (1) completing the process of obtaining FDA and international regulatory approvals is too burdensome, too costly, or takes too much time, (2) positive milk inhibitor tests involve risk of rejection of bulk tanks of milk comprised of milk from cows being treated with Re-Tain®, (3) cheese tanks fail or stall when a Nisin susceptible cheese starter culture is impacted by residues in milk that exceed on-farm treatment recommendations, (4) dairy farms will choose not to screen for subclinical mastitis (instead focusing on treating clinical mastitis that can be identified visually), (5) dairy farms are unable to judge satisfactory treatment outcomes due to lack of equipment to measure and monitor somatic cell counts (SCC) of the herd or individual cows, (6) cure rates established in scientific trials prove less than desired, or (7) dairy farms choose not to use Re-Tain® or use it improperly, rather than follow label instructions.

Regulatory Risks

Regulatory requirements for the First Defense ® product line:

First Defense ® is sold in the United States subject to a product license from the Center for Veterinary Biologics, USDA, which was first obtained in 1991, with subsequent approvals of line extensions in 2017 and 2018.

As a result, our operations are subject to periodic inspection by the USDA, and we are at risk of an unfavorable outcome from such inspections.

The potency of serial lots is directly traceable to the original serial used to obtain the product performance claims (the Reference Standard).

Due to the unique nature of the label claims, host animal re-testing is not required if periodic laboratory analyses continue to support the stability of the stored Reference Standard.

To date, these analyses have demonstrated strong stability.

However, if the USDA were not to approve requalification of the Reference Standard, additional clinical studies could be required to meet regulatory requirements and allow for continued sales of the product, which could interrupt sales and adversely affect our operating results.

Territories outside of the United States may have additional regulatory requirements that we may not be able to meet with our current facilities, processes and resources.

There is a risk that we will become subject to regulatory actions in the future, including actions that result in our inability to ship product.

In these cases, the resulting interruption in sales could have a material and adverse effect on our operating results.

Regulatory requirements limiting access to suppliers and customer base:

Maine, where our principal executive office and manufacturing facilities are located, has adopted product reporting and phase-out requirements for per- and polyfluoroalkyl substances (“PFAS”).

Maine’s statute establishes a phased ban for products that contain intentionally added PFAS, with all products (subject to certain exceptions) other than cooling, heating, ventilation, air conditioning or refrigeration equipment being banned by 2032 unless the Maine Department of Environmental Protection (“DEP”) has determined that the use of PFAS within the product is a “currently unavoidable use.” Beginning January 1, 2032, the sale of products containing intentionally added but “currently unavoidable” PFAS also is banned if the manufacturer of such products has failed to report to the DEP information concerning the presence of PFAS in those products.

The phased bans may limit our ability to access supplies and may limit those customers to whom we may sell our products.

Environmental Protection Agency also has adopted a PFAS reporting law, which requires that importers of articles that contain PFAS report the presence of such substances to the extent such information is known or reasonably ascertainable.

This reporting requirement may limit our ability to import supplies.

Risks Pertaining to the Dairy and Beef Industries

government is stepping up deportation efforts, resulting in a rising rate of deportations of criminals that are in our country

Many farms employ hard-working, non-criminal employees who have not yet achieved legal citizenship.

Significant deportations

of these individuals could have a negative impact on the operations of our customers and of our source farms.

industry data referred to below is compiled from USDA databases.

The January count of all cattle and calves in the United States had steadily declined from 97,000,000 as of January 1, 2007

to 88,500,000 as of January 1, 2014.

Then this figure increased each year, reaching 94,800,000 as of January 1, 2019 before declining

to 93,800,000 as of both January 1, 2020 and January 1, 2021.

This count continued to decline to 92,100,000 as of January 1, 2022 and

to 88,800,000 as of January 1, 2023 and to 87,200,000 as of January 1, 2024.

This count dropped to 86,700,000 as of January 1, 2025.

The cattle count has not been this low since it was 82,100,000 in 1951.

Reflecting seasonal trends, this figure was equal to 102,000,000,

101,000,000, 98,600,000 and 95,900,000 as of July 1, 2020, 2021, 2022 and 2023, respectively.

The USDA did not make this data point available

as of July 1, 2024.

A significant decline in the cattle count could negatively affect the size of our addressable market.

Prior to 1957, there were over 20,000,000 cows in the U.S.

