Good day, and welcome to the ImmuCell Corporation Reports Second Quarter 2021 Financial Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. 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, 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 Q2 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 the 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 Britam, President and CEO of ImmuCell Corporation, after which we will open the call for your questions. Mike?
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 7, 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 Q2 of 2021 and up 10% for the 1st 6 months of the year, compared to the same periods of the prior year respectively. We have recovered from the Q1 sales drop and are on track to report positive sales growth for the full year of 2021 over 2020 as projected. The $4,500,000 in sales that we recorded during the 2nd quarter indicates an annualized rate of production of about $18,200,000 We are clearly making good progress towards achieving our stated objective of increasing our annual production capacity from about $16,500,000 to about $23,000,000 and eliminating the 1st Defense order backlog. As a result of our expanding production capacity, we shipped 11% more product during the Q2 of 2021 then during the Q1 of this year.
And we reduced the backlog of First Defense orders to approximately 1,300,000 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 Q2 of 2021 compared to just 39% during the Q1 of 2021. We anticipated this improvement as the costs incurred to expand our production capacity were spread over the increasing output during the Q2. This higher level of sales helped us to report net income of $141,000 during the Q2 of 2021 in contrast to a net loss of $766,000 during the Q2 of 2020. At this stage in our development, I think we 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 3 month and 6 month periods ended June 30, 2021 to $843,000 $1,101,000 respectively, in comparison to the same periods during the prior year, but the most complete measure is a statement of cash flows in the financial statements to our quarterly report. Full details about the capital expenditure investments Of the $10,700,000 of cash that we had on hand as of June 30, we Expect to use about $7,600,000 to complete these identified projects. About $5,300,000 of this investment is for related activities and the balance of $2,300,000 is directed towards retain. This would leave us with about $3,100,000 of cash available for other purposes.
Lastly, I would like to offer a few comments about ReTain, 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 RETAIN has been long and expensive, but we are nearing completion of the required work. We aim to demonstrate that our bacteriasin niacin 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 to retain 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 RETAIN around year end. But it is important to confirm that we cannot predict the timing or the outcome of the FDA's review. So 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 was just 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. So 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. And the first question comes from Sam Rebotsky with SER Asset Management. Please go ahead.
Yes. Good morning, Michael. I'm trying to understand what the state what you expect to say In July about retain, is that dependent upon the FDA?
100%, yes. So as you know, we got 4 technical sections have been previously submitted and completed. The 5th is the one pending review and we do expect their response in the Q3 still. So when we have that response, We definitely expect to announce the results of their review.
Okay. And as far as First Defense, you need another piece of equipment to get to sort of Continue to build up more First Defense. This sounds I mean, It's been difficult because of what's going on with COVID. And So you expect that in the quarter ending September?
Yes. 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 $23,000,000 in annual capacity up, but we're kind of halfway there at around $18,200,000 So What we have completed is growing our capacity and what we need to complete will bring it up to that $23,000,000 level.
And so 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 retained. We have been talking to the FDA, but we haven't just Received the final decision or we've been discussing?
Yes. On these technical sections, the 5, they're all the same. You submit and you wait 6 months. That's just statutory and it's They've been consistent on the first four and I don't see any difference on the 5th. So yes, it's just the way that the system works is They take 6 months, usually not more and usually not less.
So that's what we're waiting on. It's kind of a it's all or nothing thing. They don't sort of give you
Okay. Michael, I'm at the airport, so we'll
Good to hear from you, Sam. Travel safe.
Thank you. Good luck.
All right, thanks.
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 and thanks to all of you for participating in today's call. We look forward to talking with you again to review the results for the Q3 of 2021 around the 2nd 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.