Financial Performance - Total assets increased by 209%, from 14.6millionin2015to45.1 million in 2024, while stockholders' equity rose by 159%, from 10.6millionto27.5 million during the same period[17]. - The company aims to exceed total product sales of 26.5millionachievedduringtheyearendedDecember31,2024,assoonaspossible,withalonger−termgoalofexceeding35 million by approximately 2027[46]. - Net cash provided by operating activities improved by 5million,reaching358,000 in 2024 compared to a net cash used of (4.7million)in2023[154].−Cashandcashequivalentsincreasedby284979,000 in 2023 to 3.76millionin2024[158].−Networkingcapitalroseby467.27 million in 2023 to 10.63millionin2024[158].−Aggregatedebtoutstandingdecreasedfrom12 million in 2023 to 10.5millionin2024[156].−Financingactivitiesgenerated2.9 million in 2024, up from 1.8millionin2023,including3 million in new debt proceeds received in Q3 2023[156]. - The company anticipates interest expenses of 452,000in2025and322,000 in 2026, down from 526,000in2024[156].−Thecompanyhasatotalof15millioncommonsharesauthorized,with8,982,623sharesoutstandingasofMarch21,2025[147].−Thecompanydoesnotcurrentlypaydividendsandhasnoplanstodosointhenearfuture[147].ProductDevelopmentandMarketStrategy−TheRe−Tainproduct,aimedattreatingsubclinicalmastitis,hasreceivedFDAapprovalforfouroutoffivesignificantTechnicalSections,withthefinalsubmissionmadeinJanuary2025[15].−Thecompanyaimstofulfillexistingorderbacklogsandexpanditsmarketshareinbothbeefanddairysectorswhilelaunchingalower−costspray−driedproduct[22].−ThecompanyisworkingtoexpanditsproductdevelopmentpipelineofantimicrobialsasalternativestotraditionalantibioticsthroughexpansionsofitsNisintechnology[53].−Thecompanyisdevelopingaspray−driedalternativeformatofFirstDefenseTechnologytopotentiallyexpanditsproductportfolioandimprovecashflow[200].−TheanticipatedproductlabelforRe−Tainincludesclaimsfortreatingsubclinicalmastitisassociatedwithspecificpathogensinlactatingdairycattle[210].SalesandMarketShare−ThemarketshareoftheFirstDefenseproductlineinthedairyandbeefmarket(calculatedonthebasisofcalvestreated)increasedfrom3631.1 million per year, with the total domestic addressable market (including dam-level products) estimated at 81.8millionperyear[32].−Domesticsalesincreasedby3530 million annually, with facility expansions completed by the end of 2022[21]. - The company has increased its production capacity to over 30millionperyear,addressinganorderbacklogofapproximately4.7 million as of March 21, 2025[148]. - The DS production facility is expected to have an initial annual production capacity sufficient to meet approximately 10millioninsalesofRe−Tainatcurrentproductionyields[45].−ProductioncapacityfortheFirstDefenseproductlineincreasedfromapproximately16.5 million to approximately 30million,withatotalinvestmentof9.9 million from 2019 to December 31, 2024[96]. Contamination and Quality Control - The company experienced contamination events leading to scrapped inventory, resulting in charges of approximately 407,000in2024and527,000 in 2023[21]. - The company has experienced production contamination events that began in late 2022 and continued through April 2024, but believes these issues have been remediated[150]. - The company implemented new quality control measures and process improvements to mitigate contamination risks and enhance production yields[172]. - The company has made significant improvements at the source farm level, including enhanced product testing and staff training, to prevent future contamination events[176]. Regulatory and Compliance Risks - Regulatory risks include the need for FDA approval for the Re-Tain product, which has faced delays and could impact future sales[101]. - The company is exposed to regulatory compliance risks through subcontractors, which could affect its ability to produce necessary products[113]. - The FDA's phased review process for Re-Tain has been ongoing since 2004, with the most recent submission of the CMC Technical Section made in January 2025[206]. Debt and Financial Obligations - As of December 31, 2024, the company's outstanding debt totaled 10.6million,withablendedfixedinterestrateof4.512 million and $3.7 million due in 2025 and 2026, respectively[74]. - The debt service coverage (DSC) ratio was below the required minimum of 1.35, with actual ratios of 0.73 and 1.10 for the years ended December 31, 2024 and 2023, respectively[75]. - The company is required to meet certain financial covenants, and failure to do so could result in unfavorable amendments to debt terms[75]. Market Conditions and Risks - Inflation and rising input costs are adversely affecting the company's gross margins, with significant volatility in the dairy market impacting profitability[77]. - The company is exposed to risks from rising interest rates, which could increase future borrowing costs and financial pressure on dairy and beef producers[74]. - Climate change poses risks that could disrupt the company's operations and negatively impact customer demand for its products[118]. - The concentration of sales and accounts receivable with two large distributors poses a risk, with 78% and 79% of trade accounts receivable due from these distributors as of December 31, 2024 and 2023 respectively[95]. Employee and Operational Risks - The company currently employs 75 employees, a decrease from 79 employees a year ago, with 57 engaged in quality and manufacturing operations[68]. - The company has maintained product liability insurance deemed reasonable relative to potential exposure, with no history of claims to date[97]. - The company relies heavily on key personnel, which poses a risk to operations if any are lost[112]. Growth and Future Outlook - The company anticipates growth in the beef market and international sales, particularly in Canada and potential new markets like Mexico, Pakistan, and India[34]. - The company aims to achieve a gross margin of 40% or more on product sales, but realized gross margins were only 30% and 22% for the years ended December 31, 2024 and 2023, respectively[71]. - The company aims to increase gross margin by approximately 3 to 8 percentage points over the 37% reported for the three-month period ended December 31, 2024[194].