Prior to 1986, there were over 10,000,000 cows in the

From 1998 through 2021, the size (annual average) of the U.S.

dairy herd ranged from the low of 9,011,000 in 2004 to

the high of 9,448,000 in 2021.

This average declined to 9,402,000 during the year ended December 31, 2022 and then declined to 9,386,000

during the year ended December 31, 2023.

This average declined slightly to 9,342,000 during the year ended December 31, 2024.

A significant

decline in the herd size could negatively affect the size of our addressable market.

The all-time high value (annual average) for a milk cow was $1,993 during 2015.

Since then, this annual average value

steadily declined to $1,205 during 2019 before increasing to $1,300 during 2020 and to $1,363 during 2021.

This price for 2022 increased

significantly to an average of $1,598, which is a 17% increase over 2021.

The 2023 average price of $1,763 represents a 10% increase

over prior year.

This price for 2024 increased to an average of $2,243, which is a 27% increase over 2023.

A significant decline in the

milk cow price could negatively affect the size of our addressable market.

The dairy market, similar to many others, has been unstable for several reasons including as a result of the pandemic.

price paid to producers for milk has been very volatile.

This market volatility, and the resulting impact on our primary end users, could

negatively impact our ability to maintain and grow sales at a profitable level.

The Class III milk price (an industry benchmark that

reflects the value of product used to make cheese) is an important indicator because it defines our customers’ revenue level.

annual average milk price level (measured in dollars per hundred pounds of milk) reached its highest point (since these prices were first

reported in 1980) during 2014 at $22.34 (peaking at $24.60 in September of 2014), which price level has never been repeated.

year ended December 31, 2020, this average milk price was equal to $18.16, but it was extremely volatile during the year due largely

to disruption in demand related to the COVID-19 pandemic.

The one-month fluctuation of 73% from a low of $12.14 in May of 2020 to $21.04

in June of 2020 set an all-time record for variability.

The average price for 2021 decreased by 6% to $17.08.

This price average increased

by 29% to $21.96 during the year ended December 31, 2022.

The average price decreased by 22% to $17.02 during the year ended December

This average price increased by 11% to $18.89 during the year ended December 31, 2024.

The annual fluctuations in this milk

price level are demonstrated in the following table:

Average Class III Milk Price During the Years

Ended December 31,

(Decrease) Increase

The actual level of milk prices may be less important than its level relative to feed costs.

One measure of this relationship

is known as the milk-to-feed price ratio, which represents the amount of feed that one pound of milk can buy.

An increase in feed costs

also has a negative impact on the beef industry and therefore could have a resulting negative impact on our business and results of operations.

This ratio varies farm-to-farm based on individual operating parameters.

Since this ratio reached 3.24 in 2005, it has not exceeded 3.00.

This ratio averaged 1.74 for 2021, amounting to a significant decline of 25% from the 2020 average of 2.32.

This average has not been

lower since 2012.

During 2022, this ratio improved by 10% to 1.91.

This ratio dropped by 12% to 1.67 during the year ended December 31,

This ratio increased to 2.49 during the year ended December 31, 2024, representing an increase of 49%.

The following table demonstrates

the annual volatility and the low values of this ratio recently:

Average Milk-To-Feed Price Ratio During the Years Ended December 31,

(Decrease) Increase

of the dairy market :

Economic Risks Pertaining to the Dairy and Beef Industries

Dairy Staffing:

government is stepping up immigration enforcement efforts.

Colostrum suppliers to our manufacturing process or customers of our products may be challenged to recruit, train and retain employees who are critical for our colostrum supply process and use of our product in the field.

Significant deportations of these individuals could have a negative impact on the operations of our customers and of our source farms.

We define our addressable market for First Defense ® as the number of calves currently or potentially protected by scours preventative products multiplied by the value paid for such products.

A significant decline in the cattle count would negatively affect the size of our addressable market by reducing the number of animals that would benefit from scours preventatives.

A significant decline in the value of newborn or pre-weaning calves would negatively affect the size of our addressable market by reducing the interest of producers to invest in calf health solutions, including scours preventatives.

A multitude of factors can contribute to changes in the number of cattle or changes in the value of calves in any particular geography, including government decisions affecting trade of live animals, disease outbreaks and containment statuses, supply and demand imbalances for specific sources of protein such as milk and beef, changes in breeding and genetics practices, and other factors.

Changes in milk and beef prices and feed costs may also impact producers' ability to pay for premium calf health products such as First Defense ® .

