Commitments and Contingencies
Contingencies
In December 2020, a derivative shareholder action, captioned Edward D. Wright, derivatively on behalf of Precigen, Inc. F/K/A Intrexon Corp. v. Alvarez et al, was filed in the Circuit Court for Fairfax County in Virginia on behalf of Precigen, Inc. The complaint named as defendants certain of the Company' directors and certain of the Company's current and former officers. The complaint's claims related to disclosures made by the Company about MBP program from May 10, 2017 to March 1, 2019. The plaintiff seeks damages, forfeiture of benefits received by defendants, and an award of reasonable attorneys' fees and costs. The case was stayed by an order entered on June 14, 2021. On September 24, 2021, an individual shareholder filed a lawsuit in the Circuit Court for Henrico County styled Kent v. Precigen, Inc., Case CL21-6349. The Kent action, also related to disclosures regarding MBP program, demands inspection of certain books and records of the Company pursuant to Virginia statutory and common law. On April 1, 2022, the court denied the demurrer and referred the matter to a hearing on the merits. The Company intends to defend the lawsuits vigorously; however, there can be no assurances regarding the ultimate outcome of these lawsuits.
In connection with the sale of the Company's Trans Ova subsidiary in 2022, the Company is required to indemnify the buyer for certain expenses incurred post close (related to covenants and certain additional specified liabilities including certain patent infringement lawsuits), if incurred, in amounts not to exceed $5,750. Such indemnification was recorded as a reduction of the gain on divestiture in 2022. As of December 31, 2025 and December 31, 2024, $2,476 and $3,213, respectively, were included in indemnification accruals on the consolidated balance sheets related to this indemnification liability. In 2025, the Company
paid an indemnification claim of $737 for expenses incurred by the buyer for the period from January 2024 to September 2025. During 2024, the Company paid $1,862 for expenses incurred by the Buyer for the period from July 2023 through December 2023. In addition, during 2023, the Company paid $675 for indemnification claims related to the period from the date of sale through June 2023. During 2025, the Company was notified by the buyer that the underlying claim related to the Company's indemnification was fully settled, and the Company will be required to further indemnify the buyer for approximately $2,000 plus associated legal fees. The Company expects to make final payments in 2026 which will discontinue the on going indemnification obligation.
In the course of its business, the Company is involved in litigation or legal matters, including governmental investigations. Such matters may result in adverse judgments, unfavorable settlements, or concessions by the Company, or adverse regulatory action, any of which could harm the Company’s business or operations. Moreover, such matters are subject to many uncertainties and outcomes are not predictable with assurance. The Company accrues liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of December 31, 2025, the Company does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows.