Good morning. And welcome to ImmuCell Corporation Reports Third Quarter Fiscal Year 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Joe Diaz at Lytham Partners. Please go ahead.

Thank you, Chad. Good morning and welcome to everyone. As Chad indicated, my name is Joe Diaz with Lytham Partners. We are the Investor Relations consulting firm for ImmuCell. I thank all of you for joining us today to discuss the unaudited financial results for the third quarter which ended September 30, 2022. I would like to preface this discussion today with a caution regarding forward-looking statements. Listeners are reminded that statements made by management during the course of this call include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Additional information regarding these risks and uncertainties is available under the cautionary note regarding Forward-Looking Statements or better known as a Safe Harbor statement provided with last night’s press release and with the company’s quarterly report on Form 10-Q for the three-month and nine-month periods ending September 30, 2022, along with the company’s other periodic filings with the SEC. With that said, let me turn the call over to Michael Brigham, President and CEO of ImmuCell Corporation. After which we will open the call for your questions. Michael?

Okay. Great. Thanks, Joe, and good morning, everyone. So a summary of the third quarter and year-to-date financial results are now available to you from last night’s press release and the details are available from the Form 10-Q for the quarter ended September 30, 2022 that we also filed last night. We did file this Form 10-Q about five business days late to allow time to restate our first quarter and second quarter filings with the SEC. The restatements were made to reflect a noncash accrual of deferred compensation expense consisting of earned and unused paid time-off during the first quarter of 2022. This change increased our administrative expenses and accrued expenses by approximately $222,000, once again, with no impact on our cash position or on our product sales. As you may know, on October 5th, we issued a press release covering our preliminary topline sales results. We have been making these optional announcements to give investors a very timely look at product sales, which I believe is the most critical measure of our operations and financial performance early in the reporting period. Have no changes to that previous disclosure. Again, sales were down about $350,000 during the three-month period ended September 30, 2022 compared to prior year. The sales were up 24% or $935,000 over sales during the second quarter of 2022. As we look at the longer periods of time, sales were up 6% or $858,000 and 15% or $2.56 million during the nine-month and 12-month periods ended September 30, 2022, respectively, compared to the same period during the prior year. We are experiencing a bit of a bumpy road as we exit from a long period of short product supply to our emerging new state with expanded and still expanding production capacity. Prior to our introduction of…

Thank you, sir. [Operator Instructions]

Chad, it looks like we have got couple of people in the queue.

Thank you. And our first question will come from Jim Barrett with Barrett Investments. Please go ahead.

Hi. Good morning, Joe and Michael. Michael, I may have missed it, but are the product challenges that you experienced in Q3, have they been solved and can you explain what happened, was it human error, was there some other factor involved? And if it has not been solved, when would you expect it to be largely behind the company?

Yeah. Thanks. It’s fair, Jim. So solved, when you are running a biological manufacturing process, I think you are always subject to contamination. So I’d hesitate to say solved, like, permanently, because it can come around. But what we are very comfortable with is we haven’t seen a contamination since these third quarter events. So I think some of the improvements we put in place are working and we are proceeding well since then. These events were kind of bunched together and looking for a smoking gun, I don’t really have one, I have a list and we have just implemented a lot of procedures that should and so far have helped us avoid further contaminations. And as I mentioned in my comments, I really think it’s largely the result of just pushing people and pushing equipment and pushing the process too hard and this is what we avoid if we move from operating equipment at 100% to push it down a bigger capacity yet run it at 80% and do all the right things with preventive maintenance and cleaning and just tightening up the process and the controls. So, so far so good, it’s extremely painful event, but so far behind us.

And maybe in the Q, what is the size of your current backlog relative to a year ago or however you measure it?

Yeah. Probably the best answer is, what we did put it in the Q is our best projection of what we think it will be around year end and we think it may be around $900,000 at year end, but again, with this new capacity coming on here in the fourth quarter. We just walk into the busy peak season first quarter with -- as our VP of Sales likes to say, it’s not a fire hose, it’s a fire brigade and we just crank at that higher level to turn that around pretty quickly. But yeah, short answer, it’s subject to sales and new product releases and actual figures, but we are thinking it’s going to be up to around 900,000 at year end.

And then finally, could you update us on your planned capital spending for both this year and in 2023?

Yeah. Now there is a lot of detail in the Q on that. I spelled out Project H to…

Okay.

…A through H. But we are completing all the current projects and then this H is the new one that will take us to get this next level, but again, for the end of 2024. So I would refer you, maybe, Bobbi, help me here on the page.

Yeah. I will read the 10-Q.

Yeah. Just the -- but specifically to your question, it’s around page 27, where we just detail each project. And I think the summary you are looking for, which maybe I will just read for the benefit of others is…

Sure.

When we disclosed our cash, obviously, and we set aside about $5.7 million to complete these projects and that leaves about. $3.1 million for go forward.

I see. Okay. Thank you very much. I appreciate the answers.

Yeah. Thanks, Jim.

[Operator Instructions] The next question is from Charles Shorehammer from Shorehammers [ph]. Please go ahead.

Hi, Michael. Thanks for all your hard work. I really appreciate that. My question is towards this rising interest rate environment. Could you opine on how the company is positioned going into this higher rate?

Yeah. I think this is a good place to bang a little bit. We -- I really like our debt structure. Just before interest rates started going up, we were able to lock everything in and we are at a blended rate of about 3.56%. So most of our debt is right around 3.5%, we do have a couple of stated main loans at 5%, again blended rate 3.56% and it’s fixed. So I think we are in ...

And what’s the duration on that apart from Macquarie?

Yeah. I mean there’s four different instruments and they have different -- between mortgage and equipment different maturities. But I am going to grab a footnote 10 and kind of refer you to the details there. But on page 13, 14 of the Q, we give the maturity schedule and the breakdown of the different instruments precisely.

Perfect. All right. Great. All right. Thank you very much.

Yeah. Thanks, Charles. Appreciate it.

[Operator Instructions] Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Joe Diaz for any closing remarks.

Thank you, Chad. And again, thanks to all of you for participating in today’s call. We look forward to talking with you again to review the results for fiscal year 2022 during the latter part of February 2023. I hope you have a great holiday season everyone. Thank you. Have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.