Volatility of the dairy market :

While the number of cows in the U.S.

herd and the production of milk per cow directly influence the supply of

milk, the price for milk is also influenced by very volatile international demand for milk products.

Given our focus on the dairy and

beef industries, the volatile market conditions and the resulting financial insecurities of our primary end users are risks to our ability

to maintain and grow sales at a profitable level.

These factors also heighten the challenge of selling premium-priced animal health products

(such as Tri-Shield ® and Re-Tain ® ) into the dairy market.

Size of the Company

on key personnel:

We are a small company with approximately 75 employees (including 6 part-time employees).

As such, we rely on certain

key employees to support multiple operational functions, with limited redundancy in capacity.

The loss of any of these key employees

could adversely affect our operations until a qualified replacement is hired and trained, which could be even more challenging in the

present difficult labor market.

Our competitive position will be highly influenced by our ability to attract, retain and motivate key

scientific, manufacturing, managerial and sales and marketing personnel.

The cost of attracting and retaining the needed additional personnel

in this current job market and inflationary environment could adversely affect our margins and profitability.

on outside party to provide certain services under contract for us:

We are exposed to additional regulatory compliance risks through

the subcontractors that we choose to work with to produce Re-Tain ® , who also need to satisfy certain regulatory

requirements in order to provide us with the products and services we need.

One example of this outside reliance is Norbrook, our DP

contract manufacturer.

Because Norbrook notified us of its intent to terminate its supply agreement with us, we initiated an investment

of approximately $4 million during 2022 to construct and equip our own DP formulation and aseptic filling capability for Re-Tain ®

in our existing DS facility.

Due to the loss in gross margin during 2023 caused by the slowdown in production output necessary

to remediate product contamination events, we have decided to defer spending of approximately $2 million of these funds for the near

The objective of this investment is to end our reliance on an outside party to perform these services for us.

Actual project costs

could exceed our current estimates.

Completion of this project could be delayed due to a number of factors outside our control, including

delays in equipment fabrication, equipment delivery or facility construction.

In addition, there is a risk that we fail to achieve regulatory

approval of the new facility or that such approval is delayed or requires significant additional expenditures to obtain.

We are evaluating

alternatives for DP supply going forward, which include the resumption of the investment in our own in-house DP services (when prudent

based on our cash reserves) or another contract manufacturing agreement or a further extension with Norbrook.

We anticipate a supply

interruption under our Controlled Launch of Re-Tain ® after the DP supply provided from our contract manufacturer

is consumed and until new supply from a new contract manufacturing agreement or our own formulation and aseptic filling facility is implemented.

Many of our competitors are significantly larger and more diversified in the relevant markets than we are and have substantially

greater financial, marketing, manufacturing and human resources and more extensive product development and sales/distribution capabilities

than we do, including greater ability to withstand adverse economic or market conditions and declining revenues and/or profitability.

Merck and Zoetis, among other companies, sell products that compete directly with the First Defense ® product line

in preventing scours in newborn calves.

The scours product sold by Zoetis sells for approximately half the price of our product, although

it does not have an E.

herd and the production of milk per cow directly influence the supply of milk, the price for milk is also influenced by very volatile international demand for milk products.

Given our focus on the dairy and beef industries, the volatile market conditions and the resulting financial insecurities of our primary end users are risks to our ability to maintain and grow sales at a profitable level.

These factors also heighten the challenge of selling our premium-priced animal health products into the dairy market.

ImmuCell Corporation

Small Size of the Company

Dependence on key personnel:

We are a small company with 73 employees.

As such, we rely on certain key employees to support multiple operational functions, with limited redundancy in capacity.

The loss of any of these key employees could adversely affect our operations until a qualified replacement is hired and trained, which could be even more challenging in the present difficult labor market.

Our competitive position will be highly influenced by our ability to attract, retain and motivate key scientific, manufacturing, managerial and sales and marketing personnel.

The cost of attracting and retaining the needed additional personnel in this current job market and inflationary environment could adversely affect our margins and profitability.

Competition from others:

Many of our competitors are significantly larger and more diversified in the relevant markets than we are and have substantially greater financial, marketing, manufacturing and human resources and more extensive product development and sales/distribution capabilities than we do, including greater ability to withstand adverse economic or market conditions and declining revenues and/or profitability.

Elanco, Merck, Zoetis, Boehringer Ingelheim and CEVA, among other companies, sell products that compete directly with the First Defense ® product line in preventing scours in newborn calves.

