Good day, welcome to the ImmuCell Corporation Reports Second Quarter 2021 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Joe Diaz. Please go ahead.
Thank you, Betsy. Good morning and welcome. My name is Joe Diaz. As Betsy indicated, I'm with Lytham Partners. We're the investor relations consulting firm for ImmuCell. Thank you for joining us today to discuss the unaudited financial results for the second quarter of 2021. I'd 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 the company's quarterly report on Form 10-Q.
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?
Great. Thanks, Joe. I appreciate the opportunity to provide some updates on what is going on at ImmuCell. The press release and the quarterly report on Form 10-Q that we disclosed last night cover the key financial highlights and all the details. As you may know, on July seventh, we issued a press release covering our preliminary top-line sales results. We have been making these optional announcements to give investors a very timely look at what I view as the most critical measure of our operations and financial performance, that being product sales early in the reporting period. I have no changes to that very strong previous disclosure. Again, product sales were up 53% during the second quarter of 2021 and up 10% for the first six months of the year compared to the same periods of the prior year, respectively.
We have recovered from the first quarter sales drop and are on track to report positive sales growth for the full year 2021 over 2020 as projected. The $4.5 million in sales that we recorded during the second quarter indicates an annualized rate of production of about $18.2 million. We are clearly making good progress towards achieving our stated objective of increasing our annual production capacity from about 16.5 million to about 23 million and eliminating the First Defense order backlog. As a result of our expanding production capacity, we shipped 11% more product during the second quarter of 2021 than during the first quarter of this year. We reduced the backlog of First Defense orders to approximately $1.3 million as of the end of last week.
I am very pleased to report that our gross margin as a percentage of product sales recovered to 46% during the second quarter of 2021, compared to just 39% during the first quarter of 2021. We anticipated this improvement as the costs incurred to expand our production capacity were spread over the increasing output during the second quarter. This higher level of sales helped us to report net income of $141,000 during the second quarter of 2021, in contrast to a net loss of $766,000 during the second quarter of 2020. At this stage in our development, I think we should focus on our cash flows more than on our bottom line as reported in accordance with GAAP. Page 4 of last night's press release provides a look at some non-GAAP financial measures and the impact of certain non-cash expenses on our financial results.
We reported increases in EBITDA during both of the three-month and six-month periods ended June 30, 2021, to $843,000 and $1,101,000, respectively, in comparison to the same periods during the prior year. The most complete measure is the statement of cash flows in the financial statements to our quarterly report. Full details about the capital expenditure investments that we are working on can be found in our quarterly report in the MD&A section under Liquidity and Capital Resources. Of the $10.7 million of cash that we had on hand as of June 30th, we expect to use about $7.6 million to complete these identified projects. About $5.3 million of this investment is for First Defense-related activities, and the balance of $2.3 million is directed towards Re-Tain. This would leave us with about $3.1 million of cash available for other purposes.
Lastly, I would like to offer a few comments about Re-Tain, our new subclinical mastitis treatment for lactating dairy cows without a milk discard or meat withhold requirement, which is currently subject to FDA review and approval. The road to FDA approval of Re-Tain has been long and expensive, but we are nearing completion of the required work. We aim to demonstrate that our bacteriocin nisin A can play a productive role in the treatment of subclinical mastitis in today's dairy industry by providing a novel alternative to traditional antibiotics. Our objective is to gain market acceptance of this new product concept as we develop a new product category. Ultimately, the market determines the value of any new product. Re-Tain will be no different. Later this quarter, we expect to issue a press release announcing the FDA's response to our last of 5 major technical section submissions.
This response from the FDA will determine whether we will be able to commence an initial limited market launch of Re-Tain around year-end. It is important to confirm that we cannot predict the timing or the outcome of the FDA's review. In conclusion, I encourage you to review the press release and the quarterly report on Form 10-Q that we filed last night. Also, please have a look at our corporate presentation slide deck and August update, which was posted to our website last night. I believe it provides a very good summary of our business strategy and objectives, as well as our current financial results. See the investors section of our website and click on the corporate presentation. With that said, I will be happy to take your questions. Let's have the operator open up the lines.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. As a reminder, if you would like to ask a question, please press star then one on your touch-tone phone. The first question comes from Sam Rebotsky with SER Asset Management. Please go ahead.
Yeah. Good morning, Michael. I'm trying to understand what you expect to say in July about Re-Tain. Is that dependent upon the FDA?
100%, yes. As you know, we got 4 technical sections have been previously submitted and completed. The fifth is the one pending review, we do expect their response in the third quarter still. When we have that response, we definitely expect to announce the results of their review.
Okay. As far as First Defense, you need another piece of equipment to sort of continue to build up more First Defense. It's been difficult because of what's going on with COVID. You expect that in the quarter ending September?
Yeah. I really wanted everything buttoned up and done and just get on to the new level of production June 30. That didn't happen. There were some COVID delays. There were some manufacturer problems. You can see, I guess my point is that we didn't hit the 23 million in annual capacity yet, but we're kind of halfway there at around 18.2. What we have completed is growing our capacity, and what we need to complete, we'll bring it up to that 23 million level. A little off on the timing, but at least we're gaining. We have increased the capacity, just not all the way yet.
Okay. Let me just get back to the Re-Tain. We have been talking to the FDA, but we haven't just received the final decision.
Yeah. On these technical sections, the five, they're all the same. You submit and you wait six months.
Okay.
That's just statutory. They've been consistent on the first 4. I don't see any difference on the fifth. Yeah, it's just the way the system works is they take 6 months, usually not more and usually not less. That's what we're waiting on. It's kind of an all or nothing thing. They don't sort of give you an interim status check. We wait for their response, complete or incomplete.
Okay. Michael, I'm at the airport.
Oh, I see.
we'll-
Good, Sam. Good to hear from you, Sam.
Yeah.
Travel safe.
Thank you. Good luck.
All right, thanks.
As a reminder, if you have a question, please press star then one to be joined into the queue. This concludes our question and answer session. I would like to turn the call back over to Joe Diaz for any closing remarks.
Okay. Thank you. Thanks all of you for participating in today's call. We look forward to talking with you again to review the results for the third quarter of 2021 around the second week of November. Have a great weekend. Stay safe and well.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.