The scours product sold by Zoetis sells for approximately half the price of our product, although it does not have an E.

coli claim (which ours does).

With Tri-Shield ® , we can compete more effectively against

vaccines that are given to the mother cow (dam) to improve the quality of the colostrum that she produces for the newborn calf.

Merck and Zoetis provide these dam vaccine products to the market.

There are many companies competing in the mastitis treatment market,

most notably Boehringer Ingelheim, Merck and Zoetis.

The mastitis products sold by these large companies are well established in the

market and are priced lower than what we expect for Re-Tain ® , but all of them involve traditional antibiotics and

are sold subject to a requirement to discard milk during and for a period of time after treatment (unlike our product which does not

carry an FDA-required milk discard or pre-slaughter withdrawal period).

There is no assurance that our products will compete successfully

in these markets.

With Tri-Shield ® , we can compete more effectively against vaccines that are given to the mother cow (dam) to improve the quality of the colostrum that she produces for the newborn calf.

Elanco, Merck and Zoetis provide these dam vaccine products to the U.S.

market and other competitors are active in international markets.

There is no assurance that our products will compete successfully in these markets.

We may not be aware of other companies that compete with us or intend to compete with us in the future.

and Trade Policies:

Changes in tariffs or cross-border trade policies could affect our ability to expand sales of our products into

foreign markets.

Ability to hire:

Our competitive position will be highly influenced by our ability to attract and retain key scientific, manufacturing, managerial, sales and marketing personnel, to develop, produce and commercialize proprietary technologies and products.

We need to obtain USDA, FDA or foreign approvals for new products to effectively promote and sell our products.

We must have available properly-licensed, efficient and effective raw material and finished product manufacturing resources to continue to profitably sell our current products.

We currently compete on the basis of product performance, price, distribution capability and customer support.

Tariffs and Trade Policies:

Changes in tariffs or cross-border trade policies could affect our ability to expand sales of our products into foreign markets.

The businesses of some of our U.S.

dairy and beef customers could be significantly affected by changes in tariffs or

trade policies, thus negatively affecting demand for our products.

Additionally, tariffs on products and materials that we import could

increase our costs of goods sold.

International

International conflicts, including ongoing wars in Ukraine and the Middle East, give rise to uncertainties and stress

on the global economy, which in turn can affect the demand for our products and our costs of operation.

dairy and beef customers could be significantly affected by changes in tariffs or trade policies, thus negatively affecting demand for our products.

Additionally, tariffs on products and materials that we import could increase our costs of goods sold.

International Conflicts:

International conflicts give rise to uncertainties and stress on the global economy, which in turn can affect the demand for our products and our costs of operation.

We have formerly done business in Iran.

Although our ability to do so in the future is unclear, a cessation of sales to Iran would not materially affect our revenues or profitability.

Climate change:

Our business, and our activities and the activities of our customers and suppliers, could be disrupted by climate change.

Potential physical risks from climate change may include altered distribution and intensity of rainfall, prolonged droughts or flooding,

increased frequency of wildfires and other natural disasters, rising sea levels, and a rising heat index, any of which could cause negative

impacts to our and our customers’ and suppliers’ businesses.

Increased temperatures and rising water levels may negatively

impact our dairy and beef livestock customers by increasing the prevalence of parasites and diseases that affect food animals.

changes caused by climate change may also prompt changes in regulations or consumer preferences which in turn could have negative consequences

for our and our customers’ businesses.

Potential physical risks from climate change may include altered distribution and intensity of rainfall, prolonged droughts or flooding, increased frequency of wildfires and other natural disasters, rising sea levels, and a rising heat index, any of which could cause negative impacts to our and our customers’ and suppliers’ businesses.

Increased temperatures and rising water levels may negatively impact our dairy and beef livestock customers by increasing the prevalence of parasites and diseases that affect food animals.

The physical changes caused by climate change may also prompt changes in regulations or consumer preferences which in turn could have negative consequences for our and our customers’ businesses.

Climate change may negatively impact our customers’ operations.

In addition, concerns

regarding greenhouse gas emissions and other potential environmental impacts of livestock production have led to some consumers opting

to limit or avoid consuming animal products.

If such events affect our customers’ businesses, they may purchase fewer of our products,

and our revenues may be negatively impacted.

Climate driven changes could have a material adverse impact on the financial performance

of our business and on our customers.

In addition, increased frequency of natural disasters and adverse weather conditions may disrupt

our manufacturing processes or our supply chain.

These disruptions may have a material adverse effect on our business, financial condition,

results of operations and/or cash flows.

The potential for epidemics of bovine diseases such as Highly Pathogenic Avian Influenza (HPAI), Foot and Mouth Disease,

Bovine Tuberculosis, Brucellosis and Bovine Spongiform Encephalopathy (BSE) presents a risk to us and our customers.

We have seen a severe

negative impact of bird flu on the U.S.

poultry flock causing a significant increase in the price of eggs.

We have seen a cross-over

to cows in the dairy industry.

Documented cases of BSE in the United States have led to an overall tightening of regulations pertaining

to ingredients of animal origin, especially bovine.

The First Defense ® product line is manufactured from concentrated

bovine colostrum, which is not considered a BSE risk material.

Future regulatory action to increase protection of the human food supply

could affect the First Defense ® product line, although presently we do not anticipate that this will be the case.

Pertaining to Common Stock

market valuation and liquidity:

In addition, concerns regarding greenhouse gas emissions and other potential environmental impacts of livestock production have led to some consumers opting to limit or avoid consuming animal products.

If such events affect our customers’ businesses, they may purchase fewer of our products, and our revenues may be negatively impacted.

Climate driven changes could have a material adverse impact on the financial performance of our business and on our customers.

In addition, increased frequency of natural disasters and adverse weather conditions may disrupt our manufacturing processes or our supply chain.

These disruptions may have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

Bovine diseases:

The potential for epidemics and outbreaks of bovine diseases presents a risk to our suppliers and to our customers.

United States policy for the prevention of certain diseases has led to an overall tightening of regulations pertaining to ingredients of animal origin, especially bovine.

The First Defense ® product line is manufactured from concentrated bovine colostrum, which is not considered a risk material.

Future regulatory action to increase protection of the human food supply could affect the First Defense ® product line, although presently we do not anticipate that this will be the case.

Risks Pertaining to Common Stock

Stock market valuation and liquidity:

Our common stock trades on The Nasdaq Capital Market (Nasdaq:

Our average daily trading volume

(which was 7,100 shares per day during the 20-day period ended March 21, 2025) is lower, our bid/ask stock price spread can be larger

and our share price can be more volatile than what other companies experience.

Those factors could result in investors facing difficulty

selling their stock for proceeds that they may expect or desire.

Our average daily trading volume (which was 16,939 shares per day during the 20-day period ended March 20, 2026) is lower, our bid/ask stock price spread can be larger and our share price can be more volatile than what other companies experience.

Those factors could result in investors facing difficulty selling their stock for proceeds that they may expect or desire.

Our share price as of March 20, 2026 was $6.07.

Most companies in the

animal health sector have market capitalization values that greatly exceed our market capitalization of approximately $44.1 million as

of March 21, 2025.

Most companies in the animal health sector have market capitalization values that greatly exceed our market capitalization of approximately $54.9 million as of March 20, 2026.

Our product sales during the year ended December 31, 2025 were $27.6 million.

This means that our market capitalization

as of March 21, 2025 was equal to approximately 1.66 times our sales during the year ended December 31, 2024.

Before adequate gross margin

from the sale of new products is achieved, our market capitalization may be heavily dependent on the perceived potential for growth from

our product under development and may therefore be negatively affected by the related uncertainties and risks.

provisions might discourage, delay or prevent a change in control of our Company or changes in our management:

Provisions of our

certificate of incorporation, our bylaws or Delaware law may discourage, delay or prevent a merger, acquisition or other change in control

that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares

of our common stock.

This means that our market capitalization as of March 20, 2026 was equal to approximately two times our sales during the year ended December 31, 2025.

Before adequate gross margin from the sale of existing and new products is achieved, our market capitalization may be heavily dependent on the perceived potential for margin expansion and revenue growth and may therefore be negatively affected by the related uncertainties and risks.

Certain provisions might discourage, delay or prevent a change in control of our Company or changes in our management:

Provisions of our certificate of incorporation, our bylaws or Delaware law may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares of our common stock.

These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management.

These provisions include:

● limitations

on the removal of directors;

notice requirements for stockholder proposals and nominations;

ability of our Board of Directors to alter or repeal our bylaws;

203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation

from engaging in a business combination with an interested stockholder (generally defined

as a person which together with its affiliates owns, or within the last three years has owned,

15% of our voting stock, for a period of three years after the date of the transaction in

which the person became an interested stockholder) unless the business combination is approved

in a prescribed manner.

existence of the foregoing provisions and anti-takeover measures could depress the trading price of our common stock or limit the price

that investors might be willing to pay in the future for shares of our common stock.

They could also deter potential acquirers of our

Company, thereby reducing the likelihood of obtaining a premium for our common stock in an acquisition.

expectation to pay any dividends or repurchase stock for the foreseeable future:

We do not anticipate paying any dividends to, or

repurchasing stock from, our stockholders for the foreseeable future.

Instead, we expect to use cash to fund product development costs

and investments in our facilities and production equipment, and to increase our working capital.

Stockholders must be prepared to rely

on market sales of their common stock after price appreciation to earn an investment return, which may never occur.

Any determination

to pay dividends or repurchase stock in the future will be made at the discretion of our Board of Directors and will depend on our financial

condition, results of operations, contractual restrictions, restrictions imposed by applicable laws, current and anticipated needs for

liquidity and other factors our Board of Directors deems relevant.

We are accessing the capital markets and issuing additional common stock, from time to time, under an ATM Offering in order

to fund our operations, as described elsewhere in this Annual Report.

Such issuances have a dilutive effect on our existing stockholders.

to raw materials and contract manufacturing services:

Our objective is to maintain more than one source of supply for the components

used to manufacture and test our products that we obtain from third parties.

However, we may experience difficulty in efficiently acquiring

essential supplies.

We have significantly increased the number of farms from which we purchase colostrum for the First Defense ®

product line.

A significant reduction in farm capacity could make it difficult for us to produce enough inventory to meet customer

The specific antibodies that we purify from colostrum for the First Defense ® product line are not readily

available from other sources.

We are and will be dependent on our manufacturing facilities and operations in Portland, Maine for the

production of the First Defense ® product line and Re-Tain ® .

We will be dependent on one manufacturer

for the supply of syringes for Re-Tain ® .

We were dependent on a contract with Norbrook for the DP formulation and

aseptic filling for supply of our Nisin DP through 2024.

Any facility used to perform these services will be subject to FDA inspection

and approval, the outcome and timing of which are not within our control.

We anticipate that this FDA approval process would take at

least two years.

The potential alternative options for these services are narrowed considerably because our product cannot be formulated

or filled in a facility that also processes traditional antibiotics (i.e., beta lactams).

Any significant damage to or other disruption

in the services at any of these third-party facilities or our own facilities (including due to lack of financing, regulatory issues or

non-compliance) would adversely affect the production of inventory and result in significant added expenses and potential loss of future

We anticipate a supply interruption and adverse effects on our Controlled Launch of Re-Tain ® beginning during

the first quarter of 2026 (subject to confirmation of final product shelf-life disposition by the FDA).

These goods represent the initial

DP production from our contract manufacturer.

The extent of the interruption will be subject to the supply timeline from a new contract

manufacturing agreement or from our own formulation and aseptic filling facility for DP.

to protect intellectual property:

The protection and enforcement of our intellectual property rights may require the expenditure

of significant financial, managerial and operational resources.

We rely on trademark, copyright and patent law, trade secret protection,

agreements and other methods with our employees and others to protect our proprietary rights.

However, we may be unable to adequately

protect our intellectual property rights or prevent third parties from infringing or misappropriating our intellectual property rights.

We may not be able to obtain registration for all intellectual property we seek to register, and effective intellectual property protection

may not be available in every country in which our products are sold.

In some cases, we have chosen (and may choose in the future) not

to seek patent protection for certain products or processes.

Instead, we have sought (and may seek in the future) to maintain the confidentiality

of any relevant proprietary technology through trade secrets, operational safeguards and contractual agreements.

Reliance upon trade

secrets, rather than patent protection may cause us to be vulnerable to competitors who successfully replicate (knock off) our manufacturing

techniques and processes.

Further, our confidentiality agreements may not effectively prevent disclosure of our proprietary information,

technologies and processes and may not provide an adequate remedy in the event of unauthorized disclosure of such information.

may independently develop similar trade secrets or technology or obtain access to our unpatented trade secrets or proprietary technology.

Others may have filed patent applications and may have been issued patents involving products or technologies potentially useful to us

or necessary for us to commercialize our products or achieve our business goals.

If that were to be the case, there can be no assurance

that we will be able to obtain licenses to such patents on terms that are acceptable to us.

Any of our intellectual property rights may

be challenged by others or invalidated through administrative process or litigation.

Third parties may claim in the future, that we have

infringed their intellectual property rights, which could result in significant costs and potential damages and license requirements.

We may initiate claims or litigation against others for infringement, misappropriation or violation of our intellectual property rights

or other proprietary rights or to establish the validity of such rights.

However, we may be unable to discover or determine the extent

of any infringement, misappropriation or other violation of our intellectual property rights and other proprietary rights.

we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights

and other proprietary rights.

dependence on the continuous and reliable operation of our information technology systems:

We rely on information systems throughout

limitations on the removal of directors;

advance notice requirements for stockholder proposals and nominations;

ImmuCell Corporation

the ability of our Board of Directors to alter or repeal our bylaws;

Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder (generally defined as a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder) unless the business combination is approved in a prescribed manner.

The existence of the foregoing provisions and anti-takeover measures could adversely affect the trading price of our common stock or limit the price that investors might be willing to pay in the future for shares of our common stock.

They could also deter potential acquirers of our Company, thereby reducing the likelihood of obtaining a premium for our common stock in an acquisition disfavored by our Board of Directors.

No expectation to pay any dividends or repurchase stock for the foreseeable future:

We do not anticipate paying any dividends to, or repurchasing stock from, our stockholders for the foreseeable future.

Instead, we expect to use cash to fund product development costs and investments in our facilities and production equipment, and to increase our working capital.

Stockholders must be prepared to rely on market sales of their common stock after price appreciation to earn an investment return, which may never occur.

Any determination to pay dividends or repurchase stock in the future will be made at the discretion of our Board of Directors and will depend on our financial condition, results of operations, contractual restrictions, restrictions imposed by applicable laws, current and anticipated needs for liquidity and other factors our Board of Directors deems relevant.

Possible dilution:

We have accessed the capital markets and issued additional common stock, from time to time, under an At-the-Market (ATM) Offering to fund our operations, as described elsewhere in this Annual Report.

Such issuances have a dilutive effect on our existing stockholders and may occur again in the future.

Access to raw materials and contract manufacturing services:

Our objective is to maintain more than one source of supply for the components used to manufacture and test our products that we obtain from third parties.

However, we may experience difficulty in efficiently acquiring essential supplies.

We have significantly increased the number of farms from which we purchase colostrum for the First Defense ® product line.

A significant reduction in farm capacity could make it difficult for us to produce enough inventory to meet customer demand.

The specific antibodies that we purify from colostrum for the First Defense ® product line are not readily available from other sources.

We are and will be dependent on our manufacturing facilities and operations in Portland, Maine for the production of the First Defense ® product line.

Any significant damage to or other disruption in the services at our leased facilities or our owned facilities (including due to lack of financing, regulatory issues or non-compliance) would adversely affect the production of inventory and result in significant added expenses and potential loss of future sales.

Failure to protect intellectual property:

The protection and enforcement of our intellectual property rights may require the expenditure of significant financial, managerial and operational resources.

We rely on trademark, copyright and patent law, trade secret protection, agreements and other methods with our employees and others to protect our proprietary rights.

However, we may be unable to adequately protect our intellectual property rights or prevent third parties from infringing or misappropriating our intellectual property rights.

We may not be able to obtain registration for all intellectual property we seek to register, and effective intellectual property protection may not be available in every country in which our products are sold.

In some cases, we have chosen (and may choose in the future) not to seek patent protection for certain products or processes.

Instead, we have sought (and may seek in the future) to maintain the confidentiality of any relevant proprietary technology through trade secrets, operational safeguards and contractual agreements.

Reliance upon trade secrets, rather than patent protection may cause us to be vulnerable to competitors who successfully replicate (knock off) our manufacturing techniques and processes.

Further, our confidentiality agreements may not effectively prevent disclosure of our proprietary information, technologies and processes and may not provide an adequate remedy in the event of unauthorized disclosure of such information.

Others may independently develop similar trade secrets or technology or obtain access to our unpatented trade secrets or proprietary technology.

Others may have filed patent applications and may have been issued patents involving products or technologies potentially useful to us or necessary for us to commercialize our products or achieve our business goals.

If that were to be the case, there can be no assurance that we will be able to obtain licenses to such patents on terms that are acceptable to us.

Any of our intellectual property rights may be challenged by others or invalidated through administrative process or litigation.

Third parties may claim in the future, that we have infringed their intellectual property rights, which could result in significant costs and potential damages and license requirements.

We may initiate claims or litigation against others for infringement, misappropriation or violation of our intellectual property rights or other proprietary rights or to establish the validity of such rights.

However, we may be unable to discover or determine the extent of any infringement, misappropriation or other violation of our intellectual property rights and other proprietary rights.

In addition, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights and other proprietary rights.

Increasing dependence on the continuous and reliable operation of our information technology systems:

We rely on information systems throughout our company.

Any disruption of these systems or significant security breaches could adversely affect our business.

Although we maintain

information security policies and employ system backup measures and engage in information system redundancy planning and processes, such

policies, measures, planning and processes, as well as our current disaster recovery plan may be ineffective or inadequate to address

all eventualities.

As information systems and the use of software and related applications by us, our business partners, suppliers, and

customers become more cloud-based, we become inherently more susceptible to cyberattacks.

There has been an increase in global cybersecurity

vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our

information systems and networks and the confidentiality, availability and integrity of data and information.

There are reports of increased

activity by hackers and scammers since the COVID-19 pandemic.

Any such attack or breach could compromise our networks and the information

stored thereon could be accessed, publicly disclosed, lost, or stolen.

While we have invested in our data and information technology

infrastructure (including working with an information security technology consultant to assess and enhance our security systems and procedures,

and periodically training our employees in such systems and procedures), there can be no assurance that these efforts will prevent a

system disruption, attack, or security breach and, as such, the risk of system disruptions and security breaches from a cyberattack remains.

We have not experienced any material adverse effect on our business or operations as a consequence of any such attack or breach but may

incur increasing costs in performing the tasks described above.

Given the unpredictability of the timing, nature and scope of such disruptions

and the evolving nature of cybersecurity threats, which vary in technique and sources, if we or our business partners or suppliers were

to experience a system disruption, attack or security breach that impacts any of our critical functions, or our customers were to experience

a system disruption, attack or security breach via any of our connected products and services, we could potentially be subject to production

downtimes, operational delays or other detrimental impacts on our operations.

Furthermore, any access to, public disclosure of, or other

loss of data or information, including any of our (or our customers’ or suppliers’) confidential or proprietary information

or personal data or information, as a result of an attack or security breach could result in governmental actions or private claims or

proceedings, which could damage our reputation, cause a loss of confidence in our products and services, damage our ability to develop

(and protect our rights to) our proprietary technologies and have a material adverse effect on our business, financial condition, results

of operations or prospects.

While this exposure is common to all companies, larger companies with greater resources may be better able

to mitigate this risk than we can.

Although we maintain information security policies and employ system backup measures and engage in information system redundancy planning and processes, such policies, measures, planning and processes, as well as our current disaster recovery plan may be ineffective or inadequate to address all eventualities.

As information systems and the use of software and related applications by us, our business partners, suppliers, and customers become more cloud-based, we become inherently more susceptible to cyberattacks.

There has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the confidentiality, availability and integrity of data and information.

There are reports of increased activity by hackers and scammers since the COVID-19 pandemic.

Any such attack or breach could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost, or stolen.

While we have invested in our data and information technology infrastructure (including working with an information security technology consultant to assess and enhance our security systems and procedures, and periodically training our employees in such systems and procedures), there can be no assurance that these efforts will prevent a system disruption, attack, or security breach and, as such, the risk of system disruptions and security breaches from a cyberattack remains.

We have not experienced any material adverse effect on our business or operations as a consequence of any such attack or breach but may incur increasing costs in performing the tasks described above.

Given the unpredictability of the timing, nature and scope of such disruptions and the evolving nature of cybersecurity threats, which vary in technique and sources, if we or our business partners or suppliers were to experience a system disruption, attack or security breach that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach via any of our connected products and services, we could potentially be subject to production downtimes, operational delays or other detrimental impacts on our operations.

Furthermore, any access to, public disclosure of, or other loss of data or information, including any of our (or our customers’ or suppliers’) confidential or proprietary information or personal data or information, as a result of an attack or security breach could result in governmental actions or private claims or proceedings, which could damage our reputation, cause a loss of confidence in our products and services, damage our ability to develop (and protect our rights to) our proprietary technologies and have a material adverse effect on our business, financial condition, results of operations or prospects.

While this exposure is common to all companies, larger companies with greater resources may be better able to mitigate this risk than we can.

See also PART I, ITEM 1C — CYBERSECURITY below.

ImmuCell Corporation

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What changed 10-K

Item 1A. Risk Factors